KINETIKS COM INC, 10KSB, 1999-06-02

KINETIKS COM INC
10KSB, 1999-06-02
COMPUTER INTEGRATED SYSTEMS DESIGN

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

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURTIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ________.

Commission file number 0-27418

KINETIKS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware 76-0478045
(State or other jurisdiction IRS Employer
of incorporation or organization) Identification number

c/o Sims & Boster
1775 Sherman Street, Suite 2015 Denver, CO 80203
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (303) 830-6660

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

Title of each class Name of each exchange on which registered
None None

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

Title of Each Class
$.001 Par Value Common Stock

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

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
form 10-K. [X]

As of May 5, 1999, the market value of the Registrant's
$0.001 par value common stock, excluding shares held by
affiliates, was $588,853 based on a closing bid price of $0.32
per share on the OTC Bulletin Board. As of December 31, 1998,
1997, and 1996, 3,389,083 shares of Common Stock of the
Registrant were outstanding.

STATEMENT

The Company's Form 10-KSB for the year ended December 31, 1996 is
filed with the Company's Form 10-KSB for the year ended December
31, 1998. Please refer to the Form 10-KSB for the year ended
December 31, 1998.

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

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURTIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ________.

Commission file number 0-27418

KINETIKS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware 76-0478045
(State or other jurisdiction IRS Employer
of incorporation or organization) Identification number

c/o Sims & Boster 1775 Sherman Street, Suite 2015 Denver, CO 80203
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (303)830-6660

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

Title of each class Name of each exchange on which registered
None None

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

Title of Each Class
$.001 Par Value Common Stock

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

Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this form 10-K. [X]

As of May 5, 1999, the market value of the Registrant's
$0.001 par value common stock, excluding shares held by
affiliates, was $588,853 based on a closing bid price of
$0.32 per share on the OTC Bulletin Board. As of December
31, 1998, 1997, and 1996, 3,389,083 shares of Common Stock
of the Registrant were outstanding.

STATEMENT

The Company's Form 10-KSB for the year ended December 31,
1997 is filed with the Company's Form 10-KSB for the year
ended December 31, 1998. Please refer to the Form 10-KSB
for the year ended December 31, 1998.

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

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURTIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to _______.

Commission file number 0-27418

KINETIKS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware 76-0478045
(State or other jurisdiction IRS Employer
of incorporation or organization) Identification number

c/o Sims & Boster 1775 Sherman Street, Suite 2015 Denver, CO 80203
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (303) 830-6660

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

Title of each class Name of each exchange on which registered
None None

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

Title of Each Class
$.001 Par Value Common Stock

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

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K. [X]

Forward-Looking Statements

In addition to historical information, this Annual Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and is thus prospective. The forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference
include, but are not limited to, competitive pressures, changing economic
conditions, the success of the Company's efforts in identifying and entering
into an agreement with an acquisition or merger candidate, the Company
negotiating settlements with numerous judgment creditors and other
claimants, and other matters discussed in the Section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof.
The Company undertakes no obligation to revise these forward-looking
statements to reflect subsequent events or circumstances. Readers should
refer to and carefully review the information in future documents the
Company files with the Securities and Exchange Commission.

Statement

The filing of this Form 10-KSB for the year ended December 31, 1998
incorporates the Forms 10-KSB for the years ended December 31, 1997 and
1996, neither of which was previously filed by the Company.

Part I

Item 1. Description of Business

Introduction

Kinetiks.com, Inc. (the "Company") is a development stage company that
was previously engaged in marketing proprietary software programs for use
on the World Wide Web ("Web") of the Internet. The Company does not own
any assets and is not engaged in any other income-producing activities.

During 1996 and 1997, the Company marketed two software programs designed
for use on the Web. The first, the Internet Waterway, was a software product
developed by the Company and debuted on the Web in October 1995. In
February 1996 the Company acquired certain assets of MarineNet,
another on-line, water sports software program on the Web. While the
Internet Waterway was intended to serve the interests of consumers,
MarineNet was an entry-level product providing marine businesses a
trade-only area using secure entry and password transfer of information.

The Company raised $4,250,000 in a public offering of its common stock
in December 1995. Those funds were not sufficient to allow the Company
to develop and market its products and to pay its obligations in the
ordinary course of business. Since 1996, creditors have obtained
court judgments against the Company, a current officer and
director and a former officer and director. In 1997, the Company
transferred all of its assets to an unaffiliated third party
(See Footnotes 5 and 8 to the Company's Financial Statements).
The only activities of the Company consist of negotiating settlements
with its creditors and attempting to identify a suitable acquisition
or merger candidate. The Company does not intend to pursue any other
activities, and there can be no assurances that it will be successful
in those endeavors.

Overview

The Internet and the World Wide Web

The Internet is a worldwide network that links thousands of public and
private computer networks. Until early 1994, use of the Internet was
generally limited to governmental, educational, and commercial organizations
with a working knowledge of the UNIX operating system and commands, and
the primary use made of the Internet was the communication of information
via electronic mail. However, there has been a rapid and accelerating
growth in the use and popularity of the Internet since early 1994. The U.S.
mass media and Internet industry sources have reported users in more than
200 countries throughout the world, numbering more than 100 million.

The increased popularity of the Internet is also attributed to the
proliferation of information and services available on the Internet, as well
as the expanded use of home personal computers, which typically contain
modems as a standard feature. Among the types of publications and
information available to Internet users are newspapers, magazines,
weather updates, government documents and industry newsletters, as well as
a variety of commercial products and services.

"Internet" has become a household word. The convergence of the telephone,
television, software, and personal computer into a single device has begun
and may be completed within the next five years. Projects to deliver fully
interactive Internet TV have been announced by leading cable, television,
and communications companies including Microsoft and @Home.

Commercial Use of the Internet

As business organizations have begun to realize the potential of the
Internet as an inexpensive and effective means of offering products and
services directly to customers and potential customers, businesses are
increasing advertising and selling of such products and services on the Web.
For example, business organizations are now using the Web to
provide product information and support to existing customers, to
advertise products and services and to offer products and services for
sale by means of on-line catalogs. It was this market, that is the
advertising and sale of products and services on the Web, that the
Company attempted to address through the Internet Waterway and MarineNet.

Computer users wishing to access the vast array of information and services
available on the Web, such as the Internet Waterway and MarineNet, use a
browser that can read HTML documents, follow hypertext links, and interface
with the diverse information archives and data formats of the Web.
The basic needs of most individual computer users casually browsing the
Web can be fulfilled by a number of different browsers available
today. The Internet has rapidly evolved to support audio, video, and
data transfer. The rapidly growing telecommunications industry is investing
significantly to upgrade the infrastructure. Even though the "information
superhighway" is not yet fully developed, commerce on the Internet is
expected to increase dramatically.

Strategy

During the period the Company owned its assets and conducted operations,
its business strategy consisted of (i) developing a national and international
user base of new and repeat users for the Internet Waterway and MarineNet
that allowed the Company to generate fee-based, direct product sales and
commission-based service revenues from suppliers, advertisers and users
and (ii) developing on a fee basis commercial proprietary software programs
similar to the Internet Waterway and MarineNet for other industries
that could be used by others or the Company to offer products and services
on the Web.

Financing Efforts

In August 1995, the Company sold an aggregate of 500,000 shares of its
Common Stock to a group of nonaffiliated investors for $1.00 per share,
pursuant to a private offering.

In October 1995, the Company borrowed $350,000 from a group of nonaffiliated
lenders payable on September 30, 1996, or ten days after the closing of the
Company's initial public offering, whichever occurred earlier. As an
additional inducement for the loan, an officer and director transferred
17,500 shares of his shares, together with certain demand and "piggyback"
registration rights, to the lenders. The loan was paid in full in
December 1995.

On December 5, 1995, the Company sold 862,500 shares of its Common Stock
to the public through Spencer Edwards, Inc. at $6.00 per share, raising
net proceeds after expenses of approximately $4,250,000.

In January and February 1996 the Company borrowed $220,000 and $50,000,
respectively, from Texas Commerce Bank. The loans were due and payable
with interest at the bank's prime rate plus 0.5%, in June 1996, and were
secured by Treasury Bills owned by the Company. The Company used the
proceeds of this loan to purchase equipment and software and for general
working capital. In June 1996 the Company converted the remaining unpaid
principal balances on those loans to a new loan of $245,190.97, which was
evidenced by a promissory note due and payable, together with
interest at the bank's prime rate plus 0.5%, in December 1996. The
Company's Treasury Bills continued to secure repayment of the loan.

On April 2, 1996, the Company entered into an agreement for Seaboard
Securities, Inc. ("Seaboard") to provide investment banking services to
the Company. The Company issued an option to purchase 50,000 shares of the
Company's Common Stock with exercise prices ranging from $6.00 to $7.00 per
share over a three-year period. In the event Seaboard identified a potential
merger partner and a business combination was consummated, Seaboard was
entitled to additional compensation.

On April 22, 1996, the Company signed a letter of intent under which Sands
Brothers & Co., Ltd., a New York investment banking firm, was to act as
managing underwriter of a second public offering of the Company's Common
Stock to raise between $14 and $20 million. Its obligation to proceed with
the offering was conditioned upon (i) the Company meeting the criteria for
inclusion of its Common Stock on the NASDAQ National Market System, and (ii)
Sands Brothers' due diligence investigation of the Company. When the
Company determined in September 1996 that it could not satisfy the financial
condition for a listing on NASDAQ, the Company terminated the letter of
intent.

In July 1996, employees were asked to defer payment of their salaries.
The Company offered to issue one share of its Common Stock for every $10.00
of salary deferred and to pay 10% interest on the deferred salary. In the
aggregate, the Company issued 7,533 shares to the employees who accepted
the offer. Between July and December 1996, the Company reduced its staff
to a minimum level of employees.

Effective August 2, 1996, the Company hired Robert Greer, a nonaffiliate,
as a financial consultant. In lieu of a consulting fee, the Company
granted Greer warrants to purchase at any time between August 2, 1996 and
August 2, 2006, up to 125,000 shares of the Company's common stock at the
lesser of $1.25 per share or 25% of the closing bid on the date of exercise.

Effective October 1996, the Company entered into an agreement to sell
Danro Corporation substantially all of its computer hardware for $200,000,
reserving the right to repurchase those assets at the same price.
Danro paid the Company a down payment of $65,000 and agreed to pay the
balance in increments subject to the Company agreeing to lease the
same assets from Danro, the Company's Board of Directors adopting a work-out
plan, and the Company delivering such financial information as required
by Danro. The agreement with Danro was amended effective
December 5, 1996, to reduce the purchase price to $138,700, the amount
Danro had already paid the Company. The Company also agreed to repurchase
the equipment no later than January 15, 1997 and to pay lease fees
of $25,000 and Danro's legal fees of $4,000 to arrange the transaction.
In February 1997, the Company and Danro extended the repurchase date to
March 31, 1997. The Company also agreed to pay all accrued rental fees
after October 1, 1996 and to reimburse Danro an additional $1,830 for
its legal fees. Because the Company was unable to pay any of the required
rental payments or the repurchase price, the Company recorded legal fees
and lease expenses in the amounts of $5,830 and $56, 829, respectively,
as of December 31, 1996.

In November 1996 the Company borrowed $15,000 from David Figueiredo.
The loan was evidenced by a promissory note requiring repayment together
with seven percent interest. As an incentive for Mr. Figueiredo to make
the loan, the Company delivered to him 50,000 shares of common stock that
had been held as treasury stock. In February 1997 Mr. Figueiredo agreed
to accept an additional 50,000 shares of the Company's treasury
stock in full payment of the note.

In November 1996, the Company sold to Dwayne Walker, a non-affiliate,
400,000 shares of the Company's treasury stock for $100,000. Simultaneous
with that sale, the Company entered into an agreement with TechWave, Inc.,
a non-affiliate, for which Walker serves as president, requiring the
Company to terminate merger discussions with specific other software
companies with which TechWave was attempting to form strategic alliances.

On December 1, 1996, the Company engaged Amerifund, Ltd. ("Amerifund"),
a company owned by Gordon Burr, a former officer of the Company, to provide
investment banking and financial advisory services. ("Burr") In lieu of a
consulting fee, the Company delivered Amerifund stock warrants to purchase
up to 400,000 shares of the Company's common stock exercisable at any time
between November 6, 1996 and November 6, 2006, in whole or in part at the
rate of $.25 per share.

In January 1997 the Company borrowed $25,000 from Caribou Capital, Inc., a
venture capital firm. The loan was evidenced by a promissory note due and
payable, together with 10% interest on March 21, 1997. The Company also
issued to Caribou a warrant to purchase 50,000 shares of the Company's
common stock at $0.25 per share on the date the Company signed the note
and an additional warrant to purchase 50,000 shares of the
Company's common stock at $0.25 per share when the Company was unable to
pay Caribou when the note came due. The proceeds of the note, which is in
default, were used for general corporate purposes.

