<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

      Annual Report Pursuant to Section 13 or 15 (d) of the Securities and
                              Exchange Act of 1934
                   For the Fiscal Year Ended February 28, 2001

                                DENMANS.COM, INC.
                 (Name of Small Business Issuer in its Charter)

         Colorado                                      E.I.N. 91-2015608
-------------------------------           -------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Indentification No.)
incorporation or organization)


Suite 1620 - 1140 West Pender Street                        V6E 4G1
Vancouver, British Columbia

------------------------------------                   -----------------
(Address of Principal Executive Offices)                   (Zip code)


Registrant's telephone number, including area code  (604) 684-7804

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

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

                    Title of each class to be so registered:

                                  COMMON STOCK
                          ---------------------------


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

Yes _X_          No ___


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

Check ___X___


As at February 28, 2001, there were 11,002,000 shares of the company's common
stock ($.001 par value) outstanding.

Transitional Small Business Disclosure Format (check one)

Yes _____         No __X__

<PAGE>

PART I


Statements contained in the annual report that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risk and uncertainties, which could cause actual results to differ materially
from estimated results. Such risks and uncertainties are detailed in filings
with the Securities and Exchange Commission, including without limitation in
Item 1. "DESCRIPTION OF BUSINESS" and Item 6. "MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION" below.


ITEM 1. DESCRIPTION OF BUSINESS


A.  BUSINESS DEVELOPMENT


                                DENMANS.COM, INC.

denmans.com, Inc. (the "Company") was incorporated in January 1999 in the state
Colorado as IDS Internet Distribution Systems Inc. For marketing, branding and
promotional reasons, the Company changed its name in July 1999 to denmans.com,
Inc. The Company has developed an electronic website (www.denmans.com) for the
purpose of retailing jewelry and jewelry related products to the public in
established markets.

The past year was a difficult one for the Company primarily due to the decrease
in market confidence in Internet based retailers. Because of the drop in market
activity in this sector and because of the limited revenues and profit of the
Company, the Company's ability to finance its operations through the capital
markets via equity financing was thwarted. The Board of Directors decided to
cease current operations on January 16, 2001.

The Board has been and is currently seeking opportunities for the Company where,
through a merger or acquisition with an existing private or public company, the
Company may be able to maximize shareholder value. As of the date of this
filing, the Board has been unsuccessful in its efforts in these regards.

<PAGE>

                       DENMANS.COM, INC. CORPORATE HISTORY

In January 1999, the Company filed its Articles of Incorporation with the
Secretary of State of Colorado as IDS Internet Distribution Systems Inc., in
which, among other things, the Board of Directors was elected as follows: Mark
N. Dohlen, Douglas N. Bolen, Kurt S. Dohlen and Terry G. Bowering. The
authorized capital of the Company consists of 100,000,000 Common Shares and
50,000,000 Preferred Shares. On January 7, 1999, the Directors, by way of
Organizational Consent of the Directors of the Company, accepted the stock
subscriptions and payment for the number of shares issued to the individuals
referred to above at a price of $0.001 per share. In addition, the Directors
appointed Mark N. Dohlen to the office of President, Douglas N. Bolen to the
office of Secretary and Kurt S. Dohlen to the office of Chief Operating Officer.

On February 10, 1999, the Company accepted subscription agreements from nine
entities to acquire securities of the Company pursuant to a Rule 504 offering
under Regulation D. The Board authorized the Company to proceed with the sale of
its shares pursuant to the subscriptions received for the sale of 4,500,000
Common Shares at a price of $0.001 per Common Share. Pacific Stock Transfer
Company was appointed as the Transfer Agent of the Common Shares of the Company.

In March 1999, Denmans Jewelry (USA) Inc. was incorporated as IDS Jewelry (USA)
Inc. in the State of Nevada, which now acts as the operating company for all USA
based business activities of the Company.

In March, 1999, Denmans Jewelry (Canada) Inc. was incorporated as IDS Jewelry
(Canada) Inc. in British Columbia, Canada which now acts as the operating
company for all Canada based business activities of the Company.

On May 15, 1999, a Board of Directors Meeting was held at which the number of
Board members was increased to five and the following additional member was
elected to the Board: Dr. Drew C. Parker.

On July 23, 1999, by way of Shareholders' Consent, the name of the Company was
changed from IDS Internet Distribution Systems Inc. to Denmans.com, Inc. to
further Management's plans in respect of marketing. On July 28, 1999, by way of
Shareholders' Consent, the name of the U.S. subsidiary was changed from IDS
Jewelry (USA) Inc. to Denmans Jewelry (USA) Inc. On August 1, 1999, by way of
Shareholders' Consent, the name of the Canadian subsidiary was changed from IDS
Jewelry (Canada) Inc. to Denmans Jewelry (Canada) Inc.

On August 20, 1999 the Board of Directors accepted the resignation of Mark N.
Dohlen from the positions of Chairman of the Board of Directors, President and
Director. On the same day, the Board of Directors appointed Kurt S. Dohlen to
the offices of President and Chairman of the Board.


<PAGE>

On August 31, 1999, the Company filed a Registration Statement on Form 10-SB
with the United States Securities and Exchange Commission to register the
Company's issued and outstanding Common Stock. This registration statement was
cleared by the SEC and became effective on October 31, 1999.

In November 1999, the Company's Sponsoring Market Maker filed a Form 211
Application to the National Association of Securities Dealers ("NASD") for a
trading symbol to permit the Company's stock to be publicly traded on the NASD
Over-the-Counter Bulletin Board Service. Said Application is still pending.

On January 16, 2001, the Company announced that its Board of Directors has
concluded that it is in the best interests of the Company to terminate its
current line of business operation as an Internet based retailer of jewelry.

On January 16, 2001 the Board of Directors accepted the resignation of Kurt S.
Dohlen from the positions of Chairman of the Board of Directors, President and
Director. On the same day, the Board of Directors appointed Douglas N. Bolen to
the offices of President and Chairman of the Board.


B.     BUSINESS OF THE ISSUER

Denmans Jewelry (USA) Inc. ("Denmans USA") was incorporated in March 1999 as IDS
Jewelry (USA) Inc. and is based in Nevada, USA. Denmans USA is a wholly owned
subsidiary of the Company and acts as the operating entity for the Company's
business in the USA. Denmans Jewelry (Canada) Inc. ("Denmans Canada"), was
incorporated as IDS Jewelry (Canada) Inc. in Vancouver, British Columbia, Canada
and is a wholly owned subsidiary of the Company which acts as the operating
entity for the Company's business in Canada. The Company, through its wholly
owned subsidiaries, had established itself as an on-line retailer of jewelry and
jewelry related products. The Company opened its only distribution center in Los
Angeles. Its early entry into the on-line jewelry products retailing industry
was expected to help the Company gain a well-recognized brand and a large
customer base. The Company's mission was to combine the advantages of online
commerce with a superior customer focus in order to be the authoritative source
for jewelry and jewelry related products.

