INTERNET INFINITY INC
10SB12G/A, 2000-02-08
BUSINESS SERVICES, NEC
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                    U. S. Securities and Exchange Commission
                             Washington, D. C. 20549


                          AMENDMENT NO. 2 TO FORM 10-SB
                 GENERAL FORM FOR REGISTRATION OF SECURITIES OF
                             SMALL BUSINESS ISSUERS

        Under Section 12(b) or (g) of the Securities Exchange Act of 1934





                             INTERNET INFINITY, INC.
                 (Name of Small Business Issuer in its charter)





         Delaware                       0-27633                95-4679342
- ------------------------------       -------------        ----------------------
State or other jurisdiction of                              (I.R.S.  Employer
incorporation or organization)       (SEC File No.)       Identification Number)








                3303 Harbor Boulevard, K-5, Costa Mesa, CA 92626
                ------------------------------------------------
                    (Address of principal executive offices)

                                  310-318-2244
                           ---------------------------
                           (Issuer's Telephone Number)




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



     Title of each class                         Name of each exchange on which
     to be so registered                         each class is to be registered

           None


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

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of Class)
<PAGE>



                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

Preliminary Statement ......................................... ........      1

Description of Business.................................................      1
        Business Development ...........................................      1
        Business of Internet Infinity ..................................      3
               Products ................................................      3
               Supplies and Sub-Contractors ............................      4
               Distribution Methods ....................................      6
               Competition .............................................      6
               Advertising and Promotion ...............................      7
               Dependence on Major Customers ...........................      7
               Patents, Trademarks and Licenses ........................      7
               Government Approval and Regulations .....................      7
               Year 2000 Computer Problems .............................      8
               Research and Development ................................      8
               Cost of Compliance with Environmental Laws ..............      8
               Seasonality .............................................      8
               Employees ...............................................      8
               New Products and Services ...............................      8

Management's Discussion and Analysis of Financial
        Condition and Results of Operations ............................      9
        Results of Operations ..........................................      9
               Sales ...................................................      9
               Gross Margin ............................................     10
               Selling, General and Administrative Expenses ............     11
               Royalties Expense .......................................     12
               Net Profit (Loss) .......................................     12
               Balance Sheet Items .....................................     13
               Liquidity and Outlook ...................................     13
               Costs of Filing Periodic Reports ........................     14

Properties ..............................................................    14
Security Ownership of Certain Beneficial Owners and
        Management ......................................................    15
               Changes in Control .......................................    15

Directors, Executive Officers and Control Persons .......................    16

Executive Compensation ...................................................   17

Certain Relationships and Related Transactions ...........................   19

Description of Securities ................................................   23
        Common Stock .....................................................   23
               Voting Rights .............................................   23
               Dividend Rights ...........................................   23
               Liquidation Rights ........................................   24
               Preemptive Rights .........................................   24
               Registrar and Transfer Agents .............................   24

                                       ii

<PAGE>



               Dissenters' Rights .......................................    24

Market for Common Stock and Related Stockholder Matters .................    24
        Holders .........................................................    25
        Dividends .......................................................    25

Legal Proceedings .......................................................    25

Recent Sales of Unregistered Securities .................................    25

Indemnification of Directors and Officers ...............................    26

Financial Statements ....................................................    27




                                       iii
<PAGE>



                              PRELIMINARY STATEMENT

        Internet  Infinity,  Inc. (the  "Company")  is filing this  registration
statement on a voluntary basis under Section 12g) of the Securities Exchange Act
of 1934. Our common stock trades in the over-the-counter market and is quoted by
NASD market makers on the OTC Bulletin Board. A recent rule change requires that
all  Bulletin  Board  companies  must  file  periodic   financial  reports  with
governmental  authorities  such as the Securities and Exchange  Commission.  The
effectiveness of this registration  statement  subjects Internet Infinity to the
periodic  reporting  requirements  imposed  by Section  13(a) of the  Securities
Exchange Act.

        We will  electronically  file with the Commission the following periodic
reports:

        o       Annual reports on Form 10-KSB;

        o       Quarterly reports on Form 10-QSB;

        o       Periodic reports on Form 8-K of matters of material interest  to
                shareholders;

        o       Annual proxy statements  to be sent  to  our shareholders in the
                notices of our annual shareholders' meetings.

In  addition  to the above  reports  to be filed  with the  Commission,  we will
prepare and send to our  shareholders an annual report that will include audited
financial statements.

        The public may read and copy any  materials we file with the  Commission
at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C.  20549.  The public may obtain  information  on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. Also, the Commission
maintains an Internet site (http://www.sec.gov) that contains reports, proxy and
information   statements,   and  other   information   regarding   issuers  that
electronically file reports with the Commission.


                             DESCRIPTION OF BUSINESS

Business Development

        Internet Infinity,  Inc. (the "Company") was incorporated on October 27,
1995 in the State of Delaware.  We raised  $375,000 in a  non-registered  public
offering of our common stock during the period August 1996 through July 1997. We
conduct  our  business  from  our  sales  headquarters  office  in  Costa  Mesa,
California. We first had revenues from operations in 1996.

        Our initial focus was on selling  Internet  software.  However,  by late
1996 we began experiencing  significant product returns from our software sales.
Sam's Club returned $237,000 of a $257,000 single order of a new Internet Access
program.  Sam's Club's reason for the return was a lack of retail sales for this
type of product caused by competitors'  low- or free-of-cost  browsers and other
Internet utility programs. By early 1997 our software sales were slipping toward
zero and Internet  Infinity had to find an  alternative  revenue  opportunity to
survive.

                                        1

<PAGE>




        We first turned our  attention and efforts to selling  electronic  media
duplication and packaging  services  offered by an unaffiliated  company,  Video
Magnetics,  LLC. Internet Infinity had experience with videotape duplication and
CD-ROMs  from prior sales of our special  interest  video  programs and Internet
software  programs.  In  addition,  the growing  digital  media  market  offered
compatible  alternative electronic media opportunities to Internet Infinity. One
of Internet  Infinity's early software packages for the retail market included a
combination  of CD and access to the Internet.  The  70-year-old  owner of Video
Magnetics had primarily sold, to small local  companies,  video tape duplication
services,  CD-ROM  duplication  services,  new low  quality and used blank video
tapes, video tape packaging supplies and used video tape duplication  equipment.
In December 1996, the owner of Video  Magnetics said he wanted to get rid of the
business and retire as soon as possible.  He advised  Internet  Infinity that he
believed a new owner would not want to  continue  the  distribution  arrangement
Video Magnetics had with Internet Infinity. Therefore, the only way to guarantee
Internet  Infinity's  right to  distribute  the products and retain the existing
customer base that came from Video  Magnetics  was to acquire  Video  Magnetics.
Accordingly,  George Morris, our chief executive officer and a director with his
wife, Dawn Morris, the controlling  shareholders of our company, through another
company, L&M Media, Inc., in which they have had a 98 percent ownership for over
ten years,  bought Video Magnetics'  business in early 1997. If the Morrises had
not acquired Video  Magnetics,  the sales to existing Video Magnetics  customers
that had been  turned  over by Video  Magnetics  to  Internet  Infinity  and the
availability of Video Magnetics'  low-cost,  in-house  manufacturing  facilities
would probably have been lost to any other new owner of Video Magnetics.

        L&M Media, Inc., the acquirer of Video Magnetics' business, had produced
and created special interest video programs,  such as how-to sports,  home, auto
and business training.

        On December 1, 1998, Apple Media Corporation,  a wholly-owned subsidiary
of L&M Media, Inc.,  assumed all  responsibility for business  operations of the
former  Video  Magnetics,  Inc.  Apple Media  focuses on the  manufacturing  and
duplication of video, CD and related  products.  Apple Media  Corporation,  as a
wholly-owned  subsidiary  of L&M Media,  Inc. is  indirectly 98 percent owned by
George and Dawn Morris since George and Dawn Morris own 98 percent of L&M Media,
Inc.

        Apple Media  Corporation  is the major  supplier of products to Internet
Infinity and its subsidiaries. It provides blank video, video packaging supplies
and  duplication  of video  and CD Media on credit  terms as needed by  Internet
Infinity and its subsidiaries.

        At the time we acquired  Video  Magnetics  we also added to the Internet
Infinity   business  the  distribution  of  better  quality  blank   videotapes,
recordable  compact discs ("CDRs") and  pre-recorded  video programs on numerous
subjects.   L&M  Media,  Inc.  and  its  wholly-owned   subsidiary  Apple  Media
Corporation,  source new suppliers of electronic  media materials and components
through aggressive purchasing management.  The business rationale is to increase
Internet  Infinity  sales  with  more  products  and  services.   The  licensed,
pre-recorded  video programs are owned by L&M Media, Inc., an affiliated company
98 percent owned by George and Dawn Morris.  Internet  Infinity  contacts  video
store  chains and school  distributors  by  telephone  to offer  these  licensed
programs.  Program subjects include "how-to" for various sports,  cooking,  home
and auto repair, lawn and garden, crafts, business success and computer software
training.


                                        2

<PAGE>



        In July  1997 we  started  to  accumulate  the  distribution  rights  to
twenty-five  Health and Medicine video programs owned by L&M Media,  Inc., which
is 98 percent owned by George and Dawn Morris, the controlling  shareholders and
officers and directors of Internet  Infinity.  We completed this accumulation in
February  1998.  Then,  in early  1999 we  purchased,  from L&M  Media  and from
Hollywood  Riviera  Studio,  the  distribution  rights to five video  modules on
Personal and Sales Skill Development.  Hollywood Riviera Studios is the "dba" of
Apple Realty,  Inc.,  which is 100 percent owned by George and Dawn Morris,  the
controlling  shareholders  and  principal  officers  and  directors  of Internet
Infinity.  We propose to commence the marketing of the Health and Medicine video
programs and the Personal and Sales Skill Development video modules in the first
half of calendar year 2000.  Finally,  we are building an "Internet  Infinity to
Business"  web site that we will launch in early  calendar year 2000 to sell our
Personal and Sales Skill Development product.