In March 1997 the Company borrowed an additional $50,000 from Mr. Figueiredo,
due and payable, together with 8% interest, on April 15, 1997. As an
inducement for Mr. Figueiredo to make the loan, the Company issued to
Mr. Figueiredo a warrant to purchase 100,000 shares of the Company's
common stock at $0.25 per share on the date the Company signed the note
and issued another warrant for 100,000 shares of the Company's
common stock at $0.25 per share when the Company failed to pay the note.
The proceeds of this note, which is in default, were used for general
working capital.

In March 1997, the Company borrowed $5,000 from Dolores Davis. The loan was
evidenced by a promissory note due and payable, together with 8% interest, on
April 15, 1997. The Company also issued to Ms. Davis a warrant to purchase
10,000 shares of the Company's common stock at $0.25 per share and an
additional warrant to purchase 10,000 shares of the Company's common stock
at $0.25 per share when the Company was unable to pay Ms. Davis. The
proceeds of this note, which is in default, were used for general
corporate purposes.

In February 1997 and during 1998, the Company borrowed $25,000 and $61,476,
respectively, from The Rockies Fund (The "Fund"), a shareholder that is a
"business development company" under the Investment Company Act of 1940.
The $25,000 loan bears interest at 10% (default rate 18%) and was due
March 30, 1997. As an inducement for the Fund to make the $25,000 loan,
the Company issued warrants to purchase 50,000 shares of the Company's
common stock at $.25 per share. Additionally, the loan agreement requires
the Company to issue 50,000 warrants monthly for every month that
the note is in default. As of May 5, 1999, the Company had granted
1,350,000 warrants to the Fund. The $61,476 loan bears interest at 8%
and has no specific repayment terms. Subsequent to December 31, 1998,
the Company borrowed an additional $29,000 from the Fund. That
unsecured loan bears interest at 8% and has no stated repayment terms.

As of April 1999, the Fund, Mr. Calandrella, the President of the Fund,
certain of his family members, and other entities that are controlled
by Mr. Calandrella and his wife, own shares and warrants totaling
1,073,500 and 1,300,000, respectively. The shares owned represent
approximately 32% of the outstanding shares of the Company. Of the
shares owned, 900,000 shares were purchased at $.05 per share directly
from the former president and vice president of the Company in private
transactions. The remaining shares owned were purchased in open market
transactions. (See "Security Ownership of Certain Beneficial Owners
and Management")

De-Listing of Company's Common Stock

Effective October 28, 1996, the Company's Common Stock was removed from
trading on the NASDAQ SmallCap Market, because the Company's net assets
and stockholders' equity fell below the minimum $2,000,000 and $1,000,000
requirements, respectively, for continued listing.

Retirement of Founders' Shares

In November and December 1996 and February 1997, Gregory Carr, an officer
and a director, and his wife, who was also a former officer and director,
transferred to the Company 2,500,000 of their shares of the Company's
common stock to be held as treasury stock and utilized by the Company
to attract new financing. The Company recorded the receipt of the Carrs'
stock as additional paid in capital at the rate of $0.001 per share,
which is the equivalent to par value of the Company's common stock.

At a December 10, 1996 meeting of the board of directors, Gregory Carr
resigned as the Company's president and chairman of the board. Charles Powell
was appointed acting chief executive officer and director, and Mr. Carr was
appointed secretary of the Company. Mr. Powell resigned as acting chief
executive officer and a director in August 1997. During the first half of
1997, all the remaining board members and corporate officers resigned,
except for Mr. Carr. As of the date of this report, Mr. Carr is the
Company's sole director and officer. (See "Certain Relationships and
Transactions")

Asset Sale

On November 27, 1996, the company entered into a Letter of Intent, subject
to shareholder approval, with Trader Publishing Company of Norfolk, Virginia,
for the sale of substantially all of the Company's assets for a purchase
price of $750,000, allocated as follows: $550,000 for the assets, $100,000
for a one-year consulting agreement with the Company, and $100,000 for a
five-year non-competition agreement. Additionally, the Company was to be
designated as the exclusive organization to produce web site services
for Trader's marine industry clients for a four year period. Upon
execution of the Letter of Intent, Trader paid the Company an earnest money
deposit of $110,000. On December 19,1996, the Company executed and
delivered to Trader a promissory note in the principal amount of $110,000,
which was secured by a security interest in all assets of the
Company. The security agreement also contained a Confession of Judgment
in the event the Company failed to pay the Note.

The Company's Board of Directors unanimously approved the sale to Trader
and intended to recommend that shareholders vote in favor of the proposed
asset sale. However, the Company could not afford a "fairness opinion" and
could not satisfy a number of conditions required to close the proposed asset
sale, including a requirement that it furnish audited financial statements
and convey its assets free and clear of all liens and encumbrances. Trader
advised the Company on March 31, 1997 that the note evidencing the obligation
to repay the earnest money, together with interest and expenses, was
immediately due and payable.

Trader filed suit to enforce the confession of judgment and on April 18, 1997,
judgment was entered in the District Court of Harris County, Texas, and a
Notice of Public Sale of the Company's assets was posted for May 13, 1997.
In addition, Trader filed suit against the Company alleging breach of the
Letter of Intent and demanding repayment of the earnest money, plus
penalties and expenses.

In an effort to settle all disputes between the Company and Trader, the
Company entered into discussions with Wildwood Capital LLC ("Wildwood"),
a Texas limited liability company. Wildwood and Danro are related entities
through common ownership. Wildwood agreed to pay Trader $228,000 for all its
rights in and to its judgment against the Company. In addition, the Company
and Trader released each other from any and all claims or liabilities against
each other.

Wildwood and the Company entered into a Settlement Agreement and Release on
May 19, 1997 under which the Company transferred to Wildwood the assets that
had been encumbered by the security interest granted to Trader. Wildwood
also conditionally committed to purchase from the Company's unsecured
creditors the obligations owed by the Company to those creditors for an
amount equal to 10% of their claims, provided Wildwood could purchase at
least 90% of the gross amount of the Company's unsecured debt. The Company
could not arrange for the purchase of 90% of the Company's unsecured debt.

Change in Control

On January 26, 1998 Gregory Carr and his wife agreed to sell The Rockies Fund
("the Fund") up to 900,000 of their shares of the Company's common stock at
the rate of $0.05 per share. As of May 5, 1999, the Fund, Mr. Calandrella,
the president of the Fund, certain of his family members, and other entities
that are controlled by Mr. Calandrella, own shares and warrants totaling
1,073,500 and 1,350,000, respectively. The shares owned represent
approximately 32% of the outstanding shares of the Company. (See "Security
Ownership of Certain Beneficial Owners and Management.")

Beginning in 1994 the United State Securities and Exchange Commission
(the "SEC") began an investigation into certain matters, including
the administrative and record keeping practices of the Fund, its
securities trading activities and those of its officers and directors.
In September 1996 the Fund received notification from the SEC
that the SEC staff was planning to recommend that an enforcement
action be brought against the Fund, its president, and each of its
directors due to certain violations of federal securities laws.
The SEC invited the Fund to make a submission setting forth the Fund's
position and arguments regarding the SEC staff's planned recommendation.
The Fund did so in October 1996, and at the SEC's request, the Fund
supplemented its submission in December 1996. An administrative trial was
held before the SEC's Chief Administrative Judge in November 1998.
During this trial the Fund vigorously contested the SEC's allegations.
No decision has been rendered.

Item 2. Description of Properties

The Company has not occupied any office space since May, 1997.
Correspondence to the Company may be addressed in care of the Company's
counsel, Sims & Boster, 1775 Sherman Street, Suite 2015, Denver, CO 80203.
During 1996 and until May 1997, the Company occupied approximately
4600 square feet in Kingwood, Texas. It also leased an office in
Florida during 1996.

Item 3. Legal Proceedings

The Company has defaulted in its obligations to all of its creditors
and former employees. Numerous suits were filed against the Company
during 1997 and 1998 that have resulted in the entry of judgments
against the Company. Claims have also been asserted, and judgments
entered against Gregory Carr and Dyann Carr personally as guarantors of
certain leases. The Company does not have any funds to pay the judgments
and claims.

The following is a description of legal proceedings against the Company:

Advanta Business Systems Corporation obtained a judgment, against the Company
and the Carrs in August 1997 in the amount of $39,495.11 for failing
to pay rental under an equipment lease.

Greentree Financial Services obtained a judgment in January 1997 against
the Company and Gregory and Dyann Carr as guarantors in the amount of 3
$34,919.16 for non-payment of an equipment lease.

Default judgment for Lease Acceptance Corporation and against the Company
and Gregory and Dyann Carr as guarantors was entered in the amount of
$19,209.70 for non-payment of a lease for office furniture.

Berger & Co., a temporary employment agency, obtained a judgment of $44,435
against the Company for non-payment of sums due for temporary technical
personnel engaged by the Company.

Default judgment for $26,865.11 was entered for Staffware, Inc., a temporary
employment agency, against the Company for non-payment of fees for temporary
staff.

Default judgment for property taxes in the amount of $5,533.95 was entered
for Montgomery County, Texas, and against the Company in March 1999.

SDX, Inc., a marketing firm, obtained judgment for $4,750 against the
Company in June 1997.

A default judgment for $10,274.30 was entered for Federal Express Company 3
and against the Company in December 1997.

Pennebaker Designs filed suit against the Company and Gregory and Dyann
Carr as guarantors on July 2, 1997 in the District Court for Harris
County, Texas, alleging damages in the amount of $12,997.50. The case
was dismissed on May 28, 1998.

A default judgment for $19,989.04 was entered for Sanwa Leasing Company
and against the Company and the Carrs in November 1997.

Hank Savage, a former employee, filed a claim for unpaid wages in the
office of the Labor Commissioner, State of California, on April 16, 1997.
The Commission awarded Mr. Savage a total of $6,870.93 for unpaid wages,
commissions due, and penalties.

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

At the annual shareholders' meeting held on June 12, 1996, two matters
were submitted to a vote by the shareholders: 1) the election of
the Board of Directors pursuant to a proxy statement dated April
30, 1996, and 2) a proposal to increase the shares of Common Stock
reserved under the Company's long-term Incentive Compensation Plan by
500,000. The shareholders elected six members to the Board of Directors
and approved an increase in the number of shares reserved for
issuance under the long-term Incentive Compensation Plan from
1,100,000 to 1,600,000.

No matters were submitted to a vote of the shareholders during fiscal
years 1997 and 1998. The Company filed a preliminary proxy statement
with the Securities and Exchange Commission in March 1997, soliciting
shareholder approval of the proposed sale of the Company's assets to
Trader Publishing Company. Because the Company could not satisfy the
conditions for completing that sale, the proxy solicitation was not pursued.

Part II

Item 5. Market for Common Equity and Related Stockholder Matters

The outstanding shares of the Company's common stock traded on the NASDAQ
SmallCap Market under the symbol "KNET" from December 5, 1995 through
October 28, 1996, when it was de-listed. From October 28, 1996 to present
the Company's Common Stock price has been quoted on the Electronic Bulletin
board in the over-the-counter market.

The following table summarizes the reported high and low bid and ask prices
for the Company's Common Stock for the period January 1, 1996 through
December 1998. Quotations reflect inter-dealer prices, without retail
markup, markdown, or commissions, and may not represent actual transactions.

Bid Ask

High Low High Low

1996 Calendar Year

1st Quarter 6 3/8 4 1/8 6 3/4 4 1/2
2nd Quarter 8 5 5/16 8 3/8 3 11/16
3rd Quarter 5 7/8 2 3/4 3 7/8 3/8
4th Quarter 2 7/8 3/8 3 1/2

1997 Calendar Year

1st Quarter 1 1/2 15/16 1/2
2nd Quarter 1/2 5/16 0.52 3/8
3rd Quarter 5/16 1/4 5/16 3/16
4th Quarter 3/16 0.04 3/16 1/16

1998 Calendar Year

1st Quarter 1/16 1/16 1/16 1/16
2nd Quarter 1/16 0.05 1/16 0.05
3rd Quarter 0.09 0.05 0.09 0.05
4th Quarter 0.20 0.06 0.27 0.06

As of May 5, 1999, the Company had approximately 66 record and
beneficial shareholders.

Dividend Policy

The Company has never paid cash dividends on its Common Stock and there
is no prospect that the Company will pay dividends.

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

Company's Financial Condition

Early in 1996 it became apparent that the proceeds from the Company's
initial public offering would not be sufficient to sustain the Company's
operations for the ensuing year. Management explored numerous financing
alternatives during 1996. These efforts included retaining financial
advisors and investment bankers to pursue a possible second public or a
private offering, finding a merger partner or business combination, and
arranging additional borrowings. None of those efforts resulted in a
sufficient cash to sustain the Company's operations. In 1996 a large
share of the Company's recorded revenues were from barter transactions
with certain of its customers. Of the total recorded revenues for the
year ended December 31, 1996, only $471,373 were from cash- generating sales.
The remainder,$432,070, were barter transactions that did not produce
any cash. The cash sales were insufficient to sustain the Company's
operations. During 1997, the Company's revenues decreased to $231,000,
none of which were from barter transactions. The Company had no revenues
for the year ended December 31, 1998.