The Company's online store offered a broad selection of jewelry, informative
content, easy to use navigation and search capabilities, a high level of
customer service, competitive pricing and personalized merchandising and
recommendations. The Company's store was open 24 hours a day, seven days a week
and offered its customers convenient and timely product fulfillment, including
an overnight delivery option.
<PAGE>

The Company implemented a broad array of scalable site management, search,
customer interaction and distribution services systems that could be used to
display products, process customer orders and payments. These services and
systems used a combination of commercially available, licensed technologies,
which were customized and integrated to provide the platform for the online
store.

The Company's mission was to be a leading Web-based retailer focused exclusively
on jewelry and jewelry related products. By combining expertise in jewelry and
jewelry related products and a commitment to excellent customer service with the
benefits of Internet retailing, the Company delivered a unique shopping
experience to consumers.

On January 16, 2001, the Company announced that it had closed its Website and
ceased its current business activities. The Company will explore strategic
alternatives for the Registrant, which may include a merger, an asset sale, an
investment in the Registrant or another comparable transaction or a financial
restructuring.


ITEM 2.    DESCRIPTION OF PROPERTY

The company occupied 3,966 square feet of commercial space at 1140 West Pender
Street, Vancouver, British Columbia. This facility housed the majority of
operations including production, technical, marketing and administration for
Denmans Jewelry Canada Inc. and Denmans Jewelry USA Inc.

The Company cancelled the Pender Street premises lease on January 31, 2001.

Denmans Jewelry USA Inc. occupied 1,202 square feet of commercial space at the
International Jewelry Center, 550 South Hill Street, Los Angeles, California.
This facility housed the company's product sourcing, fulfillment and
distribution operations and was strategically located in the heart of the Los
Angeles international jewelry district.

The Company cancelled the Hill Street premises lease on January 31, 2001.


ITEM 3.  LEGAL PROCEEDINGS

The company is not a party to any pending legal proceeding nor is its property
the subject of any pending legal proceeding.


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

There were no matters submitted to a vote of security holders for the fiscal
year covered by this report.

<PAGE>


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common equity shares are listed upon the OTC Bulletin Board
Service. The Company began trading its common equity shares on September 7,
2000. For the Company's third fiscal quarter ending November 30, 2000 the high
price was $1.87 and the low price $0.28. For the fourth quarter ending February
28, 2001, the high price was $0.39 and the low price $0.05.

As of February 28, 2001, 2,450,000 shares were reserved for issuance pursuant to
the exercise of options, 1,200,000 from the 1999 non-qualified employee stock
option plan and 1,250,000 from the 2000 non-qualified employee stock option
plan. As of February 28, 2001, 711,750 options were available to be granted
versus 925,000 options available to be granted at February 29, 2000.

On June 1, 2001, the Company cancelled and terminated any and all entitlement to
all holders of stock options granted by the stock option committee under the
Company's 1999 Stock Option Plan and 2000 Stock Option Plan.


As of February 28, 2001, there are no shares of the Company's Common Stock
subject to outstanding warrants to purchase or securities convertible into the
Common Stock of the Company.

The number of shares eligible for trading will be all of the Common Stock except
that which is owned by management of the Company. The management of the Company
currently owns an aggregate of 6,500,000 shares which can be sold only in
compliance with Rule 144.

There have been no cash dividends declared since the inception of the Company or
its subsidiaries. There are no restrictions that would limit the ability to pay
dividends on common equity or that are likely to do so in the future.


ITEM 6.    MANAGEMENT DISCUSSION AND ANALYSIS

The past year was a difficult one for the Company primarily due to the decrease
in market confidence in Internet based retailers. Because of the drop in market
activity in this sector and because of the limited revenues and profit of the
Company, the Company's ability to finance its operations through the capital
markets via equity financing was thwarted.

On December 20, 2000, the Company announced that it was actively seeking merger
and acquisition opportunities. From December 20, 2000 to January 16, 2001, The
Company actively sought strategic partners, whether public or private, in the
Internet and/or jewelry sectors. It was hoped that a merger or acquisition might
have presented opportunities to further expand and develop the business model.
Management felt that combining existing efficiencies with the efficiencies of
another entity could have lead to a further streamlining of operations and a
sharing of resources and ultimately to an increase in shareholder value.

On January 16, 2001, the Board of Directors of the Company concluded that it was
no longer in the best interests of the Company to borrow additional funds to
sustain operations when the ability to raise capital through the public markets
was no longer available. As such, the Board concluded that what was in the best
interests of the Company and its shareholders was to cease operations. On the
same date, the Company announced that it had ceased operations, given job
elimination notices to nearly all employees and would attempt to find another
opportunity for the Company with a higher probability of success.

<PAGE>

                              RESULTS OF OPERATIONS

The following tables set forth selected information from the statements of
operations for the year ended February 28, 2001 and February 29, 2000 and the
Balance Sheets as at February 28, 2001 and February 29, 2000.


SELECTED STATEMENT OF OPERATIONS INFORMATION

                                         For the Year Ended      For the Year
                                         February 28, 2001      Ended February
                                                                   29, 2000
                                        -------------------- -------------------

Sales                                           172,460             103,846
Gross Profit                                     45,425             (1,231)
Operating Expenses                            2,573,215           1,469,872
Net Loss                                      2,527,790           1,468,641


SELECTED BALANCE SHEET DATA

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

Working Capital                              (2,546,119)            321,869
Total Assets                                     75,567             809,534
Long Term Debt                                1,447,891           2,000,000
Deficit                                       4,006,510           1,478,720
Total Shareholders'deficiency                 3,994,010           1,467,720

The Company's revenues consist of net sales from jewelry and jewelry related
products net of product returns. The Company's sales were $172,460 during the
year ended February 28, 2001 compared to $103,846 for the year ended February
29, 2000. This increase of $ 68,614 was driven by the availability of the
company's website to the public as of December 1999 and the subsequent sales of
the Company's products and services.

Gross profit for the year ended February 28, 2001 was $45,425 or 26.3% of Sales
versus $(1,231) for the year ended February 29, 2000. The gross profit
percentage increase achieved by the Company for its sales for the year ended
February 28, 2001 compared to the same period last year is due primarily to the
efficiencies gained as the company transitioned out of the development stage.
Overall gross profit as a percentage of sales remained lower than anticipated
due pricing and product mix.

