FORM 10-KSB

                     SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549

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

                     For the fiscal year ended:  5/31/01
                                    OR
           ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

    For the transition period from ______________ to ________________

                     Commission file number - 000-21725
                                              ---------

                           Silk Botanicals.Com, Inc.
          ------------------------------------------------------
          (Exact name of Registrant as specified in its charter)

                Florida                            65-0886132
     -------------------------------            ----------------
     (State or other jurisdiction of            (I.R.S. Employer
      incorporation or organization)          Identification Number)

 975 S. Congress Avenue, Suite 102, Delray Beach, Fl     33445
----------------------------------------------------   ----------
     (Address of principal executive offices)          (Zip Code)

                                561-265-3600
           ----------------------------------------------------
           (Registrant's telephone number, including area code)

Securities registered pursuant
to Section 12(b) of the Act:               None
                                           ----
Securities registered pursuant
to Section 12(g) of the Act:               Common Stock, $.001 par value
                                           -----------------------------

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

                 Yes ( )                      No (X)

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the Company'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)

Silk Botanicals.Com's revenues for its most recent fiscal year were
$1,053,857.  As of May 31, 2001, the market value of Silk Botanicals.Com's
voting $.001 par value common stock held by non-affiliates of Silk
Botanicals.Com was $86,716.

The number of shares outstanding of Company's only class of common stock, as
of May 31, 2001 was 31,533 shares of its $.001 par value common stock.

Check whether the Issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.

                 Yes (X)                        No ( )

No documents are incorporated into the text by reference.

Transitional Small Business Disclosure Format (check one)

                 Yes ( )                        No (X)



<PAGE>    1


                                    PART I
                                    ------

ITEM 1. BUSINESS - General

The Company. Silk Botanicals.Com, Inc. was organized under the name of
Diversified Restaurant Holdings, Inc. ("Diversified") on November 20,
1998 in the State of Florida. On April 9, 1999, Diversified acquired
JRB Marketing of South Florida, Inc., a Florida corporation
incorporated in October 1996. With this new business acquisition,
Diversified amended its Articles of Incorporation on August 2, 1999 to
change its name to "Silk Botanicals.Com, Inc." JRB Marketing of South
Florida, Inc. and Silk Botanicals.Com, Inc. are referred to herein as
the "Company."

Business of the Company. The Company develops, markets and distributes
three lines of high-quality artificial flowers - artificial greenery
and floral arrangements in baskets and containers and artificial
floral arrangements in clear glass vases set in epoxy providing the
illusion of fresh flowers in water. These products are marketed under the
Silk Botanicals, "Living Silk(R)" and "Forever Fresh(R)" names. The Company
markets and sells these products to gift retailers, decorative accessory
retailers., and the hospitality industry. The artificial foliage and flowers
are imported primarily from Taiwan, Hong Kong and the Peoples Republic of
China. The Company purchases artificial flowers from U.S. based
importers and U.S. subsidiaries of foreign companies located in the
U.S. Glassware is purchased from domestic manufacturers.

The Company purchases its silk botanical products from an established
manufacturer owned by the Company's president and majority
stockholder (hereinafter "Manufacturer"); however, the Company may
purchase its products from other suppliers.  On April 1, 1999, the
Company entered into a non-exclusive manufacturing and distribution
agreement with the Manufacturer for a term of six years with the right
to extend the agreement for six additional six-year terms.  The
Manufacturer will invoice the Company for products and distribution of
products at rates to be negotiated periodically between the Company
and the Manufacturer.

On January 2, 2001, the Company and its primary manufacturer entered
into an agreement with an established out-of-state assembler and
manufacturer of high-quality artificial plants, trees and floral
arrangements.  This marketing, manufacturing and distribution agreement
will significantly increase the manufacturing capabilities for the
Company's product, thereby positioning the Company to potentially
increase its customer base and sales revenue.

Independent research by Jacobs, Jenner & Kent of Baltimore, Maryland,
in their study on the Permanent Floral Products Industry, has revealed
three important opportunities which the Company has and will continue
to address: (1) there is little awareness of artificial floral brands
among consumers, (2) merchandise with retail prices less than $30 is
the preferred choice for retailers and their customers, and (3) gift
boxes enhance merchandising. The Company plans to embark on a program
to build brand awareness, develop three product lines targeting
three distinct markets - gift retailers, decorative accessories
retailers, and the hospitality industry - and is developing gift boxes
for select products.

Products. The Company has developed over 500 floral and greenery
arrangements and a special gift box for its line of bud vase
arrangements. The Company believes the gift box will be well accepted
by national gift and retail store chains and has plans to develop gift
boxes for other vases in its product lines.

Arrangements are sold as get well gifts by hospital gift shops and as
gifts for birthdays, anniversaries, Christmas, Chanukah, Valentines
Day, Easter and Mothers Day. Styles retailing for $20.00 to $50.00
have been strong sellers for these markets. The Company further
believes that the quality of the product will enable customers to
overcome any reluctance to buying artificial flowers. In addition,
styles priced from $58.00 to $198.00 are sold as decorative
accessories and house warming gifts for the consumer and decorative
accents for the hospitality industry. The Company plans to develop new
products that would be less seasonal.



<PAGE>    2


Customer Service. The Company strives to serve its customers with
accurate and on-time delivery of its products. Retail and chain stores
demand a high level of service to assure full product availability for
their customers. The Company offers a variety of distribution services
depending on its customers' needs. The Company also provides its
customers with high quality customer and ordering services. Its sales
force assists customers in identifying products from the Company's
lines and works closely with them to furnish the best products for
their store requirements.

Quality Assurance. As part of its quality assurance program, the
Company intends to carefully select its suppliers and perform periodic
product inspections, both prior to shipment and after receipt. The
Company expects to experience negligible returns of defective or
damaged products.

Competition. The artificial floral industry is competitive but highly
fragmented with many small players in the manufacturing end.
Therefore, Management believes that an excellent opportunity exists
for the Company and its product lines and that there are a variety of
ways to compete in this industry.

The Company's primary competitors are other assemblers, importers and
distributors. Some of these competitors focus on price and others
specialize in a particular product segment. The Company competes
primarily on the basis of merchandising, high quality product lines,
supply dependability, price and brand name recognition. The Company's
competitors are not focused on the gift industry, have not developed
products targeting the gift industry, nor have they developed
packaging to gift industry standards.

The barriers to entry to the Company's industry are relatively low.
The Company believes, however, that attaining success in the industry
is difficult but that it has competitive advantages, including its
ability to fill orders quickly and completely and provide a high level
of customer service, high quality products, competitive prices and
brand names. The Company believes the industry does not have a single
dominant retailer or wholesaler of high quality artificial greenery
and flower arrangements. To date, the only importer, manufacturer or
distributor of artificial flowers whose shares are publicly traded is
Celebrity, Inc. (FLWR).

Sales and Marketing. The Company intends to market its products using
the "Forever Fresh(R)" and "Living Silk(R)" trademarks which are
licensed for thirty-six (36) years. The Company believes it has found
a niche in the gift industry. According to Retail Industry Indicators
in 1997, gift and general merchandise is a $49 billion market annually
in the United States. The overall target market for the Company's
products is composed of almost 200,000 stores, including general
merchandise stores, catalog and mail orders, florists, gift stores and
furniture and home furnishing stores. The Company intends to build a
national base of gift stores and develop relationships that have been
recently forged with several regional and national chains. In
addition, the Company's marketing efforts will be through its Web
site, trade shows, direct mail, telemarketing and manufacturer
representatives.

