Edgar Filing: ALTERNET SYSTEMS INC

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ALTERNET SYSTEMS, INC.
(Formerly SchoolWeb Systems Inc. and formerly North Pacific Capital Corp.)
(Name of Small Business Issuer in its Charter)

Nevada 3576 88-0473897
(State or jurisdiction of (Primary Standard Industrial I.R.S. Employer
incoporation or organization) Classification Code Number) Identification No.)

Suite 280 - 815 West Hastings Street
Vancouver, Canada V6E 1T9
Tel: (604) 608-2540
Fax: (604) 608-8775

(Address and telephone number of Registrant's principal
executive offices and principal place of business)

711 South Carson Street Suite 4
Carson City, Nevada 89701
Tel: (775) 882-4641;
(Name, address, and telephone number of agent for service)

Approximate date of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.

If the delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. ( X )

CALCULATION OF REGISTRATION FEE

Title of each Amount to be Proposed Maximum Proposed Amount
class of registered(1) offering price maximum of
securities per share of aggregate registration
to be registered common stock(2) offering fee
price

Common Stock 7,764,000 $0.35 $2,717,400 $250.24

The Company hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
Company shall file a further amendment which specifically states
that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or
until the registration statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.

(1) The total number of shares of common stock to be sold by
shareholders on a continuous offering basis under Rule 415
including 1,125,000 shares of common stock which may be issued
upon exercise of 1,125,000 outstanding share purchase warrants;

(2) There is presently no market for the securities of the
Company. As a result, it is not possible to calculate the
price of the offering in accordance with Rule 457(c) or Item
501 of Regulation S-K and it is impracticable to state the
price to the public. The proposed maximum offering price per
share of common stock represents the price at which shares of
common stock were last sold from treasury on a private
placement basis.

(3) The calculation (given footnote 2 above) was as follows:
(7,764,000 shares x $0.35)($92/1,000,000)=$250.24

PROSPECTUS
ALTERNET SYSTEMS, INC.
(formerly SchoolWeb Systems Inc. and formerly North Pacific Capital Corp.)
1007 North Federal Hwy. Suite 304
Fort Lauderdale, Florida
USA 33304
Toll Free: (866) 608-2540
Fax: (954) 764-6332

7,764,000 Shares
Common Stock *

Alternet Systems Inc., a Nevada corporation, is hereby
offering shares of common stock pursuant to the terms of this
prospectus. A total of 7,764,000 shares of common stock are to be
registered, as follows (maximum amounts): (a) 6,639,000 shares of
common stock for selling shareholders; (b) 1,125000 shares of
common stock which are reserved for issuance upon the exercise of
1,125,000 share purchase warrants of the Company previously
distributed by the Company under a private placement. Cash
proceeds received by the Company from the exercise of the warrants
will be used primarily as working capital for the Company.

The shares offered hereby are highly speculative and involve a
high degree of risk to public investors and should be purchased
only by persons who can afford to lose their entire investment (See
"Risk Factors" on page 5).

These securities have not been approved or disapproved by the
U.S. Securities and Exchange Commission or any state securities
commission nor has the U.S. Securities and Exchange Commission or
any state securities commission passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is
a criminal offense.

Information contained herein is subject to completion or
amendment. The registration statement relating to the securities
has been filed with the U.S. Securities and Exchange Commission.
The securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective.
This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such state.

Subject to Completion, Dated: ______________, 2002

TABLE OF CONTENTS

Prospectus Summary 4
Risk Factors 6
Use Of Proceeds 12
Determination Of Offering Price 13
Plan Of Distribution 13
Legal Proceedings 14
Directors, Executive Officers, Promoters and Control Persons 14
Security Ownership Of Certain Beneficial Owners And Management 16
Description Of Securities 17
Interest Of Named Experts And Counsel 18
Disclosure Of Commission Position On Indemnification
For Securities Act Liabilities 18
Organization Within Last Five Years 21
Description Of Business 21
Management's Discussion and Analysis of Financial
Condition and Results of Operations 49
Description Of Property 31
Certain Relationships And Related Transactions 31
Market For Common Equity And Related Shareholder Matters 32
Executive Compensation 33
Financial Statements 34
Changes In And Disagreements With Accountants
On Accounting And Financial Disclosure 55
Available Information 55

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by detailed
information appearing elsewhere in this prospectus. Each
prospective investor is urged to read this prospectus in its entirety.

The Company.

(a) Background.

Alternet was incorporated in the State of Nevada on June 26,
2000, under the name of "North Pacific Capital Corp.". Alternet
sought, at its meeting of shareholders to be held on December 20,
2001, shareholder approval to change its name to "SchoolWeb
Systems Inc." This approval was granted and the name change
documents were filed with the State of Nevada April 11, 2002 with
the name change effective December 20, 2001. Alternet sought
shareholder approval to a further name change at its meeting of
shareholders dated May 10, 2002. At this meeting, shareholder
approval was granted to change the name of the Company to
"Alternet Systems, Inc." and this name change was effected on May
14, 2002.

Alternet's wholly owned subsidiary, SchoolWeb Holdings Inc., was
incorporated in the State of Nevada on October 13, 2000 under the
name of "Alternet Systems, Inc." On January 1, 2001 it entered
into the License Agreement with Advanced Interactive Inc. and its
subsidiary, Advanced Interactive (Canada) Inc. (collectively,
"AII") and subsequently changed its name, on March 6, 2001, to
"SchoolWeb Systems Inc.". On July 3, 2001 the Company's name was
changed to "SchoolWeb Holdings Inc.", its present name.

The Company's registered office in the State of Nevada is 711 South
Carson Street Suite 4, Carson City, Nevada 89701. The address of
its executive office in Florida is Suite 304 - 1007 North Federal
Hwy, Ft. Lauderdale, Florida 33304. The address of its registered
office in Canada is Suite 280 - 815 West Hastings Street, Vancouver
British Columbia, Canada V6C 1B4.

(b)Business.

SchoolWeb's business is the marketing and distribution of the
SchoolWeb hardware and software system. The SchoolWeb hardware
system and software were developed as a result of Advanced
Interactive Inc.'s subsidiary, Advanced Interactive Canada Inc.
(collectively, "AII") being awarded a $650,000 contract in 1999
to provide a low cost, distance-learning Internet access system
for an initial pilot of 20 British Columbia, Canada schools.
The contract was awarded to Advanced Interactive Canada Inc. by
the Government of British Columbia.

Alternet and its subsidiary, SchoolWeb Holdings Inc., license the
SchoolWeb System from AII the rights to market and distribute AII's
caching software (which is the basis of the SchoolWeb System's
software) under the terms of a License Agreement. The terms of the
License Agreement call for monthly payments to AII and a royalty
percentage of revenue SchoolWeb realizes from sales of the
SchoolWeb System.

Utilizing satellite broadcasting and caching server technology,
SchoolWeb is the first Internet access system developed
specifically for schools. The SchoolWeb system delivers up to
ten times more user capacity than a telecom line system of
equivalent cost and provides students with e-mail and website
hosting capabilities. It allows schools to have a large number
of students accessing the internet at the same time at a lower
cost than traditional solutions.

Each basic SchoolWeb "system" or software / hardware package is
comprised of the SchoolWeb Librarian software, Linux Operating
System, a network server, redundant file system, software
configuration, uninterruptible power supply, satellite or cable
port, SchoolWeb user license, 24 hour technical support (provided
by AII through the License Agreement), On-site installation and
training (provided by resellers and distributors), system
maintenance and 5X9 on-site warranty.

The Offering.

Shares of common stock of the Company will be sold on a
continuous delayed basis under a shelf registration under Rule 415.
A total of 7,764,000 shares of common stock are to be registered,
as follows (maximum amounts):

- 6,639,000 shares of common for selling shareholders.

- 1,125,000 shares of common stock reserved for issuance, upon
payment of the exercise price of $0.50 to exercise 1,125,000
share purchase warrants of the Company.

Liquidity of Investment.

Although the shares will be free of resale restrictions once
qualified by this Prospectus, there exists only a limited public
market for the shares. Therefore, an investor may not be able to
sell shares when he or she wishes; therefore, an investor may
consider his or her investment to be long-term.

Risk Factors.

The securities offered hereby are highly speculative in nature
and involve a high degree of risk. They should be purchased only
by persons who can afford to lose their entire investment.
Therefore, each prospective investor should, prior to purchase,
consider very carefully the following risk factors, as well as all
other information set forth in this prospectus.

Changes in market for the SchoolWeb product:

We may be unable to anticipate changes in our target market or
our customers' needs;

Reliance on technological infrastructure:

Our infrastructure may fail (including our servers, hardware and
software) to efficiently handle the traffic it is required to handle;

Growth challenges:

We might not be able to handle a rapidly expanding operation and
various problems associated with this (such as installations,
timing and amount of capital expenditures and other problems);

Dependence on key personnel and management:

Because of our small size, we are particularly dependent on, and
vulnerable to the departure of, our key personnel and management.

Vulnerability to a general economic downturn:

General economic conditions may affect school funding for
intellectual property initiatives through federal, state and
provincial budget cuts;

The Company is still a development stage company:

Although the Company (through its subsidiary) has been developing
and testing its product at various sites for the previous two
years, the Company has yet to generate revenue from its products.
Accordingly, it has no profitable operating history upon which
investors may rely. The Company has received no revenues from
operations and expects that most of its revenues in the
foreseeable future will be required to expand its sales force and
pay its obligations to third parties under its software licensing
agreement. The Company's payments on its software licence with
Advanced Interactive Inc. exceed its revenues for any month of
operations to date.

Limited Operating History and Sales Revenue to date:

We have had no sales revenue to date and have a limited operating
history. We have incurred significant operating losses,
including a net loss of $(263,249) in Fiscal 2001. At December
31, 2001, we had an accumulated deficit during development stage
of $(263,249).

Cost of establishing a presence in the market for the Company's products:

Our future growth and profitability will be principally dependent
upon our ability to successfully market or license the SchoolWeb
System. Accordingly, our prospects must be considered in light
of the risks, expenses and difficulties frequently encountered in
connection with the establishment of a new business in a highly
competitive industry. We anticipate that we will incur
substantial operating expenses in connection with marketing and
distribution of our SchoolWeb System and expects these expenses
to result in continuing losses until such time as we are able to
achieve adequate revenue levels. There can be no assurance that
we will be able to significantly increase revenues or achieve
profitable operations. We may be unable to attract or retain
customers. Failure to obtain additional capital, if needed, would
have a material adverse effect on our operations. Changes in laws
(especially laws relating to our trademarks or intellectual
property) could hurt our business;

We may not be able to secure required loan or equity funding in
the future:

We presently require (and may require in the future) additional
funding in the form of loans or equity investments.We intend to
seek these funds through equity financing, collaborative
arrangements with server manufacturers or from other sources. We
may also require additional funds in order to acquire technology
or products that complement our existing SchoolWeb System.
Financing may not be available or on terms acceptable to us.
Additional equity financings could result in significant dilution
to existing shareholders. If sufficient capital is not
available, or available at prohibitive cost, we may be required
to delay, reduce the scope of our various operations, especially
distribution and marketing operations.

If we are unable to generate significant revenues, our License
Agreement with AII could be terminated if license payments are
not made;

The Company may lose important Intellectual Property, Trademarks
and Licenses.

We consider patent protection and proprietary technology, or the
lack thereof, to be materially significant to its business.
Because our SchoolWeb System is Linux based (and because Linux
software code is in the public domain as "shareware") it is
unlikely that the SchoolWeb System itself (and its cold fusion
code) could be patented. It is further unlikely that the process
by which AII writes the SchoolWeb System software from available
Linux software and code is patentable. We have no certain patent
protection.

We are particularly vulnerable to any loss of the license with
which we license the SchoolWeb System from AII. This could happen
if we are unable to make required payments under the license
agreement with AII and the payments under this agreement exceed our
revenues to date significantly.

Changes in laws (especially laws relating to our trademarks or
intellectual property) could hurt our business

Other companies may independently develop similar technologies to
the SchoolWeb System.