OPERATING EXPENSES
Operating expenses for the year ended February 28, 2001 amounted to $2,573,215
compared to $1,469,872 for the period ended February 29, 2000. Operating
expenses consist primarily of marketing and media expenditures, salaries and
benefits, general and administrative expenses, website operations expenses, and
interest expense on promissory notes.

MARKETING AND MEDIA: The Company's marketing and media expenses consist
primarily of advertising costs, affiliate program costs, production expenses,
and market research. Our advertising activities were intended to build brand
awareness, generate website traffic, and thereby increase overall sales.
Affiliate and associated program costs relate to referral fees paid to
registered affiliates for maintaining links to the Company's website and for
traffic and sales generated from said links. Marketing and media expenses
decreased to $342,853 for the year ended February 28, 2001 compared to $619,554
reported for the same twelve month period ended February 29, 2000. This decrease
is due largely to the fact that the company decided not to launch a major
holiday season advertising campaign based on projected results of the required
investment.

SALARIES AND BENEFITS: Salaries and benefits expenses increased to $830,038 for
the year ended February 28, 2001 from $408,387 for the same period last year.
This increase was due to the increase in headcount required as a result of the
website launch in December 1999 and from efforts to increase efficiency via
technology, additional maintenance to the Company's website contributed
primarily to an increase in headcount.

GENERAL AND ADMINISTRATIVE: General and administrative expenses include office
supplies and expenses, leased premises related expenses, professional fees and
other expenses. General and administrative expenses have increased $293,473 for
the year ended February 28, 2001 compared to the same period last year. The
increase is driven primarily by the growth of staffing levels required in the
operations and fulfillment processes and professional fees associated with
technology based consulting.
<PAGE>

WEBSITE OPERATIONS: Website operations expenses include website hosting and
maintenance related costs. Website operations expenses amounted to $124,350 for
the year ending February 28, 2001 versus $12,551 for the comparative period
ending February 29, 2000. This increase is due to the launch of the Company's
website in December 1999 which required ongoing hosting and related support
costs to maintain.

INTEREST INCOME: Interest income is earned on the Company's cash balances.
Interest income earned during the twelve months ending February 28, 2001
amounted to $4,228 compared to $2,973 for the same period last year.

As a result of the decision to discontinue current operations, the Company has
terminated nearly all of its employees, shut down the website, cancelled leases
for premises, and attempted to realize all of its assets. The impact of
realizing all of its assets has resulted in a loss on disposal of capital assets
amounting to $77,731, a write down of website costs amounting to $59,661, and a
write down of supplier deposits as supply agreements were cancelled and balances
became due and payable to the Company. The Company incurred a loss on the
collection of these deposits in the amount of $31,022.


LIQUIDITY AND CAPITAL RESOURCES

At February 28,2001, the Company had $9,681 in cash compared to $433,850 at
February 29,2000. The decrease in the cash balance is due primarily to the use
of $1,809,756 cash in operations offset by an additional $1,447,891 in debt
financing.

Working capital at February 28, 2001 has decreased from $321,869 at February 29,
2000 to a deficit of $(2,456,119). Accounts Receivable increased to $51,920
compared to $28,098 at February 29, 2000. Prepaid expenses and deposits
decreased by $133,209 at February 28, 2001 from $137,175 at February 29, 2000
due primarily to the Company's discontinuance of current operations whereby
supplier deposits on account with several vendors in the United States became
due and payable. Supplier deposit amounts of $31,022 were determined to be
uncollectible and subsequently written down. Accounts Payable and accrued
liabilities increased from $206,137 at February 29,2000 to $223,250 the majority
of which is comprised of trade and payroll related liabilities.

Net cash used in operating activities increased to $1,809,756 for the year ended
February 28, 2001 from $1,312,249 for the year ended February 29, 2000. This net
change in cash consumed reflects primarily the Company's transition from the
development state to the operating stage in addition to the interest expense on
long term borrowings offset by the write down and loss on assets as a result of
discontinuing operations.

Cash used in investing activities for the year ending February 28, 2001 amounted
to $63,804 ($86,063 additions to capital assets offset by $22,259 proceeds on
sale of capital assets) compared to $263,183 for the same period last year. As
the Company transitioned from the development stage in fiscal 2000 to the
operating stage in fiscal 2001, investment requirements for capital assets were
markedly reduced.

Cash provided by financing activities decreased from $1,980,000 for the year
ended February 29, 2000 to $1,449,391. This decrease is primarily the result of
lowered requirements from unsecured debt financing provided by private arm's
length lenders.


OUTLOOK
Since January 16, 2001, the Company disposed of all or substantially all of its
assets in order to compensate employees for holiday pay and severance and to pay
all governmental authorities amount owed. These transactions have substantially
exhausted all funds that remained in the Company upon closing. The Board has
been and is currently seeking opportunities for the Company where, through a
merger or acquisition with an existing private or public company, the Company
may be able to maximize shareholder value. As of the date of this filing, the
Board has been unsuccessful in its efforts in these regards.

ITEM 7.  FINANCIAL STATEMENTS

Information with respect to this item is contained in the financial statements
appearing on Item 13 of this report. Such information is incorporated herein by
reference.


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

There have been no disagreements on accounting and financial disclosures from
the inception of the Company through to the date of this Report.


<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


Kurt S. Dohlen, BA - Director.

Douglas N. Bolen, BA, LLB - President.

John David Sorlie, Peng, MBA - Director


DOUGLAS N. BOLEN, 35,  PRESIDENT, CHAIRMAN OF THE BOARD AND DIRECTOR

Employment history: Mr. Bolen brings over ten years experience in
entrepreneurial enterprise. Mr. Bolen received a Bachelor of Arts from the
University of Regina, Saskatchewan and his Bachelor of Laws from the University
of Saskatchewan. Mr. Bolen is a member in good standing of the Law Society of
Saskatchewan, the Regina Bar Association and the Canadian Bar Association. From
1995 to 1999, Mr. Bolen articled and practiced law at Balfour Moss, Barristers
and Solicitors, a large Regina, Canada based law firm with a practice
concentration in the area of Corporate Commercial law. From 1992 to 1995, Mr.
Bolen was attending the College of Law at the University of Saskatchewan. Mr.
Bolen currently is a Director and officer of Net-Force Systems Inc., an Antigua
based corporation, which offers entertainment services via the Internet.

Mr. Bolen was appointed to the position of Director in January 1999 to serve
until his successor has been elected and qualifies.


J. DAVID SORLIE, 38, DIRECTOR

Employment History: Mr. Sorlie brings over 15 years of engineering and project
management experience. Mr. Sorlie has experience in both large corporations and
entrepreneurial enterprises.

Mr. Sorlie received a Bachelor of Science in Engineering and a Master of
Business Administration from Simon Fraser University in Vancouver, Canada.