Business of Internet Infinity

        Internet Infinity

        o       distributes electronic media duplication services and electronic
                blank media;

        o       distributes prerecorded special interest video programs; and

        o       distributes  Internet web site design services and CD authoring
                services.

        Products
        --------

        We have four principal products and services:

        o       electronic  media  duplication  and  packaging  services  of two
                types -

                o       compact disks, and

                o       video tape;

        o       blank media of two types -

                o       video tape, and

                o       CDR - Recordable Compact Disc;

        o       pre-recorded special interest video programs of six types -

                o       computer training,

                o       health and medical,

                o       sports and exercise training,


                                        3

<PAGE>



                o       children's crafts,

                o       home and auto repair, and

                o       personal knowledge and skill development; and

        o       Internet site design and marketing support in two areas -

                o       non-affiliated clients of Internet Infinity, and

                o       subsidiaries of   Internet Infinity.

        Suppliers and Sub-Contractors
        -----------------------------

        Our duplication services and blank media product orders are manufactured
and fulfilled by an affiliated company, Apple Media Corporation, at a cost of 80
percent  of the  total  invoice  amount  billed  by us to a  customer  including
shipping.  Apple Media  Corporation is a  wholly-owned  subsidiary of L&M Media,
Inc.,  which is 98 percent  owned by George  and Dawn  Morris,  the  controlling
shareholders, officers and directors of Internet Infinity. Apple Media is solely
responsible for equipment leases,  raw materials and components,  manufacturing,
sub-contractors,  packaging and shipping  labor,  management  and physical plant
overhead.  We, through our  Electronic  Media Central  Corporation  wholly-owned
subsidiary,  are  responsible  for sales force  compensation,  direct  sales and
accounting  clerical  support and executive  management out of our 20 percent of
the invoice discount amount. In addition, Apple Media Corporation also provides,
at a cost of $900 a month or  $10,800  for the  twelve-month  fiscal  year ended
March 31, 1999,  office  facilities,  telephone,  and utilities to our sales and
management staff.

        Our prerecorded video programs are manufactured,  duplicated and shipped
by Apple Media at a cost of 20 percent of the total invoice  amount billed by us
to a customer for all costs including  shipping.  There is a significantly lower
percentage  cost of goods and  higher  percentage  gross  profit  margin for the
pre-recorded  programs  versus  blank  media  or  duplications  services.   This
difference allows our Morris & Associates  wholly-owned subsidiary to retain the
remaining 80 percent of the sales  revenue.  Morris & Associates is  responsible
for sales force  compensation,  direct sales and  accounting  clerical  support,
executive  management  and product  packaging  out of its 80  percent.  Morris &
Associates also pays a licensing royalty fee of between 10 percent to 20 percent
of the gross sales dollars to L&M Media, Inc. which owns the programs.  However,
the 80 percent gross margin after cost of goods less  royalties of 10 percent to
20  percent  generates  a net profit of 60 percent to 70 percent on sales of the
programs licensed from L&M Media.

        Internet  Infinity has a non-exclusive  distribution  license  Agreement
from L&M Media for  approximately  200  special  interest  video  programs  that
automatically  renews  each year on August 1 until  terminated  by either  party
without cause with thirty days written  notice.  Termination by either L&M Media
or Internet  Infinity  would  result in a loss of revenue to Internet  Infinity.
Sales for the six-month  period ended  September 30, 1999 were $30,418,  down 42
percent from $52,473 for the six-month period ended September 30, 1998. Internet
Infinity is planning to re-introduce  the 200 special interest video programs as
a low cost "budget"  ($2.95-$3.95  retail) line in an attempt to increase sales.
Internet Infinity also holds exclusive  distribution licenses from L&M Media for
25

                                        4

<PAGE>



programs on Health and Medicine and from L&M Media and Hollywood Riviera Studios
for five modules of Personal and Sales Skill Development programs. Any royalties
owed by Internet  Infinity  to L&M Media from sales of the 200 special  interest
programs may be applied to the balance due on the stock subscription  agreements
between  Internet  Infinity,  L&M Media and Hollywood  Riviera  Studios that are
associated  with both the Health  and  Medical  and the  Personal  Sales  Skills
Development  program  rights  obtained  from L&M  Media  and  Hollywood  Riviera
Studios.   The  Personal  Sales  Skills  Development  programs  were  originally
developed  by L&M Media but were  refined  and  improved  by  Hollywood  Riviera
Studios.  L&M Media and Hollywood  Riviera Studios share in all royalties earned
by the five Personal Sales Skills  Development  programs.  L&M Media, Inc. is 98
percent  owned by  George  and Dawn  Morris,  the  controlling  shareholders  of
Internet  Infinity and its principal  officers and directors.  Hollywood Riviera
Studios is 100  percent  owned by George and Dawn  Morris.  Therefore,  with the
pooling of earned royalties owed to L&M Media, Internet Infinity is not required
to use cash for royalty  payments to L&M Media until all the stock  subscription
agreements are completely paid by L&M Media and Hollywood Riviera Studios.

        Our Internet design and marketing  services  delivered to  nonaffiliated
customers have declined since first  introduced in 1996 due to low cost and free
services  offered by  competitive  Internet  service  providers.  The  increased
competition  for the  creation of smaller Web sites that led to lower prices for
these services and the reduction of the Internet Infinity staff in this area due
to a cash shortage caused Internet  Infinity to reduce its offerings of Internet
design  services in 1997,  1998 and 1999. It became more  expedient for Internet
Infinity to focus on video and CD products and services  sales to generate  cash
and financially survive in 1997. Although revenues from Internet design services
have declined to zero in early 1999,  the  opportunity to provide these services
to the visitors of our new, under-construction,  Internet Infinity business site
will be pursued.  We are now  focusing our  Internet  site design and  marketing
services for our own Internet product sales  activities.  Our current mission is
to help market the  products  and  services  of our  subsidiaries  and  selected
clients with multimedia  promotion and financial and  transactional  services to
facilitate successful trade on the Internet.  Therefore, Internet Infinity plans
to utilize its experience and resources to launch successful Internet sites that
sell its products and services.

        Internet  Infinity is currently  working with past employees who are now
acting as lower cost independent  contractors to Internet  Infinity for Internet
site design and development. They are to finish a business to business site that
will offer business productivity tools such as special books, training tapes and
electronics.  In addition,  a site is now complete and ready for improvement and
promotion for the sale of duplication services at (www.iiemc.com).  The Internet
                                                  ---------------
Infinity  plan  calls for the  utilization  of CD's and  videos  like  NetScape,
American  On-line to promote  these  sites  since we have  experience  and a low
internal cost with this media in addition to telemarketing activities.

        Our  blank  video  Internet  site   (www.blankvideo.com)   is  currently
generating  prospects  and  orders.  Internet  Infinity  is  making a  marketing
resource  commitment  to  promote  this  site  with  telemarketing  and  on-line
promotion  commencing in January 2000. Orders for blank videotapes over the last
six months  ended  December  31,  1999 were  small at  $28,775,  but  management
believes  there is an  opportunity  to  increase  sales  though  the  blankvideo
Internet site.


                                        5

<PAGE>



        The  "Internet  Infinity  Business to Business"  site will launch in the
first calendar quarter of 2000. The new Internet  Infinity  business to business
site will also  provide  new  opportunities  to sell  non-affiliate  design  and
marketing services. Our marketing plan calls for offering web design services to
members as part of belonging  to an Internet  Infinity  community of  businesses
with similar  interests.  The Internet  Infinity  value-added  concept providing
revenue and information benefits to a community member as part of the design and
marketing  package  should  help  offset the  non-differentiated  price  focused
competition.  Value added services and product  differentiation  are fundamental
tools for the marketing strategy.

        The functional relationship of our wholly-owned subsidiaries, Electronic
Media Central  Corporation and Morris & Associates,  Inc., to Internet  Infinity
facilitates  the  focus of sales  activities  and  future  growth  on  different
markets.  Electronic Media Central targets the business customer/user and Morris
& Associates  targets the  retailer or reseller to the  consumer  and  education
markets.  Internet  Infinity uses  different  personnel and tactics to market to
these  different  markets.  However,  both  subsidiaries  share many of the same
Internet  Infinity  resources  to  prepare  and  fulfill  orders  and  to  avoid
duplication of fixed costs such as office, administration and shipping.

        Distribution Methods
        --------------------

        We  distribute  our products  through  in-house  employee  sales persons
working the telephone, fax, mail and the Internet. Shipments are made throughout
the United States with a majority in California.

        Our  sales  representative  employees  are  paid  on a  salary  plus  an
incentive  bonus  based on the gross  profit  generated  each  month.  The sales
representatives  are  responsible for managing their account orders and customer
service.

        Competition
        -----------

        The  electronic   blank  media  and   duplication   industry  is  highly
             -------------------------------------------------------
competitive.  Large  competitors  such as Technicolor  Corporation  dominate the
large volume market from the movie  studios and  advertising  premium  business.
Numerous  small  regional  competitors  such as our  company  serve the  smaller
regional business and nonprofit organization markets. We have over 200 customers
that have purchased more than once and that constitute our core customer base.