Litigation, which could result in substantial cost to us, may be
necessary to enforce our rights provided under license. We may be
unable to protect our intellectual property rights or AII may be
unable to protect its intellectual property rights;

Dependence on Outsourced Installations, software maintenance and
distribution:

We rely on other companies (under software license, sub-license and
distribution agreements) to install, maintain and distribute our
SchoolWeb system. As a result, if these other companies fail to
perform their obligations, our financial affairs and business may be hurt.

At this time, the Company has not granted exclusivity rights to any
one distributor and is thus less vulnerable to such failures than
some companies.

We rely on AII for product development, product support and some
installation services under the terms of the License Agreement. If
AII fails to meet its obligations under the License Agreement, we
may not be able to continue to do business;

Competition.

A number of major server manufacturers (IBM, Compaq, Dell) are
attempting to "bundle" their server sales with sales of higher
margin software packages and other server "add-ons". As a result,
while there is little direct competition for the Company's
SchoolWeb system now, these potential competitors may attempt to
develop competitive products. These companies have greater
resources, experience and credibility with customers than the
Company does at this time.

Dependence on and Management of Future Corporate Relationships

The success of the Company's business strategy may be dependent on
its ability to enter into distributorship and software sub-licence
agreements because the Company is not large enough to install and
maintain servers and the SchoolWeb System in the large geographical
area it wishes to sell them in. As a result, if the Company is
unable to enter into such distributorship and sub-licence
relationships, it may be unable to expand its operations and its
sales revenues.

To a certain extent, the agreement between AII and Hewlett Packard
(Canada), to which Alternet has consented, may provide the
SchoolWeb Systems with distribution but there can be no assurance
that Hewlett Packard (Canada) will generate sales of the SchoolWeb System.

Currency Fluctuations.

We report our financial position and results of operations in US
dollars in our financial statements.

However, because a large portion of the Company's operations are in
Canada (and near term sales revenues, if any, are likely to be
primarily from Canada), we are exposed to foreign currency
fluctuation and such fluctuations may materially affect the
Company's financial position and results of operations.
We do not currently take any steps to hedge against currency
fluctuations. As most of our actual or potential Canadian business
relationships are with educational institutions which are hesitant
to enter into US dollar transactions, we are unable to completely
hedge against currency fluctuations.

Payments under the software license agreement with Advanced
Interactive Inc., our largest single expenditure and cost, are made
in US dollars and, as a result, this particular cost is not
vulnerable to currency fluctuations. If the Canadian dollar were
to depreciate, however, it is possible that revenues we believed
would cover payments under the license agreement would not be
adequate once converted to US currency.

Our accounts are maintained in US dollars including our accounts in
Canada.

Management of Growth.

Our future growth, if any, may cause a significant strain on its
management, operational, financial and other resources.

Control of the Company by Officers and Directors.

Our officers and directors beneficially own an absolute majority of
the Company's stock and will still, after completion of the
offering contemplated in this registration statement, have
approximately 38% of the outstanding shares of the Company's common
stock. As a result, such persons, acting together, have the
ability to exercise significant influence over all matters
requiring shareholder approval. Accordingly, it could be difficult
for the investors hereunder to effectuate control over the affairs
of the Company.

Therefore, it should be assumed that the officers, directors, and
principal common shareholders who control the majority of voting
rights will be able, by virtue of their stock holdings, to control
the affairs and policies of the Company.

Limited Public Market for Company's Securities.

There is only a very limited market for the shares of common stock
being offered. There can be no assurance that an active trading
market will develop or that purchasers of the shares will be able
to resell their securities, even at a loss. The securities are not
listed on any national exchange and are not posted for trading on
any facility such as the NASD's OTCBB or the "pink sheets". It is
unclear what the listing procedures and requirements for the
proposed "BBX" exchange in the United States would be and, as a
result, it is impossible to know whether or not the Company would
be able to list on it.

Even if a market were to develop or we were to successfully seek to
post for trading our securities on an exchange or a trading
facility such as the NASD's OTCBB (which we are seeking to do), the
market prices for the securities of technology companies have
historically been highly volatile and, since 2000, have experienced
(overall) a significant deflation.

In addition, equity markets from time to time experience
significant price and volume fluctuations that are unrelated to the
operating performance of any particular company. The market price
of the Company's shares may be affected significantly by factors
such as announcements of results or developments by the Company or
its competitors, variations in the Company's results of operations,
and market or general economic conditions. The market price for
the Company's shares may also be affected by movements in prices of
stock in general. As a result of these factors, purchasers of the
shares offered hereby may not be able to liquidate an investment in
the shares readily or at all.

Effects of Failure to Maintain Market Makers.

Even if we were successful in securing the agreement of market
makers to post our securities for trading on the NASD's OTCBB, we
may be unable to maintain National Association of Securities
Dealers, Inc. member broker/dealers as market makers and the
liquidity of the common stock could be impaired, not only in the
number of shares of common stock which could be bought and sold,
but also through possible delays in the timing of transactions, and
lower prices for the common stock than might otherwise prevail.
Furthermore, the lack of market makers could result in persons
being unable to buy or sell shares of the common stock on any
secondary market. There can be no assurance the Company will be
able to maintain such market makers.

Offering Price.

The offering price of the shares for the purpose of calculating the
registration fee with the SEC was determined in reference to the
last sale from treasury (by way of private placement sale exempt
from registration under Regulation D, Rule 506) of shares. The
price of this last sale was $0.35 per share.

It is not possible to determine the price selling shareholders will
offer their shares to the public at as there is no market for the
shares at present, the shares are not listed on any exchange at
present and there is no trading history for the shares.

Shares Eligible For Future Sale.

12,385,000 shares of common stock which are currently held,
directly or indirectly, by management have been issued in reliance
on the private placement exemption under the Securities Act of 1933
and are not registered for resale pursuant to this registration
statement.

Such shares will not be available for sale in the open market
without separate registration except in reliance upon Rule 144
under the Securities Act of 1933. In general, under Rule 144 a
person (or persons whose shares are aggregated) who has
beneficially owned shares acquired in a non-public transaction for
at least one year, including persons who may be deemed affiliates
of the Company (as that term is defined under that rule) would be
entitled to sell within any three-month period a number of shares
that does not exceed the greater of 1% of the then outstanding
shares of common stock, or the average weekly reported trading
volume during the four calendar weeks preceding such sale, provided
that certain current public information is then available. If a
substantial number of the shares owned by these shareholders were
sold pursuant to Rule 144 or a registered offering, the market
price of the common stock could be adversely affected.

ITEM 4: USE OF PROCEEDS

We will not receive proceeds from the sale of shares sold by
selling shareholders. The price at which these selling
shareholders will sell their shares cannot be practicably
determined or estimated as there is no market for our securities.
The only proceeds we will receive from the sale of shares under
this prospectus relate to the funds which the Company will receive
from exercise of warrants. The exercise of these warrants would
result in proceeds to the Company of $562,500 (1,125,000 warrants
outstanding until February 28, 2004 exercisable for one common
shares at an exercise price of $0.50 per share).

The following table sets forth the use of proceeds from the
exercise of the warrants:

Use of Proceeds Maximum Offering
Amount Percent

Transfer Agent Fee $ 1,200 0.21%
Printing Costs $ 600 0.12%
Legal Fees $ 36,000 6.40%
Accounting Fees $ 12,000 2.13%
Working Capital $512,700 91.14%
Total $562,500 100.00%

Management anticipates expending these funds for the purposes
indicated above. To the extent that expenditures are less than
projected, the resulting balances will be retained and used for
general working capital purposes or allocated according to the
discretion of the board of directors. Conversely, to the extent
that such expenditures require the utilization of funds in excess
of the amounts anticipated, supplemental amounts may be drawn from
other sources, including, but not limited to, general working
capital and/or external financing. The net proceeds of this
offering that are not expended immediately may be deposited in
interest or non-interest bearing accounts, or invested in
government obligations, certificates of deposit, commercial paper,
money market mutual funds, or similar investments.

ITEM 5: DETERMINATION OF OFFERING PRICE

There is no existing market for the securities of the Company and,
as a result, it cannot be practicably determined what will be the
offering price selling shareholders sell their securities for.

The exercise price of $0.50 for the 1,125,000 share purchase
warrants outstanding offered hereunder was determined by the
Company and shareholders in negotiation.

ITEM 6: DILUTION

No dilution to existing shareholders will result from the offering
to the public of common shares presently issued and outstanding.
No increase or decrease in the net tangible book value per share
will be attributed to the cash payments made by purchasers of these
shares as the purchases will be made from individuals and not from
the Company's treasury.

There are 1,125,000 outstanding share purchase warrants exercisable
for a period of two years at an exercise price of $0.50 per share
purchase warrant. Each share purchase warrant is exercisable for
one share of common stock.

Warrant holders who exercise their outstanding share purchase
warrants will experience dilution as follows (assuming exercise of
all outstanding warrants):

Net Tangible Book Value Per Share Before Warrants Exercised: $0.002
Net Tangible Book Value Per Share After Warrants Exercised: $0.036
Increase Attributable to Warrant Holders Exercising Warrants: $0.034
Amount of dilution to Warrant Holders Upon Exercising Warrants: $0.464
Percentage Dilution to Warrant Holders Upon Exercising Warrants: 92.80%

ITEM 7: SELLING SECURITY HOLDERS

Selling shareholders will be offering a total of 7,764,000
shares of common stock of the Company, as follows (in the
chronological order of their original issuance as restricted
shares). A number of the selling shareholders are affiliates of
the Company (and are designated in the list as such).

SHAREHOLDERS WITH COMMON SHARES PRESENTLY ISSUED AND OUTSTANDING:

Name of Amount Beneficially Amount Offered for Amount Beneficially Percentage
Selling Owned Prior to Selling Shareholder's Owned after Ownership after
Shareholder Offering Account Offering Offering (1)

Shaun Greffard 1,000 1,000 0 0%
Donna Taylor 1,000 1,000 0 0%
Anna Lush 1,000 1,000 0 0%
Debra Lush 1,000 1,000 0 0%
Janet Horbulyk 1,000 1,000 0 0%
Masa Tamashiro 1,000 1,000 0 0%
Ron Frier 1,000 1,000 0 0%
Gerard Smith 1,000 1,000 0 0%
Pat Martel 1,000 1,000 0 0%
Lynne Martel 1,000 1,000 0 0%
Gina Wakeham 1,000 1,000 0 0%
Andy Martel 1,000 1,000 0 0%
Jennifer Mitchell 1,000 1,000 0 0%
Patrick Sipos 1,000 1,000 0 0%
Corrine Fiesel 1,000 1,000 0 0%
Richard Silas (2) 116,500 116,500 0 0%
Christopher D. Farber 118,500 118,500 0 0%
Streamline Investments
Inc. (3) 2,551,000 847,000 1,704,000 11.05%
Nahatlatch Capital
Inc. (4) 2,550,000 847,000 1,703,000 11.05%
Patrick Fitzsimmons
(5) 1,001,000 333,000 668,000 4.98%
Greg Protti (6) 501,000 133,000 368,000 2.39%
Grant Farkes 500,000 133,000 367,000 2.38%
Deborah Stockwell 500,000 133,000 367,000 2.38%
United Equities Manage-
Ment Corp. 1,000,000 333,000 667,000 4.33%
Sheila Adams 250,000 250,000 0 0%
Pamela Briskar 250,000 250,000 0 0%
Tom Acheson 500,000 500,000 0 0%
Karen Acheson 500,000 500,000 0 0%
David Forsythe 10,000 10,000 0 0%
Cynthia M. Eden 500,000 500,000 0 0%
Brandon Douglas (9) 330,000 330,000 0 0%
Martin Dearden (7) 50,000 50,000 0 0%
Dennis Dearden (8) 50,000 50,000 0 0%
Michael Jacobs 50,000 50,000 0 0%
Janette Kryzankowsi 15,000 15,000 0 0%
Robert & Carolyn
White 100,000 100,000 0 0%
Michael Holden 150,000 150,000 0 0%
Glenn Burley 25,000 25,000 0 0%
Thomas Anderton 100,000 100,000 0 0%
Alan Gainsford 60,000 60,000 0 0%
Denis Ouellet 40,000 40,000 0 0%
Rainbow Creek Ranch
Ltd. 25,000 25,000 0 0%
Catherine Edwards 25,000 25,000 0 0%
John F. Marino 25,000 25,000 0 0%
San Juan Capital
Corp. 50,000 50,000 0 0%
Jan Guenther 25,000 25,000 0 0%
Charles W. Gay 25,000 25,000 0 0%
Karim Suleman 25,000 25,000 0 0%
Karima Meraly 25,000 25,000 0 0%
Murray Smith 25,000 25,000 0 0%
563663 BC Ltd. 100,000 100,000 0 0%
Streamline Investment
Inc. (3) 60,000 60,000 0 0%
Wes Huffman 30,000 30,000 0 0%
John Day 60,000 60,000 0 0%
Jacquelyn Scott 10,000 10,000 0 0%
Romeo Zoldan 15,000 15,000 0 0%
John F. Marino 10,000 10,000 0 0%
Charles W. Gay 75,000 75,000 0 0%
George S. Bailey 10,000 10,000 0 0%
Donald Castello 30,000 30,000 0 0%