Mr. Sorlie was appointed to the position of Director in December 2000 to serve
until his successor has been elected and qualifies.

KURT S. DOHLEN, 39, DIRECTOR

Employment History: Mr. Dohlen brings over 15 years of retail sales/marketing
and senior management experience. Mr. Dohlen has considerable experience in both
large corporations and entrepreneurial enterprises. Mr. Dohlen was General
Manager of Hill's Indian Crafts Limited, a private art dealer with six
locations, based in Vancouver, Canada from July 1990 to December 1997. From 1997
to 1999, Mr. Dohlen was involved in self-directed studies in the areas of
business management with a focus on Internet Retailing. Mr. Dohlen received a
Bachelor of Arts from McGill University in Montreal, Canada.

Mr. Dohlen was appointed to the position of Director in January 1999 to serve
until his successor has been elected and qualifies.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended April 30, 1999, all filing requirements
applicable to its officers, directors and greater then ten percent beneficial
owners were complied with.


<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes the total compensation of the Chief Executive
Officer and the other most highly compensated executive officers (collectively,
the "Named Executive Officers") of the Company earning in excess of $100,000 for
the year ended February 28, 2001.
<TABLE>
<CAPTION>

                                                                 Long Term Compensation
---------------------------------------------------- ------------------------------------------------
                Annual Compensation                           Awards                  Payouts
---------------------------------------------------- -------------------------- ---------------------
       Name and              Year         Salary            Securities               All Other
      Principal                           ($)(1)     Underlying Options/Stock       Compensation
       Position                                                SARs
----------------------- --------------- ------------ -------------------------- ---------------------
<S>                          <C>          <C>                 <C>
   Douglas N. Bolen          2001         43,090              337,500
        (CEO)
----------------------- --------------- ------------ -------------------------- ---------------------
</TABLE>


(1) The salary depicted is in United States Dollars. The salary was paid in
Canadian Dollars.

<TABLE>
<CAPTION>

                          Number of           % of Total
                          Securities         Options/SARs         Exercise of
                          Underlying          Granted to          Base Price          Expiration
        Name             Options/SARS        Employees in           ($/Sh)               Date
                         Granted (#)          Fiscal Year
--------------------- ------------------- -------------------- ------------------ -------------------

<S>                        <C>                   <C>                 <C>          <C>
  Douglas N. Bolen         337,500               32.0%               $0.75        December 31, 2009

--------------------- ------------------- -------------------- ------------------ -------------------
</TABLE>


For the above granted options, 237,500 options vest one quarter immediately and
one quarter every six months thereafter. The remaining 100,000 options vest one
half immediately and the other 50% vest after one year.

On June 1, 2001, the Company cancelled and terminated any and all entitlement to
all holders of stock options granted by the stock option committee under the
Company's 1999 Stock Option Plan and 2000 Stock Option Plan.

<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<CAPTION>


                                                               Number of
                                                               Securities
                      Shares Acquired                          Underlying             Value of
                        on Exercise      Value Realized       Unexercised           In-the-Money
                           (#)(1)             ($)           Options/SARs at       Options/SARs at
        Name                                                   FY-End (#)            FY-End ($)
--------------------- ----------------- ----------------- --------------------- ---------------------
                                                              Exercisable/          Exercisable/
                                                             Unexercisable         Unexercisable
                                                          --------------------- ---------------------
<S>                         <C>               <C>               <C>                      <C>
  Douglas N. Bolen          NIL               NIL               318,750/                 0/
                                                                 31,250                  0
--------------------- ----------------- ----------------- --------------------- ---------------------
</TABLE>
<PAGE>

LONG TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR

The company has no long term incentive plans or awards to report for the last
fiscal year other than the Employee Stock Plan already mentioned.

COMPENSATION OF DIRECTORS

Standard Arrangements. The members of the Company's Board of Directors are
reimbursed for actual expenses incurred in attending Board meetings.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS

There are no written contracts of agreements. Employee salaries are set by the
Board of Directors.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The table below sets forth information, as of February 28, 2001, with
     respect to beneficial ownership of the Company's Common Stock by each
     person known by the company to be the beneficial owner of more than 5% of
     its outstanding Common Stock, by each director of the company, by each
     Named Executive Officer and by all officers and directors of the Company as
     a group. Unless otherwise noted, each shareholder has sole investment and
     voting power over the shares owned.
<TABLE>
<CAPTION>

                                                               Amount and nature of
     Title of Class    Name and Address of Beneficial Owner         Beneficial          Percent
                                                                    Owner (1)           Of Class
    ------------------ -------------------------------------- ----------------------- -------------
<S>                    <C>                                    <C>                     <C>
                       Douglas N. Bolen
      Common Shares    Suite 509-1188 Quebec St               3,000,000 (2)           27.3%
                       Vancouver, British Columbia            Beneficial
                       Canada, V6A 4B3
    ------------------ -------------------------------------- ----------------------- -------------
                       Kurt S. Dohlen
      Common Shares    3249 Charles St.                       3,300,000 (3)           30.0%
                       Vancouver, British Columbia            Beneficial
                       Canada, V6B 1A7
    ------------------ -------------------------------------- ----------------------- -------------
    ------------------ -------------------------------------- ----------------------- -------------
                       Terry G. Bowering
      Common Shares    Dove Cove
                       P.O. Box 3265                          100,000 (4)             0.9%
                       St. John's Antigua                     Beneficial
                       West Indies
    ------------------ -------------------------------------- ----------------------- -------------
                       Drew C. Parker
      Common Shares    24 Arrow-Wood Place                    100,000                 0.9%
                       Port Moody, British Columbia           Record and Beneficial
                       Canada, V3H 4J1
    ------------------ -------------------------------------- ----------------------- -------------
                       All Directors and Officers as a        6,500,000               59.1%
      Common Shares    group (4 persons)                      Beneficial
    ------------------ -------------------------------------- ----------------------- -------------
</TABLE>

(1) No member of Management has the right to acquire within sixty days through
options, warrants, rights, conversion, privilege or similar obligations any
security of the Company.

(2) The BRF Family Trust, of which Douglas N. Bolen is a beneficiary enjoys
legal ownership of said securities.

(3)The Longhouse Sargent Investment Trust, of which Kurt S. Dohlen is a
beneficiary, enjoys legal ownership of said securities.

(4) Geneva Overseas Holdings Ltd., of which Terry G. Bowering is a beneficial
owner, enjoys legal ownership of said securities.


CHANGES IN CONTROL

Management is not aware of any arrangements which may result in a change of
control of the issuer.