        We compete  effectively  on both price and  special  customer  services.
Fortunately,  Internet  Infinity is located close to very competitive  suppliers
near the Pacific Coast ports of entry for video  materials from China and Korea,
and closely managed cost controls by the company allow us to compete effectively
on price.  Internet  Infinity  management is constantly  shopping the market for
better supplier products, services and prices concerning shipping, packaging and
materials that allow Internet Infinity to offer more value to its customers.  In
addition,  Internet  Infinity  monitors offers from competitors on the Internet,
through direct mail and through comparison-shopping to remain competitive.  With
Internet Infinity value pricing and offering special delivery  service,  special
design  consultation and fast order fulfillment,  customers are willing to leave
their masters with us for  convenient  repeat  orders.  Many  competitors in the
media duplication or blankvideo area charge  significantly extra for rush orders
or for small orders.  Internet  Infinity has developed the flexibility to handle
many special situations at a low cost and no charge to the customer.

                                                 6

<PAGE>




        The pre-recorded video business of selling special interest programs for
            ---------------------------
the public has few  suppliers in the form of large  distributors  like Baker and
Taylor and many  small  independent  production  companies.  "Special  interest"
refers to how-to, information and other non-entertainment  programs. Examples of
Internet  Infinity  special  interest  programs  are how-to  subjects  including
various sports, cooking, home and auto repair, lawn and garden, crafts, business
success  and  computer  software  training  tapes.  With video  retail  industry
consolidation over the past five years, there are only a few major retail chains
for  the  sale of  special  interest  programs  such as  Blockbuster  Video  and
Musicland/Sam  Goody's.  We have experienced  gradually declining sales over the
past three years of our fully priced line for consumers.  We are considering new
opportunities  to sell these  programs  as a low priced  budget line for impulse
purchases in retail  stores at $2.95 to $3.95  retail.  We have  existing  trade
relationships with Musicland and Baker & Taylor Distribution that have supported
sales  for  our  programs  in  the  past.   Internet  Infinity  currently  sells
prerecorded video programs on a non-contract limited return basis with Musicland
and Baker and Taylor.  All retail store customers can return up to 20 percent of
their total purchases over the last twelve months for credit,  not cash, against
future purchases.

        Internet  site   development  is  an  area  that  has  become  extremely
        ----------------------------
competitive over the past two years. Many services  originally offered by us are
now free or are  offered  at very low cost  from  competitive  Internet  service
providers.  However,  we will begin to promote  these  services to our  existing
customer base and to  non-affiliated  associates  of our new "Internet  Infinity
Business  to  Business"  web site as part of our  community  member  value added
services. The first of several planned addresses for the site is: (ii4b.com)

        Advertising and Promotion
        -------------------------

        Our advertising and promotion is primarily  electronic-media focused. We
engage in  telephone  and fax  campaigns  to prospect  for new  customers in the
electronic  duplication and blank media business. In addition, we are attempting
to recruit straight-commission, independentcontractor sales representatives.

        Dependence on Major Customers
        -----------------------------

        We are not dependent on any single major customer.

        Patents, Trademarks and Licenses
        --------------------------------

        We plan to apply for an Internet Infinity trademark.

        Government Approval and Regulations
        -----------------------------------

        We need no  governmental  approval  for the design and  marketing of our
electronic media. We are not aware of any proposed governmental regulations that
would affect our operations.

        Year 2000 Computer Problems
        ---------------------------

        We have  determined  that we do not face  material  costs,  problems  or
uncertainties about the Year 2000 computer problems. We have purchased new sales
and accounting software and

                                        7

<PAGE>



hardware  that  are  Year  2000  compliant.  We  anticipate  any  problems  with
integrated circuits will be minimal in effect on the remaining office equipment.

        Research and Development
        ------------------------

        We are  budgeting  approximately  $50,000  in  Fiscal  Year 2000 for the
development of an "Internet  Infinity  Business to Business" site in addition to
using our internal non-cash company  resources for this  development.  Our chief
executive  officer,  George  Morris,  as a loan will  provide  cash to  Internet
Infinity to retain independent software and back-office  information  technology
subcontractors for this development.

        Cost of Compliance with Environmental Laws
        ------------------------------------------

        There are no  environmental  laws that impact any of our  operations  of
marketing and distributing electronic duplication and blank media,  pre-recorded
video programs or Internet services.

        Seasonality
        -----------

        Our sales are almost  evenly  distributed  at this time across the year.
There are slight  variations  with the fall and winter  exceeding the spring and
summers seasons for a variety of factors including vacation,  school and holiday
cycles.

        Employees
        ---------

        We employ five full-time persons and no part-time persons.

        New Products & Services
        -----------------------

        We are in the process of designing a new "Internet  Infinity Business to
Business"  eCommerce  site for the sale of a range of business  products to help
small  businesses  succeed.  Products will ultimately  include books,  software,
tapes and electronics.  We have signed an agreement with Ingram Book Company,  a
national book  distributor  that will provide us with up to 38,000 business book
titles.  A prior  agreement  with Ingram  Micro,  a national  computer  software
distributor,  has been abandoned at this time solely by Internet Infinity due to
a lack of  resources  to  implement  it in a  timely  manner.  We plan to  start
offering the new products in the first quarter of 2000.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Results of Operations

        The following table presents, as a percentage of sales, certain selected
financial  data for the two fiscal years ended March 31, 1998 and March 31, 1999
and for the six-month periods ended September 30, 1998 and September 30, 1999:


                                        8

<PAGE>



                              Year Ended  3-31             6-months Ended  9-30
                            1998           1999            1998           1999
                            -------------------            -------------------

Sales                        100.0%      100.0%            100.0%       100.0%
Cost of sales                 77.9        74.1              67.8         75.8
                             -----       -----             -----        -----
Gross margin                  22.1        25.9              32.2         24.2
Selling, general and
    administrative
    expenses                  30.4        19.3              21.4         15.2
Asset impairment
    charge                      --        23.5                --          --
Other expenses:
    Amortization and
    interest                                                 0.8         2.3
                             -----       -----             -----       -----

Net income (loss)
  before income taxes        (8.3)         6.6              10.0         6.7


        Sales
        -----

        Sales increased from $828,023 in the fiscal year ended March 31, 1998 to
$1,312,452 in the fiscal year ended March 31, 1999, an increase of 58.5 percent.
The  increase  in sales was  attributable  primarily  to an increase in sales of
Electronic  Media  Central  from  $710,110  in 1998 to  $1,222,453  in 1999,  an
increase of 72.1 percent,  and a decrease in sales of Morris & Associates,  Inc.
from  $117,913  in 1998 to $89,959 in 1999,  a decrease of 23.7  percent.  These
changes   were  due,  we  believe,   to  an   increased   effort  by  the  sales
representatives  and the  resulting  increase  in the  number of  customers  for
Electronic  Media Central  products.  The industry  growth for electronic  media
duplication has helped Internet  Infinity sales. This trend should continue with
the  proliferation  of CD drives in computers,  DVD players and large  installed
base of videocassette  recorders. In addition, the new management focus on blank
videotape  sales  for  Internet  Infinity  is  expected  to  continue  with  the
management  commitment  of  additional  resources.  Internet  Infinity  is  also
expanding  its  telemarketing  sales force to prospect for sales of  duplication
services,  blank media and accessory product such as packaging materials. On the
other hand, we have  experienced  gradually  declining sales over the past three
years of our  fully-priced,  special-interest,  video line for consumers sold by
Morris & Associates.

             Interim results.  Sales increased 6.5 percent from $583,033  in the
             ---------------
six-month  period ended  September 30, 1998 to $620,783 in the six-month  period
ended  September  30,  1999.  Sales  for  the  Internet  Infinity   wholly-owned
subsidiary  Electronic Media Central Corp.  increased 11.3 percent from $530,560
in the  six-month  period ended  September 30, 1998 to $590,365 in the six-month
period ended  September 30, 1999 and sales  decreased  40.1 percent for Morris &
Associates,  Inc. from $52,473 in the six-month  period ended September 30, 1998
to  $30,418  in the six  months  ended  September  30,  1999.  The  increase  in
Electronic Media Central is due to our sales representatives' continued focus on
duplication  sales for the six months ended September 30, 1999, and the decrease
in  Morris  &  Associates  sales  is due to the  increasing  age of the  special
interest  video  programs  offered at a full price of $9.95 - $19.95.  The total
increase in sales was attributable

                                        9

<PAGE>



to an increased effort by the sales  representatives  and the resulting increase
in the number of customers for Internet Infinity products.

        Gross Margin
        ------------

        Gross margin improved from $183,382, or 22.1 percent of sales, in fiscal
year 1998 to  $339,547,  or 25.9  percent  of sales,  in fiscal  year  1999,  an
improvement  of 85.2  percent.  This  improvement  is  primarily  attributed  to
increased  company sales,  smaller  inventory and labor adjustments for Morris &
Associates.  The  increase  in gross  margin was  attributable  primarily  to an
increase in gross margin of our Electronic Media Central subsidiary from $99,801
in 1998 to $274,988 in 1999,  an  increase of 175.5  percent,  and a decrease in
gross  margin of Morris &  Associates,  Inc.  from $83,581 in 1998 to $64,559 in
1999, a decrease of 22.8  percent.  These  changes  were due, we believe,  to an
increased effort by the sales  representatives and the resulting increase in the
number of customers  for  Electronic  Media Central  products.  This decrease in
gross  margin  for the  Morris &  Associates  subsidiary  is  attributable  to a
decrease in the sales of the higher-margin pre-recorded video and an increase in
the  sales of  lower-margin  duplication  services.  The  increasing  age of the
original 200 special interest video programs  licensed by Internet Infinity with
gross profit margins as high as 70 percent is leading to a decrease in the sales
of these  programs at their intended full retail price range of $9.95 to $19.95.
In addition, the increase in higher volume, lower 20 percent margin, duplication
sales  reflects  the  increasing  marketing  opportunity  for this  product  for
Internet Infinity. Therefore, the proportion of pre-recorded video program sales
to total sales  should  continue to decrease  versus  duplication.  Reducing the
retail  price of the  pre-recorded  video  to a range  of  $2.95  to $3.95  will
increase  unit sales,  but it cannot be  determined  at this time whether  total
revenue will increase enough to offset the trend in product sales.