By July 1996 the Company's financial condition had worsened to the extent
that management was forced terminate approximately half of its
employees and asked the remaining employees to defer payment of a
portion of their salaries. The Company continued to reduce the number
of employees through 1996 and 1997. By December 31, 1996, the Company
employed only seventeen persons. On December 31, 1997, the Company
employed one person. The Company was not able to complete a sale of its
assets to Trader Publishing Company in March 1997 and was forced to
assign all of its assets to Wildwood Capital LLC in May 1997.
(See "Strategy-Asset Sale")

During 1996, 1997 and 1998, the Company did not have sufficient financing
resources allowing it to pursue its initial business strategy. The
Company borrowed on a short-term basis from individuals and investment
companies to provide working capital with the expectation that it
could find an acquisition or merger partner or sell its assets. The
balances of those loans were approximately $48,000, $116,000 and $178,000
as of December 31, 1996, 1997 and 1998, respectively. They have not
been repaid and all are in default.

The Company owed $1,058,368, $971,033 and $868,065 to vendors as of
December 31, 1996, 1997 and 1998, respectively. A number of creditors
obtained judgments against the Company and against an officer and
director and a former officer and director. Judgment payables for
the years ended December 31, 1997 and 1998 were approximately $101,000
and $199,937, respectively. (See "Legal Proceedings")

The Company owes former employees approximately $187,000, $170,000 and
$106,000 for the years ended December 31, 1996, 1997, and 1998, respectively.
The decrease in the accrued wages in 1998 is attributable to the current
officer and director and his wife, who was a former officer and director,
accepting a cash payment of $6,700 in settlement of all accrued and
unpaid salary, reimbursable expenses and other indebtedness. The
difference between the cash payment and such obligations, $250,245,
was recorded as additional paid in capital.

Accrued interest on borrowings was approximately $11,000, $27,000 and
$42,000 for the years ended December 31, 1996, 1997 and 1998, respectively.

The Company is a development stage enterprise that failed to achieve
significant operations. Given the lack of any assets there is substantial
doubt the Company can continue as a going concern unless it identifies a
suitable acquisition or merger candidate that will allow it to achieve a
level of operations sufficient to meet its cash flow requirements.

Results of Operations

1998 as compared to 1997:

The Company has not generated any revenue since the first quarter of
1997, during which period it recorded $231,480 in revenue. Given the
Company transferred its assets to Wildwood Capital in May 1997, the
Company had no means to generate revenue. (See Note 8 to Financial
Statements). The revenue for 1997 was mainly attributable to long-
term contract revenue established in 1996.

Operating loss decreased to ($54,436) in 1998 from ($170,378) in 1997,
or a 68% decrease. General and administrative expense decreased $246,061
or 82% from 1997. The major components of general and administrative
expenses during 1998 consisted of approximately $35,000 paid to an
accountant and consultant to reconcile the Company's books and records
and prepare the necessary schedules for the Company's audit, prepare
this and other reports for filing with the SEC, and professional fees
in the amount of $7,500. The funds utilized for operating expense in
1998 were derived from loans that the Company obtained from The Rockies Fund,
Inc. During 1998 the Company incurred no sales and marketing expenses
as compared to $101,295 recorded in 1997.

Interest expense decreased by $10,952 from $32,273 in 1997 to $21,321
in 1998. This decrease was due entirely to an agreement in May 1998
under which an officer and director and his wife, who was previously
an officer and director, accepted a cash payment of $6,700 in satisfaction
of accrued indebtedness due and payable to them. The sum of $250,245,
which is the difference between the $6,700 payment and the accrued and
unpaid indebtedness, was recorded as additional paid in capital.

Net loss in 1998 was ($75,757) or ($0.02) per share versus a net
loss of ($202,518) or ($0.06) per share in 1997.

Liquidity and Capital Resources

Except for $169 cash on hand at the close of 1998, there were no assets
at the close of either 1998 or 1997.

Judgments payable continued to increase in 1998. (See "Legal Proceedings.")
The total at December 31, 1998 was $199,937 compared to $101,374 at
December 31, 1997. Accounts payable decreased from $971,033 in 1997
to $868,065 in 1998. The decrease is primarily due to the transfer
of accounts payable to judgments payable during 1998. Notes payable
increased $61,476, representing the amount of the new loan from The
Rockies Fund. The Company owed former employees $105,503 as of
December 31, 1998.

The Company is in the process of contacting its vendors, employees and
note holders in an attempt to restructure its debts. There can be no
assurances that the Company will be successful in these endeavors.
Additionally, the Company is in the process of contacting potential
acquisition and merger candidates. The efforts to date have consisted
of the Company placing advertisements in publications such as The Wall
Street Journal and contacting other parties. To date the Company has
not identified any candidates.

1997 as compared to 1996:

Results of Operations

Revenue decreased $671,963 or 74% from December 1996 to December 1997.
Revenues of $231,480 recorded in 1997 are attributable to long-term
contracts entered into in 1996. The Company recorded no revenues from
barter transactions during the year ended December 31, 1997.

Operating expenses decreased $5,671,128 or 93% from $6,072,986 in 1996
to $401,858 in 1997. The major operating expenses in 1997 consisted
of salaries, legal fees, and travel and entertainment. Salaries
decreased by $1,604,225 or 92% from $1,753,188 in 1996 to $148,963
in 1997. Legal fees decreased by $54,211 or 61% from $88,711 in 1996
to $34,500 in 1997. Travel and entertainment decreased by $347,148 or
92% from $376,477 in 1996 to $29,329 in 1997.

Operating loss decreased ($4,989,165) from a loss of ($5,169,543) in
1996, to a loss of ($170,378) in 1997.

In 1996 interest expense was $66,259 compared to $32,273 in 1997.
Interest expense in 1996 was attributable to various note agreements
with Texas Commerce National Bank Association and the recording of $14,590
in interest expense relating to the financing costs associated with a
note payable to David Figuerido.

Based on the foregoing information, net loss for 1997 was ($202,518)
or ($0.06) per share versus a net loss of ($5,445,354) or ($1.61).

Liquidity and Capital Resources

As of December 31, 1997 the Company had no assets. This represents a
decrease of $120,206 from 1996.

During the year ended December 31, 1997, several creditors sued the
Company to recover lease payments and other vendor indebtedness.
Judgments payable were $101,374 compared to $0 at December 31, 1996.
Accounts payable decreased $87,335 or 8% from $1,058,368 in 1996
to $971,033 in 1997. The decrease is attributable primarily to the
transfer of accounts payable to judgments payable in 1997. Notes
payable increased $68,458 from 1996 to 1997. The Company borrowed
an additional $108,500 from shareholders and other entities during
1997. In January 1997, the Company and a shareholder who previously
loaned the Company $100,000 entered into a restructuring agreement
under which the Company exchanged an existing note payable, together
with accrued and unpaid interest for a new $9,000 note payable with
interest at 10.91%, and surrendered to the shareholder the Company's
boat, which had a net book value of $26,815. Additionally, during
1997 the Company applied $18,756 of personal charges made by Mr. Carr
on the Company's American Express card against the amounts owed
to him. Total liabilities increased 6% from $1,304,749 in 1996 to
$1,386,528 in 1997.

1996 as compared to 1995:

Results of Operations

Revenues increased $887,076 or 5,420% from $16,637 in 1995 compared
to $903,443 in 1996. Of the revenues derived in 1996, $432,070
were generated from barter transactions with certain of the Company's
customers. In an effort to increase the Company's market
presence, the Company advertised in trade publications and at various
boat and marine trade shows. The Company paid for that advertisement
by either developing web pages for those vendors or promoting those
vendors on the Company's own web site. Although those arrangements
reduced the Company's advertising costs, the transactions generated
no cash flow for the Company. Coupled with the fact that the Company
typically absorbed the pre-production costs of generating the web sites
for barter customers, the transactions adversely affected the Company's
ability to sustain its operations. By March 1996, the Company knew
that it would need a significant influx of capital for the Company
to survive and made such disclosure in the Company's first quarter
Form 10-QSB.

Operating loss increased ($3,538,805) or 217% from ($1,630,735) in 1995
to ($5,169,543) in 1996. The major operating expenses in 1996 consisted
of salaries, consulting fees, rent and accelerated lease payments, and
travel and entertainment. Salaries increased $1,310,156 or 295% from
$443,032 in 1995 to $1,753,188 in 1996. A nationwide sales force was
put in place during 1996 and the Company leased a satellite office in
Florida. The Company also supported sales activities in Massachusetts,
California, and Illinois. Consulting fees increased to $856,678 from
$0 in 1995. During 1996, when the Company realized that an immediate
influx of capital was necessary to support its market plan, the
Company engaged several individuals to evaluate the Company's operations
and assist the Company in obtaining additional equity capital. The
Company compensated those consultants primarily by issuing options
and warrants. The Company, in accordance with Financial Accounting
Standards No.121, "Accounting for Stock Based Compensation,"
recorded the fair value of the options and warrants granted as
consulting expense with a corresponding amount recorded as additional
paid in capital. (See Note 6 to the Financial Statements.)

Rent expense increased $400,543 or 1,131% from $35,413 in 1995 to
$435,956 in 1996. Because the Company was unable to make timely
payments for its leased facilities and equipment, several lessors
accelerated the total amounts due under the leases, all of which
was recorded as rent expense. Travel and entertainment increased
$277,119 or 278% from $99,358 in 1995 to$376,477 in 1996, all of which
was directly related to the Company's efforts to market its product
and achieve market penetration.

In October 1996, the Company entered into a series of transactions
in an attempt to sell all of its assets. See Asset Sale.

The Company recorded a loss on sale of assets for the year
ended December 31, 1996 as follows:

Write-off net book value of assets assigned to Wildwood $ (414,389)
Write-off prepaid marketing (50,000)
Write-off net book value of License Agreement (148,849)
Trader deposit for Letter Agreement 110,000
Note payable to Trader 110,000
Proceeds from Danro pursuant to Purchase Agreement 138,700

$ (254,538)

The net loss for 1996 was $(5,445,354) or $(1.61) per share compared
with $(1,734,270) or $(0.33) per share in 1995.

Liquidity and Capital Resources

In 1995 the Company's working capital was at its highest, $3,245,783,
and the current ratio was 6.77. By December 1996 working capital was
negative. Total current assets were only $120,206, while current
liabilities were $1,304,749. This represents a swing of $4,550,532
in a twelve-month period. Cash and short-term investments were depleted
to $40,923 and $5,784, respectively, by the closing of 1996.

Accounts payable had increased to $971,033 at the end of 1996, compared
to $175,667 at the close of 1995. Other accrued expenses, attributable
primarily to accrued and unpaid salaries as of December 31, 1996, increased
by $88,332. Employees were asked to voluntarily defer a portion of their
salary during three payroll periods. Each employee who agreed to the deferral
received one share of restricted stock for each $100 of deferred salary.
The Company also agreed to pay the employee 10% interest. Other accrued
expenses include salaries that were not paid during the last quarter of 1996.

Item 7. Financial Statements

Kinetiks.com, Inc.
(A Development Stage Compant)
Index to Financial Statements
December 31, 1998, 1997 and 1996

Report of Independent Auditor
Balance Sheets
Statements of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements

Board of Directors and Shareholders
Kinetiks.com, Inc.

Independent Auditor's Report

I have audited the accompanying balance sheets of
Kinetiks.com, Inc. (a development stage company), as of
December 31, 1998, 1997 and 1996 and the related statements
of operations, stockholders' equity (deficit), and cash
flows for the years then ended, and for the period January
18, 1995 (inception) through December 31, 1998. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on
these financial statements based on my audits. I did not
audit the financial statements of Kinetiks.com, Inc. as of
December 31, 1995, and for the period January 18, 1995
(inception) to December 31, 1995. Those statements were
audited by other auditors, whose report has been furnished
to me, and my opinion, insofar as it relates to the
cumulative amounts for the period January 18, 1995
(inception) to December 31, 1995, is based solely on the
report of the other auditors.

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

In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Kinetiks.com, Inc. as of December 31, 1998, 1997
and 1996, and the results of its operations and its cash
flows for the years then ended and from January 18, 1995
(inception) to December 31, 1998, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the
Company is in the development stage, has not achieved
significant operations, and has incurred losses since
inception. These conditions raise substantial doubt as to
the Company' ability to continue as a going concern. In
order for the Company to emerge out of the development stage
and continue as a going concern, the Company must achieve a
level of operations sufficient to meet cash flow
requirements, obtain a favorable settlement with its
creditors, and find a suitable merger candidate.
Management's plans in regards to these matters are described
in Note 1. The financial statements do not include any
adjustments to reflect the possible future effects on the
recoverablility and classification of asset carrying amounts
or the amounts and classification of liabilities that may
result should the Company be unable to continue as a going
concern.