<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company is not aware of any transactions or proposed transactions in respect
of which the Company was or is to be a party, in which any director, executive
officer, nominee for election as a director, 5% security holder, member of the
immediate family of any of the previously named persons had a direct or indirect
interest in the transaction other than the Company borrowed the sum of $50,000
from Mark N. Dohlen, a former shareholder and director on May 26, 1999 and
repaid said sum, without interest, on July 20, 1999.


ITEM 13.  INDEX TO EXHIBITS

(a)         Financial Statements (included in Part II of this Report):

            Report of Independent Accountants

            Consolidated Balance Sheet - February 28, 2001

            Consolidated Statements of Loss and Retained Earnings (Deficit) -
            February 28, 2001

            Consolidated Statements of Cash Flows - February 28, 2001

            Notes to Consolidated Financial Statements - February 28, 2001

3.1         Articles of Incorporation (1)

3.2         Bylaws (2)

27.1        Financial Data Schedule (3)

            (1) Incorporated by reference from Form 10SB/A dated October 13,
            1999

            (2) Incorporated by reference from Form 10SB/A dated October 13,
            1999

            (3) Incorporated by reference from Form 10-KSB dated February 29,
            2000


(b)  REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the last quarter of the period covered
by this Report

<PAGE>

SIGNATURES

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

(Registrant)                        Denmans.com, Inc.

By:                        /s/ Douglas N. Bolen
                           -----------------------------------
                           President, Chairman of the Board, and Director

Date:                      June 29, 2001

By:                        /s/ Kurt S. Dohlen
                           -----------------------------------
                           Director

Date:                      June 29, 2001


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

By:                        /s/ Douglas N. Bolen
                           -----------------------------------
                           President, Chairman of the Board, and Director

Date:                      June 20, 2001



By:                        /s/ Kurt S. Dohlen
                           -----------------------------------
                           Director

Date:                      June 20, 2001


By:                        /s/ J. David Sorlie
                           -----------------------------------
                           Director

Date:                      June 20, 2001



<PAGE>



Consolidated Financial Statements

DENMANS.COM, INC.
(formerly IDS Internet Distribution Systems Inc.)
February 28, 2001
(expressed in U.S. dollars)


<PAGE>



                         REPORT OF INDEPENDENT AUDITORS





To the Board of Directors and Shareholders of
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)

We have audited the accompanying consolidated balance sheets of DENMANS.COM,
INC. as of February 28, 2001 and February 29, 2000 and the related consolidated
statements of loss and comprehensive loss, shareholders' deficiency and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of DENMANS.com, Inc.
at February 28, 2001 and February 29, 2000, and the consolidated results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 2, the Company's
history of losses and a working capital deficiency of $2,546,119 raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in note 2. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.




Vancouver, Canada,
June 7, 2001.                                              Chartered Accountants


<PAGE>


DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
<TABLE>

                           CONSOLIDATED BALANCE SHEETS
                          [see note 2 - Going Concern]

                                                     (expressed in U.S. dollars)

<CAPTION>

                                                                        AS AT              AS AT
                                                                    FEBRUARY 28,       FEBRUARY 29,
                                                                        2001               2000
                                                                          $                  $
--------------------------------------------------------------------------------------------------
<S>                                                                  <C>               <C>
ASSETS
CURRENT
Cash and cash equivalents                                                9,681            433,850
Accounts receivable [NOTE 4]                                            51,920             28,098
Prepaid expenses and deposits [NOTE 5]                                   3,966            137,175
Assets held for disposal [NOTE 6]                                       10,000                 --
--------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                    75,567            599,123
--------------------------------------------------------------------------------------------------
Capital assets (net) [NOTE 6]                                               --            210,411
--------------------------------------------------------------------------------------------------
                                                                        75,567            809,534
--------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT
Accounts payable and accrued liabilities                               200,694            144,764
Interest payable [NOTE 7]                                              398,436             55,392
Payroll taxes payable                                                   22,556             61,373
Current portion of notes payable [NOTE 7]                            2,000,000                 --
Deferred revenue                                                            --             15,725
--------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                            2,621,686            277,254
--------------------------------------------------------------------------------------------------
Notes payable [NOTE 7]                                               1,447,891          2,000,000
--------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                    4,069,577          2,277,254
--------------------------------------------------------------------------------------------------

SHAREHOLDERS' DEFICIENCY
Share capital [NOTE 8]
   Preferred stock, $0.0001 par value; 50,000,000 shares
     Authorized, none issued and outstanding
   Common stock, $0.001 par value; 100,000,000 shares
     authorized, 11,002,000 shares issued and outstanding
     [2000 - 11,000,000 shares]                                         11,002             11,000
Additional paid in capital                                               1,498                 --
Deficit                                                             (4,006,510)        (1,478,720)
--------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' DEFICIENCY                                      (3,994,010)        (1,467,720)
--------------------------------------------------------------------------------------------------
                                                                        76,767            809,534
--------------------------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES
</TABLE>


<PAGE>

<TABLE>

DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)

                            CONSOLIDATED STATEMENT OF
                           LOSS AND COMPREHENSIVE LOSS
                          [see note 2 - Going Concern]

                                                     (expressed in U.S. dollars)

<CAPTION>

                                                                       FOR THE            FOR THE
                                                                     YEAR ENDED          YEAR ENDED
                                                                    FEBRUARY 28,        FEBRUARY 29,
                                                                        2001               2000
                                                                          $                  $
--------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>
Sales                                                                  172,460            103,846
Cost of sales                                                          127,035            105,077
--------------------------------------------------------------------------------------------------
Gross profit                                                            45,425             (1,231)
--------------------------------------------------------------------------------------------------

EXPENSES
Marketing and media                                                    342,853            619,554
Salaries and benefits                                                  830,038            408,387
General and administrative                                             571,979            278,506
Interest on notes payable [NOTE 7]                                     343,044             55,392
Depreciation and amortization                                          127,183             52,772
Accounting and legal                                                    68,838             35,496
Foreign exchange loss                                                    1,104              6,348
Website operations                                                     124,350             12,551
Loss on disposal of capital assets [NOTE 6]                             77,371                 --
Interest income                                                         (4,228)            (2,973)
Incorporation costs                                                         --              1,377
Writedown of website costs [NOTE 6]                                     59,661                 --
Writedown of supplier deposits [NOTE 5]                                 31,022                 --
--------------------------------------------------------------------------------------------------
                                                                     2,573,215          1,469,872
--------------------------------------------------------------------------------------------------
LOSS AND COMPREHENSIVE LOSS FOR THE YEAR                             2,527,790          1,468,641

LOSS PER COMMON SHARE                                                     0.23               0.13
--------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF SHARES
   OUTSTANDING FOR THE YEAR                                         11,000,784         11,000,000
--------------------------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES

</TABLE>

<PAGE>


DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
<TABLE>

                            CONSOLIDATED STATEMENT OF
                            SHAREHOLDERS' DEFICIENCY
                          [see note 2 - Going Concern]