            Interim  results.  Gross margin decreased from  $187,610,   or  32.2
            ----------------
percent of sales, in the six-month  period ended September 30, 1998 to $150,300,
or 24.2 percent of sales,  in the  six-month  period ended  September  30, 1999.
Gross margin for the Internet Infinity wholly-owned  subsidiary Electronic Media
Central Corp. decreased 14.5 percent from $150,879 in the six-month period ended
September 30, 1998 to $129,008 in the six-month period ended September 30, 1999.
Gross margins decreased 42.0 percent for Morris & Associates,  Inc. from $36,731
in the  six-month  period ended  September 30, 1998 to $21,292 in the six months
ended September 30, 1999. The decrease in Electronic  Media Central gross margin
is due to the  increased  cost of sales for some  duplication  sales for the six
months  ended  September  30, 1999.  The  decrease in Morris & Associates  gross
margins is due to the decreasing  sales of Morris & Associates  products because
of increasing age of the special interest video programs offered at a full price
of $9.95 - $19.95.

        Selling, General and Administrative Expense
        -------------------------------------------

        Selling, general and administrative expenses decreased from $251,954, or
30.4 percent of sales in fiscal year 1998, to $242,866, or 18.5 percent of sales
in fiscal year 1999, an improvement  of 11.9 percent.  This decrease in selling,
general and  administrative  expenses as a percent of sales is  attributable  to
higher sales volume for 1999 over 1998 and relatively little increase in selling
general and administrative  expenses.  The sale of Morris & Associates  products
involves low sales volume but low overhead - essentially,  sales are little more
than simple order taking,  and because sales are increasing for Electronic Media
Central and decreasing for Morris & Associates, the

                                       10

<PAGE>



operating expense improvements are almost totally associated with the Electronic
Media Central operations.  Therefore,  we believe the reduction in the amount of
these  expenses  is due to  better  operating  efficiency  in  Electronic  Media
Central.  The  percentage  decrease  is a function  of this  reduced  amount and
increased sales for Electronic Media Central.

            Interim results.  Selling,  general  and  administrative    expenses
            ----------------
decreased from $124,443, or 21.4 percent of sales, in the six-month period ended
September 30, 1998 to $97,778, or 15.8 percent of sales, in the six-month period
ended September 30, 1999. This decrease in selling,  general and  administrative
expenses as a percent of sales is  attributable  almost  exclusively  to tighter
cost  controls  of  expenses  for  Electronic  Media  Central  versus  Morris  &
Associates expenses.  The comparison of interim expenses for the first six-month
periods of 1998 and 1999 is as follows:

       o     A 100 percent decrease in advertising expense from $397 to nothing;

       o     A 188 percent increase in bank charges from $645 to $1,861;

       o     A  25.7 percent increase  in payroll processing expense from $2,031
             to $2,553;

       o     A 64.3 percent decrease in insurance expense from $5,608 to $2,000;

       o     A 30.6 percent  decrease  in  legal  and  accounting  expense  from
             $25,017 to $17,360;

       o     An 11.3 percent decrease in salary expense from $72,530 to $64,358;

       o     An 11.0 percent decrease in office expense from $839 to $747;

       o     A 100 percent decrease in taxes and licenses expense from $6,772 to
             nothing;

       o     A 19.2 percent decrease in payroll expense from $6,772 to $5,471;

       o     A 100 percent decrease in telephone expense from $708 to nothing;

       o     A 100 percent decrease in trade show expense from $5,727 to nothing

        Royalties Expense
        -----------------

        Our distribution  rights to both the health and medical programs and the
personal  development  and  sales  training  programs  require  the  payment  of
royalties  equal to  fifteen  percent  of gross  sales  of these  programs.  The
royalties are owed to L&M Media and Hollywood Riviera Studios, both of which are
controlled  by George and Dawn Morris,  controlling  shareholders  and principal
officers  and  directors  of  Internet   Infinity.   The  three-year   exclusive
distribution  rights  granted to Internet  Infinity for these programs allow the
royalties  to be  applied  to  the  extinguishment  of  the  stock  subscription
agreement  payments owed to Internet Infinity by L&M Media and Hollywood Riviera
Studios  before any cash  payment is made to  Internet  Infinity.  In  addition,
Internet Infinity has a similar but non-exclusive  distribution license from L&M
Media for  approximately 200  special-interest  video programs for which it owes
royalties equal to ten percent

                                       11

<PAGE>



of gross  sales.  Royalties  owed to L&M from the sales of these L&M programs by
Internet  Infinity are also applied to the  subscription  agreement  balance due
from L&M Media.

        The benefits to Internet Infinity in dealing with L&M Media programs can
be measured by the positive cash flow  generated over the past two fiscal years.
Sales of these  products have a high 80 percent gross margin before  dilution of
royalties.  For the year ended March 31, 1998,  these  royalties  accounted  for
$10,749 of the $83,859 gross margin  obtained  from the sale of these  products.
For the year ended March 31, 1999,  these royalties  accounted for $7,368 of the
$64,519 gross margin obtained from the sale of these products.

             Interim  results.  For the six-month  period  ended  September  30,
             ----------------
1999, these royalties  accounted for $3,042 of the $21,292 gross margin obtained
from the sale of these  products.  For the six-month  period ended September 30,
1998, these royalties  accounted for $4,634 of the $32,517 gross margin obtained
from the sale of these products.  Management of Internet  Infinity believes that
it is the best interest of Internet Infinity to have the licensing relationships
with L&M Media and Hollywood  Riviera  Studios.  The cash flow  generated by the
sales of programs from  affiliates for the last three years has been critical to
the survival of Internet Infinity.

        Net Profit (Loss)
        -----------------

        We had a net loss from  operations,  after a provision for income taxes,
in the fiscal  year ended  March 31,  1998 of  $69,372,  or $0.01 a share of our
common  stock.  In the fiscal year ended March 31, 1999 we had a net profit from
operations, after a provision for income taxes, of $121,495, or $0.01 a share of
common stock. This profit of 9.3 percent of sales for fiscal year 1999 is due to
the 58.5  percent  increase  in sales  over  fiscal  year 1998  while  operating
expenses  actually  decreased  by 3.6 percent  from such  expense in fiscal year
1998.

            Interim  results.   We  had  net  income  from  operations,  after a
            ----------------
provision for income taxes, of $58,837, or $0.006 a share of our common stock in
the six-month  period ended September 30, 1998 and net income from operations of
$30,112, after a provision for income taxes, of $8,000, or $0.003 a share of our
common stock in the six-month  period ended  September  30, 1999.  The lower net
income  is  attributed  to a  higher  cost of  goods  for the six  months  ended
September  30, 1999, a cost that was only  partially  offset by lower  operating
expenses for the six months ended September 30, 1999.

        Balance Sheet Items
        -------------------

        Net income from  operations  of $121,495 for the fiscal year ended March
31, 1999  reduced the  retained  earnings  deficit  from  $567,381 to  $445,886.
However,  a $506,883  charge to stockholders  equity for the stock  subscription
balance due from L&M Media and Hollywood  Riviera Studios reduced  stockholders'
equity to create a $33,100  deficit  at the end of fiscal  year  1999.  Our cash
position  improved  from  $10,610  for the fiscal  year ended  March 31, 1998 to
$64,458 for the fiscal year ended March 31, 1999.  Accounts  receivable from non
affiliates  increased from $78,461 at the end of fiscal year 1998 to $129,537 at
the end of fiscal year 1999,  while inventory  decreased from $65,175 to $59,918
at the end of fiscal year 1999.


                                       12

<PAGE>



               Interim balance sheet items.    Net  income  from  operations  of
               ---------------------------
$30,112 for the six-month period ended September 30, 1999,  reduced the retained
earnings  deficit from $445,886 to $415,774 on September 30, 1999. The impact of
this on total  stockholders'  equity is a change  from a deficit  of  $33,100 to
positive  equity of $54 on September 30, 1999. Our cash position  decreased from
$64,458 at March 31, 1999 by $37,083 to $27,375 at September 30, 1999.  Accounts
receivable from non-affiliates increased from $129,537 at the end of fiscal year
1999 to $146,541 for the six-month  period ended September 30, 1999. The $20,079
increase  in  the  combined  balance  of  cash  and  accounts   receivable  from
non-affiliates  of  $193,995  for the  fiscal  year  ended  March 31,  1999 over
$173,916 for this combined  balance for the six months ended  September 30, 1998
is  attributed  to normal  business  variance and does not represent any pattern
affecting cash flows.