Gerald R. Hendricks & Company, P.C.
March 30, 1999
Westminster, Colorado

Kinetiks.com, Inc.
(A Development Stage Company)
Balance Sheets

December 31,
1998 1997 1996
Assets

Current assets:
Cash 169 0 40,923
Short term investments 0 0 5,784
Accounts receivable, net 0 0 13,354
Prepaid expenses and other current assets 0 0 15,000

Total current assets 169 0 75,061

Property and equipment, net 0 0 45,145

169 0 120,206

Liabilities and Stockholders' (Deficit)

Current liabilities:
Judgments payable 205,471 106,908 0
Notes payable 177,976 116,500 48,042
Accounts payable 862,531 965,499 1,058,368
Accrued compensation 105,503 170,463 187,095
Other accrued expenses 41,680 27,158 11,244

Total current liabilities 1,393,161 1,386,528 1,304,749

Note payable to shareholder officer 0 180,952 201,263

Stockholders'(deficit):
Preferred stock, $.001 par value,
500,000 shares authorized;
none issued 0 0 0
Common stock, $.001 par value;
20,000,000 shares authorized;
5,389,083 issued; 3,389,083
outstanding 5,390 5,390 5,390
Less treasury stock, 2,000,000
shares, at cost (2,000) (2,000) (2,000)
Additional paid-in capital 6,061,517 5,811,272 5,790,428
Deficit accumulated during the
development stage (7,457,899) (7,382,142) (7,179,624)

Total stockholders' (deficit) (1,392,992) (1,567,480) (1,385,806)

169 0 120,206

See accompanying notes.

Kinetiks. Com, Inc.
(A Development Stage Company)
Statements of Operations

Cumulative
January 18,
1995(Inception)
through
Years Ended December 31, December 31,
1998 1997 1996 1998

Revenues 0 231,480 903,443 1,151,290

Operating expenses:
Cost of revenue 0 66 438,044 489,112
Research and development 0 0 342,878 769,094
Sales and Marketing 0 101,295 1,346,832 2,025,064
General and administrative 54,436 300,497 3,945,232 4,893,112

54,436 401,858 6,072,986 8,176,382

Operating loss (54,436) (170,378) (5,169,543) (7,025,092)

Other income (expense):
Early extinguishment of debt 0 0 0 (87,500)
Interest expense (21,321) (32,273) (66,259) (141,187)
Interest income 0 133 44,986 50,418
Loss on sale of assets 0 0 (254,538) (254,538)

Net loss (75,757) (202,518) (5,445,354) (7,457,899)

Net loss per common and common
equivalent share (0.02) (0.06) (1.61) (1.82)

Shares used in computing net
loss per common and common
equivalent share 3,389,083 3,389,083 3,383,675 4,108,319

See accompanying notes.

<TABLE>
Kinetiks.com, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
<CAPTION>
Deficit
Recreational Accumulate Total
Data Additional During The Stockholders'
Services, Common Paid In Treasury Developmen Equity
L.L.C. Stock Capital Stock Stage (Deficit)
<S> <C> <C> <C> <C> <C> <C>
Initial contribution in
Recreational Data Services,
L.L.C. (April 1995) 4,000 0 0 0 0 4,000
Issuance of 4,000,000 shares
of common shares in exchange
for all of the ownership
interest in Recreational
Data Services, L.L.C. on
August 14, 1995 (4,000) 4,000 0 0 0 0
Issuance of 500,000 shares
of common stock at $1 per
share, net of issuance
costs of $42,186
(August 1995) 0 500 457,314 0 0 457,814
Issuance of 17,500 shares
of common stock at $3 per
share in connection with the
bridge loan agreements
(October 1995) 0 18 52,482 0 0 52,500
Initial public offering of
862,500 shares of common
stock at $6 per share, net
of issuance costs of
$923,670 (December 1995) 0 862 4,250,568 0 0 4,251,430
Net loss for the period ended
December 31, 1995 0 0 0 0 (1,734,270) (1,734,270)

Balance at December 31, 1995 0 5,380 4,760,364 0 (1,734,270) (3,031,474)

Issuance of stock options to
purchase 70,000 shares of
common stock for license
agreement (February 1996) 0 0 289,800 0 0 289,800
Issuance of stock options
to purchase 50,000 shares
of commons stock for
consulting services
(April 1996) 0 0 91,250 0 0 91,250
Issuance of 1,550 shares of
common stock at $5.13 per
share to former employees
in full settlement of
accrued wages (June 1996) 0 2 7,950 0 0 7,952
Issuance of 7,533 shares of
common stock at an average
of $2.84 per share to former
employees as additional
compensation for wage
deferals (July and
August 1996) 0 8 21,42 0 0 21,432
Issuance of stock warrants
to purchase 125,000 shares
of common stock at $1.25
per share for compensation
relating to consulting
services (August 1996) 0 0 219,000 0 0 219,000
Transfer of 400,000 shares
of common stock to the
treasury by the then
president and chief
executive officer
at $.001 per share
(November 1996) 0 0 400 (400) 0 0
Issuance of 400,000 shares
of common stock at $.25
per share for cash
(November 1996) 0 0 99,600 400 0 100,000
Consulting expense associated
with a noncompete agreement
executed by the Company in
connection with the
sale of 400,000 shares of
common stock
(November 1996) 0 0 100,050 0 0 100,050
Issuance of stock warrants to
purchase 400,000 shares of
common stock at $.25
per share for compensation
relating to consulting
services (November 1996) 0 0 184,000 0 0 184,000
Transfer of 50,000 shares of
common stock to the treasury
by a former officer and
director at $.001 per share
(November 1996) 0 0 50 (50) 0 0
Issuance of 50,000 shares of
common stock in additional
consideration for
borrowings (November 1996) 0 0 14,540 50 0 14,590
Transfer of 2,000,000 shares
of common stock to the
treasury by the then
president and chief
executive officer
at $.001 per share
(December 1996) 0 0 2,000 (2,000) 0 0
Net loss for the year ended
December 31, 1996 0 0 0 0 (5,445,354) (5,445,354)

Balance at December 31, 1996 0 5,390 5,790,428 (2,000) (7,179,624) (1,385,806)

Transfer of 50,000 shares of
common stock to the treasury
by a former officer and
director at $.001per share
(February 1997) 0 0 50 (50) 0 0
Issuance of 50,000 shares of
common stock in exchange
for debt 0 0 20,794 50 0 20,844
Net loss for the year ended
December 31, 1997 0 0 0 0 (202,518) (202,518)

Balance at December 31, 1997 0 5,390 5,811,272 (2,000) (7,382,142) (1,567,480)

Capital contributed to the
Company by the former
president and chief exectuive
officer and a former officer
and director upon the
settlement of a note payable
and accrued expenses
(February 1998) 0 0 250,245 0 0 250,245
Net loss for the year ended
December 31, 1998 0 0 0 0 (75,757) (75,757)
Balance at December 31, 1998 0 5,390 6,061,517 (2,000) (7,457,899) (1,392,992)

See accompanying notes.
</TABLE>

Kinetiks. Com, Inc.
(A Development Stage Company)
Statements of Cash Flows

Cumulative
January 18,
1995(Inception)
through
Years Ended December 31, December 31,
1998 1997 1996 1998

Operating Activities
Net loss (75,757) (202,518) (5,445,354) (7,457,899)
Adjustment to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 0 0 267,368 289,272
Early extinguishment of debt 0 0 0 87,500
Loss (gain) on sale of asset 0 0 254,538 254,538
Stock issued for wages 0 0 29,384 29,384
Options and warrants issued for
consulting services 0 0 594,300 594,300
Interest officer note payable 11,033 10,265 19,822 54,561
Finance costs 0 20,844 14,540 35,384
Bad debts 0 0 43,469 43,469
Writeoff advances to employees 0 0 30,000 30,000
Changes in operating assets and
liabilities:
Accounts receivable, net 0 13,354 1,452 (43,469)
Prepaid expenses and other 0 15,000 13,049 0
Judgments payable 98,563 106,908 0 205,471
Accounts payable (102,968) (92,869) 882,701 862,531
Accrued compensation 0 (16,632) 145,247 170,463
Other accrued expenses 14,522 15,914 (87,519) 41,680
Deferred revenue 0 0 (63,483) 0

Net cash used in operating
activities (54,607) (129,734) (3,300,486) (4,802,815)

Kinetiks. Com, Inc.
(A Development Stage Company)
Statements of Cash Flows

Cumulative
January 18,
1995(Inception)
through
Years Ended December 31, December 31,
1998 1997 1996 1998

Investing Activities
Purchase of equipment 0 0 (388,201) (537,406)
Proceeds from sale of assets 0 0 358,700 358,700
Prepaid marketing agreement 0 0 (50,000) (50,000)
Redemption of short-term investments 0 3,109 1,495,059 0
Advances on notes from employees 0 0 5,844 (34,521)
Net cash provided by investing
activities 0 3,109 1,421,402 (263,227)

Financing Activities
Proceeds notes payable
shareholders (6,700) 0 0 217,746
Proceeds from notes payable 61,476 108,500 0 432,476
Deposit for secondary offering 0 0 (25,000) (25,000)
Issuance of common stock 0 0 100,000 4,865,744
Repayment of bridge loans 0 0 0 (350,000)
Repayment of notes 0 (22,798) (51,957) (74,755)
Net cash provided by financing
activities 54,776 85,702 23,043 5,066,211
Net change in cash 169 (40,923) (1,856,041) 169
Cash at beginning 0 40,923 1,896,964 0
Cash at end 169 0 40,923 169

Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest 0 0 19,923
Supplemental disclosure of noncash
investing and financing transactins:
Stock options issued for License Agreement 289,900
Shares contributed to the treasury by an officer
and director and a former officer and director (2,450)
Additional paid in capital contributed by an officer
and director and a former officer and director upon
settlement of debt, consisting of:
Accrued wages 64,960
Accrued expenses 4,061
Notes payable and accrued interest 181,224
250,245

See accompanying notes.

Kinetiks.com, Inc.
(A Development Stage Company)
Notes to Financial Statements

1. Background of the Company

Kinetiks.com, Inc. (the "Company") is a development stage
enterprise. The Company, during the years ended December
31, 1995 and 1966, attempted to develop and market
proprietary software programs for use on the World Wide Web
(the "Web") of the Internet. The Company's first and only
software production, designated Internet Waterway, offered
products and services and provided free information to
sailors, fishermen, and other water sports enthusiasts. The
Company's development efforts were devoted to developing the
Internet Waterway, through which the Company began
electronic publishing and advertising in November 1995. On
December 12, 1995, the Company raised equity funding through
an initial public offering ("IPO") of shares of its common
stock to the public (see Note 6).

During 1996 the Company experienced significant cash flow
difficulties as the net proceeds from the Company's IPO were
not sufficient to allow the Company to successfully develop
and market the Internet Waterway and achieve profitable
operations. Because of its cash flow difficulties, the
Company was unable to pay its liabilities in the ordinary
course of business. Several creditors have obtained court
judgments against the Company and a current officer and
director and a former officer and director (see Note 5).
Ultimately, the Company sold all of its assets to an
unaffiliated third party (see Note 8). The Company is
currently in the process of negotiating a favorable
settlement with its creditors and attempting to find a
suitable merger candidate. If the Company is unsuccessful
in these endeavors, and there can be no assurances that it
will be, it may be forced to file for bankruptcy and/or
liquidate.

The founding shareholders began operations on January 18,
1995 as a sole proprietorship doing business as Recreational
Data Service ("RDS"). On April 3, 1995, Recreational Data
Services, L.L.C. ("RDS, L.L.C."), a Texas Limited Liability
Company was formed. On August 9, 1995, the shareholders of
RDS, L.L.C., formed Kinetiks.com, Inc., a Delaware
corporation. Effective August 14, 1995, Kinetiks.com, Inc.
and RDS, L.L.C. were merged with Kinetiks.com, Inc. being
the surviving entity. All of the outstanding ownership
interest in RDS, L.L.C. were exchanged for 4,000,000 shares
of common stock of the Company. Prior to the merger on
August 14, 1995, Kinetiks.com, Inc. had no operations. The
statement of operations of the Company for the period ended
December 31, 1995, includes the results of RDS and RDS, L.L.C.

The Company is still in the development stage and has yet to
achieve significant operations. This raises substantial
doubt as to the Company's ability to continue as a going
concern. In order for the Company to emerge out of the
development stage and to continue as a going concern, the
Company must negotiate a satisfactory settlement with its
creditors and find a suitable merger candidate that will
allow the company to achieve a level of operations
sufficient to meet its cash flow requirements.

2. Summary of Significant Accounting Policies

Cash Equivalents and Short-term Investments

The Company considers all highly liquid investments with
original maturities of three months or less to be cash
equivalents.

Short-term investments include a certificate of deposit that
has an original maturity ranging from four to six months.