                                                     (expressed in U.S. dollars)

<CAPTION>


                                                                       ADDITIONAL
                                           COMMON STOCK                  PAID-IN
                                     SHARES             AMOUNT           CAPITAL          DEFICIT
                                        #                  $                $                $
--------------------------------------------------------------------------------------------------
<S>                               <C>                   <C>                <C>         <C>
BALANCE, FEBRUARY 28, 1999        11,000,000            11,000                --          (10,079)
Loss for the period                       --                --                --       (1,468,641)
--------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 29, 2000        11,000,000            11,000                --       (1,478,720)
Stock options exercised                2,000                 2             1,498               --
Loss for the period                       --                --                --       (2,527,790)
--------------------------------------------------------------------------------------------------

BALANCE, FEBRUARY 28, 2001        11,002,000            11,002             1,498       (4,006,510)
--------------------------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES

</TABLE>

<PAGE>

<TABLE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                          [see note 2 - Going Concern]

                                                     (expressed in U.S. dollars)

<CAPTION>

                                                                       FOR THE            FOR THE
                                                                     YEAR ENDED          YEAR ENDED
                                                                    FEBRUARY 28,        FEBRUARY 29,
                                                                        2001               2000
                                                                          $                  $
--------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>
OPERATING ACTIVITIES
Loss for the year                                                   (2,527,790)        (1,468,641)
Adjustment to recover the net cash used in operations
   Depreciation and amortization                                       127,183             52,772
   Loss on disposal of capital assets                                   77,371                 --
   Writedown of website costs                                           59,661                 --
   Writedown of supplier deposits                                       31,022                 --
   Accrued interest on notes payable                                   343,044             55,392
Changes in operating assets and liabilities
   Increase in accounts receivable                                     (23,822)           (28,098)
   (Increase) decrease in prepaid expenses and deposits                102,187           (137,035)
   Increase in accounts payable and accrued liabilities                 55,930            136,263
   Increase (decrease) in payroll taxes payable                        (38,817)            61,373
   Increase (decrease) in deferred revenue                             (15,725)            15,725
--------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES                                   (1,809,756)        (1,312,249)
--------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Additions to capital assets                                            (86,063)          (263,183)
Proceeds from sale of capital assets                                    22,259                 --
--------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES                                      (63,804)          (263,183)
--------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Issuance of notes payable                                            1,447,891          1,980,000
Proceeds from exercise of stock options                                  1,500                 --
--------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES                                1,449,391          1,980,000
--------------------------------------------------------------------------------------------------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
   DURING THE YEAR                                                    (424,169)           404,568
Cash and cash equivalents, beginning of year                           433,850             29,282
--------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR                                   9,681            433,850
--------------------------------------------------------------------------------------------------

SEE ACCOMPANYING NOTES
</TABLE>


<PAGE>


1. NATURE OF BUSINESS

DENMANS.com, Inc. (the "Company") was incorporated on January 6, 1999 in the
State of Colorado as IDS Internet Distribution Systems Inc. On July 23, 1999 the
Company changed its name from IDS Internet Distribution Systems Inc. to
DENMANS.com, Inc.

DENMANS.com, Inc. has two wholly owned subsidiaries; Denmans Jewelry (USA) Inc.
and Denmans Jewelry (Canada) Inc.

Denmans Jewelry (USA) Inc. was incorporated on March 8, 1999 as IDS Jewelry
U.S.A. Inc. On July 28, 1999, IDS Jewelry U.S.A. Inc. changed its name to
Denmans Jewelry (USA) Inc. It was incorporated in the State of Nevada and was
intended to function as the operating company for the United States market.

Denmans Jewelry (Canada) Inc. was incorporated on March 25, 1999 as IDS Jewelry
Canada Inc. On August 1, 1999, IDS Jewelry Canada Inc. changed its name to
Denmans Jewelry (Canada) Inc. It was incorporated in the Province of British
Columbia and was intended to function as the operating company for the Canadian
market.

On January 16, 2001, the Company announced that it was terminating its current
line of business operation as an Internet based retailer of jewelry. As a result
of the decision to cease operations, the Company has terminated nearly all of
its employees, shut down its website, cancelled the leases for its premises and
attempted to realize on all of its assets [notes 5 and 6]. The Company is
currently searching for an opportunity to sell or merge the Company with another
entity.


2. GOING CONCERN

These financial statements have been prepared on a going concern basis which
presumes the realization of assets and the settlement of liabilities and
commitments in the normal course of business for the foreseeable future.

The Company incurred a loss of $2,527,790 for the period ended February 28,
2001, and as of February 28, 2001 had a working capital deficiency of
$2,546,119. During the year, the Company terminated its current line of business
operation and no longer has a source of operating revenue.

The Company's continuation as a going concern is uncertain and dependent upon
the continued support of its lenders and/or the Company must obtain additional
financial resources by raising capital from stockholders or other sources
successfully. The outcome of these matters cannot be predicted. Accordingly, the
Company's continuation as a going concern is in substantial doubt.



<PAGE>


2. GOING CONCERN (CONT'D.)

On June 13, 2001, the Company agreed with their lenders an extension of $500,000
promissory note bearing interest at 5% originally due on May 30, 2001 to
December 30, 2001.

The Company has been and is currently seeking opportunities to complete a merger
or an acquisition with an existing private or public Company. The Company has
been unsuccessful in its efforts in these regards.

These financial statements do not include any adjustments to the carrying values
and classification of assets and liabilities that may be necessary if the
Company is unable to continue in business.


3. SIGNIFICANT ACCOUNTING POLICIES

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

CONSOLIDATION

These consolidated financial statements include the accounts of DENMANS.com,
Inc. and its wholly-owned subsidiaries, Denmans Jewelry (USA) Inc. and Denmans
Jewelry (Canada) Inc. All intercompany balances and transactions have been
eliminated.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand and balances with banks. Cash
equivalents comprise highly liquid investments with original maturities of 90
days or less. Cash equivalents are carried at cost which approximates their fair
value.



<PAGE>


3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

CAPITAL ASSETS

Capital assets are recorded at cost less accumulated depreciation. Capital
assets are depreciated over their useful lives as follows:

     Office furniture                               5 years straight line
     Production equipment                           3 years straight line
     Computer software                              2 years straight line
     Computer hardware                              3 years straight line
     Website costs                                  2 years straight line
     Leasehold improvements                         2 years straight line

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

REVENUE RECOGNITION

Revenues are recognized from on-line sales only after cash has been collected
and the goods have been delivered to the customer. Cash collections in advance
of the delivery of the goods are included in deferred revenue and will be
recognized at the time the goods are delivered to the customer.