SUBTOTAL: 12,483,000 6,639,000 5,844,000 38.56%

(1) Assuming exercise of all outstanding warrants
(2) Richard Silas is a former director and President of the
Company. He resigned from both offices on September 10, 2001.
(3) Streamline Investments Inc. is a company wholly owned by
Michael Dearden, Director and President of the Company.
(4) Nahatlatch Capital Inc. is a company wholly owned by
Griffin Jones, Director, Secretary and Treasurer of the Company.
(5) Patrick Fitzsimmons is a director and Vice President of the Company.
(6) Greg Protti is a director of the Company.
(7) Martin Dearden is the brother of Michael Dearden,
Director and President of the Company. He is of legal age and
does not reside with Michael Dearden.
(8) Dennis Dearden is the father of Michael Dearden, Director
and President of the Company. He does not reside with Michael Dearden.
(9) Brandon Douglas is a director of the Company.

COMMON SHARES RESERVED FOR ISSUANCE UPON EXERCISE OF SHARE PURCHASE WARRANTS:

Name of Amount Beneficially Amount Offered for Amount Benefically Percentage
Selling Owned Prior to Selling Shareholder's Owned after Ownership after
Shareholder Offering Account Offering Offering (1)

Robert & Carolyn White 100,000 100,000 0 0%
Michael Holden 150,000 150,000 0 0%
Glenn Burley 25,000 25,000 0 0%
Thomas Anderton 100,000 100,000 0 0%
Alan Gainsford 60,000 60,000 0 0%
Denis Ouellet 40,000 40,000 0 0%
Rainbow Creek Ranch Ltd. 25,000 25,000 0 0%
Catherine Edwards 25,000 25,000 0 0%
John F. Marino 25,000 25,000 0 0%
San Juan Capital Corp. 50,000 50,000 0 0%
Jan Guenther 25,000 25,000 0 0%
Charles W. Gay 25,000 25,000 0 0%
Karim Suleman 25,000 25,000 0 0%
Karima Meraly 25,000 25,000 0 0%
Murray Smith 25,000 25,000 0 0%
563663 BC Ltd. 100,000 100,000 0 0%
Streamline Investment
Inc. (2) 60,000 60,000 0 0%
Wes Huffman 30,000 30,000 0 0%
John Day 60,000 60,000 0 0%
Jacquelyn Scott 10,000 10,000 0 0%
Romeo Zoldan 15,000 15,000 0 0%
John F. Marino 10,000 10,000 0 0%
Charles W. Gay 75,000 75,000 0 0%
George S. Bailey 10,000 10,000 0 0%
Donald Castello 30,000 30,000 0 0%

SUBTOTAL: 1,125,000 1,125,000 0 0%

TOTAL OF
SUBTOTALS ABOVE 13,608,000 7,764,000 5,844,000 38.56%

(1) included with the percentage calculation is the assumed
exercise of 1,125,000 common shares underlying share purchase
warrants which are presently exercisable until February 28, 2004.
(2) Streamline Investment Inc. is a company wholly owned by
Michael Dearden, the Company's President and one of its directors.

ITEM 8: PLAN OF DISTRIBUTION

Registration under this Offering.

A total of 7,764,000 shares of common stock are to be registered,
as follows (maximum amounts):

- 6,639,000 common shares for selling shareholders, as set forth above.

- 1,125,000 common shares from selling shareholders said shares
to be obtained from exercise of outstanding warrants

No commissions or other fees will be paid, directly or indirectly,
by the Company, or any of its principals, to any person or firm in
connection with solicitation of sales of the shares.

ITEM 9: LEGAL PROCEEDINGS

Neither Alternet nor its subsidiary, SchoolWeb Holdings Inc., are
party to any litigation and neither have knowledge of any
threatened or pending litigation against them.

ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,AND CONTROL PERSONS

The following discussion contains disclosure concerning our
directors, officers and control persons. There are no persons
which have acted as a promoter, controlling person, or significant
employee of the Company other than as disclosed below.

Name Position Term of Office*1*2

Michael Dearden President and Director Expires May 10, 2003
Griffin Jones Secretary, Treasurer Expires May 10, 2003
and Director
Patrick Fitzsimmons Director Expires May 10, 2003
Greg Protti Director Expires May 10, 2003
Karim Lakhani Director Expires May 10, 2003
Brandon Douglas Director Expires May 10, 2003

1. Directors, whether appointed at a meeting of shareholders or
by the remaining directors, are appointed until the next
annual meeting of shareholders. As Alternet had its last
annual meeting of shareholders on May 10, 2002 all of the
directors terms expired on that date and they were reappointed
by the shareholders until the next annual meeting of
shareholders. The expiry dates are estimates of when the next
meeting will be held.

2. The President, Secretary and Treasurer do not have a set term
of office. They serve at the pleasure of the Directors and
can be removed at any time by the Directors.

Michael Dearden, President and Director

Michael Dearden, age 47. Mr. Dearden has over 25 years
experience in sales and marketing, and for the past 15 years has
focused specifically on corporate marketing and venture capital
financing. Prior to joining Alternet in 2000, Mr. Dearden was,
for five years, a director of Rolland Virtual Business Systems
Limited (formerly Americ Resources Corp.), where he helped to
facilitate the merger of Rolland Virtual Business Systems Limited
and Americ Resources Corp. and helped to facilitate a concurrent
financing of $1,800,000. Rolland Virtual Business Systems
Limited is a Montreal, Canada, based E-commerce software
developer with approximately 35 employees.

Griffin Jones, Secretary, Treasurer and Director

Griffin Jones, age 46. Mr. Jones has been self-employed for
approximately 15 years as a management consultant. Mr. Jones
brings to the Company experience in financial management, and
experience in providing management to companies in a number of
industry areas including high technology, industrial products and
mining. Mr. Jones has worked in marketing management, finance and
corporate relations.

Patrick Fitzsimmons, Director

Pat Fitzsimmons, age 48. Mr. Fitzsimmons brings to the Company
sales and management experience, gained from a 22-year career in
the high-technology marketplace. Mr. Fitzsimmons has represented
firms such as NCR, Timeplex, Rogers Cable, and Newbridge
Networks, offering a wide range of technology solutions. His most
recent position was Manager, Major Accounts, AT&T Canada,
Vancouver B.C., Canada (with whom he was employed for five years
prior to joining Alternet Systems Inc.).

Greg Protti, Director

Greg Protti, age 44. Mr. Protti has over 17 years experience in
the high technology sector. He has held sales and management
positions in all segments of the high tech sector from SHL
Systemhouse consultants to Regional Sales Manager for Merisel
Canada (with whom he was employed for five years prior to joining
Alternet Systems Inc.), where he was responsible for running a
$200 million in sales revenue territory in Western Canada. Mr.
Protti was previously Regional Manager for Digidyne, Inc. a value
added reseller of technology products. He was responsible for
hardware sales as well as managing a staff of contract personnel.

Karim Lakhani, Director

Karim Lakhani, age 42. Mr. Lakhani is a co-founder of AII
Multimedia Corp. He holds a Bachelor of Applied Science in
Electrical Engineering from The University of British Columbia.
From 1993 to 1996, Mr. Lakhani was Vice President of Electronic
Cottage International Inc. During this period he developed a
News Archival and Retrieval system as well as the Internet-based
U.S. Senate Proceedings Multimedia Archiving and Retrieval
system. As President of Orion Technologies Inc. he directed the
development of a secure network for electronic commerce and
banking for 79 banks in 33 countries in Asia Pacific. In
addition, Mr. Lakhani has marketed technologies to giants such as
McDonnel Douglas, Groupe Videotron, Raytheon, and Samsung.

Each officer and director generally serves until the next annual
meeting of shareholders or until such time as he or she resigns.

The Company does not have standing nominating or compensation
committees of the board of directors, or committees performing
similar functions. During the last fiscal year ended December 31,
2001, the board of directors did not formally meet other than
following the last meeting of shareholders on December 19, 2001.

ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial
ownership of shares of the Company's common stock as of May 31,
2002 (15,483,000 issued and outstanding) by (i) all shareholders
known to the Company to be beneficial owners of more than 5% of the
outstanding common stock; and (ii) all directors and executive
officers of the Company, and as a group (each person has sole
voting power and sole dispositive power as to all of the shares
shown as beneficially owned by them):

Name and Address Position Amount of
Stock Percentage of

Beneficially Class
Owned

Streamline Investments, Inc. (2) Director, President 2,611,000
16.86%
711 South Carson St.
Carson City, Nevada89701

Nahatlatch Capital Corp. (3) Director, Secretary, Treasurer 2,550,000
16.47%
711 South Carson St.
Carson City, Nevada89701

Patrick Fitzsimmons Director, VP Sales 1,001,000
6.47%
1406-151 E. Keith Rd.
N. Vancouver, BCV7L 4M3

Greg Protti Director, VP Business 501,000
3.24%
6405 Holly Park Dr. Development
Ladner, BC V4K 4W6

Karim Lakhani Director *1
0.00%

Advanced Interactive Inc. 1,500,000
9.69%
718 - 1350 East Flamingo Road
Las Vegas, NV 89119

Advanced Interactive Canada Inc. 1,500,000
9.69%
2101 - 1177 W. Hastings St.
Vancouver, BC V6E 2K3

Directors, Officers and 9,663,000
62.42%
5% shareholders in total (6
Persons)

1. Karim Lakhani does not personally own any common stock.
However, as well as being a director of Alternet, he is a
Director and President of Advanced Interactive Inc. and is a
director of its Canadian subsidiary, Advanced Interactive
Canada Inc. These two companies hold a total of 19.38% of the
issued and outstanding stock of the Company.

2. Streamline Investments, Inc. is a company wholly owned by the
Company's President and Director, Michael Dearden. Streamline
Investments, Inc. also owns 60,000 of our outstanding share
purchase warrants which it purchased for $0.10 per warrant.

3. Nahatlatch Capital Corp. is a company wholly owned by the
Company's Treasurer, Secretary and Director, Griffin Jones.

ITEM 12: DESCRIPTION OF SECURITIES

General Description.

The securities being offered are shares of common stock. The
authorized capital of the Company consists of 100,000,000 shares of
common stock, $0.00001 par value per share. As of May 30, 2002,
15,483,000 shares of common stock were issued and outstanding. Each
outstanding share of the common stock entitles the holder to one
vote, either in person or by proxy, on all matters that may be
voted upon by the owners thereof at meetings of the shareholders.

The holders of the common stock (i) have equal rights to
dividends, when, and if, declared by our the Board of
Directors; (ii) are entitled to share ratably in all of our
assets available for distribution to the holders of the common
stock upon liquidation, dissolution or winding up of our affairs;
and (iii) do not have preemptive subscription or conversion rights.