Revenue and Cost of Revenue

Service revenues from the sale of advertising space is
recognized ratably over the period in which the
advertisements are displayed on the Internet. Payments
received in advance of providing advertising services and
contract amounts that have been billed but have not been
earned are recorded as deferred revenue. All costs related
to revenue producing activities are expensed as incurred.
The Company recorded revenues, and a corresponding charge to
cost of revenues, from barter transactions at the estimated
fair value of the products or services received.

The Company believed that the majority of costs associated
with an advertisement were included in the set-up period and
intended to develop statistical information regarding the
advertisement cost cycle based upon experience. However,
the Company's operations ceased before meaningful data was
obtained to substantiate this belief.

Property and Equipment

Property and equipment are recorded at cost. The Company
provides for depreciation using the straight-line method
over the estimated useful life of the assets as follows:

Automobile 5 years
Boat 10 years
Computer and office equipment 3 years
Furniture and fixtures 7 years

Impairment of Long-Lived Assets

The Company periodically reviews the carrying value of long-
lived assets for potential impairment by comparing the
carrying value of these assets with their related, expected
future net cash flows. Should the sum of the related,
expected future net cash flows be less than the carrying
value, the Company would determine whether an impairment
loss should be recognized. An impairment loss would be
measured by the amount by which the carrying value of the
asset exceeds the future discounted cash flows.

Fair Value of Financial Investments

Based on the borrowing rates currently available to the
Company for bank and other loans with similar terms and
maturities, the fair value of the Company's debt
approximates the carrying value.

Research and Development Costs

Research and development expenditures are charged to expense
as incurred. Statement of Financial Accounting Standards
No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed," requires capitalization
of certain software development costs subsequent to the
establishment of technological feasibility.

Based upon the Company's product development process,
technological feasibility is established upon completion of
a working model. Costs incurred by the Company between
completion of the working model and the point at which the
product is ready for general release have been
insignificant. All research and development costs have been
expensed.

Income Taxes

Income taxes are accounted for under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
Under this method, deferred tax assets and liabilities are
determined based on differences between the financial
reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.

For the period from inception through August 14, 1995, RDS
and RDS, L.L.C. were organized as a sole proprietorship and
a Texas Limited Liability Company, respectively. As a
result, the income tax benefits from the operations during
this period passed directly to the sole proprietor and
shareholders, respectively. The expenditures incurred prior
to the merger were primarily start-up expenditures, which
were capitalized by the owners for income tax purposes,
creating a deferred tax assets of approximately $136,000.
This tax asset was contributed to the Company in connection
with the merger. Losses from operations from August 14, 1995
through December 31, 1998 have created additional deferred
tax assets of approximately $2,847,160, resulting in a
total deferred tax asset of $2,983,160. A valuation
allowance was established for the full amount of these
deferred tax assets because the future realization of the
cumulative tax benefit is not assured. When more than a 50%
change in ownership occurs, over a three year period, as
defined, the Tax Reform Act of 1986 limits the utilization
of net operating loss (NOL) carryforwards in the years
following the change in ownership. Therefore, it is
possible that the Company's utilization of its NOL
carryforwards may be partially reduced as a result of the
changes in stock ownership (See Note 6). No determination
has been made as of December 31, 1998, as to what
implications, if any, there will be in the net operating
loss carryforwards of the Company.

Stock Options and Stock Based Compensation

The Company follows Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," and related
interpretations in accounting for its employee stock
options. Compensation cost for stock options, if any, is
measured as the excess of the quoted market price of the
Company's stock at the date of grant over the amount an
employee must pay to acquire the stock.

Use of Estimates

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

Per Share Amounts

Net loss per common and common equivalent share is computed
using the weighted average number of common and common
equivalent shares outstanding during the period. Pursuant
to the Securities and Exchange Commission Staff Accounting
Bulletin (SAB) No. 83, common stock and options to purchase
common stock issued by the Company within 12 months of the
initial public offering date have been included in the
calculation of the weighted average number of common and
common equivalent shares outstanding (using the treasury
stock method) as if they were outstanding for the entire
period. Common stock equivalents are not included in the
computation as the amount would be anti-dilutive.

3. Property and Equipment

Property and equipment consist of the following:

December 31,
1998 1997 1996

Automobile and boat $ - $ - $ 60,700
Computer and office
equipment - - -
Furniture and
fixtures - - -

- - 60,700

Less accumulated
depreciation - - (15,555)

$ - $ - $ 45,145

Depreciation expense was $0, $0, $126,417, and $21,904 for
the years ended December 31, 1998, 1997, 1996, and 1995,
respectively.

4. Notes Payable

Notes payable consists of the following:

December 31,
1998 1997 1996
Shareholders

Note payable, shareholder,
interest at 10.91%, payable
monthly in installments
of $10,000, due November 1996,
without collateral. $ 9,000 $ 9,000 $ 9,000
Note payable, shareholder,
interest at 7%, principal
and interest due
February 1997, without
collateral. Note converted
into 50,000 shares of the
Company's common stock in
February 1997. - - 15,000
Note payable, shareholder,
interest at 8%, principal
and interest due
April 1997, without
collateral. 50,000 50,000 -
Note payable, interest at 8%,
principal and interest due
April 1997, without
collateral. 5,000 5,000 -
Note payable, shareholder,
no stated interest, no stated
repayment terms, without
collateral. 2,500 2,500 -
Note payable, shareholder,
business development company,
interest at varying amounts,
no stated repayment terms,
without collateral. 86,476 25,000 -

Unaffiliated Third Parties

Notes Payable, shareholder,
venture capital firm,
interest at 10%,
principal and interest
due March 1997, without
collateral. 25,000 25,000 -
Bank, interest at prime
rate plus .5%,
interest payable
monthly, principal
due December 1996,
without collateral. - - 3,042

$ 177,976 $ 116,500 $ 48,042

During 1996, the Company made only seven of the required
eleven payments pursuant to the 10.91% note payable to
shareholder and at December 31, 1996 was in default. In
January 1997 the Company and the shareholder entered into a
restructuring agreement whereby the Company exchanged the
existing note payable and accrued interest with a new $9,000
note payable and surrendered to the shareholder the Company's
boat, which had a net book value at the date of this
restructuring of $26,815. The new note bears interest at
10.91%, has no stated repayment terms, and is without collateral.
The Company recorded a gain on this restructuring agreement
for the year ended December 31,1997, in the amount of $389.

In November 1996, the Company borrowed $15,000 from a
shareholder and issued 50,000 shares of the Company's
common stock. The shares of stock issued to this note
holder were issued out of the treasury from shares
previously contributed to the treasury by an officer and
director (see note 6). In connection with the issuance of
these shares, the Company recorded additional financing
expense in the amount of $14,590 which represented the fair
market value of the stock on the date of grant less a one-
third discount for restriction. In February 1997, the note
holder agreed to accept another 50,000 shares of stock in
lieu of receiving payment on the note. The additional shares
of stock were issued out of the treasury from shares
previously contributed to the treasury by an officer and
director. In connection with the issuance of these shares,
the Company recorded additional financing expense in the
amount of $5,223.

In March 1997, the Company borrowed $50,000 from a
shareholder and issued warrants to purchase 100,000 shares
of the Company's common stock at $.25 per share. In April
1997, when the Company was unable to pay this note, the
Company issued additional warrants to purchase 100,000
shares of the Company's common stock at .25 per share. The
exercise price of the warrants approximated the fair market
value of the Company's stock on the dates of these grants.

In March 1997, the Company borrowed $5,000 from a
shareholder and issued warrants to purchase 10,000 shares of
the Company's common stock at $.25 per share. In April
1997, when the Company was unable to pay this note, the
Company issued additional warrants to purchase 10,000 shares
of the Company's common stock at $.25 per share. The
exercise price of the warrants approximated the fair market
value of the Company's stock on the dates of these grants.

During 1997 and 1998, the Company borrowed $25,000 and
$61,476, respectively, from The Rockies Fund (The "Fund"), a
shareholder that is a "business development company" under
the Investment Company Act of 1940. In connection with the
execution of the $25,000 note, the Company issued warrants
to purchase 50,000 shares of the Company's common stock at
$.25 per share. Additionally, the note agreement requires
the Company to issue 50,000 warrants monthly for every month
that the note is in default. As of December 31, 1998, the
Company has granted 1,150,000 warrants to this shareholder
(see Note 6). No warrants were issued pursuant to the
$61,476 note payable. Subsequent to December 31, 1998, the
Company borrowed an additional $29,128 from the Fund. This
note bears interest at 8%, has no stated repayments terms
and is without collateral.

As of April 1999 the president of the Fund, certain of his
family members, and other entities that are controlled by
the president of the Fund, Inc. and his wife, own shares and
warrants totaling 1,073,500 and 1,300,000, respectively.
The shares owned represent approximately 32% of the
outstanding shares of the Company. Of the shares owned,
900,000 shares were purchased at $.05 per share directly
from the former president and vice president of the Company
in private transactions. The remaining shares owned were
purchased in open market transactions.

In January 1997, the Company borrowed $25,000 from Caribou
Capital, Inc. ("Caribou"), a nonaffiliate. In connection
with this borrowing, the Company issued warrants to purchase
50,000 shares of the Company's common stock at $.25 per
share. In March 1997, when the Company was unable to pay
this note, the Company issued additional warrants to
purchase 50,000 shares of the Company's common stock at $.25
per share. The exercise price of the warrants approximated
the fair market value of the Company's stock on the date of
grant.

Shareholder Officer

The note payable to shareholder officer consists of amounts
advanced by Mr. Carr to fund the operating and start-up
expenses of the Company and the contribution of certain
operating assets. The note bore interest at 9% per annum
and matured in January 1997. In January 1997, when the
Company was unable to pay this note, the shareholder
officer accepted as partial payment, the Company's automobile.
The net book value of the automobile approximated $21,000,
which the shareholder officer and the Company believed to be
the estimated fair market value. During the year ended
December 31, 1997 the Company reduced the principal amount
owed to the shareholder officer by $18,756, which represented
personal charges made by the shareholder officer on the
Company's credit card.

In February 1998, the Company and the shareholder officer and
his wife, who was previously an officer and director of the
Company, entered into a settlement agreement. In addition
to the remaining unpaid principal and interest pursuant to
the note payable shareholder officer, the Company owed these
two individuals accrued wages and unreimbursed expenses in
the amount of $64,960 and $4,061, respectively. These
individuals agreed to accept a cash payment in the amount of
$6,700 and contribute the remaining balances, in the amount
of $250,245, as additional paid in capital.

5. Commitments and Contingencies

Leases

The Company leased its office space and certain office
equipment under noncancellable operating lease agreements
expiring through the year 2000. An officer and director and
a former officer and director personally guaranteed certain
of these leases. Due to the lack of operating funds and the
inability of the Company to raise additional equity capital,
the Company defaulted on all of its leases, and,
accordingly, the lease creditors accelerated all remaining
payments. Certain of the lease creditors filed legal
proceedings against the Company during the years ended
December 31, 1997 and 1998 and obtained court ordered
judgments against the Company and the officer and director
and former officer and director. As of December 31, 1998
and 1997, judgments from lease creditors were $113,613 and
$59,485,respectively. Rent expense, including default
amounts, was $0, $19,436, and $435,956; for the years ended
December 31, 1998, 1997, 1996, respectively.

Other

Certain other creditors also filed legal proceedings against
the Company during the years ended December 31, 1997 and
1996 and obtained court ordered judgments against the
Company. As of December 31, 1998 and 1997, judgments from
other creditors were $91,858 and $47,423, respectively.

Employee

During the year ended December 31, 1997, a former employee
filed a claim in the state of California for unpaid wages.
The Labor Commission for the State of California awarded
this former employee $6,871 for unpaid wages and
commissions. The amount is included in accounts payable for
the years ended December 31, 1998 and 1997.

The Rockies Fund

Beginning in 1994 the United State Securities and Exchange
Commission (the "SEC") began an investigation into certain
matters, including the administrative and record keeping
practices of the Fund, its securities trading activities and
those of its officers and directors. In September 1996 the
Fund received notification from the SEC that the SEC staff
was planning to recommend that an enforcement action be
brought against the Fund, its president, and each of its
directors due to certain violations of federal securities
laws. The SEC invited the Fund to make a submission setting
forth the Fund's position and arguments regarding the SEC
staff's planned recommendation. The Fund did so in October
1996, and at the SEC's request, the Fund supplemented its
submission in December 1996. An administrative trial was
held before the SEC's Chief Administrative Judge in November
1998. During this trial the Fund vigorously contested the
SEC's allegations. No decision has been rendered.

Securities and Exchange Commission

The Company has failed to timely file the required Forms 10-
KSB and Forms 10-QSB as required by the Securities and
Exchange Commission (the "SEC"). The Company and its
officers and directors could by subject to certain fines and
penalties from the SEC for its failure to timely file these
reports. The Company cannot determine the effect, if any,
that this uncertainty may have on its financial position.

NASDAQ Delisting

Effective at the close of business on October 28, 1996, the
NASDAQ Stock Market, Inc. delisted the Company's common
stock from trading on the NASDAQ SmallCap Market for failure
to satisfy the listing maintenance standards adapted by the
NASDAQ Stock Market, Inc. The Company's stock is eligible
to trade on the OTC Bulletin Board ("OTCBB"). However,
quotes for stock traded on the OTCBB are not published in
major national newspapers.