        Liquidity and Outlook
        ---------------------

        We have  been  able to stay in  operation  only (1)  from  the  services
provided by Apple Media  Corporation,  a  wholly-owned  subsidiary of L&M Media,
Inc., a supplier of electronic media  duplication  services and blank electronic
media,  which is under the control of George and Dawn  Morris,  the  controlling
shareholders and principal  officers of Internet  Infinity and (2) from the cash
flow  generated  for  Internet  Infinity  from  the sale of high  gross  margin,
pre-recorded  video licensed from L&M Media, Inc. and Hollywood Riviera Studios,
a d/b/a of Apple  Realty,  Inc.,  which is 100 percent  owned by George and Dawn
Morris.  With  both the lack of  sales  and the  returns  of  Internet  Infinity
software from retail customers in early 1997,  Internet Infinity was in jeopardy
of failing  with large  accounts  payable  balances  and little cash or accounts
receivable  available to pay debts.  George and Dawn Morris personally  advanced
funds to Internet  Infinity.  They also acquired Video  Magnetics,  an insolvent
electronic media  duplication  company with their personal cash and proceeded to
turn around the  situation  for the benefit of Internet  Infinity,  Inc. and its
sales and  survival.  Since early 1997,  sales from  electronic  blank media and
duplication  services  have  continued  to grow and  provide the funds to reduce
Internet  Infinity  debt and to create a new Internet  product and service line.
Internet  Infinity has been  developing  for over one year a small business site
called "Internet  Infinity Business to Business" and hopes to launch the site in
early 2000. The site will be used for the sale of business  productivity  books,
software,  tapes,  electronics  and supplies.  George Morris has loaned funds to
Internet  Infinity  to aid in the  development  of the site and is  providing  a
personal  development  and sales training  program in exchange for company stock
granted to  Hollywood  Riviera  Studios,  a company he  controls.  In  addition,
Internet  Infinity  will  begin work on a  consumer  Internet  site based on the
distribution  rights to the health and medical  programs  we  acquired  from the
George and Dawn Morris-controlled company, L&M Media, Inc.

        Internet Infinity  management  believes that we will generate sufficient
cash flow to support  operations  during the twelve months ended March 31, 2000.
Sales continue to grow, and Internet Infinity continues to generate a net profit
and positive cash flow from operations.

        In  addition  to  cash  provided  from  operations,  stock  subscription
payments  from L&M Media and  Hollywood  Riviera  Studios - both  controlled  by
George  Morris - and  additional  loans from George  Morris,  the  president  of
Internet  Infinity,  for  the  further  development  of  the  Internet  Infinity
eCommerce sites will provide additional cash to Internet Infinity. A credit line
for $25,000  from the Wells Fargo Bank as well as a trade credit from L&M Media,
Inc. will support the cash flow needs of Internet Infinity.

                                       13

<PAGE>




        The $92,386  notes  payable are due to a group of  "friendly"  investors
that could be paid from additional  lines of credit,  operations'  cash flow and
additional  officer  loans.  Internet  Infinity  carries an accounts  receivable
insurance policy with CNA Insurance to indemnify it against any large bad debts.

        The most serious factors affecting the liquidity of Internet Infinity in
the fiscal year ending March 31, 1999 have been slow-pay accounts receivable and
a high  return  from  retailer  customers  that bought  special  interest  video
programs and computer  software  products.  Internet  Infinity has stopped doing
business with these "slow paying"  accounts.  The payment record of our existing
customers  has been good with  little or no bad debt  losses for over two years.
Accordingly,  management believes the risk of non-payment in the future has been
reduced. In addition,  Internet Infinity accounts receivable are insured against
loss by CNA Insurance to further protect Internet Infinity from loss.

        The trade relationship between Internet Infinity and L&M Media, which is
owned 98 percent by George Morris,  president of Internet Infinity, has resulted
in a $39,994 note  receivable to Internet  Infinity from L&M Media.  The current
amount of $36,526 is due on March 31,  2000 plus 6 percent  interest.  This note
receivable  from L&M Media is secured by George Morris using notes due to him by
Internet Infinity, Inc. Payment of the note will generate additional cash flow.

        Costs of Filing Periodic Reports
        --------------------------------

        The filing of this Form 10-SB  registration  statement subjects Internet
Infinity to certain requirements of the Exchange Act of 1934. These requirements
include the filing of an annual report of Internet  Infinity's  business,  which
must include audited financial statements, quarterly reports, which must include
unaudited interim financial statements; and periodic reports of certain material
events of which investors should be made aware.  Legal and accounting  expertise
are required to prepare these statements for Internet Infinity.  The services of
Internet  Infinity's  securities law attorney and the annual auditor's  services
must be paid for in cash.  Should cash not be  available  to pay for these legal
and auditor's services, Internet Infinity will have to borrow these needed funds
from sources not yet identified.

                                   PROPERTIES

        Apple Media Corporation  ("AMC"),  controlled by George and Dawn Morris,
provides Internet Infinity with approximately 800 square feet of office space in
Costa Mesa,  California,  and George Morris, chief executive officer of Internet
Infinity,   provides  it  approximately   600  square  feet  in  Redondo  Beach,
California.  Both locations with telephone and utilities are at a cost of $900 a
month  total to  Internet  Infinity.  The  space  provided  is part of  Internet
Infinity's  distributorship  arrangement  with AMC,  and AMC may  terminate  the
arrangement  for free  space at any  time  with a  30-days  notice  to  Internet
Infinity.  There is a large amount of office space available for less than $2.00
a square  foot within  three miles of the  existing  office.  Internet  Infinity
reserves the right to move at any time.


                                       14

<PAGE>



         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The table below sets forth,  as of  September  30,  1999,  the number of
shares of common stock of Internet Infinity  beneficially  owned by each officer
and director of Internet Infinity individually and as a group, and by each owner
of more than five percent of the common stock.

                                                                Percent of
                                           Number               Outstanding
        Name and Address                   of Shares              Shares
        ----------------                   ---------            -----------

        L&M Media, Inc. (1)                4,535,714               45.3
        663 the Village
        Redondo Beach, CA  90277


        Dawn Morris                        1,238,000               12.4
        663 the Village
        Redondo Beach, CA  90277


        Apple Realty, Inc. d/b/a
        Hollywood Riviera Studios  (1)     1,034,482               10.3
        663 the Village
        Redondo Beach, CA  90277


        George Morris, Chairman/CEO          938,000                9.4
        663 the Village
        Redondo Beach, CA  90277

        Officers and Directors
        as a group (2 persons)(2)          7,746,196               77.4
        ------------------------

        (1) The  shares  owned  of  record  by L&M  Media,  Inc.  and  Hollywood
            Riviera Studios are under the control of George Morris.

        (2) These officers and directors are George Morris and Dawn Morris,  his
            spouse.

Changes in Control

        There are no  arrangements  which may  result in a change in  control of
Internet Infinity.


                                       15

<PAGE>



                DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

        Internet  Infinity's  directors,   officers  and  significant  employees
occupying executive officer positions,  their ages as of September 30, 1999, the
directors' terms of office and the period each director has served are set forth
in the following table:


Person                  Positions and Officers                 Since     Expires

George Morris, 61       Chairman of the Board of Directors -    1996       2000
                        Acting President/CEO
                        Vice President Marketing

Roger Casas, 50         Director                                1998       2000
                        Vice President Operations

Dawn Morris, 44         Member of the Board of Directors        1996       2000
                        Vice President Internet Sales

Kathy Boag, 46          Vice President Traditional Sales        1999       2000

Shirlene Bradshaw, 60   Member of the Board of Directors        1999       2000
                        Business Manager


        GEORGE  MORRIS,  Ph.D. Dr. Morris has been the full time Chairman of the
        ---------------------
Board  of   Directors,   principal   shareholder,   Vice   President  or  Acting
President/Chief  Executive  Officer and  Secretary  of Internet  Infinity  since
Internet  Infinity went public in 1996. George Morris has also been the Chairman
and Vice President of Apple Realty,  Inc.  doing  business as Hollywood  Riviera
Studios since 1974 and the Chairman of the Board of Directors of L&M Media, Inc.
since 1990. Dr. Morris is also the Founder and has been the President,  Chairman
of the Board of Directors and principal of Morris Financial, Inc., a NASD member
broker-dealer  firm,  since  its  inception  in  1987.  He has  been  active  in
designing,  negotiation and acquiring all equipment,  facilities and systems for
manufacturing,   accounting  and   operations  of  Internet   Infinity  and  its
affiliates.  Morris has produced over 20 computer training programs in video and
interactive  hypertext  multimedia  CD-ROM  versions,  as  well  as  negotiating
Internet Infinity's and its affiliate distribution and licensing agreements. Dr.
Morris  earned a Bachelor  of  Business  Administration  and Masters of Business
Administration  from  the  University  of  Toledo,  and a Ph.D.  (Doctorate)  in
Marketing and Finance and  Educational  Psychology from the University of Texas.
Prior to founding Internet Infinity and its Affiliates,  Dr. Morris had 20 years
of academic experience as a professor of Management, Marketing, Finance and Real
Estate at the University of Southern California (1969 - 1971) and the California
State  University  (1971 -  1999).  During  this  period  Dr.  Morris  served  a
Department  Chairman for the  Management and Marketing  Departments.  Morris has
since retired from full time teaching at the University. Dr. Morris was the West
Coast Regional Director of the American Society for Training and Development,  a
Director  of the  South Bay  Business  Roundtable  and a speaker  on a number of
topics relating to business,  training and education. Morris has created or been
directly  involved in the design,  writing and development of numerous  Internet
web  sites  for  Internet  Infinity,  blank  video,  Greg  Norman,  Northwestern
University,  etc. He most recently  taught  University  courses  about  Internet
Marketing for domestic and foreign markets and Sales Force Management.

                                       16

<PAGE>




        ROGER CASAS. Mr. Casas has been a Member of the Board of Directors since
        -----------
1998 and the Vice President of Operations since Internet Infinity went public in
1996.  Roger has managed  production,  personnel,  helped  coordinate  marketing
efforts and managed packaging,  printing and shipping on a daily basis. Prior to
joining Internet  Infinity,  Mr. Casas was a computer software marketing manager
at More Media and a Financial  Consultant  for  Stonehill  Financial in Bel Air,
California an Account  Executive for Shearson  Lehman Brothers in Rolling Hills,
California and Dean Witter Reynolds in Torrance,  California,  and the owner and
operator of the Hillside restaurant in Torrance,  California. Mr. Casas earned a
Bachelor of Science in  Business  Administration,  from  Ashland  University  in
Ashland,  Oregon, along with a Bachelor of Art in Marketing and Psychology.  Mr.
Casas holds Series 22 and 7 licenses with the National Association of Securities
Dealers, Inc. and is a registered representative with Morris Financial.