Employees. Currently the Company employs six part-time and six full-
time employees. It anticipates increasing the staff with an additional
six new employees by March 2002.

Key Employees: The Company's key employees are Joseph R. Bergmann,
President, Chief Executive Officer and Director; Regina M. Bergmann,
Director of Personnel; Thomas Maxwell, Controller; Gail Scheel,
Director of Advertising and Marketing; Harold Coren, National Sales
Manager, and Joyce Bernard, Merchandise Manager.

Reports to Security Holders: The Registration Statement became
effective, the Company has become a reporting company as of October
29, 1999 with the Securities and Exchange Commission ("SEC"), and will
thereafter provide an annual report to its security holders, which
will include audited financial statements. The public may read and
copy any materials filed with the SEC at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may also obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains
an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the SEC. The address of that site is www.sec.gov.
The Company currently maintains its own Internet address at
www.silkbotanicals.com.



<PAGE>    3



ITEM 2.  PROPERTIES.

The Company's administrative, warehousing and distribution facilities
are located at 955 and 975 South Congress Avenue in Delray Beach,
Florida. The Company currently subleases this property, which consists
of approximately 20,000 square feet of prime, high-end commercial
space. The existing sublease expires in October 2004, and the terms
include additional ten-year options. Various leasehold improvements
have been made to this facility to support the anticipated growth that
will come from the Company's new projects. The Landlord the Company
leases office space from provides sufficient insurance coverage on the
property, equipment and inventory.  The Company believes that these
facilities are adequate for the foreseeable future.


ITEM 3.  LEGAL PROCEEDINGS.

There are no legal actions pending against the Company nor are any
such legal actions contemplated.


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

During the fourth quarter of the fiscal year ended May 31, 2001, no
matters were submitted to a vote of Silk Botanicals.Com's security
holders, through the solicitation of proxies.


                                 PART II
                                 -------

ITEM 5.  MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information.  Beginning in April of 2000, Silk Botanicals.com's
common stock has been quoted on the OTC Bulletin Board.

*Quarter Ended                    High Bid                 Low Bid
 -------------                    --------                 -------
 May 31, 2000                      $350.00                 $105.00
 Aug. 31, 2000                      122.50                   17.50
 Nov. 30, 2000                       30.80                   11.20
 Feb. 28, 2001                       13.30                    4.90
 May 31, 2001                         7.00                    1.40

* All prices reflect the 1:70 reverse split effective 2/2/01.

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

Holders. The approximate number of holders of record of the Company's
$.001 par value Common Stock, as of May 31, 2001, was 56.

Dividends. The Company has never paid or declared any cash dividends
on our common stock and does not intend to pay dividends on our common
stock in the foreseeable future. We presently expect to retain our
earnings to finance the development and expansion of our business. The
payment of dividends, if any, on our common stock in the future is
subject to the discretion of the Board of Directors and will depend on
our earnings, financial condition, capital requirements and other
relevant factors.



<PAGE>    4



As of May 31, 2001     Title of Security         Amount of Security
                       -----------------         ------------------

                       Common Stock                31,533 Shares

                       Series A Preferred           1,900 Shares

                       Warrants                     5,143 Shares
                                                  $175.00 exercise price

                       Series 2000 Convertible
                       Preferred Stock            4,042,687 shares

                       Series 2000A Convertible
                       Preferred Stock            2,444,532 shares


Common Stock - On November 20, 1998, the Company issued 4,788 shares
of common stock to additional founders of the Company and recorded an
expense of $335 for the issuance.  These shares were issued at par
value since no operations existed in the Company.  Between November
30, 1999 and March 31, 1999, the Company issued 375 shares of common
stock as compensation for services rendered and recorded an expense of
$26.  From January 2, 1999 until March 31, 1999, the Company issued
1,414 shares of common stock for cash of $49,500, which was utilized
by Southern prior to the recapitalization.  The Company issued, from
April 1, 1999 through April 6, 1999, 19,339 shares of common stock and
recorded an expense of $671,460, which approximates market value.  All
of the stock issued has been restated to reflect the reverse stock
splits of 1 for 4 (effective as of May 31, 1999), and 1 for 70
(effective February 2, 2001).

On October 6, 2000, the Company increased the number of authorized
shares of common stock from 25,000,000 to 300,000,000.

Warrants - In March of 2000 the Company issued warrants for 5,143
shares of common stock.  The warrants were issued for $35.00 each for
a total of $180,000.  The warrants have an exercise price of $175.00
per share and are exercisable as follows:
3,428 from April 30, 2000 to April 30, 2002 and 1,715 from May 7, 2000
to May 7, 2002.  The warrants carry a provision to issue options for
up to 5,143 shares exercisable over the same time frame as the
corresponding warrant at a price of $210.00 per share, if an when the
warrants are exercised. All of the warrants issued and exercise prices
have been restated to reflect the reverse stock split of 1 for 70,
effective February 1, 2001.

Preferred Stock - On October 6, 2000, the Company increased the number
of authorized shares of preferred stock from 5,000,000 to 50,000,000,
of which a total of 1,900 shares had previously been dedicated as
Series A preferred stock.  This series is entitled to receive
dividends at the rate of $6.00 per share per annum, payable quarterly.
Such dividends are cumulative and hold a preference over any other
distribution.  This series has no voting rights or conversion
features.

On January 2, 2001, the Company authorized 2,000,000 shares of Series
2001 convertible preferred stock, to be issued in a private offering.
Each share of this series in convertible into common stock, one year
after issuance, at a conversion ratio of either $5.00 per share or 30%
below the trading price of the common stock as priced the prior
trading day to conversion, whichever is less. This series has no
voting rights.

On January 2, 2001, the Company authorized and issued 4,042,687 shares
of Series 2000 convertible preferred stock in exchange for a like
number of shares of common stock owned by the majority shareholder.
Each share of this series is convertible into fully paid and non-
assessable shares of common stock, at the option of the holder, on
one-for-one basis at any time after January 5, 2002.  Each share of
this series entitles the holder to one vote, either in person or by
proxy, at meetings of shareholders, and such vote shall be equal to
the voting rights of the common stock and shall be counted with the
common stock toward election of directors or such other action as the
class of common stock shall be entitled.

On January 2, 2001, the Company authorized 2,444,532 shares of Series
2000A convertible preferred stock, pursuant to an agreement between
the Company and a third party for services to be performed.  Each
share of this series is convertible into common stock, at any time
after twelve months from the date of execution of the agreement, on a
one-for-one basis.  This series has no voting rights.

The rights, preferences and limitations of any additional series of
preferred stock will be determined by the Board of Directors.
Dividends in arrears at May 31, 2001 were $12,825.



<PAGE>    5



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

Revenues: Silk Botanicals.com began generating revenues on June 1,
1999. Prior to that the Company was a development stage company and did
not generate revenue.

For the twelve months ended May 31, 2001, revenues were $1,053,857.
The cost of goods sold was $789,225 with a gross profit of $264,632 or
25.1%.  Total expenses were $195,144 or 18.5%, producing a pretax
income of $69,488 or 6.6%.  The Company maintained $52,174 of
inventory as of May 31, 2001.