6. Capital Structure

Private Offering

Pursuant to a July 17, 1995 Confidential Private Placement
Memorandum, the Company sold 500,000 shares of its common
stock at $1 per share in August and September 1995.

Bridge Loans

As of October 3, 1995, the Company had entered into
subscription agreements for the private placement of
$350,000 in bridge loans. In connection with the
agreements, the Company issued 17,500 shares of its common
stock to the holder of the notes. The notes accrued
interest at prime plus 2% per annum and were payable at the
earlier of September 30, 1996 or ten days after completion
of the Company's initial public offering of its common
stock. The bridge loans were repaid in December 1995
following the initial public offering. The early repayment
of this debt resulted in $87,500 in debt extinguishment
costs, which are included in the statement of operations.
These costs include the write-off of $35,000 in loan
acquisition costs and $52,500 of unamortized loan discounts.

Initial Public Offering

In December 1995, the Company sold 862,500 shares of its
common shares of stock to the public, resulting in net
proceeds to the Company of approximately $4,251,000. In
connection with the initial public offering, the underwriter
also purchased warrants for 75,000 shares of the Company's
common stock for $100. The warrants are exercisable at any
time in the four year period ending December 5, 1999 at an
exercise price of $7.20 per share.

Stock Option Plan

On August 10,1995, the Company's board of directors approved
a stock option plan under which up to 1,000,000 shares of
the Company's common stock may be issued. In June 1996, the
shareholders approved an amendment to the Plan increasing
the Company's total common shares available under the plan
to 1,600,000. Under the Plan, incentive and nonqualified
stock options may be granted to employees, directors, and
consultants of the Company. Incentive stock options are
granted at an exercise price of not less than 100% (110% for
individuals owning 10% or more of the Company's common stock
at the time of the grant) of the stock's fair market value
at the time of the grant. Nonqualified stock options may
be granted at an exercise price determined by the Company's
Compensation Committee.

The stock option activity under this plan is set forth below
for the period January 18, 1995 (inception) to December 31,
1998:
Shares
Under Option
Option Per Share

Granted 1,254,000 $1.00 to $6.25
Forfeited (37,500) $1.00 to $6.00
Outstanding at December 31, 1995 1,216,500 $1.00 to $6.25
Granted 536,500 $1.00 to $7.00
Forfeited (334,000) $ .50 to $6.25
Outstanding at December 31, 1996 1,419,000 $ .25 to $7.00
Granted - -
Forfeited (923,500) $ .50 to $3.69
Outstanding at December 31, 1997 495,500 $ .50 to $7.00
Granted - -
Forfeited (53,000) $ .50 to $3.69
Outstanding at December 31, 1998 442,500 $1.00 to $7.00

In connection with various consulting and financing
agreements, the Company has issued warrants to purchase the
Company's common stock at prices that range from $.25 per
share to the lessor of $1.25 per share or 15% discount to
the closing bid price of the Company's stock price on the
date of exercise. The warrants are exercisable for a ten-
year period and generally provide "piggy-back" registration
rights for the underlying shares at the request of the
majority of warrant holders. Outstanding warrants were
1,995,000, 1,395,000, 525,000, and 0 as of December 31,
1998, 1997, 1996, and 1995, respectively.

License, Consulting and Other Agreements

In February 1996, the Company entered into an exclusive
license agreement (the "License Agreement") pursuant to
which it acquired in perpetuity the exclusive worldwide
rights to the use of the tradename "MarineNet" and a five
year non-compete agreement from William Chen ("Chen"), a
nonaffiliate. In lieu of a royalty payment the Company
paid to Chen, as full and complete consideration for acquisition
of the MarineNet tradename, stock options to purchase up to
70,000 shares of the Company's common stock exercisable in whole
or in part at $6.00 per share at any time between December 12, 1997
and February 10, 2006. As required by Financial Accounting
Standards No. 121, "Accounting for Stock Based
Compensation," ("FAS No. 121") the Company recorded the fair
value of the options granted for acquisition of the
tradename "MarineNet," as additional cost of the license
agreement and as additional paid in capital in the amount of
$289,000. Simultaneous with the execution of the License
Agreement, the Company entered into a consulting agreement
with Chen pursuant to which the Company retained Chen as a
consultant to the Company from February 10, 1996 to July 11,
1997. In connection therewith the Company agreed to pay
Chen aggregate consulting fees of $200,000 payable over the
term of the consulting agreement.

In April 1996, the Company entered into an agreement with
Seaboard Securities, Inc. ("Seaboard"), a nonaffiliate to
serve as the Company's financial advisor and provide
investment banking and financial advisory services to the
Company. In lieu of a consulting fee, the Company paid to
Seaboard, as full and complete consideration, stock options
to purchase up to 50,000 shares of the Company's common
stock. Of the options granted, 25,000 shares are exercisable
at $6.00 per share, 12,500 options are exercisable at $6.50
per share and 12,500 options are exercisable at $7.00 per
share, and are exercisable in whole or in part at any time
between April 2, 1996 and April 2, 1999. As required by FAS
No. 121, the Company recorded the fair value of the options
granted for these services as consulting expense and as
additional paid in capital in the amount of $91,250.

In June 1996 the Company issued 1,550 shares of its common
stock to two former employees as full and complete
consideration for wages that the former employees claimed
were due and owing them. The Company recorded the fair
market value of the common stock granted as wage expense and
additional paid in capital in the amount of $21,432.

During July and August 1996, the Company entered into
agreements with certain employees who elected to defer their
wages while the Company attempted to raise additional
capital. The agreements required the Company to issue one
share of common stock for each $10 dollars in salary that
was deferred. The deferral periods consisted of the pay
periods ended on July 30, 1996, August 15, 1996 and August
30,1996. Total wages deferred during these periods amounted
to approximately $75,000, resulting in the issuance of 7,533
shares of the Company's common stock. The Company recorded
the fair market value of the common stock granted as wage
expense and additional paid in capital in the amount of
$21,432.

In August 1996, the Company entered into an agreement with
Robert Greer ("Greer"), a nonaffiliate, to serve as the
Company's financial advisor and provide financial advisory
services to the Company. In addition to a consulting fee,
the Company granted Greer warrants to purchase up to 125,000
shares of the Company's common stock at the lesser of $1.25
per share or a 15% discount to the closing bid price of the
Company's common stock on the date of exercise at any time
between August 2, 1996 and August 2, 2006. The Company
recorded the difference between the fair market value of the
stock and the exercise price of the warrants on the date of
grant as consulting expense and as additional paid in
capital in the amount of $219,000.

In November 1996, the Company entered into an agreement with
Dwayne Walker ("Walker"), a non-affiliate, whereby the
Company sold, for cash, 400,000 shares of the Company's
common stock for $100,000 or $.25 per share. The shares
issued to Walker were shares that were previously
contributed to the treasury by an officer and director.
Simultaneous with the sale of its common stock, the Company
entered into a separate agreement with TechWave, Inc.
("TechWave"), a non-affiliate, in which Walker serves as
president. The agreement with TechWave required the Company
to terminate merger discussions with specific other software
companies with which TechWave was attempting to form
strategic relations. The Company recorded the fair value of
the non-compete agreement as consulting expense and
additional paid in capital in the amount of $100,500. The
cash purchase price of the stock along with the value
assigned to the non-compete totaling $200,500 approximated
the fair market value of the Company's common stock on the
date on these transactions.

In November 1996, the Company entered into an agreement with
Amerifund, Ltd.("Amerifund"), an entity in which a
shareholder and former officer is an owner, to serve as the
Company's financial advisor and provide investment banking
and financial advisory services to the Company. In lieu of
a consulting fee, the Company paid to Amerifund, as full and
complete consideration, stock warrants to purchase up to
400,000 shares of the Company's common stock. The stock
purchase warrants are exercisable in whole or in part at
$.25 per share at any time between November 6, 1996 and
November 6, 2006. As required by FAS 121,
the Company recorded the fair value of the stock purchase
warrants granted for these services as consulting expense
and as additional paid in capital in the amount of $184,000.

During the year ended December 31, 1996 the Company entered
into a letter of intent with Sands Brothers, Inc.
("Sands"), an investment banking firm, to raise additional
equity capital through a secondary offering of its common
stock. The Company paid a non-refundable deposit with Sands
of $25,000 to Sands for its services. When Sands informed
the Company that it was unlikely that the secondary offering
would be successful, the Company terminated the letter of
intent and expensed the $25,000 deposit.

7. Related Party Transactions

In addition to the related party transactions discussed in
Notes 4 and 6, the Company entered into the following
related party transactions:

During the year ended December 31, 1996 the Company
reimbursed a former officer approximately $240,000 for the
purchase of computer equipment.

During the year ended December 31, 1995, the Company
advanced a former officer $30,000 to assist this former
officer with his move to the Company's headquarters. During
1996 this former officer and the Company entered into a
settlement agreement whereby the Company agreed to forgive
the moving advance in lieu of the former officer's agreement
that he would not proceed with a labor claim for unpaid
wages, which the Company denied were owed.

8. Asset Sale

Danro Purchase Order

In October 1996 the Company entered into a Purchase Order
(the "Agreement") with Danro Corporation ("Danro") whereby
the Company sold to Danro essentially all of its assets for
$200,000. The Agreement provided that the Company would
receive a downpayment of $65,000 and the remaining $135,000
would by advanced once the Company satisfied the following
conditions: 1) execution of one or more leases between the
Company and Danro covering the purchased items; 2) adoption
by the Board of Directors of a work-out plan; and 3)
delivery of such financial information as required by Danro.

On December 5, 1996, the Agreement was amended whereby the
Company and Danro agreed to adjust the purchase price
downward to $138,700, the amount which had already been
received by the Company. The Company agreed to repurchase
the equipment by January 15, 1997 and to pay lease fees of
$25,000 and legal fees incurred by Danro in the amount of
$4,000.

On February 5, 1997, the Company and Danro entered into an
Equipment Rental Extension Agreement (the "Extension
Agreement"). The Extension Agreement provided an extension
for the Company to repurchase its assets to March 31, 1997
and called for immediate payment of all rental fees due
Danro from October 1, 1996. The Company additionally agreed
to pay legal fees incurred by Danro in the amount of $1,830.

The Company was unable to pay any of the required payments
pursuant to these agreements, nor was it able to ultimately
repurchase its assets. Because the Company was in default
of the Agreement and The Extension Agreement, all amounts
due Danro were accelerated. Accordingly, the Company
recorded legal fees and lease expenses in the amounts of
$5,830 and $56, 829, respectively, as of December 31, 1996.

Trader Letter Agreement

In November 1996 the Company and Trader Publishing Company
("Trader") entered into a Letter Agreement (the "Letter
Agreement") whereby Trader would acquire substantially all
of the assets and properties used by the Company for a
purchase price of $750,000, consisting of $550,000 for the
assets being sold, $100,000 for a one-year consulting
agreement with the Company, and $100,000 for a five-year non-
compete agreement. Trader advanced the Company $110,000 as
an earnest money deposit for this Letter Agreement.
Additionally, the Letter Agreement provided that the Company
would be designated as the exclusive organization to produce
web site services for marine industry clients of Trader for
a period of four years. The agreement contained a provision
that in the event of a breach of the Letter Agreement which
resulted from events beyond the control of the Board of
Directors or the then president and executive officer and
his wife, who was an officer and director, the Company would
pay Trader a break-up fee in the amount of $35,000.

On December 19, 1996, Trader loaned the Company $110,000
pursuant to a promissory note. The note bore interest at
the prime rate plus 3% and was due January 30, 1997. The
promissory note was also subject to a security agreement
encumbering essentially all of the assets of the Company.
Upon the execution of the security agreement, the Company
pledged as collateral certain of the same assets that were
previously sold to Danro in October 1996.

On March 4, 1997, the Company filed a preliminary proxy
statement with the Securities and Exchange Commission. The
Company intended to solicit proxies seeking shareholder
approval of the proposed sale of substantially all the
Company's assets to Trader pursuant to the Letter Agreement
entered into in November 1996. The Company's board of
directors unanimously approved the asset sale to Trader and
intended to recommend that shareholders vote in favor of the
proposed asset sale. However, the Company was unable to
obtain a "fairness opinion" from a financial advisor
regarding the fairness of the proposed asset sale, and the
proposed sale of assets to Trader failed to close and
proxies were not solicited to approve the sale. The Company
was unable to satisfy a number of conditions required to
close the proposed asset sale, including the ability to
provide audited financial statements and the ability to
convey assets subject to the proposed sale free and clear of
all liens and encumbrances.

As a result of the Company and Trader being unable to
finalize a definitive agreement pursuant to the Letter of
Agreement, Trader advised the Company on March 31, 1997 that
the earnest money deposit plus all sums due under the
promissory note, plus interest and expenses, were due and
payable. Trader also gave notice of its intent to exercise
all its rights under the security agreement unless payment
was made.