There are no restrictions, in the Articles or By-Laws of the
Company, on the rights of holders of common stock to transfer or
sell their shares of common stock.

Non-Cumulative Voting.

The holders of shares of common stock of the Company do not have
cumulative voting rights. As a result, the holders of more than
50% of such outstanding shares, voting for the election of
directors, can elect all of the directors to be elected, if they so
choose. In such event, the holders of the remaining shares will not
be able to elect any of the Company's directors.

Dividends.

The Company does not currently intend to pay cash dividends and has
not in the past paid dividends.

The Company's Articles and By-Laws empower the directors to make
distributions of dividends to the Company's shareholders when the
Company's board of directors deems such distributions appropriate.

Because the Company does not intend to make cash distributions (its
business plan is to use available funds, for the near future, for
expansion of its operations, particularly its marketing and
distribution teams), potential shareholders would need to sell
their shares to realize a short-term return on their investment.

There can be no assurances of the projected values of the shares,
nor can there be any guarantees of the success of the Company.
There is presently no public market for shares of the Company nor
are its securities listed on any exchange.

A distribution of dividends will be made only when, in the judgment
of the Company's board of directors, it is in the best interest of
the Company's shareholders to do so.

Possible Anti-Takeover Effects of Authorized but Unissued Stock.
The Company's authorized but unissued capital stock, as of May 31,
2002, consists of 84,517,000 shares of common stock. One effect of
the existence of authorized but unissued capital stock may be to
enable the board of directors to render more difficult or to
discourage an attempt to obtain control of the Company by means of
a merger, tender offer, proxy contest, or otherwise, and thereby to
protect the continuity of the Company's management. If, in the due
exercise of its fiduciary obligations, for example, the board of
directors were to determine that a takeover proposal was not in the
Company's best interests, such shares could be issued by the board
of directors without shareholder approval in one or more private
placements or other transactions that might prevent, or render more
difficult or costly, completion of the takeover transaction by
diluting the voting or other rights of the proposed acquirer or
insurgent shareholder or shareholder group, by creating a
substantial voting block in institutional or other hands that might
undertake to support the position of the incumbent board of
directors, by effecting an acquisition that might complicate or
preclude the takeover, or otherwise.

Outstanding Warrants.

There are 1,125,000 outstanding share purchase warrants of the
Company. Each of these share purchase warrants entitles the owner,
upon payment of the $0.50 exercise price, to one share of common
stock of the Company. The outstanding share purchase warrants were
sold as part of a Regulation D offering of securities.

Transfer Agent.

The Company is in the process of engaging the services of Transfer
Online, Inc., an Oregon company, as its transfer agent and
registrar. The address for Transfer Online, Inc. is Suite 300 -
227 SW Pine Street, Portland, Oregon 97204 Tel: (503) 227-2950 /
Fax: (503) 227-6874.

ITEM 13: INTEREST OF NAMED EXPERTS AND COUNSEL

No named expert or counsel was hired on a contingent basis, will
receive a direct or indirect interest in the small business issuer,
or was a promoter, underwriter, voting trustee, director, officer,
or employee of the Company.

ITEM 14: DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES

The Articles and Bylaws of the Company do not provide for
indemnification of the directors and officers of the Company for
acts taken in their capacity as directors or officers.

The Articles and Bylaws of the Company do not prohibit
arrangement by the Company of indemnification insurance or an
agreement by the Company to indemnify directors and officers
against loss or damage from such acts.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Company pursuant to any future
amendments to the Company's Articles or Bylaws, the Company has
been advised that in the opinion of the US Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforcable.

ITEM 15: ORGANIZATION WITHIN LAST FIVE YEARS

The names of the officers and directors are disclosed elsewhere in
this registration statement. None of these individuals, in a
capacity as a promoter, has received anything of value from the
Company. No other persons act as or have acted as promoters of the Company.

ITEM 16: DESCRIPTION OF BUSINESS

Company History.

Alternet was incorporated in the State of Nevada on June 26,
2000, under the name of "North Pacific Capital Corp.". Alternet
sought approval, at its meeting of shareholders to held on
December 20, 2001, shareholder approval to change its name to
"SchoolWeb Systems Inc." This name change was effected on April
11, 2002 when filed with the Secretary of State in Nevada. On
May 10, 2002 the Company sought and received shareholder approval
to a name change to "Alternet Systems, Inc." and this name change
was effected on May 14, 2002.

SchoolWeb was incorporated in the State of Nevada on October 13,
2000 under the name of Alternet Systems, Inc. On January 1, 2001
it entered into the License Agreement with Advanced Interactive
Inc. and its subsidiary, Advanced Interactive (Canada) Inc.
(collectively, "AII") and subsequently changed its name, on March
6, 2001, to "SchoolWeb Systems Inc.". On July 3, 2001
SchoolWeb's name was changed to "SchoolWeb Holdings Inc.", its
present name.

The SchoolWeb hardware system and software were developed as a
result of Advanced Interactive Inc.'s subsidiary, Advanced
Interactive Canada Inc., being awarded a $650,000 contract in
1999 to provide a low cost, distance-learning Internet access
system for an initial pilot of 20 British Columbia, Canada
schools. The contract was awarded to Advanced Interactive
Canada Inc. by the Government of British Columbia.

The Company's registered office in the State of Nevada is 711 South
Carson Street Suite 4, Carson City, Nevada 89701. Its principal
executive offices are located at 1007 North Federal Hwy, Suite 304,
Fort Lauderdale, Florida 33304 and the address of its offices in
Canada is Suite 280 - 815 West Hastings Street, Vancouver British
Columbia, Canada V6C 1B4.

The Company became a reporting issuer under the Securities Exchange
Act of 1934 on November 6, 2000.

General.

The consideration exchanged pursuant to the Share Exchange
Agreement was negotiated between the shareholders of SchoolWeb
Holdings Inc. and the management of Alternet (which, at that
time, was still named North Pacific Capital Corp.).

In evaluating SchoolWeb Holdings Inc. as a possible acquisition
candidate, management used criteria such as management's
estimates of the value of the assets of SchoolWeb Holdings Inc.
(particularly the License Agreement), the anticipated future
operations of SchoolWeb Holdings Inc., material contracts,
quality of management and current operations.

The primary asset of Alternet (through its subsidiary, SchoolWeb
Holdings Inc.) is the License Agreement between SchoolWeb,
Advanced Interactive Inc. and Advanced Interactive Canada Inc.
dated January 1, 2001 as amended June 29, 2001 and September 10,
2001. Advanced Interactive Inc. and its subsidiary, Advanced
Interactive Canada Inc. had developed proprietary hardware
systems and software known primarily as the "SchoolWeb System"
for caching Internet and multimedia files on special servers at
schools, homes, businesses or other locations

SchoolWeb wished to acquire the rights to distribute, market,
sell and license the SchoolWeb System in the United States and Canada.

The License Agreement grants SchoolWeb, for a term of five (5)
years renewable for an additional five (5) years, the exclusive
right to distribute, market, sell and sub-license caching server
software developed by AII (the SchoolWeb System) in the US and
Canada for educational related purposes and grants SchoolWeb, for
a period of five (5) years renewable for an additional five (5)
years, the non-exclusive worldwide right to distribute, market,
sell and license the same products. Under the terms of the
License Agreement, SchoolWeb must pay to Advanced Interactive
Inc. the sum of $10,000 per month in year one, $20,000 per month
in year two and increased payments in subsequent years. Advanced
Interactive Inc. also receives a royalty of 40% on revenue
realized from SchoolWeb's use of the Licensed Technology.

Advanced Interactive Inc. was issued a total of 3,000,000 shares
of common stock of SchoolWeb under the terms of the License
Agreement, the Share Exchange Agreement, and their amendments.

In March of 2002, AII and Hewlett Packard (Canada), in
negotiations for which Alternet was present and involved, entered
into an agreement whereby AII agreed that all sales of its
caching server software would be "bundled" (would include)
Hewlett Packard hardware. In exchange for this promise, Hewlett
Packard (Canada) agreed to make efforts to distribute the
SchoolWeb System. No minimum sales were imposed under the terms
of this agreement. Because AII had licensed the caching server
software to Alternet (as the SchoolWeb System), Alternet's
consent to this agreement was required. Alternet did consent
believing that, even though there were no guaranteed sales
volumes, Hewlett Packard (Canada)'s established distribution
system could potentially generate significant sales volumes. We
simply don't have the established relationships or distribution
capabilities of a company like Hewlett Packard.

Share Purchase Agreement with SchoolWeb Holdings Inc.

This is the agreement by which we acquired our subsidiary,
SchoolWeb Holdings Inc., and began to pursue its business as our
own. Under an Agreement (the "Share Exchange Agreement") dated
as of July 2, 2001, as amended September 10, 2001 between the
shareholders of SchoolWeb Holdings Inc. and Alternet Systems Inc.
(at that time named North Pacific Capital Corp.), all of the
12,343,000 outstanding shares of common stock of SchoolWeb
Holdings Inc. were exchanged for 12,343,000 shares of common
stock of the Company, in a transaction in which the Company was
the surviving corporation. The 12,343,000 shares of common stock
(of which 3,000,000 are held by AII) represented approximately
86% of the issued and outstanding shares of common stock as of
September 30, 2001, the end of the quarter in which they were issued.

The Share Exchange Agreement was adopted by the unanimous consent
of the Board of Directors of SchoolWeb Holdings on July 2, 2001
and approved by the unanimous consent (evidenced by their
signatures on the Share Exchange Agreement) of the shareholders
of SchoolWeb Holdings.

The Share Exchange Agreement was adopted by the unanimous consent
of the Board of Directors of Alternet on July 2, 2001.

The closing of the Share Exchange Agreement occurred on September
10, 2001 with the completion of stock issuances to Advanced
Interactive Inc. under the terms of the Settlement Agreement.

As a result of this closing, AII has a total of 3,000,000 (held
1,500,000 by Advanced Interactive Inc. and 1,500,000 by Advanced
Interactive Canada Inc.) shares of common stock of the Company.
This represents 21% of the issued and outstanding shares of common stock.

As a result of this closing, Mr. Michael Dearden and Mr. Griffin
Jones, who were concurrently appointed as Directors, acquired
17.85% and 17.84% of the issued and outstanding shares of common
stock of the Company respectively.

The SchoolWeb System:

Utilizing satellite broadcasting and caching server technology,
the SchoolWeb System is the first Internet access system
developed specifically for schools. The SchoolWeb system
delivers up to ten times more user capacity than a telecom line
system of equivalent cost and provides students with e-mail and
website hosting capabilities (according to internal tests not
independently verified).

This is how it works:

1 A student makes a request for an Internet website.

2 The SchoolWeb server at the school first searches its memory
to determine if the site was recently requested and cached (stored) in the
computer memory.

3 If the website is present in the computer memory, the
information is delivered at LAN speed (usually 100 megabits per second) to
the student.

4 If the file is not available in the server cache, the
SchoolWeb server goes to the Internet (via the school's telecom link to the
SchoolWeb Network Center).

5 The SchoolWeb Network Center accesses the Internet and broadcasts the
website via satellite to the local SchoolWeb server.

6 All subsequent requests for this site are now available at high speed
(100Mb/sec) from the local SchoolWeb server.

Value added services offered by the SchoolWeb system include:

- fast downloading of large Internet sites for each student
- pre-programmed downloading of teacher-requested Internet sites
- e-mail and web site hosting for each student
- streaming audiovisual for 50+ computer stations
- Internet computer games (recreational users do not affect
Internet access speed)
- Content control and the ability to screen viewed sites

The SchoolWeb system has more value added services than
competitive systems and is focussed on the education niche of the
market for internet access services. SchoolWeb provides more
benefits than any competitive alternative, features such as e-
mail addresses and websites for each student, and full-motion
(streaming) audiovisual viewing. When used as a distribution
network to teachers, administrators and students, SchoolWeb's
broadcast caching method of distribution results in significant
time savings when compared to the current methods of information
distribution over the Internet (according to internal tests not
independently verified).