The income of $69,488 for year-end May 31, 2001 increased $32,005 over
the profit recorded in year ended May 31, 2000.  Earnings per share
increased to $0.69 as of May 31, 2001 as compared to $0.29 as of May
31, 2000.

During the third quarter, the Company executed a 1:70 reverse split of
its common stock.  On February 5, 2001, the Company obtained a new
symbol SILK (OTC:BB).  The Company's common stock began trading
February 5th, 2001 under the new symbol.

Product Development: Much of the efforts since its inception have been
on product design and development. The design staff studies
competitive fresh cut and artificial arrangements, researches new
sources of stems and vases, surveys retailers and end users for
preferences, and tests prototypes in focus groups and by sampling. The
Company is focused not only on meeting production requirements, but
also in developing new product. The Company design staff have
developed and refined over 500 arrangements by communicating with
customers and by attending silk and fresh flower trade shows.

As the product line has been refined, the focus has included packaging
and merchandising. Although competitors offer similar products, the
Company is not aware of any that have focused its energies on
developing a brand, marketing to the gift & decorative accessories
markets, and responding to the packaging requirements of these
markets.

The Company will continue to diversify to meet retailers' demands for
quality and value. The products will create revenue streams as
follows:

Basic Line: The basic line is drawn from the existing designs, sold
and shipped in bulk. These are inexpensive and serve as the opening
price point for gift stores. The Company believes that this product
sells especially well for tabletop displays, for parties, and to the
hospitality market.

Forever Fresh(R) Gift-Boxed Line: This line is the Forever Fresh
arrangements packaged in a branded window gift box. Benefits to the
retailer include Uniform Product Code ("UPC") labels for inventory and
Point of Sale ("P.O.S."), reduction of breakage, and enhanced on-shelf
merchandising. Wholesale prices range from $8.00 to $14.00 and retail
from $16.00 to $30.00 per unit.

Catalog Program Sales: Catalog program sales are basic line and custom
products that are suitable for "drop shipping." The Company's products
have appeared in Smithsonian Institute, Touch of Class and Good
Catalogs. The Company continually seeks new and diversified catalogs
to carry their products.

Signature Series: The Company's design staff has developed the
Company's signature line of large floral arrangements. These will
wholesale for $100.00 to $300.00. This line marketed to home
accessories retailers and hospitality providers through manufacturers'
representatives. Other designer containers will be introduced that
will enhance the silk flowers and fit into custom interiors.



<PAGE>    6



Market Development: The Company will continue to cater to the needs of
gift retailers and expand its marketing efforts to include the western
half of the United States. The Company plans to target five segments
of the market: Independent Shops. Businesses that own/operate one or
two retail locations; Strand Businesses: Companies that own/operate
from three to twenty-five retail locations; Chain Stores: Companies
that own a nationally or regionally recognized retail gift business;
Catalogs: Companies that sell products directly to consumers via
direct mail catalogs; Department Stores: The Company has begun to work
closely with department stores, rather than discounters, to develop
products to meet their specifications.

By identifying and categorizing the prospect list, current sales
presentations will be modified and new presentations developed, to
meet specific needs of current and future customers. Additional target
markets will continue to include home furnishings retailers, hotels
and restaurants, corporate gifts and furnishings.

Sales and Marketing. The Company will use the following marketing
tactics to achieve its financial objectives:

Trade Shows: The Company believes most sales are generated through
trade shows where the products can be properly displayed to their
fullest effect. The Company currently participates in wholesale trade
shows and anticipates increasing the number of shows they attend:

Gift Industry Trade Shows. The gift and general merchandise industries
purchase approximately $1 billion of products at gift trade shows each
year. Buyers prefer to view the merchandise in person before buying
for their businesses and trade shows provide this opportunity. The
Company believes that participating in these shows will enhance sales
due to the visual nature of the product.

High Point, NC Furniture Show. This trade show is the only resource
dedicated by the Company to general sales within the furniture
industry. Furniture stores represent a projected 23% of the Company's
sales, making attendance at this show cost effective. The Company
anticipates participation in other furniture shows as well.

Manufacturers' Reps: Independent sales organizations sell products
through road sales and trade shows. The Company has representatives
for the Southwest, Midwest and East coast of the United States. The
Company plans to increase representation on the west coast with
representatives who can provide quality representation.

Color Catalogs: Full color catalogs have been produced for Forever
Fresh(R) and Living Silk(R) and Silk Botanicals(R). These are being
used to sell the most important and popular designs in all lines.

Telemarketing: The Company strives to contact its customer base at
least four times a year. Two of the calls will be used for pre-show
marketing and the other two calls will sell reorders.

Web Site: The Company completed its Web site www.silkbotanicals.com in
April of 2000. The site is operational. The Company displays its
product lines and accept orders through its site, as well as provide
information on the company for potential investors.

The sales and marketing plans take into account the Company's desire
to expand operations both financially and geographically. While the
Company continues to build on the solid base of existing customers,
with additions to the sales force, enhanced trade shows schedules, and
product development, it will be able to achieve its revenue and market
share objectives.



<PAGE>    7



ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements
--------------------

The response to this item is being submitted as a separate section of
this report beginning on page 19.


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

(a)      Previous independent accountants

         (i)      Effective August 4, 2000, Silk Botanicals.com, Inc.
                  (the "Registrant") dismissed Sweeney Gates & Co. as its
                  independent accountants.

         (ii)     The report of Sweeney Gates & Co. for the Registrant's
                  fiscal year ended May 31, 1999 contained no adverse opinion
                  or disclaimer of opinion and was not qualified or modified
                  as to uncertainty, audit scope or accounting principle.

         (iii)    The Registrant's Board of Directors participated in
                  and approved the decision to change independent
                  accountants.

         (iv)     In connection with its audits for the past two fiscal years,
                  there have been no disagreements with Sweeney Gates
                  & Co. on any matter of accounting principles or practices,
                  financial statement disclosure, or auditing scope and
                  procedure, which disagreements if not resolved to the
                  satisfaction of Sweeney Gates & Co. would have caused
                  them to make reference thereto in their report on the
                  financial statements for such periods.

         (v)      The Registrant has requested that Sweeney Gates & Co.
                  furnish it with a letter addressed to the Securities and
                  Exchange Commission stating whether or not it agrees with
                  the above statements. A copy of that letter, dated August 7,
                  2000, is filed as Exhibit 16 to this Form 8-K/A.

(b)      Independent accountants

         (i)      The Registrant appointed the accounting firm of
                  Michaelson & Co., P.A. as its new independent accountants
                  for fiscal 2000 to replace Sweeney Gates and Co. effective
                  with such appointment. The Registrant has not consulted with
                  Michaelson & Co., P.A. on (1) the application of accounting
                  principles to a specific opinion that might have been
                  rendered on the Registrant's financial statements or (2)
                  the subject matter of a disagreement or reportable event
                  with the former auditor (as described in Regulation S-B
                  Item 304 (a) (1) (iv).