On April 18, 1997, Judgment was entered against the Company
in the District Court of Harris County, Texas, and a Notice
of Public Sale of the Company's assets covered by the
security agreement was posted for May 13, 1997. In addition,
Trader filed suit against the Company on April 18, 1997,
alleging breach of the Letter of Agreement and demanding
repayment of the earnest money deposit of $110,000 plus
$35,000 for the break-up fee and legal fees of approximately
$36,000.

Wildwood

On May 19, 1997 the Company and Trader entered into a
Settlement Agreement and Release in which Wildwood Capital
LLC ("Wildwood"), a nonaffiliate, agreed to pay Trader
$228,000 for the right to obtain the assignment of the
judgment, the litigation, and the liens securing the assets.
Wildwood and Danro are related entities through common
ownership. Simultaneously with the execution of the
Settlement Agreement, the Company executed and delivered to
Wildwood a bill of sale transferring, assigning, and
conveying to Wildwood and settlement of the judgment and in
lieu of foreclosure by Wildwood essentially all of the
Company's assets.

The Company recorded the loss on sale of assets for the year
ended December 31, 1996 as follows:

Write-off net book value of assets
assigned to Wildwood $ (414,389)
Write-off prepaid marketing (50,000)
Write-off net book value of License
Agreement (148,849)
Trader deposit for Letter Agreement 110,000
Note payable to Trader 110,000
Proceeds from Danro pursuant to
Purchase Agreement 138,700

$ (254,538)

Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure

Effective June 11, 1997, Ernst & Young LLP resigned as the
Company's certified public accountants. This event was
reported on Form 8-K filed with the Securities and Exchange
Commission on June 16, 1997.

For the Company's year ended December 31, 1995 an unqualified
opinion was issued on the financial statements. However, Ernst
& Young's report dated March 15, 1996 contained the following
paragraph:

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company is
in the development stage, has not achieved significant
operations, and has incurred losses since inception. These
conditions raise substantial doubt as to the Company's ability
to continue as a going concern. In order for the Company to
emerge out of the development stage and continue as a going
concern the Company must achieve a level of operations
sufficient to meet cash flow requirements and to recover the
development costs incurred. Management's plans in regard to
these matters are described in Note 1. The financial
statements do not include any adjustments to reflect the
possible future effects on the recoverability and
classification of asset carrying amounts or the amounts and
classification of liabilities that may result should the
Company be unable to continue as a going concern.

During the Company's two most recent fiscal years and through
June 11, 1997 there were no disagreements with
Ernst & Young LLP regarding financial accounting and reporting
matters which, if not resolved to the satisfaction of Ernst &
Young LLP, would have caused it to make reference to the
subject of the disagreement in connection with its report.

On May 28, 1998, the Company retained Gerald R. Hendricks and
Company, P.C. as the Company's certified public accountant.

Part III

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

Directors and Executive Officers as of December 31, 1996:

Name Age Position
Charles M. Powell 45 President, Chief Executive
Officer, Chief Financial
Officer, Chairman of the
Board
Gregory S. Carr 39 Secretary and Director
Peter H. Salus 58 Director
Robert C. Newman 53 Director
Dyann L. Carr 36 Director

Directors and Executive Officers as of December 31, 1997 and 1998:

Gregory S. Carr 39 Secretary and Director

Each director is elected for a period of one year and serves
until his or her successor is duly elected by the Company's
stockholders. Dr. Peter Salus is the sole member of the
Company's Compensation Committee. Gregory S. Carr and Dyann L.
Carr are married.

The principal occupation of each director and executive officer
of the company for a minimum of five years preceding December
1996 was as follows:

Charles M. Powell, president, chief executive officer, chief
financial officer, chairman of the board and director. Mr.
Powell co-founded and has served as Vice President of
International Operations and Chief Financial Officer of KaPre
Software, Inc., a Boulder, Colorado based privately held
developer of commercial business software, since its inception
in 1992. From January 1989 to March 1992 Mr. Powell served as
Vice President of International Operations for J.D. Edwards &
Company, a Denver, Colorado based software production company.
Mr. Powell previously held positions with Price Waterhouse,
Storagetek, Inc., and Columbine Systems, Inc. Mr. Powell
served as a director of the following publicly-held firms: The
Business Development Company; Siscom, Inc., a software
development company; International Nursing, Inc., a home health
care service provider; and Premier Concepts, Inc., a retail
jewelry distribution company. Mr. Powell resigned all his
positions with the Company effective August 4, 1997. As of
the date of filing this report, Mr. Powell is president and
director of Antalys Corporation, a wholly-owned subsidiary of
Baan Company. He is also a director of The Rockies Fund, a
publicly-traded company on the NASDAQ under the symbol ROCES.

Gregory S. Carr, secretary and director. Mr. Carr co-founded
the Company in April 1995 with his wife, Dyann L. Carr. From
inception of the Company to December 10, 1996, Mr. Carr served
as the Company's president, CEO and chairman of the Board of
Directors. He resigned the offices of president, CEO, and
chairman on December 4, 1996. Mr. Carr was appointed corporate
secretary and retained a membership position on the Board of
Directors. From September 1991 until April 1995, he was a
regional manager for Molten Metal Technology, Inc., responsible
for sales and management of certain projects. From June 1983
to September 1991, he held a similar position with Liquid Air
Corp. in sales, project management, and corporate re-
engineering. Mr. Carr graduated from Southern Illinois
University in 1980 with a Bachelor's degree in Chemistry, and
earned a Masters degree in Thermal and Environmental
Engineering from the same university in 1983. In 1989, Mr.
Carr completed advanced business studies in the corporate
program at "INSEAD," the European Institute for Business
Administration in Fountainbleau, France. As of the date of
filing this report, Mr. Carr is the sole corporate officer and
director of the Company.

Peter H. Salus, Ph.D., director. Dr. Salus was the Executive
Director of Sun User Group, a privately-held independent users
association based in San Joe, California. He is a past
Executive Director of USENIX, the UNIX user group association.
Since January 1993, he has been a freelance author and
consultant in the areas of UNIX and the Internet. Dr. Salus is
the Managing Editor of the MIT Press Publication Computing
Systems, editor of the magazine I-Way, and a regular columnist
in Sun Expert. Mr. Salus earned a Bachelor of Science degree
in Chemistry in 1960, a Masters degree in German in 1961, and a
Ph.D. degree in Linguistics in 1963, all from New York
University. Dr. Salus resigned his position as director of the
Company effective March 14, 1997.

Dyann L. Carr, Director. Ms. Carr co-founded the Company with
her husband, Gregory S. Carr, in April 1995. Prior to that
time, Ms. Carr owned and operated Dynamic Concepts, a graphic
design studio that licensed her designs to firms for various
consumer applications. Ms. Carr resigned her position as
director of the Company effective May 16, 1997.

Mr. and Ms. Carr each failed to file the reports relating to
transactions as required by Section 16(a) of the Securities
Exchange Act of 1934, as amended. By December 10, 1996,
Mr. Carr had failed to file a Form 4 when he retired 400,000
shares of Common Stock to the Company treasury, which were
immediately resold to Duane Walker in November 1996. Both Mr.
and Ms. Carr failed to file the necessary Forms 4 when in December
1996 they each retired 1,000,000 shares of the Company's Common
Stock that they owned. In addition, no annual Form 5 was filed
by either party.

Item 10. Executive Compensation

The following table sets forth remuneration paid to certain executive officers:

<TABLE>
<CAPTION>
Name and Year Salary($) Bonus($) Other Annual Restricted Securities LTIP All Others
Principal Compensation Stock Award Underlying Payout($) Compensation
Position Option/SARs ($)(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gregory S.
Carr 1996 120,000<F1> 12,500
Charles M.
Powell 1996 140,00
<FN>
<F1> All salaries were deferred by all corporate officers by the
end of fiscal year 1996. As of September 15, 1996, Gregory
Carr's salary was reduced from $120,000 annually to $80,400
annually. As a result of the salary Mr. Carr deferred during
1996, he is eligible to receive options to purchase a maximum
of 12,500 shares of the Company's Common Stock at an exercise
price per share of $1.00 for the period of ten years from the
date of the grant (through April of 2005 and April 2006) or
until three months after his termination with the Company.
During the fiscal year ended December 31, 1996, Mr. Carr
received total cash compensation in the amount of $74,408. Mr.
Carr received no compensation for the years ended December 31,
1997 and 1998.

Mr. Powell received no regular compensation for his services to
the Company as acting Chief Executive Officer and President.
However, the Company granted Mr. Powell an option to purchase
140,000 shares of the Company's Common Stock at an exercise
price of $1.00 per share for ten years (through August 31,
2006).

The members of the Company's Board of Directors did not receive
any cash compensation for their services as directors although
they were reimbursed for out-of-pocket expenses in attending
Board of Directors' meetings and have been granted options
under the Company's stock option plan exercisable at $1.00 per
share. (See "Long-Term Incentive Compensation Plan.")
</FN>
</TABLE>

Long-Term Incentive Compensation Plan

In August 1995, the Company adopted a Long-Term Incentive
Compensation Plan (the "1995 Incentive Plan") which provides
for the grant of options intended to qualify as "incentive
stock options" and "nonqualified stock options" within the
meaning of Section 422 of the United States Internal Revenue
Code of 1986 (the "Code"). Incentive stock options are
issuable only to eligible officers, directors, key employees,
and consultants of the Company.

The 1995 Incentive Plan is administered by the Compensation
Committee of the Board of Directors which is comprised of non-
employee directors. At December 31, 1996 the Company had
reserved 1,600,000 shares of Common Stock for issuance under
the 1995 Incentive Plan. Under the 1995 Incentive Plan, the
Board of Directors determines which individuals shall receive
options, the time period during which the options may be
partially or fully exercised, the number of shares of Common
Stock that may be purchased under each option, and the option
price.

The per share exercise price of the Common Stock may not be
less than the fair market value of the Common Stock on the date
the option is granted. No person who owns, directly or
indirectly more than 10% of the total combined voting power of
all classes of stock of the Company is eligible to receive
incentive stock options under the 1995 Incentive Plan at the
time of the granting of an incentive stock option unless the
option price is at least 110% of the fair market value of the
Common Stock, subject to the option on the date of grant.

No options may be transferred by an optionee other than by will
or the laws of descent and distribution, and during the
lifetime of an optionee, the option may only be exercisable by
the optionee. Options may be exercised only if the option
holder remains continuously associated with the Company from
the date of grant to the date of exercise. Options under the
1995 Incentive Plan must be granted within ten years from the
effective date of the 1995 Incentive Plan and the exercise date
of an option cannot be later than ten years from the date of
grant. Any options that expire unexercised or that terminate
upon an optionee's ceasing to be employed by the Company become
available once again for issuance. Shares issued upon exercise
of an option will rank equally with other shares then
outstanding.

The stock option activity under this plan is set forth below
for the period January 18, 1995 (inception) to December 31,
1998:
Shares
Under Option
Option Per Share

Granted 1,254,000 $1.00 to $6.25
Forfeited (37,500) $1.00 to $6.00
Outstanding at December 31, 1995 1,216,500 $1.00 to $6.25
Granted 536,500 $1.00 to $7.00
Forfeited 334,000 $ .50 to $6.25
Outstanding at December 31, 1996 1,419,000 $ .25 to $7.00
Granted - -
Forfeited 923,500 $ .50 to $3.69
Outstanding at December 31, 1997 495,500 $ .50 to $7.00
Granted - -
Forfeited 53,000 $ .50 to $3.69
Outstanding at December 31, 1998 442,500 $1.00 to $7.00

As of December 31, 1998, 442,500 shares were exercisable and
1,157,500 are available for future grants. The options are
generally exercisable for up to ten years following the date of
grant (five years for 10% owners). Of the outstanding options,
12,500 are issued to Mr. Carr, and an additional 165,000 are
issued to formers directors of the Company.

In connection with various consulting and financing agreements,
the Company has issued warrants to purchase the Company's
common stock at prices that range from $.25 per share to the
lessor of $1.25 per share or 15% discount to the closing bid
price of the Company's stock price on the date of exercise.
The warrants are exercisable for a ten-year period and
generally provide "piggy-back" registration rights for the
underlying shares at the request of the majority of warrant
holders. Outstanding warrants were 1,995,000, 1,395,000,
525,000, and 0 as of December 31, 1998, 1997, 1996, and 1995,
respectively.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information regarding
the beneficial ownership of the Company's Common Stock as of
December 31, 1996 by (i) each person who is known by the
Company to own of record or beneficially more than 5% of the
Company's Common Stock, (ii) each of the Company's directors
and executive officers, and (iii) all directors and officers of
the Company as a group. The stockholders listed in the table
have sole voting and investment powers with respect to the
shares indicated, except as noted.