Each school's SchoolWeb system includes a network server with
large storage capability, redundant file systems, uninterruptible
power supply and a 36" satellite dish. SchoolWeb utilizes a Linux
operating system that includes e-mail, streaming multimedia
(video, audio, animation, text) and broadcast caching.
SchoolWeb can be managed and monitored by teachers at each school
using SchoolWeb Management Software. This client interface
provides great flexibility for teachers who, for teaching
purposes, wish to pre-request websites the previous day, or
minutes before the class commences. The SchoolWeb network's
software and hardware performance is monitored remotely 24
hours/day by SchoolWeb support personnel (or rather by AII
support personnel under the terms of the License Agreement).

Although SchoolWeb was originally developed for rural schools
that do not have high speed Internet access, urban schools can
also benefit from the SchoolWeb system. These urban schools have
the highest bandwidth telecom links available in North America,
but have saturated them with up to 600 online computers, all
accessing the Internet at the same time. SchoolWeb's efficiency
provides an additional 1000% user capacity increase for the same
price as a telecom link that would provide just a 100% increase in capacity.

The SchoolWeb system design is the type of infrastructure that is
required to solve the problem of congestion. SchoolWeb delivers
the Internet to schools up to ten times more efficiently than
telecom lines, due to its caching server and satellite
downloading. Without it, most school administrators can't afford
the amount of Internet access they desire, due to the large
monthly telephone bills incurred. The paradox is, government
directives have been funding more on-line computers, but not the
corresponding increase in monthly telecom expenses. This can
result in many computers trying to access an overcrowded
telephone line, and in effect, getting a busy signal.

SchoolWeb is presently installed in 17 schools.

In British Columbia, Canada where the first SchoolWeb systems
were installed the SchoolWeb systems were installed on a 12 to 18
month test basis.

Because SchoolWeb is a new technology, acceptance of the
SchoolWeb System (the Company believes) must be preceded by a
test period of placing the SchoolWeb server in the school for as
long as a year to build comfort with the system and generate
(after the test period has been completed) orders and revenue.

As the test periods are only now being completed in British
Columbia and have only begun in the United States, it is
anticipated that significant revenues will not be realized from
sales until the third quarter of 2002, if at all.

Product Pricing

For elementary schools, the SchoolWeb system costs $525 per month
for a period of three years.

For secondary schools, the SchoolWeb system costs $695 per month
for a period of three years.

Where schools desire to pay "up front" the total costs of a
SchoolWeb system, prices vary according to the school's
particular situation (eg. Urban or rural, close to an established
distributor / authorized dealer). Average cost per secondary
school is expected to be approximately $7,500 (Cdn $11,500 for
Canadian secondary schools) for "up front" payment.

Prices will vary with the number of students to be served at each school.

Status.

We do not anticipate incurring any significant expenditures on
research and development for the next 12 months. AII is
responsible for the updating and revision of the SchoolWeb
software under the terms of the License Agreement.

Markets

The market for SchoolWeb's system and software can best be
characterized as the market for "Internet access and e-learning
in educational organizations".

Estimating the size of this market is difficult.

The SchoolWeb system is suitable for colleges, universities and
libraries. Combined with approximately 96,000 K-12 schools
(elementary and high schools) and an additional 44,000 private
schools, colleges, universities and other educational
institutions in North America, the total annual market targeted
by SchoolWeb is very large.

The market for Internet access and e-learning in educational
organizations is one of the fastest growing segments of the high-
tech industry in North America. Merrill Lynch estimates that
the K-12 e-learning market is currently $1.3 billion and is
likely to increase to $6.9 billion in 2003.

In addition, the US Federal Communications Commission recently
allocated $2.25 billion to fund additional high-speed Internet
access to US schools and libraries.

In Canada, similar funding initiatives are being implemented by
Industry Canada, a federal government agency, to facilitate
Internet access for all Canadian K-12 students (in fact, the
first development funding that SchoolWeb received, through AII,
came from Industry Canada).

Market Trends and Analysis:

Management of the Company believes that there has been
significant growth in the sales of caching servers and software
in North America although figures for the sales of caching
servers are not available from independent sources such as the US
Census Bureau (figures are given for technology sales and
spending by educational institutions but are not available for
specific sales of caching servers).

This growth, management believes, is fuelled by the necessity of
having a caching server if the internet is to be a teaching tool
in classrooms. Having a large number of students accessing the
internet over traditional lines (eg. Telephone or fibre) at the
same time slows the traditional lines and access to the point
where classroom teaching cannot be based on active use of the
internet. Caching websites (using SchoolWeb software and a
caching server) speeds student's access and makes use of the
internet in classrooms more feasible. Management of the Company
believes that the trend in the market is for educational
institutions (customers) to seek software and hardware that
permits such use of the internet.

Marketing Strategy:

SchoolWeb's marketing strategy is characterized by the following:

- Push sales strategy. The relative newness of the SchoolWeb
hardware system and software requires us to actively push it out
into the field through direct sales efforts (of distributors,
authorized dealers and resellers) rather than pull clients
through print advertising campaigns.

- Solution selling. The product is sold as a total solution
complete with implementation and on-going management services at
the client site. This differentiates us from "shrink-wrapped"
software or communications suppliers that offer no services or
provide a limited set of services after installation has occurred.

- Strong branding within target segments. We intend to build the
School WebT brand name within targetted markets. SchoolWeb hopes
to accomplish this in part through selective advertising in trade
journals and attendance at relevant trade shows if and when
revenues permit such expenditures (it is unlikely that there will
be significant resources devoted to this in the year ending
December 31, 2002).

- Channel ready product. The SchoolWeb system is designed to be
channel-ready and easily installable by personnel working for our
distributors and authorized dealers. Installation of the
SchoolWeb hardware system and software does not require extensive
training or experience.

- Direct Distribution Channel (Direct Sales). Our direct sales
channel will consist of 4 regional sales managers for each
geographic region, overseen by the vice president of sales,
Patrick Fitzsimmons. All corporate sales management personnel
will be involved in managing direct sales and in dealing with
Federal, State and Provincial Education Departments and school
boards.

Although this direct distribution from SchoolWeb to schools is
planned, it is clear that SchoolWeb's marketing strategy relies
to a great degree upon SchoolWeb's ability to secure agreements
with channel partners (authorized dealers) and distributors
(value added resellers). To this end SchoolWeb has entered into
a Reseller Agreement with Microserve Computer Solutions Inc.
(with offices in the United States and Canada). None of the
distributors are expected to be given geographical or product
exclusivity and a copy of the specimen form of Reseller Agreement
is attached hereto as an exhibit.

The agreement with Hewlett Packard (Canada) and AII where Hewlett
Packard (Canada) agrees to make efforts to distribute the
SchoolWeb System will also, hopefully, generate product sales
through Hewlett Packard (Canada)'s distribution channels.

To date, SchoolWeb's marketing efforts have been limited
primarily to parts of Western Canada. SchoolWeb has servers
installed in 17 schools.

Competitors

SchoolWeb competes with the distribution branches of IBM, Compaq,
Dell and Hewlett Packard in that these companies market their
servers directly to educational institutions. It does not
directly compete with them in the provision of software and
caching services.

SchoolWeb's leading competitors in the area of caching server
software are Novell and Bascom.com (a company which produces
caching server software not directly targetted at educational
institutions). Novell does not specifically target educational
institutions and Bascom.com does not have the same number of
value added services that SchoolWeb's systems have, in
management's view.

The SchoolWeb system also arguably competes with providers of
traditional cable and telecomm means of accessing the internet.
The competitive advantages that SchoolWeb has over these
providers is detailed in Competitive Factors below.

Competitive Factors in the Market:

The primary competitive factors in the market for internet access
at educational institutions are reliability, speed and cost efficiency.

The SchoolWeb system provides a dramatic increase in user speed
and capacity over telecommunication lines of similar cost. This
increase in user speed and capacity is due primarily to the
SchoolWeb system's caching of internet files and websites.

Although originally developed by AII as a software and hardware
system geared towards rural locations, the SchoolWeb system has
been installed with success in urban locations in British
Columbia as well.

Although urban schools have better access to high-speed telecom
lines, the efficiency of the SchoolWeb system still allows up to
ten times more users than an equivalent costing telephone line.

In rural areas, which represent 23% of all schools in North
America (22,000 schools), schools often have no access to high-
speed telecom infrastructure. These schools are restricted to
access the Internet through slow-speed (56K-128K) telecom lines,
which are only suitable for a small number of users at a time.
For many rural schools, SchoolWeb is the only alternative for
high-speed Internet access.

A typical School Board will be utilizing a Private Line solution
at 56k or 128k for primary schools, and usually T-1 (DS-1), or
Ethernet ports for their secondary schools. Schools are usually
connected to State or Provincial communication systems by full or
partial T-1 circuits to a central government office, which
provides services such as firewall filtering, virus protection,
curriculum and systems management. Because so many students and
schools become connected, not only are the typical school's
overall telecom operating costs are substantial, these circuits
are usually near or at saturation most times, due to increased
demand from an ever increasing number of online computers. At a
conservative rating of 5 times more user capacity (based on the
SchoolWeb system's efficient use of bandwidth) than similar
costing telecom lines, the SchoolWeb system can provide cost
savings of up to 80% over conventional alternatives.

ADSL and high speed Cable, although excellent for the
residential/SOHO (small office/home office) market, is not widely
used by schools due to security issues and limited performance
for commercial applications. Cable is a shared network with
security and congestion problems, and ADSL bandwidth performance
is greatly affected by the distance from the telephone company
Central Office (C.O.). These internet access solutions are
rarely used by educational institutions (except in circumstances
where a small or less developed school may only have one or a few
computers with internet access).

Because many school Internet requests are repetitive, the
SchoolWeb system caches and serves these requests at LAN speed of
100 megabits/second (Mb/S). Based on SchoolWeb data in schools
in British Columbia where the SchoolWeb system has been
installed, it has been shown that the repeat request ratio is
between 40% and 70%. Therefore, over half of the student
requests are serviced at 100 Mb/sec from the local SchoolWeb
cache. This equates to a performance increase of between 5 and
100 times when compared to operating without SchoolWeb.

Proprietary Protection

(a) General.

Our patent and trademark strategy is to pursue in selected
jurisdictions the broadest possible patent protection on its
proprietary products and technology. The Company plans to protect
its technology, any inventions and improvements to its inventions
by filing patent applications, where practicable, in selected key
countries according to industry standard in a timely fashion.
However, the SchoolWeb System's software is written by AII using
Linux code available on the internet as "shareware" (that is, it is
in the public domain and is unlikely to be patentable).
Furthermore, we think it is unlikely that the process by which the
software is written can itself be patented. Other associated
processes, such as installation, are too generic to be patented.
As a result, although we state that we wish to seek protection, it
is unlikely that the SchoolWeb System or the process of writing its
software and installing it can be patented and protected.
We also, however, relyupon trade secrets, know-how and continuing
technological innovations to develop its competitive position as
well as (hopefully) confidential customer lists and contacts in the future.

(b) Patents, Copyrights and Trade Secrets.

SchoolWeb does not own the intellectual property rights to the
SchoolWeb hardware system and software. These rights are held by
AII and licensed to SchoolWeb under the terms of the License
Agreement. Under the terms of the License Agreement, SchoolWeb
has the right to sub-license these rights.

AII itself is unlikely to seek patent protection of the SchoolWeb
System because, as described in the previous section, the
software and the processes of installing it with customers are
unlikely to be patentable.

We do not have patents or patents pending.

We have applied for trademark rights in the United States and
Canada for the tradename "SchoolWeb". The initial application
was filed in Canada on March 30, 2001 and it is expected that a
response should be received within 18 months.

The trademark is expected to be registered on the supplemental
register in the United States as the United States trademark was
applied for based on the Canadian trademark application. Once a
company has used a supplemental register mark in the United
States for five years, the company's mark is placed on the full
register. In the meantime, its rights in the United States are
protected to the general extent that another company cannot
commence using the name.

Organizational Structure and Facilities

At this time, none of our employees are subject to collective
bargaining agreements.