                                 PART III
                                 --------

ITEM 9.  DIRECTORS, SIGNIFICANT EMPLOYEES AND EXECUTIVE OFFICERS OF SILK
         BOTANICALS.COM

Directors, significant employees and principal executive officers of
the Company. Said persons are listed on the following table:



Name                       Position                                 Age
-----------------------------------------------------------------------
Joseph R. Bergmann         President, Secretary & Director          53
Regina M. Bergmann         Director of Personnel                    52
Joyce Bernard              Merchandise Manager                      58
Thomas Maxwell             Controller                               42
Gail Scheel                Director of Advertising & Marketing      58
Harold Coren               National Sales Manager                   61


Biographical Information on Directors and Executive Officers:



<PAGE>    8



Joseph R. Bergmann, President, Chief Executive Officer and Director.
Mr. Bergmann oversees the entire operation of the Company. He is
responsible for merchandising of products, as well as the formation
and implementation of the Company's marketing plans. Prior to his
tenure with the Company, he was President of Jewelmasters, Inc., a
public multimillion dollar fine jewelry company. He also served as
Senior Vice President of Federated Department Stores. Mr. Bergmann
currently serves as President of JRB Enterprises, Inc. He is a
graduate of Queens College in New York.

Biographical Information on Significant Employees:

Regina M. Bergmann, Director of Personnel. Ms. Bergmann serves as the
Company's Director of Personnel and participates in the daily operations
of the business.

Joyce Bernard, Merchandise Manager. Ms. Bernard has direct
responsibility for purchasing, manufacturing, inventory control and
shipping and receiving. She has over 15 years experience in the floral
industry. Prior to joining the Company, Ms. Bernard held various
merchandising positions with Ben Franklin Stores, Inc.

Thomas Maxwell, Controller.  Mr. Maxwell is responsible for financial
reporting as well as budgeting, financial analysis, cash management
and computer network administration.  Mr. Maxwell has over 20 years of
experience in key financial, technical and management consulting
positions including Controller, Tax & Computer Consultant, Operations
Manager, and Financial Analyst.  He received a Bachelor of Science
degree from Florida Atlantic University, and has taken graduate level
courses at Nova Southeastern University.

Gail Scheel, Director of Advertising and Marketing. Ms. Scheel is
responsible for the Company's advertising programs including media
analysis and selection, advertising scheduling and advertising
promotion. Ms. Scheel majored in Marketing at DePaul University.

Harold Coren, National Sales Manager.  Mr. Coren oversees all of the
sales reps and showrooms in which the Company sells its product.  He
is also directly responsible for relationships with key accounts as
well as developing new accounts.  Prior to joining the Company, Mr.
Coren had extensive sales and marketing background with various
companies, including ten(10)years in the silk plant, tree and floral
industry.  Mr. Coren also had extensive experience in the direct
importation of product from the Orient.  He is a native of
Philadelphia, Pennsylvania and attended Long Island University,
majoring in sales and marketing.

Family Relationships. Joseph R. Bergmann, President, Chief Executive
Officer and Director and Regina M. Bergmann, Director of Personnel,
are husband and wife.


ITEM 10.  EXECUTIVE COMPENSATION

The table below summarizes the annual compensation for services in all
capacities to the company for the (i) person(s) serving as our Chief
Executive Officer; and (ii) our four most highly compensated executive
officers other than the CEO for the last fiscal year:

NAME                  TITLE             SALARY/FISCAL YR.   BONUS    AWARDS
----                  -----             -----------------   -----    ------

Joseph R. Bergmann    President         $35,000.00           N/A      N/A

(ii) Not applicable

Joseph R. Bergmann is also an officer and director of JRB Enterprises,
Inc. Together we and JRB Enterprises, Inc. have engaged in numerous
transactions including, but not limited to, the Manufacturing
Agreement, the Sub-Lease Agreement, and a Licensing Agreement. Mr.
Bergmann's role in these transactions was to negotiate and procure the
Agreements and he received no compensation save for his income
received in the ordinary course of business.



<PAGE>    9



For the Officers and Directors of JRB Enterprises, Inc. the following
outlines compensation received for the last three fiscal years:

NAME                  TITLE           YEARS         COMPENSATION PER YEAR
----                  -----           -----         ---------------------

Joseph R. Bergmann    Director        1996-2001                 0
Joseph R. Bergmann    President       1996-2001          $150,000

Regina M. Bergmann    Director        1996-2001                 0
Regina M. Bergmann    Secretary       1996-2001          $ 25,000



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth certain information regarding the
beneficial ownership of the Company's common stock as of August 2,
2001, by (i) each person or entity known by the Company to be
beneficial owner of more than 5% of the outstanding shares of common
stock, (ii) each of the Company's directors and named executive
officers, and (iii) all directors and executive offices of the
Company as a group.

<TABLE>
<CAPTION>
                                            Amount and Nature of    Percent of
Title of Class         Name & Address         Beneficial Owner         Class
--------------         --------------       --------------------    ----------
<S>                    <C>                  <C>                     <C>
Series 2000            Joseph R. Bergmann    4,042,687 Shares*        100.0%
Convertible Preferred  975 S. Congress Ave.  President & Director
Par Value $.001        Delray Beach, Fl

Series 2000            Directors & Officers   4,042,687 Shares*       100.0%
Convertible Preferred  As a Group
Par Value $.001

</TABLE>

*  Of this number, 1,042,687 shares are issued to Joseph R. Bergmann IRA.


Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is
defined by the provisions of Item 403(c) of Regulation S-B.

Preferred Class A     JRB Enterprises, Inc.         1,900 Shares
Par Value $.001       975 S. Congress Ave.
                      Delray Beach, FL

Common                Directors & Officers           -0- shares       0.0%
Par Value $.001       As a group


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On April 9, 1999, Diversified Restaurant Holdings, Inc. acquired JRB
Marketing of South Florida, Inc. from Joseph R. Bergmann in a stock
for stock exchange.

The Company will purchase its silk botanical products from JRB
Enterprises, Inc., which is owned by the Company's President and
majority stockholder. On April 1, 1999, the Company entered into a
Manufacturing and Distribution Agreement with JRB Enterprises, Inc.
for a term of six years with the right to extend the term for six
additional terms. JRB Enterprises, Inc. will invoice the Company for
products and distribution of the products at rates to be negotiated
periodically between the Company and JRB Enterprises, Inc.

Additionally, the Company shares office facilities, certain office
equipment and certain employees with JRB Enterprises, Inc. At May 31,
1999, the Company had issued 1,900 shares of preferred stock to JRB
Enterprises, Inc. for the license rights to the trademarks Living Silk
and certain manufacturing processes. The Company owed JRB Enterprises,
Inc. $138,338 at May 31, 1999, for the purchase of inventory, a
computer and software, and monies JRB Enterprises, Inc. had
advanced the Company in acquiring the trademark and manufacturing
process rights to the Forever Fresh(R) line of floral arrangements.



<PAGE>    10



JRB Enterprises, Inc., one of the Company's primary suppliers of
artificial plants and foliage, is owned by Joseph R. Bergmann,
President and Majority Shareholder of the Company.

On April 10, 1999, the Company entered into an exclusive license
agreement to market and distribute artificial greenery and floral
arrangements with the Living Silk and Silk Botanicals trademarks owned
by JRB Enterprises, Inc. Additionally, the license agreement granted
the Company the exclusive right to use the manufacturing process of
the Living Silk(TM) and Silk Botanicals(TM) products. As consideration
for the license agreement the Company issued preferred stock to JRB
Enterprises, Inc. valued at $190,000. The Company further agreed to pay
JRB Enterprises, Inc. royalty payments of 5% of the net amount invoiced
by the Company, or any affiliate, for Living Silk(TM) or Silk Botanicals(TM)
products invoiced to any third party during the initial six year term. For
additional periods of up to six, six year terms, the Company agreed to
pay one quarter of one percent (.25%) of its net sales per annum for
all Living Silk(TM) and Silk Botanicals(TM) products sold to any third
party.