        KATHY BOAG. Ms. Boag has been the Sales Manager and/or Vice President of
        ----------
Sales  since  joining  Internet  Infinity  in 1997 where she has  developed  and
managed major accounts. Ms. Boag manages sales and coordinates the production of
her large orders.  Prior to joining Internet Infinity,  she was the President of
the International Television Association of Orange County. She has also been the
co-owner of a marketing and distribution company for Special Interest video. She
also handled the marketing, distribution and promotion for Jack LaLanne exercise
programs.  Ms Boag has over 20 years experience in the electronic media industry
as a Sales  Manager  and Vice  President  for  numerous  companies.  Her clients
include  major  corporations  like  Yamaha,  Olivetti,   Sprint  and  the  major
automobile companies.

        DAWN  MORRIS.  Ms.  Morris has been the  President,  Vice  President,  a
        ------------
principal  shareholder and a Director of Internet  Infinity since it went public
in 1996. She has also been the Vice President of L&M Media, Inc. since 1990, now
an  affiliate  of  Internet  Infinity.  Ms.  Morris has also been the Manager of
Corporate  Finance/Mergers and Acquisitions and a registered representative with
Morris Financial,  Inc., a NASD member  broker-dealer  firm, since 1994. She has
been responsible for the development of educational and computer  training video
programs,  some of which have  been,  produced  in CD-ROM  and other  multimedia
versions. Ms. Morris has produced finance and investment,  as well as commercial
and infomercial programs.  Prior to joining the predecessor company in 1984, Ms.
Morris was a Senior Account  Representative  in the Office Products  Division of
Xerox Corporation, and a Sales Manager at Joseph Magnin Stores. Ms Morris earned
a Bachelor  of  Business  Administration  in  Marketing  from  California  State
University  and  studied  television   production  and  directing  at  UCLA  and
California State University. Dawn Morris was nominated for Woman Graduate of the
Year in the California State University System.

        SHIRLENE  BRADSHAW.  Ms.  Bradshaw  has  been a Member  of the  Board of
        ------------------
Directors since 1999 and Internet  Infinity Business Manager since 1997. She has
managed  accounting  including,  receivable  and payable  processing  and helped
coordinate the supplier  relationship with the Apple Media Corporation supplier.
She was the Business  Manager for More Media, a predecessor  company of Morris &
Associates,  Inc. for over six years.  She had  extensive  experience  in office
management and accounting before joining Internet Infinity.

                             EXECUTIVE COMPENSATION

        Set forth below is the aggregate  compensation during fiscal years 1997,
1998 and 1999 of the chief executive officer of Internet Infinity.

                                       17

<PAGE>




Salaries

                             Fiscal Year           Annual Compensation
                             -----------           -------------------

        George Morris(1)     1999                   37,700
                             1998                   38,400
                             1997                   41,700

        Dawn Morris(1)       1999                    1,000

        (1)    Compensation was reduced from our original  compensation  plan of
               $50,000 salary annually for each of George Morris and Dawn Morris
               to help Internet Infinity manage needed cash flow for operations.
               Options  presented  below  were  granted  to offset  the  reduced
               salary.

Stock Options

        Set forth  below are the  stock  options  granted  to the  officers  and
directors of Internet Infinity.

        During the last three fiscal years,  the executive  officers of Internet
Infinity have received the following Stock Options:

                             Fiscal Year           No. of Shares
                             -----------           -------------

        George Morris        1999                  100,000
                             1998                   75,000
                             1997                   75,000

        Dawn Morris          1999                  100,000
                             1998                   75,000
                             1997                   75,000

        Kathy Boag           1999                   10,000
                             1998                    5,000

        Roger Casas          1999                   15,000
                             1998                    5,000
                             1997                    5,000

        Hollywood Riviera
        Studios(1)           1999                  258,621
- ------------------------

(1)     These options are under the control of George  Morris,  chief  executive
        officer of Internet Infinity.

                                       18

<PAGE>




                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Our company is under the control of George and Dawn Morris,  husband and
wife, who  beneficially  own 76.5 percent of all  outstanding  stock of Internet
Infinity,  Inc.  The  basis  of  their  control,  and  the  relationship  of all
affiliates of Internet Infinity, are depicted in the following chart:

        1.     George and Dawn Morris
               ----------------------

               a.     They own 98 percent of L&M Media, Inc.
                                             --------------

                      i.     It owns 100 percent of Apple Media Corporation
                                                    -----------------------

                      ii. It owns 45.3 percent of Internet Infinity, Inc.
                                                  -----------------------

               b.     They  own  100  percent  of  Apple  Realty,  Inc.,  d/b/a
                                                   ----------------------------
                      Hollywood Riviera Studios
                      -------------------------

                      i.     It owns 10.3 percent of Internet Infinity, Inc.
                                                     -----------------------

               c. They own 21.8 percent of Internet Infinity, Inc.
                                           -----------------------

                      i.     It owns  100  percent  of  Electronic Media Central
                                                        ------------------------
                             Corp.
                             ----
                      ii. It owns 100 percent of Morris & Associates, Inc.
                                                 ------------------------

        Summary
        -------

         .98   x      .453   =      .44394
        1.00   x      .103   =      .103
                      .218   =      .218
                                    ------

        George and Dawn Morris
           beneficially own         .765 of Internet Infinity, Inc.

        The Fiscal Year 1998 L&M Media, Inc. Transactions
        -------------------------------------------------

        On July 30, 1997, L&M Media, Inc.  subscribed to purchase 125,000 shares
of Internet  Infinity  Common  Stock,  valued at $0.60 a share,  $0.02 below the
closing  price and $0.10 more than the bid price for  Internet  Infinity  common
shares on August 1, 1997.  In addition to its  obligation  to pay cash for these
subscribed  shares,  L&M  Media  assigned  to  Internet  Infinity  a  three-year
exclusive  distribution  right for five health and medical video  programs.  L&M
Media is 98 percent owned by George and Dawn Morris,  husband and wife, and they
are directors and executive officers of Internet Infinity.

        On February 27, 1998, L&M Media, Inc.  subscribed to purchase  2,142,897
shares of Internet  Infinity Common Stock at $0.14 a share, or 50 percent of the
lowest  closing  price of $0.28 for Internet  Infinity  Common Stock within last
sixty days prior to February 27, 1998. In addition to its

                                       19

<PAGE>



obligation  to pay cash for  these  subscribed  shares,  L&M Media  assigned  to
Internet Infinity a three-year  exclusive  distribution  right for 20 additional
health and medical video programs.

        The 50 percent value of the  "free-trading"  stock price assigned to the
February  27, 1998 stock  subscription  for  licensing  rights to 20  additional
health and medical  programs is deemed  reasonable  considering the inability of
L&M Media to  dispose  of the  restricted  stock for a long  period of time.  In
addition,  standard  media  industry  practice  usually  requires  cash  advance
payments for the acquisition of distribution rights of programs.

        To  summarize,  L&M Media  subscribed  to purchase  2,267,897  shares of
Internet Infinity's Common Stock in exchange for:

        o       a subscription agreement obligation to pay  $375,000 to Internet
                Infinity,

        o       the  exclusive  distribution  rights  to  twenty-five health and
                medical video programs, and

        o      royalties set at fifteen  percent of sales,  the payment of which
               royalties  will go to the  reduction  of the  stock  subscription
               obligation until the stock subscriptions are paid in full.

        The Fiscal Year 1999 Hollywood Riviera Studios Transaction.
        ----------------------------------------------------------

        On January 4, 1999, Apple Realty,  Inc., d/b/a Hollywood Riviera Studios
subscribed to purchase 517,241 shares of Internet Infinity Common Stock at $0.29
a share,  or 50  percent of the  closing  price of $0.57 for  Internet  Infinity
Common Stock on January 4, 1999.  In addition to its  obligation to pay cash for
the  subscribed  shares,  Apple  Realty,  Inc.  assigned to Internet  Infinity a
three-year  licensing  distribution  right for five training modules on Personal
and Sales  Skill  Development.  Apple  Realty,  Inc.,  d/b/a  Hollywood  Riviera
Studios, is a company 100 percent owned by George Morris.

        The 50 percent value of the  "free-trading"  stock price assigned to the
January 4, 1999 stock  subscription for licensing  distribution  rights for five
training  modules on Personal and Sales Skill  Development is deemed  reasonable
considering  the  inability  of  Hollywood  Riviera  Studios  to  dispose of the
restricted stock for a long period of time. In addition, standard media industry
practice   usually  requires  cash  advance  payments  for  the  acquisition  of
distribution rights of programs.

        Also, as part of the same transaction,  Internet Infinity issued 258,621
stock options to Hollywood  Riviera Studios  exercisable at $0.627 a share.  The
options were priced at 110 percent of the $0.57 Common  Stock  closing  price on
January 4, 1999.  The Hollywood  Riviera stock  options,  after the  two-for-one
stock  split of  February  25,  1999,  are now for  517,241  shares at a $0.3135
exercise price.

        To summarize, Apple Media, d/b/a Hollywood Riviera Studios subscribed to
purchase 517,241 shares of Internet  Infinity's  Common Stock and obtained stock
options to  purchase  517,241  shares of our Common  Stock at $0.3135 a share in
exchange for:

                                       20

<PAGE>




        o      a  subscription agreement obligation to  pay $150,000 to Internet
               Infinity,

        o      the  exclusive  distribution  rights  to  five  training  program
               modules on Personal and Sales Skill Development,

        o      royalties  set at twenty  percent of sales,  the payment of which
               royalties  will go to the  reduction  of the  stock  subscription
               obligation until the stock subscription is paid in full.