FOREIGN EXCHANGE

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

INCOME TAXES

The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets and
liabilities using enacted tax rates that will be in effect for the year in which
the differences are expected to reverse.



<PAGE>


3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

STOCK BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements using
the intrinsic value method in accordance with the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25") and complies with the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). Under APB 25, compensation expense for employees is based on the
difference between the fair value of the Company's stock and the exercise price
if any, on the date of the grant. The Company accounts for stock issued to
non-employees at fair value in accordance with SFAS 123. The Company uses the
Black-Scholes option pricing model to determine the fair value of stock options
granted to non-employees.

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 these estimates.

LOSS PER SHARE

Basic loss per share is computed by dividing the net loss applicable to common
shares by the weighted average number of common shares outstanding during the
period. The Company has no dilutive financial instruments.

FINANCIAL INSTRUMENTS

The carrying values of the Company's financial instruments approximate fair
values, except as otherwise disclosed in the financial statements.



<PAGE>


3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

RECENT ACCOUNTING PRONOUNCEMENTS

SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), as amended by SFAS 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133",
and SFAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities", is effective for the Company as of March 1, 2001. SFAS 133, as
amended, requires that an entity recognized all derivatives as either assets or
liabilities measured at fair value. The accounting for changes in the fair value
of a derivative depends on the use of the derivative. The Company has determined
there will be no impact of SFAS 133 on the financial statements.


4. ACCOUNTS RECEIVABLE

Accounts receivable comprise:
                                                       2001               2000
                                                         $                  $
--------------------------------------------------------------------------------

Amounts due from the sale of goods                   11,711              7,722
GST recoverable                                       6,578             10,864
Other                                                33,631              9,512
--------------------------------------------------------------------------------
                                                     51,920             28,098
--------------------------------------------------------------------------------


5. PREPAID EXPENSES AND DEPOSITS

Prepaid expenses and deposits comprise:
                                                       2001               2000
                                                         $                  $
--------------------------------------------------------------------------------

Deposits held by merchant banks                          --             19,361
Deposits for leases for premises                         --             12,634
Deposits held by suppliers                               --             89,433
Other prepaid expenses                                3,966             15,747
--------------------------------------------------------------------------------
                                                      3,966            137,175
--------------------------------------------------------------------------------



<PAGE>


5. PREPAID EXPENSES AND DEPOSITS (CONT'D.)

The Company had obtained "just in time" supply accounts with several vendors in
the United States. Under the conditions of the supply agreements, the company
was required to provide the vendors with deposits on account. The deposits were
revolving and were non-interest bearing. Net balances on deposit were held by
the vendors until the supply agreements were canceled.

The Company discontinued all operations on January 16, 2001 at which date the
aforementioned supply agreements were canceled and the balances outstanding
became due and payable to the Company. The Company incurred a loss of $31,022 on
the collection of these supplier deposits.

The Company had a merchant account with a bank in the United States for credit
card processing. Under the conditions of the merchant agreement, the Company was
required to provide the bank with a security deposit. The deposit was revolving
and non-interest bearing.


6. CAPITAL ASSETS AND ASSETS HELD FOR DISPOSAL

As at February 28, 2001 and February 29, 2000 capital assets and assets held for
disposal comprised the following:

                                                       ACCUMULATED      NET BOOK
                                          COST        DEPRECIATION        VALUE
                                            $               $               $
--------------------------------------------------------------------------------

FEBRUARY 28, 2001
Website costs                            184,414        174,414          10,000
--------------------------------------------------------------------------------

FEBRUARY 28, 2000
Office furniture                          32,273          3,310          28,963
Production equipment                       6,672            556           6,116
Computer software                         14,123          3,020          11,103
Computer hardware                         64,494         11,336          53,158
Website costs                            143,155         34,242         108,913
Leasehold improvements                     2,466            308           2,158
--------------------------------------------------------------------------------
                                         263,183         52,772         210,411
--------------------------------------------------------------------------------



<PAGE>


6. CAPITAL ASSETS (CONT'D.)

a]   SALE OF CAPITAL ASSETS

As a result of the terminated operations, the Company sold or otherwise disposed
its capital assets excluding its website for cash of $19,107, resulting in a
loss on disposal of assets of $74,211.

Prior to the sale of capital assets triggered by the termination of operations,
the Company had sold assets with a net book value of $6,312 for proceeds of
$3,152 resulting in a loss on disposal of $3,160.

b]   WEBSITE COSTS WRITEDOWN

The termination of the Company's operations has caused the obsolescence of
capitalized website costs with a carrying amount of $69,661. Subsequent to
February 28, 2001, the Company sold its website for cash of $10,000.
Accordingly, the Company recorded an impairment loss of $59,661 which is
included in other operating expenses.

<TABLE>

7. NOTES PAYABLE

Notes payable comprise and are due to:
<CAPTION>

                                                              RATE OF          2001
-------------------------------------------------------------------------------------
                                         MATURITY DATE       INTEREST            $

<S>                                    <C>                        <C>      <C>
DGD Wealth Management                   October 25, 2001           5%        500,000
DGD Wealth Management                  December 30, 2001           5%        500,000
Eagle Harbour Management                December 8, 2001          16%        500,000
Eagle Harbour Management               February 15, 2002          16%        500,000
Eagle Harbour Management                  April 12, 2002          16%        500,000
Eagle Harbour Management                 August 20, 2002          16%        500,000
Eagle Harbour Management               September 1, 2002          16%         50,000
Eagle Harbour Management                October 31, 2002          16%        129,921
Eagle Harbour Management               November 30, 2002          16%        118,000
Eagle Harbour Management               December 10, 2002          16%        149,970
-------------------------------------------------------------------------------------
                                                                           3,447,891
Less current portion                                                      (2,000,000)
-------------------------------------------------------------------------------------
                                                                           1,447,891
-------------------------------------------------------------------------------------
</TABLE>



<PAGE>


7. NOTES PAYABLE (CONT'D.)

The notes payable to DGD Wealth Management and Eagle Harbour Management are
unsecured and principal and interest are due at the maturity date. During 2001,
the Company incurred $343,044 [2000 - $55,392] of interest. As at February 28,
2001, $398,436 [February 29, 2000 - $55,392] of interest remains unpaid.

During 2001, the Company received an additional $1,447,891 in notes payable from
Eagle Harbour Management.

On June 13, 2001, the Company negotiated for no cost, an extension of a $500,000
note payable from DGD Wealth Management. The note payable originally matured on
May 30, 2001 and has been extended to December 30, 2001.