On January 2nd, 2001, the Company and its primary manufacturer of its
silk botanical products (which is owned by the Company's President &
Primary Stockholder) entered into a marketing, manufacturing &
distribution agreement with an established out-of-state assembler and
manufacturer of high quality artificial plants, trees and floral
arrangements.  This agreement can significantly increase the
manufacturing capabilities of Silk Botanical's products, thereby
positioning the Company to potentially expand its customer base.


ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (A)   FINANCIAL STATEMENTS AND SCHEDULES

The following financial statements and schedules are filed as part of
this report:



<PAGE>    11


                              SIGNATURES
                              ----------

	Pursuant to the requirements 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 in the City of
Delray Beach, State of Florida, on the 30th day of November, 2001.

                                 SILK BOTANICALS.COM, INC.,
                                 a Florida corporation


                                 By:______/s/ Joseph R. Bergmann______
                                    Joseph R. Bergmann, President


	Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed by the following persons in the
capacities and on the dates indicated:

Signature                       Title                            Date
---------                       -----                            -----

/s/___Joseph R. Bergmann___     Chairman of the Board of    November 30, 2001
Joseph R. Bergmann              Directors and Chief
                                Executive Officer
                                (Principal Executive Officer)



<PAGE>    12





                       SILK BOTANICALS.COM, INC.


                         FINANCIAL STATEMENTS
                              YEARS ENDED
                         MAY 31, 2001 AND 2000



<PAGE>    13


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


                                                                 Page
                                                                 ----

Independent Auditor's Report                                     F-1

Financial Statements:

Balance Sheets                                                   F-2

Statements of Operations                                         F-3

Statements of Changes in Stockholders' Equity (Deficit)          F-4

Statements of Cash Flows                                         F-5

Notes to Financial Statements                                  F-6 - F-15



<PAGE>    14


                  [MICHAELSON & CO., P.A. LETTERHEAD]



Independent Auditor's Report
----------------------------


To the Board of Directors and Stockholders
  of Silk Botanicals.Com, Inc.
Delray Beach, Florida

We have audited the accompanying balance sheets of Silk
Botanicals.Com, Inc. (a Florida corporation) as of May 31, 2001 and
2000 and the related statements of operations, changes in
stockholders' equity (deficit), 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 of America.  Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Silk
Botanicals.Com, Inc. as of May 31, 2001 and 2000 and the results of
its operations and its cash flows for the fiscal years then ended, in
conformity with accounting principles generally accepted in the United
States of America.


                                /s/ Michaelson & Co., P.A.


West Palm Beach, Florida
November 29, 2001







<PAGE>    F-1


                          SILK BOTANICALS.COM, INC.
                               BALANCE SHEETS
                           MAY 31, 2001 AND 2000

<TABLE>
<CAPTION>
ASSETS
                                                         2001            2000
                                                     ------------    ------------
<S>                                                  <C>             <C>
CURRENT ASSETS:
  Cash                                               $      4,162    $     13,445
  Accounts receivable (net of allowance
    for doubtful accounts of $20,000 and $4,000           166,246         121,582
    at May 31, 2001 and 2000, respectively)
   Accounts receivable - related party                    115,226            -
    Inventory                                              52,174          62,338
    Other current assets                                     -              3,275
                                                     ------------    ------------
            Total Current Assets                          337,808         200,640
                                                     ------------    ------------

PROPERTY & EQUIPMENT, net of accumulated
  depreciation of $1,778 and $614 at
  May 31, 2001 and 2000, respectively)                      1,703           2,867

OTHER ASSETS:
  License rights (net of valuation allowance
    & accumulated amortization)                            28,340          35,420
  Other assets                                              8,270           1,165
                                                     ------------    ------------
            Total Other Assets                             36,610          36,585
                                                     ------------    ------------
TOTAL ASSETS                                         $    376,121    $    240,092
                                                     ============    ============

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Accounts payable and accrued expenses              $     50,652    $      7,194
  Accounts payable due to factors                          31,820            -
  Income taxes payable                                     24,221           3,927
  Accounts payable due to related party                      -             30,972
  Other current liabilities                                36,922          13,242
                                                     ------------    ------------
          Total Current Liabilities                       143,615          55,335
                                                     ------------    ------------

TOTAL LIABILITIES                                         143,615          55,335

STOCKHOLDERS' EQUITY (DEFICIT):
  Series A preferred stock, $.001 par value,
    1,900 shares authorized, issued and
    outstanding                                                 2               2
  Series 2001 convertible preferred stock,
    $.001 par value, 2,000,000 shares
    authorized; none issued and outstanding                  -               -
  Series 2000 convertible preferred stock,
    $.001 par value, 4,042,687 shares
    authorized, issued and outstanding                      4,043           4,043
  Series 2000A convertible preferred stock,
    $.001 par value, 2,444,532 shares
    authorized, issued and outstanding                      2,445            -
  Preferred stock, $.001 par value, 41,510,881
    shares authorized, none issued and outstanding           -               -
  Common stock, $.001 par value, 300,000,000
    shares authorized, 31,533 shares issued and
    outstanding                                                31              31
  Additional paid-in capital                              853,636         853,636
  Deficit accumulated during the development stage       (699,126)       (699,126)
  Retained earnings                                        71,475          26,171
                                                     ------------    ------------
          Total Stockholders' Equity (Deficit)            232,506         184,757
                                                     ------------    ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)   $    376,121    $    240,092
                                                     ============    ============

</TABLE>


               See Independent Auditor's Report and Accompanying Notes


<PAGE>    F-2

                         SILK BOTANICALS.COM, INC.
                         STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED MAY 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                  2001             2000
                                              -------------    ------------
<S>                                           <C>              <C>

SALES                                         $   1,053,857    $    690,621

COST OF SALES                                       789,225         499,399
                                              -------------    ------------
GROSS PROFIT                                        264,632         191,222
                                              -------------    ------------

MARKETING EXPENSES                                   36,545          63,331

GENERAL AND ADMINISTRATIVE EXPENSES                 142,464          88,129
                                              -------------    ------------

INCOME FROM OPERATIONS                               85,623          39,762
                                              -------------    ------------

OTHER INCOME/(EXPENSES):
   Interest Expense                                 (16,135)         (2,279)
                                              -------------    ------------

INCOME BEFORE PROVISION FOR INCOME TAXES             69,488          37,483

Provision for Income Taxes                           15,634           2,762
                                              -------------    ------------

NET INCOME                                           53,854          34,721

ACCUMULATED DEFICIT, BEGINNING OF PERIOD           (672,955)       (699,126)

Preferred Stock Dividend                             (8,550)         (8,550)
                                              -------------    ------------
ACCUMULATED DEFICIT, END OF PERIOD            $    (627,651)   $   (672,955)
                                              =============    ============
Earnings per share (after preferred
dividends):
  Basic and diluted                           $        0.69    $       0.39
                                              =============    ============
  Weighted average shares outstanding
    - basic & diluted                                65,222          89,286
                                              =============    ============