Alternet currently has only two employees: Patrick Fitzsimmons,
who performs sales and marketing functions as VP Sales and Greg
Protti, who performs various business development functions as VP
Business Development.

The directors of Alternet, excluding Karim Lakhani and Brandon
Douglas, offer their services full-time to Alternet (although not
remunerated as employees). Karim Lakhani is only part-time as is
Brandon Douglas. Griffin Jones and Michael Dearden have received
consulting service payments from the Company as described in
executive compensation.

SchoolWeb's business is not labour intensive. SchoolWeb's
software development and updating is provided by Advanced
Interactive Inc. and Advanced Interactive Canada Inc. under the
terms of the License Agreement. The actual sales and
installations are performed by various resellers, primarily
Microserve (a division of IBM). However, there will be a need
in the future to either hire additional sales people or develop
additional distribution relationships.

In addition, when needed, Alternet and SchoolWeb employ
independent consultants and intends to appoint an advisory board
(possibly for equity compensation) to help manage its affairs.

ITEM 17: MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with the
financial statements of the Company and notes thereto contained
elsewhere in this prospectus.

(a) Fiscal Year Ended December 31, 2001

The fiscal year ended December 31, 2001 was the first full year of
operations for the Company and also represented the year in which
it purchased SchoolWeb Holdings Inc.

For this fiscal year, the Company (on a consolidated basis with its
subsidiary SchoolWeb Holdings Inc.) had a net loss for the period
of $(263,249) and no revenue. Of this loss, the largest expense or
expenditure was payments for the Company's license agreement with
Advanced Interactive Inc. which represented $120,000. Office and
general expenses were $50,530, marketing expenses were $39,429 and
professional fees were $29,390. The basic net loss per share was $(0.02).

The Company had current assets of $5,669 cash and $3,758 in prepaid expenses.

Given the Company's monthly payment for its license agreement with
Advanced Interactive Inc. (which is $20,000 per month at a minimum)
the Company did not have enough working capital to meet its
obligations for even one month.

As of the date of this registration statement, the Company has
raised additional working capital through sales of unregistered
securities under Regulations S and D. The proceeds of these sales
have, to date, been sufficient to meet the Company's ongoing requirements.

Our limited operating history makes the prediction of future
results difficult or impossible. Furthermore, our limited
operating history leads us to believe that period-to-period
comparisons of our operating results may not be meaningful and
that the results for any particular period should not be relied
upon as an indication of future performance.

To date, SchoolWeb has essentially developed and tested its
SchoolWeb system. It is only now (in the first quarter of fiscal
year 2002) anticipating that it will begin to realize revenue
from its products (although it has been installed in some schools
for as long as 12 monthsr) in succeeding quarters of this fiscal year.

Development of the SchoolWeb system began when AII received
approximately $250,000 from Industry Canada (a branch of the
Canadian federal government) and the Ministry of Education for
the Province of British Columbia to develop the SchoolWeb system
from 1998 to 2001.

From October 13, 2000 to the present, the Company (and its
subsidiary, SchoolWeb Holdings Inc.) received a total of $263,249
(see cumulative cash flow statement for cash flow component of
share capital) in subscription proceeds from investors.

(b) Fiscal Year Ended December 31, 2000:

This was the first year that SchoolWeb's subsidiary, SchoolWeb
Holdings Inc., commenced operations.

As a result, there was little operating or financial activity
other than that relating to negotiating the License Agreement,
installing servers and the SchoolWeb system in the 19 schools in
British Columbia where they are installed, working with AII to
detect any failings in the SchoolWeb software and monitoring the
performance of the SchoolWeb system in the schools in which it was installed.

SchoolWeb has, as of the date of this report, for the most part
completed its testing of the SchoolWeb system in the 19 schools
in British Columbia where it is installed (some tests will
continue until April of 2002). SchoolWeb has also completed
initial distributorship agreements or understandings with a
number of distributors.

As a result of the completion of this testing and the completion
of these initial distributorship agreements, SchoolWeb is now
prepared to market and sell its product.

SchoolWeb's plan of operation for the year ending December 31,
2002 anticipates an increase in employees to 6 people,
representing the hiring of 4 additional persons, to focus on
direct sales to schools. Existing employees will (primarily
Patrick Fitzsimmons and Greg Protti) continue to develop
distributorship relationships in the hopes of generating sales
through these channels.

The Company expects that it will, at least to the year ending
December 31, 2002, maintain its present offices which have some
additional office space for expansion.

It is hoped that sales will commence in January of 2002 and will
grow throughout the year ending December 31, 2002. The magnitude
and size of these sales cannot, at this time (partly as a result
of a lack of operating history on SchoolWeb's part) be predicted.

Operating costs, particularly those costs associated with
administrative overhead, are expected to increase as a result of
the planned hirings. To date, salaries have been very limited
(Patrick Fitzsimmons was the only paid employee in the fiscal
years ending December 31, 2000 and December 31, 2001 at a salary
of $40,000 per year).

Forward-Looking Statements.

This prospectus contains "forward looking statements" within the
meaning of Rule 175 of the Securities Act of 1933, as amended, and
Rule 3b-6 of the Securities Act of 1934, as amended, including
statements regarding, among other items, the Company's business
strategies, continued growth in the Company's markets, projections,
and anticipated trends in the company's business and the industry
in which it operates. The words "believe," "expect," "anticipate,"
"intends," "forecast," "project," and similar expressions identify
forward-looking statements. These forward-looking statements are
based largely on the Company's expectations and are subject to a
number of risks and uncertainties, certain of which are beyond the
Company's control. The Company cautions that these statements are
further qualified by important factors that could cause actual
results to differ materially from those in the forward looking
statements, including, among others, the following: reduced or lack
of increase in demand for the Company's products, competitive
pricing pressures, changes in the market price of ingredients used
in the Company's products and the level of expenses incurred in the
Company's operations. In light of these risks and uncertainties,
there can be no assurance that the forward-looking information
contained herein will in fact transpire or prove to be accurate.
The Company disclaims any intent or obligation to update "forward
looking statements."

ITEM 18: DESCRIPTION OF PROPERTY

SchoolWeb currently does not have any physical property other
than its office equipment and a number of computer servers.

ITEM 19: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the past two years, there have not been any transactions
that have occurred between the Company and its officers, directors,
and five percent or greater shareholders, except as follows:

The License Agreement entered into between the Company's
subsidiary, SchoolWeb Holdings Inc. and Advanced Interactive Inc.
and its Canadian subsidiary, Advanced Interactive (Canada) Inc. saw
Advanced Interactive Inc. become an affiliate of the Company with
its President, Karim Lakhani, joining the board of directors of the
Company and with Advanced Interactive Inc. and its subsidiary
acquiring 3,000,000 common shares of the Company under the terms of
the Share Exchange Agreement.

Certain of the officers and directors of the Company are engaged in
other businesses, either individually or through partnerships and
corporations in which they have an interest, hold an office, or
serve on a board of directors. As a result, certain conflicts of
interest may arise between the Company and its officers and
directors. The Company will attempt to resolve such conflicts of
interest in favor of the Company. The officers and directors of
the Company are accountable to it and its shareholders as
fiduciaries, which requires that such officers and directors
exercise good faith and integrity in handling the Company's
affairs. A shareholder may be able to institute legal action on
behalf of the Company or on behalf of itself and other similarly
situated shareholders to recover damages or for other relief in
cases of the resolution of conflicts is in any manner prejudicial
to the Company.

ITEM 20: MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

There is no market for the securities of the Company at this
time. The Company's securities are not traded on a recognized
exchange or over-the-counter trading system at this time.

As of May 31, 2002, there were 61 shareholders of record of the
Company's common stock.

Dividend Information.

The Company has not declared or paid a cash dividend to
shareholders since it was incorporated on June 26, 2000. The board
of directors presently intends to retain any earnings to finance
Company operations and does not expect to authorize cash dividends
in the foreseeable future. Any payment of cash dividends in the
future will depend upon the Company's earnings, capital
requirements and other factors.

ITEM 21: EXECUTIVE COMPENSATION

Summary Compensation Table

Annual compensation Long-term
Compensation
Awards
Payouts
Name and Other Restricted Securities
principal annual stock underlying
LTIP All other
position Year Salary Bonus compensation award(s)
options/SARs payouts compensation
($) ($) ($) ($) (#)
($) ($)
(a) (b) (c) (d) (e) (f) (g)
(h) (i)

Michael Dearden 2000 - - - - -
- -
President & 2001 - - - - -
- -
Director

Griffin Jones 2000 - - - - -
- -
Secretary, 2001 - - - - -
- -
Treasurer &
Director

Patrick 2000 - - - - -
- -
Fitzsimmons 2001 $40,000 - - - -
- -
Director

Greg Protti 2000 - - - - -
- -
Director 2001 - - - - -
- -

Karim Lakhani 2000 - - - - -
- -
Director 2001 - - - - -
- -

Alternet, at its annual meeting of shareholders held on December
20, 2001, adopted a Stock Option Plan. This Stock Option Plan
was approved by shareholders. No stock options have yet been
granted under this Stock Option Plan nor has it been filed with
the SEC using the S8 Registration Statement procedure. However,
some or all of the persons named above may be granted stock
options in the future and the Stock Option Plan may be filed
using the S8 Registration Statement procedure.

As of December 31, 2001, certain directors had provided cash
loans to the Company totaling $16,186. These amounts due from
related parties are non-interest bearing and have no specific
terms of repayment.

A director of SchoolWeb Holdings Inc. received $32,607 in
marketing fees in the year ended December 31, 2001 (the director
was Patrick Fitzsimmons and the $32,607 is included in the
$40,000 figure given in the table above).

Two other directors (Michael Dearden and Griffin Jones) received
a total of $17,300 in consulting fees paid to a company in
which Michael Dearden owns 100% of the issued and outstanding
shares and paid to Griffin Jones personally.

Other than as stated below, there is no known relationship
between any of the Directors and Control persons with major
clients or providers of essential products and technology, nor
are there any known related transactions.

Karim Lakhani is Director and President of Advanced Interactive
Inc. and Director of Advanced Interactive Canada Inc.,
corporations which own a total of 3,000,000 shares of common
stock (approximately 21% of the issued and outstanding shares of
common stock) of Alternet. These corporations are also party to
the License Agreement.

None of the directors or officer's individual's total compensation
under all contracts with the Company, including special allowances
or bonuses, will exceed $100,000 this year. All officers and
directors will be reimbursed for expenses incurred on behalf of the
Company including director expenses pertaining to attendance at
meetings. It is anticipated that additional management may be hired
as the Company develops and revenue is generated. If such hirings
occur, salaries paid to new employees will be consistent with the
salaries of others in similar positions in the industry.

(b) although the Company's shareholders adopted a Stock Option
Plan on December 20, 2001 at the Company's annual shareholders'
meeting no stock options have been granted under this Stock Option
Plan to date and no stock options are, at this time, planned to be
granted.

(c) There are no annuity, pension or retirement benefits proposed
to be paid to officers, directors, or employees of the Company in
the event of retirement at normal retirement date as there is no
existing plan provided for or contributed to by the Company.

ITEM 22: FINANCIAL STATEMENTS

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LABONTE & CO.
C H A R T E R E D A C C O U N T A N T S
1205 - 1095 West Pender Street
Vancouver, BC Canada
V6E 2M6
Telephone (604) 682-2778
Facsimile(604) 689-2778
Email rjl@labonteco.com

AUDITORS' REPORT

To the Board of Directors and Stockholders of Schoolweb Systems
Inc. (formerly North Pacific Capital Corp.)

We have audited the consolidated balance sheets of Schoolweb
Systems Inc. (formerly North Pacific Capital Corp.) (A
Development Stage Company) as at December 31, 2001 and 2000 and
the consolidated statements of operations, changes in
stockholders' equity and cash flows for the year ended December
31, 2001, the period from October 16, 2000 (inception) to December
31, 2000 and cumulatively, from October 16, 2000 (inception) to
December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian and United
States generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain reasonable
assurance 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, these consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as at December 31, 2001 and 2000 and the results of its
operations and its cash flows and the changes in stockholders'
equity for the year ended December 31, 2001, the period from
October 16, 2000 (inception) to December 31, 2000 and
cumulatively, from October 16, 2000 (inception) to December 31,
2001in accordance with generally accepted accounting principles in
the United States.