        As of September  30, 1999 there have been no sales by Internet  Infinity
or its  affiliates  of any of the  twenty-five  video  programs  on  Health  and
Medicine  or of any of the five  video  modules  on  Personal  and  Sales  Skill
Development.  However,  no resources  were  available to promote  sales of these
products.  We project  that sales will  commence of the Personal and Sales Skill
Development  modules  during the first  quarter of the fiscal  year to  commence
April 1, 2000 and that sales will  commence of the Health and Medicine  programs
during the second quarter of the fiscal year to commence April 1, 2000.

        Internet  Infinity also sells special  interest  video programs on other
subjects,  which video programs are owned by L&M Media.  There are approximately
200 of these  programs.  Internet  Infinity pays a ten-percent  royalty on these
sales to L&M Media.  L&M Media's cost of goods is set at twenty percent of sales
with its cost of goods to cover all its manufacturing and assembly costs as well
as the shipping costs to our customers'  doors. L&M Media agreed to purchase the
Health and Medicine  program  library in 1986 for  $400,000.  It consists of 400
hours of video  footage and  partially or fully edited  titles.  We estimate the
replacement  cost  of  each  of  the  completed   twenty-five   programs  to  be
approximately $62,500 or a total value in excess of $1,500,000.

        L&M Media developed the Personal and Sales Skill Development modules and
has sold them over the last ten years. Hollywood Riviera Studios is revising and
expanding the multimedia  delivery of the programs.  We estimate the replacement
cost of each module to be $150,000 or $750,000 for the set of five.

        We buy all of our duplication and blank video products and services from
Apple Media Corporation  ("AMC"),  a manufacturing  company under the control of
and owned by George and Dawn  Morris,  directors,  executive  officers and major
shareholders of Internet Infinity. Due to a lack of working capital available to
Internet Infinity, George and Dawn Morris acquired the predecessor to AMC, known
as Video  Magnetic,  LLC,  in order  that it would  continue  to provide a sales
distribution  opportunity for Internet  Infinity.  Internet Infinity had earlier
established a distribution  arrangement with Video Magnetics,  LLC in 1996. When
the previous  owner  indicated he would sell Video  Magnetics  and terminate the
distribution  arrangement with our company,  the Morrises bought Video Magnetics
to maintain the product source.  Video Magnetics was an insolvent company at the
time of the  Morris'  acquisition.  However,  the  successor  company  to  Video
Magnetics,  Apple Media Corporation,  is solvent. George and Dawn Morris finally
settled the purchase  transaction for Video Magnetics  through mediation and are
paying the purchase notes over the next four years.


                                       21

<PAGE>



        Internet  Infinity  takes title to the products it purchases  from Apple
Media  Corporation,  which is 98 percent  owned by George  Morris,  president of
Internet Infinity, just as it did under the original  distributorship  agreement
with independently owned Video Magnetics, LLC. Internet Infinity will take title
to products  under the  independent  distributorship  agreement with Ingram Book
Company.  This  distributorship  model for taking  title is  planned  for other,
future distributorship arrangements.

Internet Infinity, Inc. and L&M Media, Inc. Operating Structure
- ---------------------------------------------------------------

        Under this  distributorship  arrangement,  Internet  Infinity,  Inc.  is
responsible  for the collection of accounts  receivable and must collect them or
take a bad debt loss. However, Internet Infinity carries CNA accounts receivable
loss insurance.  As is standard business practice with a drop-ship  arrangement,
Electronic Media Central, the 100 percent owned subsidiary of Internet Infinity,
does not carry an inventory.  However,  Morris & Associates  does carry a small,
finished  goods  inventory  of special  interest  videos from time to time and a
$59,918  packaging  inventory as of September 30, 1999 to prepare orders for the
200 special  interest  videos.  An Internet  hosting  service handles the server
computer  equipment for the Internet.  By these means the management of Internet
Infinity  attempts  to minimize  the risk of loss from  inventory  and  accounts
receivable as well as technology obsolescence.

        The process for taking  orders,  shipping,  billing and collection is as
follows:  When Internet  Infinity sells  Electronic  Media Central  products and
services to an independent  customer,  we first determine the sales credit terms
that will be given to the customer based on a credit  worthiness  review. If the
order will be shipped on an open account basis and is over approximately $5,000,
we contact our accounts receivable insurance company,  CNA, for credit insurance
approval. After credit terms and freight are determined by Internet Infinity, we
issue a purchase order to Apple Media Corporation,  which is 98 percent owned by
George Morris, the president of Internet Infinity, for the products and services
ordered  including  shipping.  Apple Media  sources  materials  and  components,
manufactures  or  assembles  and drop ships the order to the  Internet  Infinity
customer.  Internet Infinity invoices the customer for the products and services
delivered  and credits  its sales  account  and debits the  accounts  receivable
account  in  Internet  Infinity's  general  ledger at the time of  shipment  and
invoicing.   Internet  Infinity  is  responsible  for  collecting  the  accounts
receivable from the customers.  Apple Media grants a 20 percent  wholesale trade
discount to Internet  Infinity on the order amount and charges Internet Infinity
at the time of shipping. Internet Infinity is solely responsible for the payment
of its accounts  payable to Apple Media,  Inc. The CNA accounts  receivable loss
insurance  does not cover  losses  under  $5,000  and the  policy  has a $10,000
deductible.

        The major risk for  Internet  Infinity  is the  non-payment  of accounts
receivable from an order.  Internet Infinity remains  responsible for payment of
the wholesale  cost of the order to Apple Media even if a customer  doesn't pay.
Internet Infinity  maintains a $59,918  packaging  inventory and thereby reduces
potential losses on inventory shrinkage and obsolescence.  However,  the absence
of a complete Internet Infinity  inventory and the control of any inventory by a
supplier  to Internet  Infinity  has  operated  to reduce our  control  over the
shipping priority of orders.

        When we sell pre-recorded video programs to media retailers, wholesalers
and school  suppliers,  we place an order with Apple Media for the  products and
services, including shipping.

                                       22

<PAGE>



Apple Media  sources,  manufactures  or  assembles,  with  Morris &  Associates'
packaging,  and drop  ships the  product  to our  customer.  Apple  Media  gives
Internet  Infinity an 80 percent  discount off the total order amount  including
freight.  The 80 percent gross margin before  packaging and royalties  remaining
for Internet  Infinity gives Internet  Infinity a very  profitable,  low volume,
distribution  opportunity.  The 80 percent  gross  profit  margin  for  Internet
Infinity from pre-recorded video sales versus the 20 percent for duplication and
blank media sales to independent  customers  reflects the  significantly  higher
price and profit margin  associated  with selling a video tape with a program on
it versus a blank  tape or the  lower  margin  for  duplicating  an  independent
customer  tape or CD.  During  fiscal  year 1999,  the 80 percent of these sales
amounted to $95,858.

                            DESCRIPTION OF SECURITIES

        Internet Infinity is authorized to issue twenty million shares of common
stock ($0.001 par value) and one million shares  preferred  stock at ($0.001 par
value).  The  presently  outstanding  shares of common  stock are fully paid and
non-assessable.

Common Stock

        Voting Rights
        -------------

        Holders of shares of common stock have one vote per share on all matters
submitted  to a vote of the  shareholders.  Shares of  common  stock do not have
cumulative  voting  rights,  which  means that the  holders of a majority of the
shareholders  votes eligible to vote and voting for the election of the board of
directors can elect all members of the board of directors.

        Dividend Rights
        ---------------

Holders  of  record of shares of  common  stock  receive  dividends  when and if
declared by the board of  directors  out of funds of Internet  Infinity  legally
available therefor.

        Liquidation Rights
        ------------------

        Upon any  liquidation,  dissolution or winding up of Internet  Infinity,
holders of shares of Common Stock receive pro rata all of the assets of Internet
Infinity available for distribution to shareholders after distributions are made
to the holders of Internet Infinity's preferred stock.

        Preemptive Rights
        -----------------

        Holders of common stock do not have any  preemptive  rights to subscribe
for or to  purchase  any stock,  obligations  or other  securities  of  Internet
Infinity.

        Registrar and Transfer Agent
        ----------------------------

        Internet  Infinity's  registrar and transfer  agent is Nevada Agency and
Trust Company, 50 West Liberty Street, Suite 880, Reno, Nevada 87501.



                                       23

<PAGE>


        Dissenters' Rights
        ------------------

        Under current Delaware law, a shareholder is afforded dissenters' rights
which,  if properly  exercised,  may require  Internet  Infinity to purchase his
shares.  Dissenters' rights commonly arise in extraordinary transactions such as
mergers, consolidations,  reorganizations,  substantial asset sales, liquidating
distributions,  and certain  amendments to Internet  Infinity's  Certificate  of
Incorporation.

             MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

        Internet  Infinity's  Common  Stock is quoted on the OTC Bulletin Board.
Its symbol is "ITNF."

        During the last two fiscal years and the  subsequent  interim period for
which  financial  statements  are  provided,  the  range  of  high  and  low bid
information  for our  common  stock  is set  forth  below.  The  source  of this
information is the OTC Bulletin Board.

        The quotations reflect the inter-dealer prices without markup,  markdown
or commissions and may not represent actual transactions.