</TABLE>


           See Independent Auditor's Report and Accompanying Notes


<PAGE>    F-3


                           SILK BOTANICALS.COM, INC.
            STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                FOR THE YEARS ENDED MAY 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                                 DEFICIT
                                                                                                ACCUMULATED
                                                                                 ADDITIONAL     DURING THE
                                    PREFERRED STOCK          COMMON STOCK         PAID-IN       DEVELOPMENT   RETAINED
                                   SHARES     AMOUNT       SHARES     AMOUNT      CAPITAL         STAGE       EARNINGS     TOTAL
                                 ----------  ---------   ----------  ---------   ----------   ------------  ----------  ----------
<S>                              <C>          <C>         <C>         <C>         <C>          <C>           <C>        <C>
BALANCE, MAY 31, 1999                 1,900   $       2    6,250,000  $   6,250   $  671,460   $  (699,126)  $    -     $  (21,414)

  Issuance of warrants                 -          -            -          -         180,000          -            -        180,000
  Preferred stock dividend             -          -            -          -            -             -          (8,550)     (8,550)
  Net income                           -          -            -          -            -             -          34,721      34,721
                                 ----------  ---------   ----------  ---------   ----------   -----------   ----------  ----------
BALANCE, MAY 31, 2000                 1,900  $       2    6,250,000  $   6,250   $  851,460   $  (699,126)  $   26,171  $  184,757
                                 ----------  ---------   ----------  ---------   ----------   -----------   ----------  ----------

  Issuance of Series 2000
    convertible preferred         4,042,687      4,043   (4,042,687)    (4,043)        -             -            -           -
    stock exchange for like
    number of shares of
    common stock
  Issuance of Series 2000A        2,444,532      2,445         -          -            -             -            -          2,445
    convertible preferred
    stock as prepayment for
    various future services
  70:1 reverse split, common
    stock                              -          -      (2,175,780)    (2,176)       2,176         -             -           -
  Preferred stock dividend             -          -            -          -            -            -           (8,550)     (8,550)
  Net income                           -          -            -          -            -            -           53,854      53,854
                                 ----------  ---------   ----------  ---------   ----------   -----------   ----------  ----------
BALANCE, MAY 31, 2001             6,489,119  $   6,490       31,533  $      31   $  853,636   $  (699,126)  $   71,475  $  232,506
                                 ==========  =========   ==========  =========   ==========   ===========   ==========  ==========

</TABLE>


          See Independent Auditor's Report and Accompanying Notes


<PAGE>    F-4

                          SILK BOTANICALS.COM, INC.
                          STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED MAY 31, 2001 AND 2000

<TABLE>
<CAPTION>

                                                              2001           2000
                                                           ----------     ----------
<S>                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                               $   53,854     $   34,721
   Adjustments to Reconcile Net Gain to
     Net Cash Used in Operating Activities:
       Depreciation and amortization                            8,244          7,694
       Changes in assets and liabilities:
            (Increase) in accounts receivable                 (44,664)      (121,582)
            (Increase) in accounts receivable
              - related party                                (115,226)          -
            (Increase) decrease in inventory                   10,164         (4,985)
            (Increase) decrease in prepaid expenses             3,275         (3,275)
            (Increase) in deferred tax asset                   (4,660)        (1,165)
            Increase (decrease) in accounts payable            43,458        (14,220)
            Increase in accounts payable due to
              factors                                          31,820          -
            Increase in income taxes payable                   20,294          3,927
            (Decrease) in due to related parties              (30,972)       (70,381)
            Increase (decrease) in other current
              liabilities                                      23,680         13,242
                                                           ----------     ----------
       NET CASH PROVIDED BY (USED IN)
       OPERATING ACTIVITIES                                     (733)       (156,024)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                             -            (1,981)
                                                           ----------     ----------
       NET CASH USED IN INVESTING ACTIVITIES                     -            (1,981)
                                                           ----------     ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of warrants                                           -           180,000
  Preferred stock dividend                                     (8,550)        (8,550)
                                                           ----------     ----------
       NET CASH PROVIDED BY FINANCING ACTIVITIES               (8,550)       171,450
                                                           ----------     ----------

NET INCREASE IN CASH                                           (9,283)        13,445

CASH AT BEGINNING OF PERIOD                                    13,445           -
                                                           ----------     ----------
CASH AT END OF PERIOD                                      $    4,162     $   13,445
                                                           ==========     ==========
SUPPLEMENTAL DISCLOSURES:
    Cash paid for interest                                 $   16,140     $    2,038
    Cash paid for income taxes                                   -              -

</TABLE>


          See Independent Auditor's Report and Accompanying Notes



<PAGE>    F-5

                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Silk Botanicals.Com, Inc. (the "Company"), formally known as
Diversified Restaurant Holdings, Inc., was organized November 20,
1998 in the State of Florida.  The Company was a development
stage company until June 1999, when it commenced operations.  The
Company develops, markets and distributes high-quality artificial
flowers, artificial greenery and floral arrangements under the
trademark names Forever Fresh[R], Living Silk[TM] and Silk
Botanicals[TM] in the wholesale market.  All of the Company's
product is purchased from a company related by common ownership.
Major customers include wholesale store chains and supermarkets.

On April 9, 1999, the Company acquired all the outstanding common
stock of JRB Marketing of South Florida, Inc. ("JRB"), a Florida
corporation formed October 2, 1996.  For accounting purposes, the
transaction was treated as a reverse acquisition of the Company
by JRB and as a recapitalization of JRB.  The recapitalization
resulted in the issuance of 4,435,813 shares of the Company and
the recording of $4,436 in expenses.  The historical financial
statements prior to November 20, 1998 are those of JRB.  No pro
forma information is presented, as the acquisition was not a
business combination.  At the time of this transaction, JRB had
no assets, liabilities or operations.  As such, the financial
statements of the Company reflect the accounting for JRB as if
JRB had been the reporting entity from inception.

Prior to acquiring JRB, the Company owned 99% of the stock of
Southern Dragon, Inc. ("Southern"), a development stage company
in the restaurant industry.  On March 31, 1999, the Company sold
the stock of Southern back to Southern and began concentrating on
the development, marketing and distribution of artificial
flowers, greenery and floral arrangements.

On August 2, 1999, the Company officially changed its name to
Silk Botanicals.Com, Inc. from Diversified Restaurant Holdings,
Inc.

On August 20, 1999, the Company's Board of Directors approved a 1
for 4 reverse split of its common stock, retroactively effective
as of May 31, 1999.  On January 2, 2001, the Company's Board of
Directors approved a 70 for 1 reverse split of its common stock,
effective February 5, 2001.  This split did not change the number
of authorized shares of the Company, nor the par value of $0.001.
All common shares and the per share amounts in the accompanying
audited financial statements have been restated for the effects
of the reverse splits.

Revenue Recognition:
--------------------

Revenue is recognized, net of discounts and estimated returns,
upon shipment of product.


<PAGE>    F-6

                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventory:
----------

Inventory consists primarily of finished floral and greenery
arrangements and is valued at the lower of cost (first-in, first-
out method) or market.

Furniture and Equipment:
------------------------

Furniture and equipment are recorded at cost.  Depreciation is
calculated on a straight-line basis over the estimated useful
lives of the assets.

License Rights:
---------------

The license rights acquired by the Company have been recorded at
cost less a valuation allowance.  The rights and valuation
allowance are amortized on the straight-line basis over the term
of the license right agreements, which is six years.