1998 1997 1996
Name of Number of Percentage Number of Percentage Number of Percentage
Beneficial Shares of Class(%) Shares of Class(%) Shares of Class(%)
Owner Owned Owned Owned

Gregory S.
Carr(1) 132,500 3.9 582,500 17.3 582,500 17.3
Dyann L.
Carr(1)(2) 450,000 13.3 900,000 26.6 950,000 28.0
Charles M.
Powell(3) 10,000 - 10,000 - 10,000 -
Peter H.
Salus(4) - - - - - -
Samuel W.
Humphreys(5) - - - - - -
Robert C.
Newman(6) 25,000 1.0 25,000 1.0 25,000 1.0
Dwayne
Walker 400,000 11.8 400,000 11.8 - -
The Rockies
Fund(7) 400,000 9.3 - - - -
Marco
Foods(7) 313,500 9.3 - - - -
The
Calandrella
Family
Foundation(7)20,000 1.2 - - - -
All officers
and Directors
as a group 582,500 17.2 1,482,500 43.9 1,567,500 46.0

(1) As of May 5, 1999 Gregory S. Carr and Dyann L. Carr are
husband and wife, own 132,500 and 450,000 shares, respectively,
of the Company's Common Stock, and disclaim any beneficial
interest in the Common Stock owned by the other. Pursuant to
an irrevocable proxy executed December 20, 1996 by the Carr's,
Gregory Carr and Dyann Carr granted the Company's Board of
Directors voting power over a total of 1,000,000 shares of the
Company's Common Stock owned by the Carr's during the period
beginning December 20, 1996 through May 20, 1997. As of the
date of filing this report, the irrevocable proxy granted to
the Board of Directors by the Carr's has expired.

(2) Ms. Carr resigned her positions with the Company as of May 16, 1997.

(3) Mr. Powell resigned his positions with the Company as of August 4, 1997.

(4) Mr. Salus resigned his positions with the Company as of March 14, 1997.

(5) Mr. Humphreys resigned his positions with the Company as of
November 12, 1996.

(6) Mr. Newman resigned his positions with the Company as of May 19, 1997.

(7) On January 26, 1998 Mr. and Ms. Carr entered into an
agreement with The Rockies Fund ("the Fund")
whereby the Carr's agreed to sell up to 2,900,000 shares of
their stock to the Fund at the rate of $0.05 per share. As
of May 5, 1999, the Fund, Mr. Calandrella, the president of
the Fund, certain of his family members, and other entities
that are controlled by Mr. Calandrella, own shares and
warrants totaling 1,073,500 and 1,350,000, respectively.
The shares owned represent approximately 32% of the
outstanding shares of the Company. Of the shares owned,
900,000 shares were purchased at $.05 per share directly
from the former president and vice president of the Company
in private transactions. The remaining shares owned were
purchased in open market transactions.

Item 12. Certain Relationships and Related Transactions

On August 14, 1995, the Company issued 4,000,000 shares of its
Common Stock to the shareholders of Recreational Data Services,
Inc. ("RDS") in exchange for all of its equity interests and
assets. RDS was originally organized by Gregory S. and Dyann L
Carr on April 3, 1995 as a Texas limited liability company.
The Carr's were its sole members and managers. RDS
subsequently incorporated in Delaware in July 1995. RDS had
previously exchanged equity interests in RDS for all the assets
of a sole proprietorship formed by the Carr's, who had
commenced development of a software program known as the
"Internet Waterway." The Carr's' investment in RDS through
August 14, 1995 was $4,000. Accordingly, the Carr's received
4,000,000 shares of the Company's Common Stock for $4,000
(which represents the dollar amount of their investment in RDS)
or $.001 per share of the Company's Common Stock.

In August 1995, the Company sold an aggregate of 500,000 shares
of its Common Stock to a group of nonaffiliated investors for
$1.00 per share. In October 1995, the Company borrowed
$350,000 from a group of nonaffiliated lenders (the "October
1995 Bridge Loan") payable on September 30, 1996 or ten days
after the closing of the Company's initial public offering,
whichever was earlier. The October 1995 Bridge Loan was paid
in full in December 1995 from the proceeds of the Company's
initial public offering. As additional compensation for the
October 1995 Bridge Loan, an officer and director conveyed an
aggregate of 17,500 shares of his personal share, which carried
certain demand and piggyback registration rights.

Mr. Carr advanced funds to the Company to fund the operating
and start-up expenses of the Company. The note
bore interest at 9% per annum and matured in January 1997. In
January 1997, when the Company was unable to pay this note, the
shareholder officer accepted as partial payment, the Company's
automobile. The net book value of the automobile approximated
$21,000, which the shareholder officer and the Company believed
to be the estimated fair market value. During the year ended
December 31, 1997 the Company reduced the principal amount owed
to the shareholder officer by $18,756, which represented
personal charges made by the shareholder officer on the
Company's credit card. In April 1998, the Company and the
shareholder officer and his wife, who was previously an officer
and director of the Company, entered into a settlement
agreement. In addition to the remaining unpaid principal and
interest pursuant to the note payable shareholder officer, the
Company owed these two individuals accrued wages and
unreimbursed expenses in the amount of $64,960 and $4,061,
respectively. These individuals agreed to accept a cash
payment in the amount of $6,700 and contribute the remaining
balances, in the amount of $250,245, as additional paid in
capital.

In November 1996, December 1996 and February 1997, Mr. and Ms.
Carr contributed 450,000, 2,000,000 and 50,000 shares of common
stock to the treasury. The contribution of stock to the
treasury was to facilitate the issuance of shares to new
investors, attract new financing and to reduce the outstanding
number of shares of common stock. The Company recorded the
contribution of common stock as treasury stock and additional
paid in capital at a rate of $0.001 per share, which is
equivalent to the par value of the Company's common stock. Of
the shares contributed to the treasury, 100,000 shares were
issued to Mr. Figueiredo pursuant to his note payable and
400,000 shares were sold to Mr. Walker at $0.25 per share.
200,000 shares remain in the treasury. (See "Strategy -
Financing Efforts.")

During 1996 1,000,000 shares of the Company's Common Stock
owned by Gregory Carr and Dyann Carr (500,000 each) were made
subject to an irrevocable proxy dated December 20, 1996,
appointing the Company's Board of Directors as their lawful
proxy, thus granting them voting control over the 1,000,000
shares of the Company's Common Stock for the period December
20, 1996 through May 20, 1997.

In September 1996 Thomas Cabanski, the former Senior Vice
President & Chief Information Officer, separated from the
Company. As part of the severance agreement entered into
between the Company and Mr. Cabanski, Mr. Cabanski waived
alleged claims against the Company for wages due and the
Company waived all claims against Mr. Cabanski for repayment of
personal loans in the amount of $30,000 due the Company. Mr.
Cabanski is the brother-in-law of Dyann L. Carr, the former
executive vice president and director of the Company.

During 1996, the Company reimbursed Mr. Gary W. Tidwell, who
was the vice president and general counsel for the Company,
approximately $240,000 for the purchase of computer equipment.

On December 1, 1996, the Company entered into an agreement with
Amerifund, Ltd. ("Amerifund"), to serve as one of the Company's
financial advisors and provide investment banking and financial
advisory services to the Company. Gordon Burr ("Burr"), a
former officer of the Company, is also an owner of Amerifund.
In lieu of a consulting fee, the Company paid to Amerifund, as
full and complete consideration, stock warrants to purchase up
to 400,000 shares of the Company's common stock. The stock
purchase warrants are exercisable in whole or in part at the
rate of $.25 per share at any time between November 6, 1996 and
November 6, 2006.

In February 1997 and during 1998, the Company borrowed $25,000
and $61,476, respectively, from The Rockies Fund (The "Fund"),
a shareholder which is a "business development company" under
the Investment Company Act of 1940. The $25,000 note bears
interest at 10% (default rate 18%) and was due March 21, 1997.
Pursuant to the note agreement, the Company issued warrants to
purchase 50,000 shares of the Company's common stock at $.25
per share. Additionally, the note agreement requires the
Company to issue 50,000 warrants monthly for every month that
the note is in default. As of May 5, 1999, the Company granted
1,350,000 warrants to the Fund. The $61,476 note bears
interest at 8% and has no specific repayment terms. No
warrants were issued pursuant to the $61,476 note payable.
Subsequent to December 31, 1998, the Company borrowed an
additional approximately $29,000 from the Fund. This note
bears interest at 8%, has no stated repayments terms and is
without collateral.

As of April 1999, the Fund, Mr. Calandrella, the president of
the Fund, certain of his family members, and other entities
that are controlled by Mr. Calandrella and his wife, own shares
and warrants totaling 1,073,500 and 1,300,000, respectively.
The shares owned represent approximately 32% of the outstanding
shares of the Company. Of the shares owned, 900,000 shares
were purchased at $.05 per share directly from the former
president and vice president of the Company in private
transactions. The remaining shares owned were purchased in
open market transactions. (See "Security Ownership of Certain
Beneficial Owners and Management")

Gregory S. Carr acted as a consultant to Wildwood Capital
between May 19, 1997 and April 1999. He consulted on an hourly
basis at a rate of $50.00 per hour.

Part IV

Item 13.
(a) Exhibits

Articles and Bylaws

(3.1) Articles of Incorporation, by reference from the period ending
December 1995.
(3.2) Bylaws, by reference for the period ending December 1995.

Instruments Defining the Rights of Security Holders, Including Indentures

(4.1) Promissory Note dated September 28, 1995 issued to
Greg S. Carr incorporated by reference from 10-KSB for the
period ending December 31, 1995.
(4.2) Promissory Note dated November 22, 1995 issued to
Gary Keogh incorporated by reference from 10-KSB for the period
ending December 31, 1995
(4.3) Promissory Note dated January 28, 1997 issued to Gary Keogh.
(4.4) Promissory Note dated November 20, 1996 issued to David Figueiredo.
(4.5) Promissory Note dated March 26, 1997 issued to David Figueiredo.
(4.6) Promissory Note dated March 26, 1997 issued to Dolores Davis.
(4.7) Promissory Note dated January 30, 1997 issued to Caribou Capital.
(4.8) Promissory Note dated February 14, 1997 issued to The Rockies Fund.
(4.9) Promissory Note dated April 30, 1998 issued to The Rockies Fund.
(4.10) Promissory Note dated January 1,1999 issued to The Rockies Fund.
(4.11) Promissory Note dated January 8, 1996 issued to Texas
Commerce Bank National Association.
(4.12) Promissory Note dated February 6, 1996 issued to
Texas Commerce Bank National Association.
(4.13) Promissory Note dated June 6, 1996 issued to Texas
Commerce Bank National Association.

Material Contracts

(10.1) Stock Option and Incentive Plan incorporated by reference from
10-KSB, December 1995.
(10.2) William Chen License and Consulting Agreement.
(10.3) Danro Ltd., Purchase Order, October 1, 1996.
(10.4) Danro Ltd., Bill of Sale, October 1, 1996.
(10.5) Danro Ltd., Agreement for Amendment to Purchase Order for
Computer Equipment, December 5, 1996.
(10.6) Danro Ltd., Equipment Rental Extension, February 5, 1997.
(10.7) Trader Publications, General Security Agreement, December 19, 1996.
(10.8) Trader Publications, Commercial Note, December 19, 1996.
(10.9) Trader Publications, Letter of Intent to Purchase
Assets of Kinetiks.com, Inc., November 27, 1996.
(10.10) Trader Publications, Settlement Agreement and Release, May 18, 1997.
(10.11) The Rockies Fund, Private Purchase of Stock, January 26, 1998.
(10.12) Gregory S. and Dyann L. Carr, Settlement Agreement with Kinetiks.
com, Inc. and Amendment to Private Purchase of Stock, April 15, 1998.
(10.13) Warrant Agreement, Amerifund, December 1, 1996.
(10.14) Warrant Agreement, Robert R. Greer, October 31, 1996.
(10.15) Option Agreement, Seaboard Securities, April 2, 1996.
(10.16) Warrant Agreement, Sand Brothers, April 22, 1996.
(10.17) Consulting Agreement, Gary E. Keough, November 24, 1995.

(27.1) Financial Data Schedule

1996

November 12: Form 8-K filed noting that Sam Humphreys
had resigned his position on the Board of Directors and
that the Company had received notification from the SEC
that its stock would no longer trade on the NASDAQ
SmallCap market.

December 27: Form 8-K filed noting that Gregory S. Carr
had resigned as President and CEO of the Company and that
Gregory S. and Dyann L Carr had retired 2,000,000 shares
of stock. This 8-K also notes that the Board of Directors
were granted voting control of an additional 1,000,000
shares of the founders' stock for a minimum period of six
months.

1997

May 19: Form 8-K filed noting the Settlement Agreement
with Trader Publications, Wildwood LLC, and Danro, Ltd.

June 16: Form 8-K filed noting the resignation of the
Company's independent auditors, Ernst & Young, LLP.

1998

June 18: Form 8-K filed noting the hiring of Gerald R.
Hendricks & Co., P.C., as the Company's independent
auditor.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange
Act, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized:

Kinetiks.com, Inc.