"LaBonte & Co."

CHARTERED ACCOUNTANTS

February 28, 2002
Vancouver, B.C.

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-UNITED STATES REPORTING
DIFFERENCES

In the United States, reporting standards for auditors' would
require the addition of an explanatory paragraph following the
opinion paragraph when the financial statements are affected by a
significant uncertainty such as referred to in Note 1 regarding
the Company's ability to continue as a going concern. Our report
to the directors and stockholders dated February 28, 2002 is
expressed in accordance with Canadian reporting standards which do
not permit a reference to such uncertainties in the auditors'
report when the uncertainties are adequately disclosed in the
financial statements.

"LaBonte & Co."

CHARTERED ACCOUNTANTS

February 28, 2002
Vancouver, B.C.

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS

December 31 December 31
2001 2000
(Note 1)

ASSETS

CURRENT ASSETS
Cash $ 5,669 $ 3
Prepaid expenses 3,758 -

9,427 -

LICENSE RIGHTS (Note 4) 24,000 -
FIXED ASSETS, net of depreciation 3,400 -
36,827 3

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable $ 26,091 $ -
Due to related parties (Note 6) 33,486 -
59,577 -

COMMITMENTS AND CONTINGENCIES (Notes 1 and 4)

STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Capital stock (Note 5)
Common stock, $0.00001 par value, 100,000,000
shares authorized 14,733,000 (2000 - 20,000)
issued and outstanding 147 3
Additional paid-in capital 242,302
Comprehensive loss (1,950) -
Deficit accumulated during development stage (263,249) -
(22,750) 3
36,827 3

The accompanying notes are an integral part of these consolidated financial
Statements

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS

Year ended
October 13 October 13
December 31
2000 2000
2001
(inception) to (inception)to

December 31 December 31

2000 2001

(Note 1)

EXPENSES
Depreciation and amortization $ 6,600 $
- $ 6,600
Consulting 17,300
- 17,300
License fees 120,000
- 120,000
Office and general 50,530
- 50,530
Marketing 39,429
- 39,429
Professional fees 29,390
- 29,390

NET LOSS FOR THE PERIOD (263,249)
- (263,249)

BASIC NET LOSS PER SHARE (0.02)
-

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,566,069
12,343,000

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

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM OCTOBER 13, 2000 (INCEPTION) TO DECEMBER 31, 2001

Deficit
Other
Accumulated
Comprehensive
Additional During
Income
Number of paid in Development
(loss)
Shares Amount capital Stage
Total

Issuance of common stock
for cash at $.001 per share
- October 16, 2000 3,000 $ 3 $ - $ -
$ - $ 3

Balance, December 31, 2000 3,000 3 - -
3

Issuance of common stock for
cash at $.007 per share -
May 24, 2001 5,500,000 5,500 33,000 -
38,500

Issuance of common stock for
cash at $.01 per share -
June 4, 2001 4,010,000 4,010 36,090 -
40,100

Issuance of common stock for
cash at $.15 per share -
June 8, 2001 330,000 330 49,170 -
49,500

Issuance of common stock for
license agreement at
$.01 per share - June 29,
2001 (Note 4) 2,500,000 2,500 22,500
- 25,000

Schoolweb Holdings Inc.
balance before reverse
acquisition 12,343,000 12,343 140,760
- 153,103

Schoolweb Systems Inc.
balance before reverse
acquisition (Note 5) 1,350,000 14 19
(7,937) - (7,904)

Issued to effect reverse
Acquisition 12,343,000 123 (123)
- - -

Reverse acquisition
Recapitalization
Adjustment (12,343,000) (12,343) 4,406
7,937 - -

Schoolweb Systems Inc.
balance after reverse
acquisition 13,693,000 137 145,062
- - 145,199

Issuance of common stock
for license agreement at
$.01 per share - September
10, 2001 500,000 5 4,995
- - 5,000

Issuance of common stock
for cash at $.10 per share -
September 11, 2001 100,000 1 9,999
- - 10,000

Issuance of common stock
for cash at $.10 per share -
November 5, 2001 50,000 1 4,999
- - 5,000

Issuance of common stock
for cash at $.15 per share -
November 8, 2001 15,000 - 2,250
- - 2,250

Issuance of common stock
for cash at $.20 per share -
November 24, 2001 375,000 3 74,997
- - 75,000

Foreign exchange translation
Adjustment - - -
- (1,950) (1,950)

Net loss for the year ended
December 31, 2001 - - -
(263,249) - (263,249)

Balance, December 31, 2001 14,733,000 147 242,302
(263,249) (1,950) (22,750)

Note: The statement of Stockholders' Equity has been restated to reflect the
reverse acquisition of Schoolweb Holdings Inc. Refer to Notes 1 and 3.

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

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended
October 13 October 13
December 31
2000 2000
2001
(inception) to (inception)to

December 31 December 31

2000 2001

(Note 1)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (263,249) $
- $ (263,249)
Adjusted for item not involving cash:
Depreciation and amortization 6,600
- 6,600
Changes in prepaid expenses (3,758)
- (3,758)
Changes in accounts payable 21,951
- 21,951

NET CASH FLOWS USED IN OPERATING ACTIVITIES (238,456)
- (238,456)

CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related parties 29,648
- 29,648
Proceeds on sale of common stock 220,350
3 220,353

NET CASH FLOWS FROM FINANCING ACTIVITIES 249,998
3 250,001

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital assets (4,000)
- (4,000)
Cash acquired on reverse acquisition
of SchoolWeb (Note 3) 74
- 74

NET CASH FLOWS FROM INVESTING ACTIVITIES (3,926)
- (3,926)

EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,950)
- (1,950)

INCREASE IN CASH 5,666
3 5,669

CASH, BEGINNING OF PERIOD 3
- -

CASH, END OF PERIOD 5,669
3 5,669

OTHER NON-CASH TRANSACTION:

During 2001 the Company issued a total of 3,000,000 common shares
for a license agreement at $.01 per share. (Note 4)

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

SCHOOLWEB SYSTEMS INC.
(Formerly North Pacific Capital Corp.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The Company was incorporated on June 26, 2000 in the State of
Nevada as North Pacific Capital Corp. and was organized for the
purpose of creating a corporate vehicle to locate and acquire an
operating business. On December 19, 2001 the Company changed its
name to Schoolweb Systems Inc. ("SW Systems" or the "Company").
On November 6, 2000, the Company filed a Form 10SB registration
with the United States Securities and Exchange Commission and as
a result is subject to the regulations governing reporting
issuers in the United States.

By agreement dated July 2, 2001 and completed September 10, 2001,
SW Systems issued 12,343,000 shares of restricted common stock to
the shareholders of Schoolweb Holdings Inc. ("SW Holdings"), a
development stage company incorporated October 13, 2000 in the
State of Nevada, in exchange for all of the issued and
outstanding shares of SW Holdings.

The acquisition resulted in the former shareholders of SW
Holdings acquiring 90.1% of the outstanding shares of the Company
and has been accounted for as a reverse merger with SW Holdings
being treated as the accounting parent and SW Systems, the legal
parent, being treated as the accounting subsidiary. Accordingly,
the consolidated results of operations of the Company include
those of SW Holdings for all periods shown and those of the SW
Systems since the date of the reverse acquisition. The results
of SW Holdings are from its inception, October 13, 2000 and
include the results of its wholly-owned subsidiary, SchoolWeb
Systems (Canada) Ltd. a company incorporated April 17, 2001 in
the Province of British Columbia. The comparative balance sheet
as at December 31, 2000 and the comparative results of operation
and changes in financial position for the periods ended December
31, 2000 are those of SW Holdings. Refer to Note 3.

SW Holdings, through a License Agreement dated January 1, 2001,
will distribute, market, sell and license in the United States
and Canada, certain proprietary software and hardware systems
technology known as "SchoolWeb" used for caching Internet and
multimedia files on special servers (refer to Note 4).

The consolidated financial statements have been prepared on the
basis of a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of
business. The Company has incurred losses since inception and
further losses are anticipated before the Company reaches a
commercial stage raising substantial doubt as to the Company's
ability to continue as a going concern. The Company's continued
operations are dependent on the successful implementation of its
business plan, its ability to obtain additional financing as
needed, and ultimately to attain profitable operations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, SW Holdings and
Schoolweb Systems (Canada) Ltd. which have been accounted for as
a reverse acquisition. All significant intercompany transactions
and account balances have been eliminated.

Use of Estimates and Assumptions

Preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ
from those estimates.

Cash and Cash Equivalents

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

License Rights

The Company amortizes the cost of acquiring license rights on a
straight-line basis over the term of the license.

Fixed Assets

Fixed assets are recorded at cost and depreciated on a declining
balance basis at a rate of 30% per annum.

Foreign Currency Translation

The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards
No. 52, "Foreign Currency Translation", foreign denominated
monetary assets and liabilities are translated to their United
States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Revenue and expenses are
translated at average rates of exchange during the year. Related
translation adjustments are reported as a separate component of
stockholders' equity, whereas gains or losses resulting from
foreign currency transactions are included in results of operations.

Fair Value of Financial Instruments

In accordance with the requirements of SFAS No. 107, the Company has
determined the estimated fair value of financial instruments
using available market information and appropriate valuation
methodologies. The fair value of financial instruments
classified as current assets or liabilities approximate carrying
value due to the short-term maturity of the instruments.

Stock-Based Compensation

The Company accounts for stock-based compensation in respect to
stock options granted to employees and officers using the
intrinsic value based method in accordance with APB 25. Stock
options granted to non-employees are accounted for using the fair
value method in accordance with SFAS No. 123. In addition, with
respect to stock options granted to employees, the Company
provides pro-forma information as required by SFAS No. 123
showing the results of applying the fair value method using the
Black-Scholes option pricing model.

The Company accounts for equity instruments issued in exchange
for the receipt of goods or services from other than employees in
accordance with SFAS No. 123 and the conclusions reached by the
Emerging Issues Task Force in Issue No. 96-18. Costs are
measured at the estimated fair market value of the consideration
received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of
equity instruments issued for consideration other than employee
services is determined on the earliest of a performance
commitment or completion of performance by the provider of goods
or services as defined by EITF 96-18.

The Company has also adopted the provisions of the Financial
Accounting Standards Board Interpretation No.44, Accounting for
Certain Transactions Involving Stock Compensation - An
Interpretation of APB Opinion No. 25 ("FIN 44"), which provides
guidance as to certain applications of APB 25. FIN 44 is
generally effective July 1, 2000 with the exception of certain
events occurring after December 15, 1998.

Income taxes

The Company follows the liability method of accounting for income
taxes. Under this method, future tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax balances.
Future tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable
income in the years in which those differences are expected to be
recovered or settled. The effect on future tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the date of enactment or substantive
enactment. As at December 31, 2001 the Company had net operating
loss carryforwards; however, due to the uncertainty of realization
the Company has provided a full valuation allowance for the
deferred tax assets resulting from these loss carryforwards.

Net Loss per Common Share

Basic earnings per share includes no dilution and is computed by
dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive earnings per share reflects the potential dilution of
securities that could share in the earnings of the Company.
Because the Company does not have any potentially dilutive
securities, the accompanying presentation is only of basic loss per share.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB")
issued Statement No. 142, Goodwill and Other Intangible Assets
("SFAS 142"), which requires that goodwill not be amortized.
SFAS requires that the Company review goodwill at least annually
to determine if an impairment has occurred and if so that
goodwill should be reduced accordingly. The Company has
determined that the implementation of this standard will not have
any impact on its financial statements.
NOTE 3 - ACQUISITION OF SW HOLDINGS

By agreement dated July 2, 2001 and completed September 10, 2001, SW
Systems acquired 100 % of the issued and outstanding shares of SW
Holdings in exchange for 12,343,000 shares of restricted common stock
of SW Systems. At the time of this transaction, the former
shareholders of SW Holdings acquired 90.1% of the 13,693,000 total
issued and outstanding shares of SW Systems.