Fair Value of Financial Instruments:
------------------------------------

The carrying amount of trade receivables and payables approximate
fair value

Income Taxes:
-------------

The Company accounts for income taxes on an asset and liability
approach to financial accounting.  Deferred income tax assets and
liabilities are computed annually for the difference between the
financial statement and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future, based
on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income.  Valuation
allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.  Income tax expense
is the tax payable or refundable for the period, plus or minus
the change during the period in deferred tax assets and
liabilities.

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 reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.



<PAGE>    F-7


                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Reclassifications
-----------------

Certain reclassifications were made to the 2000 financial
statements presentation in order to conform to the 2001 financial
statements presentation.

Start-Up Costs:
---------------

In April 1998, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5").  SOP 98-5 requires that start-up costs,
including organizational costs, be expensed as incurred.  The
Company has accepted early adoption of SOP 98-5 and expensed all
start-up costs.

Earnings per Share:
-------------------

The Company has utilized Financial Accounting Standards No. 128
"Earnings per Share" ("FAS 128").  FAS 128 requires presentation
of earnings or loss per share on basic and diluted earnings per
share. Basic earnings or loss per share is computed by dividing
net income available to common shareholders by the weighted
average number of common shares outstanding for the period.
Diluted earnings per share is computed using the weighted average
number of common shares outstanding and potentially diluted
common shares during the period. The warrants were anti-dilutive
at May 31, 2001 as the exercise price was in excess of the market
price. The computation of fully diluted earnings per share is not
presented as it would be anti-dilutive.

Impairment of Long-Lived Assets
-------------------------------

The Company evaluates the recoverability of its property and
equipment, and other assets in accordance with Statement of
Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144").  SFAS
144 requires recognition of impairment of long-lived assets in
the event the net book value of such assets exceeds the estimated
future undiscounted cash flows attributable to such assets or the
business to which such intangible assets relate.  No impairments
were required to be recognized during the years ended May 31,
2001 and 2000.

Segment Reporting:
------------------

In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related



<PAGE>    F-8


                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
     ------------------------------------------

Segment Reporting (continued):
------------------------------

Information" ("SFAS 131").  This statement requires companies to
report information about operating segments in interim and annual
financial statements.  It also requires segment disclosures about
products and services, geographic areas and major customers.  The
Company has determined that it did not have any separately
reportable operating segments as of May 31, 2001 and 2000.

Advertising:
------------

Advertising costs ($5,362 and $9,947 for the years ended May 31,
2001 and 2000, respectively) are charged to expense as incurred.

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

The Company considers all short-term highly liquid investments
with maturities of three months or less at the date of their
acquisition and all cash on hand and in checking and savings
accounts to be cash and cash equivalents.

Contingencies:
--------------

Certain conditions may exist as of the date the financial
statements are issued, which may result in a loss to the Company
but which will only be resolved when one or more future events
occur or fail to occur. The Company's management and its legal
counsel assess such contingent liabilities, and such assessment
inherently involves an exercise of judgement. In assessing loss
contingencies related to legal proceedings that are pending
against the Company or unasserted claims that may result in such
proceedings, the Company's legal counsel evaluates the perceived
merits of any legal proceedings or unasserted claims as well as
the perceived merits of the amount of relief sought or expected
to be sought therein. If the assessment of a contingency
indicates that it is probable that a material loss has been
incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's
financial statements. If the assessment indicates that a
potentially material loss contingency is not probable but is
reasonably possible, or is probable but cannot be estimated, then
the nature of the contingent liability, together with an estimate
of the range of possible loss if determinable and material, would
be disclosed. Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the
nature of the guarantee would be disclosed.



<PAGE>    F-9

                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


2.   PROPERTY AND EQUIPMENT

Property and Equipment consists of the following as of May 31,
2001 and 2000:
                                           2001            2000
                                         --------        --------
     Computer equipment                  $  3,481        $  3,481
     Less:  Accumulated depreciation       (1,778)           (614)
                                         --------        --------
                                         $  1,703        $  2,867
                                         ========        ========

Depreciation expense was $1,164 and $614 for the years ended May
31, 2001 and 2000, respectively.


3.   RELATED PARTY TRANSACTIONS

The Company purchases its silk botanical products from an
established manufacturer owned by the Company's president and
majority stockholder (herein after, the "Manufacturer"); however,
the Company may purchase its products from other suppliers.  On
April 1, 1999, the Company entered into a non-exclusive
manufacturing and distribution agreement with the Manufacturer
for a term of six years with the right to extend the agreement
for six additional six-year terms.  The Manufacturer will invoice
the Company for products and distribution of products at rates to
be negotiated periodically between the Company and the
Manufacturer.

On January 2, 2001, the Manufacturer entered into an agreement
with an established out-of-state assembler and manufacturer of
high-quality artificial plants, trees and floral arrangements.
This marketing, manufacturing and distribution agreement will
significantly increase the manufacturing capabilities for the
Company's product, thereby positioning the Company to potentially
increase its customer base and sales revenue.

The Company subleases office facilities and certain office
equipment from the Manufacturer, who also provides insurance
coverage on the Company's property, equipment and inventory.  The
Company issued 1,900 shares of preferred stock to the
Manufacturer for the license rights to the trademarks Living
Silkr and Silk Botanicals [TM], and for certain manufacturing
processes.  The Company was owed $115,226 by the Manufacturer at
May 31, 2001 (recorded as an accounts receivable), and owed the
Manufacturer $30,972 at May 31, 2000 (recorded as an accounts
payable, for the purchase of inventory, a computer and software,
operational expenses, license fees and advances to acquire the
trademark and manufacturing process rights to the Forever Fresh[R]
line of floral arrangements.) During the years ended May 31, 2001
and 2000, the Company paid $796,324 and $553,816, respectively,
to the Manufacturer.


<PAGE>    F-10

                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


3.   RELATED PARTY TRANSACTIONS (continued)

No formal arrangement on terms and conditions relating to
advances, should they be required, had been entered into by the
Company with the Manufacturer.


4.   LICENSE RIGHTS

On December 21, 1998, the Company purchased an exclusive license
for the right to assemble and distribute the "water-look" floral
arrangements and the trademark and copyright materials of Forever
Freshr from a third party manufacturer and distributor in South
Florida.  The term of the license agreement is for six years with
the right to extend for additional terms of six years each,
unless terminated by either party at the end of any six-year
term.  As part of the agreement, the Company paid $42,500 for the
license rights.  The Manufacturer advanced the funds for the
payment.  Additionally, the Company agreed to make royalty
payments to the licensor of 5% of the net amount invoiced by the
Company or any affiliate, for Forever Fresh[R] products during the
initial six year term.  For additional periods of up to six, six-
year terms, the Company agreed to pay to the licensor one quarter
of one percent (.25%) of its net sales per annum of all Forever
Freshr products sold to any third party. At May 31, 2001 license
rights of $42,500 are presented net of $14,160 of accumulated
amortization.