8. SHARE CAPITAL

AUTHORIZED
    100,000,000 common shares, par value $0.001
     50,000,000 preferred shares, par value $0.001

[a]  Stock options

     As of February 28, 2001, the Company had stock options outstanding under
     two plans: 878,750 pertain to the 1999 Stock Option Plan ("1999 Plan") and
     861,500 pertain to the 2000 Stock Option Plan ("2000 Plan"). All the plans
     are administered by the Board of Directors who have sole discretion and
     authority to determine individuals eligible for awards. The Board
     determines the conditions of exercise of each grant individually at the
     time of the grant.

     The 1999 Plan, which became effective on October 26, 1999, provided for the
     issuance of 1,200,000 options to employees and directors of the Company and
     its subsidiary at an exercise price of $0.75. Options issued under this
     plan expire on December 31, 2009.

     The 2000 Plan, which became effective on January 10, 2000, provided for the
     issuance of 1,250,000 options to employees and directors of the Company and
     its subsidiary at an exercise price to be determined based on the trading
     price of the Company's shares. Options issued under this plan expire on
     December 31, 2010.

     Under both plans, options issued to employees vest straight line on a
     monthly basis over two years. Options issued to senior officers and vice
     presidents vest one quarter immediately and one quarter every six months
     thereafter. Options issued to directors vest one half immediately and the
     other 50% vest after one year.


<PAGE>


8. SHARE CAPITAL (CONT'D.)

     As at February 28, 2001, 2,450,000 [2000 - 2,450,000] shares were reserved
     for issuance pursuant to the exercise of options. As at February 28, 2001,
     711,750 [2000 - 925,000] options were available to be granted.

     Stock option activity during the years indicated is as follows:
<TABLE>
<CAPTION>

                                                                                           WEIGHTED-
                                                                            PRICE OF        AVERAGE
                                                            OPTIONS          OPTION        EXERCISE
                                                          OUTSTANDING        GRANTS          PRICE
                                                               #                $              $
--------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>                   <C>
     Balance, March 1, 1999                                     --              --             --
     Granted                                             1,525,000            0.75           0.75
     Exercised                                                  --              --             --
--------------------------------------------------------------------------------------------------
     Cancelled                                                  --              --             --
     Balance, February 29, 2000                          1,525,000                           0.75
     Granted                                             1,105,000     0.75 - 1.44           0.76
     Exercised                                              (2,000)           0.75           0.75
--------------------------------------------------------------------------------------------------
     Cancelled                                            (887,750)           0.75           0.75
     Balance, February 28, 2001                          1,740,250                           0.76
--------------------------------------------------------------------------------------------------
</TABLE>

     The following table summarizes information concerning outstanding and
     exercisable options at February 28, 2001:

                                                   WEIGHTED-
                                                    AVERAGE
    EXERCISE                   NUMBER              REMAINING           NUMBER
     PRICES                  OUTSTANDING          CONTRACTUAL        EXERCISABLE
        $                         #                  LIFE                 #
--------------------------------------------------------------------------------

      0.75                 1,712,750                 9.32          1,712,750
      1.00                     7,500                 9.83              7,500
      1.31                    10,000                 9.83             10,000
      1.44                    10,000                 9.83             10,000
--------------------------------------------------------------------------------
                           1,740,250                 9.33          1,740,250
--------------------------------------------------------------------------------

     On June 1, 2001, the Company cancelled and terminated any and all
     entitlement to all holders of stock options granted by the stock option
     committee under the Company's 1999 Stock Option Plan and 2000 Stock Option
     Plan.


<PAGE>


8. SHARE CAPITAL (CONT'D.)

[c]  ACCOUNTING FOR STOCK BASED COMPENSATION

     During 2001 and 2000, the Company's option grants consisted of 1,105,000
     and 1,525,000 stock options respectively, issued to employees and directors
     and, in accordance with APB 25, no compensation expense was required to be
     recorded.

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

                                                                        2001               2000
                                                                          $                  $
--------------------------------------------------------------------------------------------------
<S>                                                                  <C>              <C>
     Net loss as reported                                            (2,527,790)      (1,468,641)
     Pro forma net loss under FAS 123                                (2,914,760)      (1,618,986)
     Net loss per share - basic as reported                               (0.23)           (0.13)
     Pro forma net loss per share - basic, under FAS 123                  (0.26)           (0.15)
--------------------------------------------------------------------------------------------------

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

                                                                        2001               2000
--------------------------------------------------------------------------------------------------

     Dividend yield                                                      0.00%                0%
     Expected volatility                                                 0.05%             0.01%
     Risk-free interest rate                                             5.53%             5.48%
     Expected lives                                                10.76 YEARS        9.81 years
--------------------------------------------------------------------------------------------------
</TABLE>

     The weighted average fair value per share of stock options granted during
     fiscal 2001 is $0.44 [2000 - $0.26].




<PAGE>


9. INCOME TAXES

Deferred income taxes arise from temporary differences in the recognition of
income and expenses for financial reporting and tax purposes. The source of
temporary differences in operations and the related deferred income tax amounts
are as follows:
                                                         2001           2000
                                                           $              $
--------------------------------------------------------------------------------

Deferred tax asset:
   Net operating loss carryforward                  1,508,000        650,000
   Depreciation                                       209,000          8,000
--------------------------------------------------------------------------------
Net deferred tax asset                              1,717,000        658,000
Valuation allowance                                (1,717,000)      (658,000)
--------------------------------------------------------------------------------
Total deferred tax assets                                  --             --
--------------------------------------------------------------------------------

The net deferred tax assets have been fully offset by a valuation allowance due
to the uncertainty of the realization of the assets.

At February 28, 2001, the Company had the following net operating loss
carryforwards:

                              AMOUNT          EFFECTIVE           YEAR
COUNTRY                          $            TAX RATE          OF EXPIRY
--------------------------------------------------------------------------------

USA                          700,000            40.0%               2020
USA                        2,200,000            40.0%               2021
Canada                       570,000            44.6%               2007
Canada                       211,000            44.6%               2008
--------------------------------------------------------------------------------

Pursuant to Section 382 of the Internal Revenue Code, use of the Company's net
operating loss carryforwards may be limited if the Company experiences a
cumulative change in ownership of greater than 50% in a moving three year
period. Ownership changes could impact the Company's ability to utilize net
operating losses and credit carryforwards remaining at the ownership change
date. The limitation will be determined by the fair market value of common stock
outstanding prior to the ownership change, multiplied by the applicable federal
rate. The Canadian non-capital loss carryforwards may also be limited by a
change in company ownership.




<PAGE>


10. SHIPPING AND HANDLING COSTS

The Company does not charge its customers for shipping and handling costs.
Shipping and handling costs are included in general and administrative expenses.
For the twelve months ended February 28, 2001, the Company incurred $9,500 [2000
- $1,175] of shipping and handling costs.