This acquisition has been accounted for as a recapitalization using
accounting principles applicable to reverse acquisitions with SW
Holdings being treated as the accounting parent (acquirer) and SW
Systems being treated as the accounting subsidiary (acquiree). The
value assigned to the capital stock of consolidated SW Systems on
acquisition of SW Holdings is equal to the book value of the capital
stock of SW Holdings plus the book value of the net assets of SW
Systems as at the date of the acquisition.

The book value of SW System's capital stock subsequent to the
acquisition is calculated and allocated as follows:

SW Holdings capital stock $ 153,103
SW Systems net assets (liabilities) (7,904)

$ 145,199

Capital stock $ 137
Additional paid-in capital 145,062

$ 145,199

These consolidated financial statements include the results of
operations of SW Holdings since October 13, 2000 (inception) and
the results of operations of SW Systems since the date of the
reverse acquisition on September 10, 2001. SW Systems had no
material assets, liabilities or operations for the period from
July 1, 2001 to September 10, 2001.

For the period from October 13, 2000 (inception) to September 10,
2001 the weighted average number of common shares outstanding is
deemed to be 12,343,000 being the number of shares issued by SW
Systems in connection with the acquisition of SW Holdings.

NOTE 4 - LICENSE AGREEMENT

By agreement dated January 1, 2001, SW Holdings entered into an
agreement with Advanced Interactive Inc. ("AII") and Advanced
Interactive (Canada) Inc. ("AIC") whereby SW Holdings acquired
exclusive and non-exclusive rights and licenses to commercialise,
distribute and market SW Holdings related licensed technology,
products and services in the United States and Canada for a
period of five years. SW Holdings must pay royalties equal to
40% of net revenue received plus $10,000 per month in the first
year, $20,000 per month in year two, and increasing by $8,000 per
month in each of the subsequent years to a maximum of $84,000 per
month. After year three, the monthly payment is reduced by the
amount of royalties otherwise payable. In addition SW Holdings
issued 2,500,000 shares on June 29, 2001 valued at $.01 per share
or $25,000.

Effective September 10, 2001 SW Holdings, AII and AIC amended the
original agreement such that AI and AIC would receive an
additional 500,000 shares valued at $5,000 which SW Systems issued
on September 10, 2001.

NOTE 5 - CAPITAL STOCK

To December 31, 2001, the Company has not granted any stock
options and has not recorded any stock-based compensation.

SW System's capital stock transactions prior to reverse acquisition are
as follows:

Deficit

Accumulated
Additional
During
Number of paid in
Development
Shares Amount capital
Stage Total

Issuance of common stock for
cash at $.001 per share
- June 26, 2000 3,000 $ - $ 3 $
- $ 3

Issuance of common stock for
cash at $.001 per share
- September 13, 2000 17,000 1 16
- 17

Net loss for the period June 26,
2000 (inception)
to December 31, 2000 - - -
(4,280) (4,280)

Balance, December 31, 2000 20,000 1 19
(4,280) (4,260)

Issuance of common stock for
cash at $.00001 per share
- May 17, 2001 1,000,000 10 -
- 10

Issuance of common stock for
cash at $.001 per share
- May 18, 2001 230,000 2 -
- 2

Issuance of common stock for
cash at $.001 per share
- June 1, 2001 100,000 1 -
- 1

Loss from January 1, 2001 to
date of reverse take-over - - -
(3,657) (3,657)

SW Systems balance before
reverse acquisition 1,350,000 14 346
(7,937) (7,904)

NOTE 6 - RELATED PARTY TRANSACTIONS

Certain directors have provided cash loans totalling $16,186 at
December 31, 2001. Amounts due from related parties are non-
interest bearing and have no specific terms of repayment.

A director of SW Holdings received $32,607 in marketing fees.
The Company also incurred $17,300 in consulting fees to two other directors

A company controlled by a shareholder of the Company received
$3,000 in professional fees.

NOTE 7 - INCOME TAXES

The Company and its subsidiaries have tax losses which may be
available to reduce future year's taxable income, that result in
deferred tax assets. Management believes that the realization of
the benefits from these deferred tax assets appears uncertain due
to the Company's limited operating history and losses to date.
Accordingly a full, deferred tax asset valuation allowance has
been provided and no deferred tax asset benefit has been recorded.

NOTE 8 - SUBSEQUENT EVENT

Subsequent to December 31, 2001 the Company received $55,000
towards private placement subscriptions.

ITEM 23: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

During the Company's two most recent fiscal years and any
subsequent interim period, there were no disagreements with the
Company's accountants on any matter of accounting principle or
practices, financial statement disclosure or auditing scope or
procedure. In addition, there were no reportable events as
described in Item 304(a)(1)(iv)(B)1 through 3 of Regulation S-B
that occurred within the Company's two most recent fiscal years
and the subsequent interim periods.

Labonte & Company have been engaged as the Company's principal
accountants to audit its financial statements since its inception.

PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS

No statute, charter provision, article, by-law, contract or other
arrangement exists under which any controlling persons, directors
or officers of the Company is insured or indemnified in any
manner against liability which he or she may incur acting in his
or her capacity as such.

Information on this item is set forth in the prospectus under the
heading "Disclosure of Commission Position on Indemnification for
Securities Act Liabilities."

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

As the offering under this registration statement, which is a
continuous offering under Rule 415, involves existing shareholders
selling their shares to members of the public, the transfer agent's
fees, printing and engraving, legal, accounting and other fees
associated with the distribution are minimal.

Information on this item is set forth in the prospectus under the
heading "Use of Proceeds."

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

The Company has engaged in sales of unregistered securities, often
relying on Regulation S and Regulation D, as follows:

1. From June 1, 2001 to July 2, 2001 the Company issued from
treasury to principles of the Company (directors and officers)
a total of 5,503,000. These were not sales to the public and
were made for nominal consideration ($0.00001 per share of
common stock). No share purchase warrants were sold during
this period of time.

2. From July 2, 2001 to September 10, 2001 the Company issued
from treasury a total of 12,843,000 shares of common stock to
purchase all of the issued and outstanding shares of SchoolWeb
Holdings Inc. which, as a result of this purchase, is now the
Company's wholly owned subsidiary. The purchase of SchoolWeb
Holdings Inc. is described more fully in Description of
Business earlier in this Form SB2.

3. From September 11, 2001 to September 18, 2001 the Company
issued from treasury a total of 100,000 shares of common stock
at a price of $0.10 per share of common stock. The sales were
exempt from registration under Regulation S as the purchasers
were resident outside of the United States.

4. On November 5, 2001 the Company issued from treasury a total
of 15,000 shares of common stock at a price of $0.15 per share
of common stock. The sale was exempt from registration under
Regulation S as the purchaser was resident outside of the
United States.

5. From November 24, 2001 to April 30, 2002 the Company issued
from treasury a total of 965,000 units, each unit comprised of
one share of common stock and one share purchase warrant
(exercisable for one share of common stock at an exercise
price of $0.50 per share until February 28, 2004) under sales
exempt from registration under Regulation S or Regulation D,
Rule 506. Of the 965,000 units issued, 460,000 were issued to
persons not residing in the United States and 505,000 units
were issued to persons residing in the United States. Those
persons residing in the United States who purchased a total of
505,000 units were each asked to review (as part of their
subscription agreement) the definition of "accredited
investor", to confirm in writing that they were accredited
investors and to consult independent advisors regarding state
and federal securities restrictions on resale of unregistered
securities. A total of 9 persons were United States residents.

Of the total of 965,000 units issued, a total of 780,000 units
were issued on or before February 28, 2001 at a price of $0.20
per unit. Of the total of 965,000 units issued, a total of
185,000 units were issued between March 1, 2001 and April 30, 2001.

The Regulation D offering is expected to close on May 31,
2002. The maximum number of units that can be sold under this
offering are 750,000 units at $0.20 (for sales prior to
February 28, 2001) and 500,000 units at $0.35 (for sales after
February 28, 2001 and prior to the closing of the offering on
May 31, 2002.

No commission or professional fees were paid in connection
with the Company's sales of unregistered securities under
either Regulation S or Regulation D, Rule 506. Although not
strictly required to do by Regulation D, Rule 506, in light of
anti-fraud provisions and for the purpose of ensuring that
potential investors were aware of the Company's financial
circumstances and stage of development, all persons purchasing
under Regulation S or Regulation D, Rule 506 were advised to
review the Company's continuous disclosure filings and
financial statements available on the EDGAR system.

ITEM 27. EXHIBITS

The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.

ITEM 28. UNDERTAKINGS

In accordance with Rule 415 and Item 512 of Regulation S-K, the
undersigned company hereby undertakes to:

(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:

(i) Include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;

(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental
change in the information in the registration statement;
and Notwithstanding the forgoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation From the low or
high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the U.S.
Securities and Exchange Commission pursuant to Rule
424(b) if, in the aggregate, the changes in the volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.

(iii) Include any additional or changed material
information on the plan of distribution.

(2) For determining liability under the Securities Act of 1933,
treat each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.

The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

SIGNATURES

In accordance with the requirements of the Securities Act of 1933,
the corporation certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and
authorized this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorize, in the City of
Vancouver in the Province of British Columbia, Canada on this 3rd
day of June, 2002.

"Michael Dearden"

By: /s/ Michael Dearden
President and Director

ITEM 27: EXHIBITS

(a) The following exhibits are filed as part of this
registration statement

NUMBER EXHIBIT DESCRIPTION

3.1 Articles of incorporation dated June 26, 2000 (incorporated
by reference to Exhibit 3 of the Registration Statement of
the Form 10-SB filed on November 6, 2000)

3.2 Certificate of Amendment to Articles of incorporation
concerning name change to SchoolWeb Systems Inc.

3.3 Certificate of Amendment to Articles of incorporation
concerning name change to Alternet Systems Inc.

4.1 Stock Plan for Non-Employee Directors and Consultants

4.2 Specimen Form of Share Purchase Warrants for common shares
issued by the Company and allowing for a total of 1,125,000
common shares to be purchased.

5.1 Legal opinion

10.1 License Agreement between Advanced Interactive Inc.,
Advanced Interactive (Canada) Inc., SchoolWeb Holdings Inc.
(formerly Alternet Systems Inc.) dated January 1, 2001

10.2 Amendment to License Agreement between Advanced Interactive
Inc., Advanced Interactive (Canada) Inc., SchoolWeb Holdings
Inc. (formerly Alternet Systems Inc.) dated June 29, 2001

10.3 Amendment to License Agreement between Advanced Interactive
Inc., Advanced Interactive (Canada) Inc., SchoolWeb Holdings
Inc. (formerly Alternet Systems Inc.) dated July 17, 2001

10.4 Amendment to License Agreement between Advanced Interactive
Inc., Advanced Interactive (Canada) Inc., SchoolWeb Holdings
Inc. (formerly Alternet Systems Inc.) dated March 8, 2002

10.5 Share Purchase Agreement between the shareholders of
SchoolWeb Holdings Inc. and Alternet Systems Inc. (formerly
North Pacific Capital Corp.) (incorporated by reference to
Exhibit 2.1 of the Form 8K filed on December 20, 2002)

10.6 Amendment to License Agreement between Advanced Interactive
Inc., Advanced Interactive (Canada) Inc., SchoolWeb Holdings
Inc. (formerly Alternet Systems Inc.) dated September 10, 2001

10.7 Solutions Partner Agreement between Hewlett Packard (Canada)
Ltd. and Advanced Interactive Inc. dated March 8, 2002

10.8 Consent of Alternet Systems Inc. to the Solutions Partner
Agreement between Hewlett Packard (Canada) Ltd. and Advanced
Interactive Inc. dated March 8, 2002

10.9 Specimen form of Reseller Agreement between Alternet Systems
Inc. and distributors

23.1 Consent of Accountants (see below)

23.2 Consent of Counsel (see below)