During April 1999, the Company entered into an exclusive license
agreement to market and distribute artificial greenery and floral
arrangements with the Living Silk and Silk Botanicals trademarks
owned by the Manufacturer.  Additionally, the license agreement
granted the Company the exclusive right to use the manufacturing
process of the Living Silk[TM] and Silk Botanicals [TM] products.  As
consideration for the license agreement, the Company issued
preferred stock to the Manufacturer valued at $190,000.  Since
the transaction was a nonmonetary transaction between related
parties, a valuation allowance of $190,000 has been
provided against the license rights and as an offset to
stockholder equity.  The Company further agreed to pay the
Manufacturer, royalty payments of 5% of the net amount invoiced
by the Company or any affiliates for Living Silk[TM] or Silk
BotanicalsT products invoiced to any third party during the
initial six-year term.  For additional periods of up to six, six-
year terms, the Company agreed to pay one quarter of one percent
(.25%) of its net sales per annum for all Living Silk[TM] and Silk
BotanicalsT products sold to any third party.


5.   EQUITY

Preferred Stock - On October 6, 2000, the Company increased the
number of authorized shares of preferred stock from 5,000,000 to
50,000,000, of which a total of 1,900 shares had previously been
designated as Series A preferred stock.  This series is entitled
to receive dividends at the rate of $6.00 per share per annum,
payable quarterly.  Such dividends are



<PAGE>    F-11


                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


5.   EQUITY (continued)

Preferred Stock (continued) -

cumulative and hold a preference over any other distribution.
This series has no voting rights or conversion features.

On January 2, 2001, the Company authorized 2,000,000 shares of
Series 2001 convertible preferred stock, to be issued in a
private offering.  Each share of this series is convertible into
common stock, one year after issuance, at a conversion ratio of
either $5.00 per share or 30% below the trading price of the
common stock as priced the prior trading day to conversion,
whichever is less.  This series has no voting rights.

On January 2, 2001, the Company authorized and issued 4,042,687
shares of Series 2000 convertible preferred stock in exchange for
a like number of shares of common stock owned by the majority
shareholder.  Each share of this series is convertible into fully
paid and nonassessable shares of common stock, at the option of
the holder, on a one-for-one basis at any time after January 5,
2002.  Each share of this series entitles the holder to one vote,
either in person or by proxy, at meetings of shareholders, and
such vote shall be equal to the voting rights of the common stock
and shall be counted with the common stock toward election of
directors or such other action as the class of common stock shall
be entitled.

On January 2, 2001, the Company authorized and issued 2,444,532
shares of Series 2000A convertible preferred stock in exchange
for various services to be provided in the future.  Each share of
this series is convertible into common stock, at any time after
twelve months from the date of execution of the agreement, on a
one-for-one basis.  This series has no voting rights.

The rights, preferences and limitations of any additional shares
of preferred stock will be determined by the Board of Directors.
Dividends in arrears at May 31, 2001 are $12,825.

Common Stock - On November 20, 1998, the Company issued 4,788
shares of common stock to additional founders of the Company and
recorded an expense of $335 for the issuance.  These shares were
issued at par value since no operations existed in the Company.
Between November 30, 1998 and March 31, 1999, the Company issued
375 shares of common stock as compensation for services rendered
and recorded an expense of $26.  From January 2, 1999 until March
31, 1999, the Company issued 1,414 shares of common stock for
cash of $49,500, which was utilized by Southern prior to the
recapitalization.  The Company issued, from April 1, 1999 through
April 6, 1999, 19,339 shares of common stock and recorded an
expense of $671,460, which approximates market value.  All of the




<PAGE>    F-12

                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


5.   EQUITY (continued)

Common Stock (continued) -

stock issued has been restated to reflect the reverse stock
splits of 1 for 4 (effective as of May 31, 1999) and 1 for 70
(effective February 2, 2001).

On October 6, 2000, the Company increased the number of
authorized shares of common stock from 25,000,000 to 300,000,000.

Warrants - In March of 2000 the Company issued warrants for 5,143
shares of common stock. The warrants were issued for $35.00 each
for a total of $180,000. The warrants have an exercise price of
$175.00 per share and are exercisable as follows; 3,428 from
April 30, 2000 to April 30, 2002 and 1,715 from May 7, 2000 to
May 7, 2002. The warrants carry a provision to issue options for
up to 5,143 shares exercisable over the same time frame as the
corresponding warrant at a price of $210.00 per share, if and
when the warrants are exercised.
All of the warrants issued and exercise prices have been restated
to reflect the reverse stock split of 1 for 70, effective
February 2, 2001.

6.   INCOME TAXES

The provision for income taxes for the year ended May 31, 2001
of $15,634 is made up of federal income tax expense of $15,859
and state income tax expense of $4,435 less the current deferred
tax asset of $4,660.  The deferred tax asset consists of timing
differences related to the allowance for doubtful accounts.


7.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of $2,777 in
trade accounts payable and $47,875 in accrued expenses at May
31, 2001 and $2,656 in trade accounts payable and $4,538 in
accrued expenses at May 31, 2000.

Accounts payable due to factors consists of balances paid by
customers in error on outstanding invoices that had been
factored.


8.   OTHER CURRENT LIABILITIES

Other current liabilities consist of credit card debt at
weighted-average interest rates of 17.9% and 15.4% as of May 31,
2001 and May 31, 2000, respectively.  This debt, which is
assumed on behalf of companies owned by the Company's president
and majority stockholder, is recorded as a receivable from these
related party companies (see Note 3).


<PAGE>    F-13


                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)



9.   CONTINGENCIES

The Company is involved in various claims which have arisen as a
result of the funding of the warrants. The Company, after
conferring with its legal counsel, is unable to predict the
outcome of these matters but does not believe, based upon
currently available facts, that the ultimate resolution of such
matters will have a material adverse effect on the financial
statements of the Company.

10.  CONCENTRATIONS

Business Risk
-------------

The Company's revenues and profitability are affected by many
conditions, including changes in economic conditions, inflation,
and political events.  Because these factors are unpredictable
and beyond the Company's control, earnings may fluctuate from
year to year.

Major customers accounted for 44% and 53% of revenues for the
years ended May 31, 2001 and 2000, respectively.

11.  COMMITMENTS - RELATED PARTY

The Company has a lease, which expires April 30, 2003, with the
Manufacturer for 500 square feet of furnished office space,
including office equipment, and approximately 1,500 square feet
of warehouse and shipping space at a cost of $10 per square foot.
For the years ended May 31, 2001 and 2000, rental expenses
incurred were $20,000 and $20,000, respectively.  Minimum future
rental payments under the non-cancelable operating lease as of
May 31, 2001 are as follows:

                     2001     -     $ 11,667
                     2002     -       20,000
                     2003     -        6,667

                    Total     -     $ 38,334


12.  SUBSEQUENT EVENTS

On October 30, 2001, the Company began negotiations of intent
with a European limited liability company (the "LLC") to acquire
certain assets and business opportunities of the LLC.  The
Company intends to purchase certain assets of the LLC in exchange
for the Company's common stock in a tax-free reorganization.  The
LLC will transfer the assets to a newly-formed subsidiary of the
Company, and the Company will issue restricted common stock to
the LLC in


<PAGE>    F-14

                      SILK BOTANICALS.COM, INC.
                    NOTES TO FINANCIAL STATEMENTS
               FOR THE YEARS ENDED MAY 31, 2001 and 2000
                  (See Independent Auditor's Report)


12.  SUBSEQUENT EVENTS (continued)

an amount to be determined so that, following the consummation of
the transaction, the LLC will own a majority of the issued and
outstanding preferred and common stock of the Company.

Both the Company and the LLC will also consider measures to
prevent the current shareholders of the Company from being
further diluted by a contemplated 1:2 reverse stock split after
the closing.


<PAGE>    F-15