                                            High                      Low
                                            ----                      ---

        1997
        ----
               1st Qtr.                     2.5                      1.25
               2nd Qtr.                     1.5                      0.5625
               3rd Qtr.                     0.875                    0.4375
               4th Qtr.                     0.5625                   0.25

        1998
        ----
               1st Qtr.                     0.3125                   0.1875
               2nd Qtr.                     1.3125                   0.23
               3rd Qtr.                     0.96875                  0.5625
               4th Qtr.                     1.1200                   0.4000

        1999
        ----
               1st Qtr.                     1.7188                   0.3750
               2nd Qtr.                     2.0625                   0.3750
               3rd Qtr.                     0.6875                   0.4800
               4th Qtr.                     0.53125                  0.35


        On  September  30,  1999 there were  10,010,196  shares of common  stock
outstanding.  There are 1,437,241  shares  subject to  outstanding  options.  No
shares are subject to securities convertible into such shares of stock.

Holders

        As of September 30, 1999 there were  approximately  36 holders of record
of our common stock. Some 1,454,880 shares of common stock are held in brokerage
accounts under the record name of "Cede & Co."

                                       24

<PAGE>




Dividends

        We have paid no cash  dividends to our  stockholders  and do not plan to
pay dividends on our Common Stock in the foreseeable future. We currently intend
to retain any earnings to finance future growth.

                                LEGAL PROCEEDINGS

        Neither  Internet  Infinity  nor its  property is a party to any pending
legal  proceeding  or any known  proceeding  that a  governmental  authority  is
contemplating.

                     RECENT SALES OF UNREGISTERED SECURITIES

        During the past three years,  Internet Infinity sold 3,110,098 shares of
our common stock in eight transactions exempt from registration  pursuant to the
provisions of Regulation D, Rule 506 of the Securities and Exchange  Commission.
No  underwriters  were used to effect the sales.  The names of the  persons  who
bought the  shares of stock,  the dates the  shares  sold,  the number of shares
issued, the prices paid in cash or services for the shares and the nature of the
consideration received by Internet Infinity are as follows.


                                         No. of
                                         Shares     Price per      Nature of
Person                        Date       Issued      Share       Consideration
- ------                        ----       ------     ---------    -------------

L&M Media, Inc.             07-30-97      125,000      $0.60      (1)

L&M Media, Inc.             02-27-98    2,142,897      $0.14      (1)

Kiowa Oil                   03-24-98      100,000      $0.25      Cash

Newport Underwriters        03-24-98      100,000      $0.25      Cash

Thomas J. Kenan             03-24-98       50,000      $0.14      Legal Services

Gary Bryant                 08-28-98       50,000      $0.50      Cash

Hollywood Riviera Studios   01-04-99      517,241      $0.29      (2)

George Morris               02-25-99       75,000      $0.25      (3)

Dawn Morris                 02-25-99       75,000      $0.25      (3)

- -------------------------

(1)   Assignment of distribution rights to 25 Health and Medical video programs.

(2)   Assignment of distribution rights to five Personal Development and Sales
      Skill Development training programs.

(3)   Reduction  of debt owed by  Internet  Infinity  to this person upon this
      person's exercise of a stock option.

                                       25

<PAGE>




                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

        Under Delaware corporation law, a corporation is authorized to indemnify
officers, directors,  employees and agents who are made or threatened to be made
parties  to  any  civil,  criminal,  administrative  or  investigative  suit  or
proceeding  by reason of the fact  that  they are or were a  director,  officer,
employee or agent of the  corporation or are or were acting in the same capacity
for  another  entity at the  request of the  corporation.  Such  indemnification
includes expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement  actually and reasonably incurred by such persons if they acted in
good faith and in a manner  reasonably  believed  to be in or not opposed to the
best  interests of the  corporation  or, with respect to any criminal  action or
proceeding,  if they  had no  reasonable  cause to  believe  their  conduct  was
unlawful.

        In the case of any action or suit by or in the right of the  corporation
against  such  persons,   the  corporation  is  authorized  to  provide  similar
indemnification, provided that, should any such persons be adjudged to be liable
for negligence or misconduct in the  performance  of duties to the  corporation,
the court  conducting  the  proceeding  must  determine  that such  persons  are
nevertheless fairly and reasonably  entitled to  indemnification.  To the extent
any such  persons are  successful  on the merits in defense of any such  action,
suit or proceeding, Delaware law provides that they shall be indemnified against
reasonable expenses, including attorney fees.

        A corporation  is authorized  to advance  anticipated  expenses for such
suits or  proceedings  upon an undertaking by the person to whom such advance is
made to repay such advances if it is ultimately  determined  that such person is
not entitled to be indemnified by the corporation.

        Indemnification and payment of expenses provided by Delaware law are not
deemed exclusive of any other rights by which an officer, director,  employee or
agent may seek  indemnification  or payment of  expenses  or may be  entitled to
under any by-law, agreement, or vote of shareholders or disinterested directors.
In such regard,  a Delaware  corporation is empowered to, and may,  purchase and
maintain  liability  insurance on behalf of any person who is or was a director,
officer,  employee or agent of the corporation.  As a result of such corporation
law,  Internet  Infinity may, at some future time,  be legally  obligated to pay
judgments (including amounts paid in settlement) and expenses in regard to civil
or criminal  suits or proceedings  brought  against one or more of its officers,
directors, employees or agents.

        Insofar as indemnification  for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
Internet  Infinity pursuant to the foregoing  provisions or otherwise,  Internet
Infinity  has been advised  that in the opinion of the  Securities  and Exchange
Commission  such  indemnification  is against  public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.

                                       26

<PAGE>




                              FINANCIAL STATEMENTS

There appears below the following financial statements of Internet Infinity:

Report of Independent Auditor ...................................          F-1

Report of Prior Independent Auditor .............................          F-2

Consolidated Balance Sheet at March 31, 1999.....................          F-3

Consolidated Statements of Operations for the Years Ended
        March 31, 1999 and March 31, 1998 .......................          F-5

Statements of Changes in Stockholders' Equity
        for the Years Ended March 31, 1999 and
        March 31, 1998 ..........................................          F-6

Consolidated Statements of Cash Flows for the Years Ended
        March 31, 1999 and March 31, 1998 .......................          F-7

Notes to Consolidated Financial Statements
        March 31, 1999 ..........................................          F-9

Basis of Presentation of Interim Financial Statements ...........         F-18

Consolidated Balance Sheet (unaudited)
        at September 30, 1999 ...................................         F-19

Consolidated Statement of Operations (unaudited)
        for the Six Months Ended September 30, 1999
        and September 30, 1998 ..................................         F-20

Consolidated Statement of Cash Flows (unaudited)
        for the Six Months Ended September 30, 1999
        and September 30, 1998 ..................................         F-21

Notes to Consolidated Financial Statements
        September 30, 1999 ......................................         F-22


                                       27

<PAGE>



                                    EXHIBITS

Index to Exhibits

        Exhibit No.                    Description
        -----------                    -----------

             2         -   Certificate  of Ownership  and  Merger  of  Morris &
                           Associates, Inc., a  California  corporation,  into
                           Internet Infinity, Inc., a Delaware corporation*

             3         -   Articles of Incorporation of Internet Infinity, Inc.*

             3.1       -   Amended  Certificate  of  Incorporation  of  Internet
                           Infinity, Inc.*

             3.2       -   Bylaws of Internet Infinity, Inc.*

            10.1       -   Master  License   and   non-exclusive   Distribution
                           Agreement between Internet Infinity, Inc. and Lord &
                           Morris Productions, Inc.*

            10.2       -   Master License and Exclusive Distribution  Agreement
                           between L&M Media, Inc. and Internet Infinity, Inc.*

            10.3       -   Master License and Exclusive Distribution  Agreement
                           between  Hollywood   Riviera  Studios  and  Internet
                           Infinity, Inc.*

            10.4       -   Fulfillment   Supply   Agreement  between   Internet
                           Infinity, Inc. and Ingram Book Company

            16         -   Letter of resignation from George Brenner, CPA, dated
                           August 25, 1999

        *Previously filed and incorporated herein by reference.

                                       28

<PAGE>



                                   SIGNATURES

        In accordance  with Section 12 of the  Securities  Exchange Act of 1934,
the registrant caused this registration  statement to be signed on its behalf by
the undersigned, thereunto duly authorized.

                             INTERNET INFINITY, INC.



Date:  February 8, 2000                 By /s/ George Morris
                                        ---------------------------------------
                                          George Morris, Chief Executive Officer

                                       29
<PAGE>




               Report of Independent Certified Public Accountants




To the Board of Directors and Stockholders
Internet Infinity, Inc. and Subsidiaries

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Internet
Infinity,  Inc.  (a  Delaware  Corporation)  and  its  Subsidiaries  (California
Corporations) as of March 31, 1999, and the related  consolidated  statements of
operations,  stockholders'  equity  (deficit),  and cash flows for the year then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements  of Internet  Infinity,  Inc.  as of March 31,  1998 were  audited by
another  auditor  whose report dated  August 10, 1998  expressed an  unqualified
opinion on those statements.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Internet Infinity,
Inc. and  Subsidiaries as of March 31, 1999, and the results of their operations
and their  cash  flows  for the year then  ended in  conformity  with  generally
accepted accounting principles.



/s/ Caldwell, Becker, Dervin, Petrick & Co., L.L.P.

CALDWELL, BECKER, DERVIN, PETRICK & CO., L.L.P.
Woodland Hills, California





September 21, 1999

                                          F-1
<PAGE>

                                 George Brenner
                           Certified Public Accountant
                       9300 Wilshire Boulevard, Suite 480
                         Beverly Hills, California 90212
                          310-276-8845 Fax 310-276-5933



                        REPORT OF INDEPENDENT ACCOUNTANT




Board of Directors
Internet Infinity, Inc.
Costa Mesa, CA 92626

I have audited the accompanying balance sheets of Internet Infinity,  Inc. as of
March 31, 1998 and 1997, and the related statements of operations, stockholders'
equity and cash flows for the years then ended.  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 conducted my audits 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 Internet Infinity, Inc. as of March
31,  1998 and 1997 and the  results  of its  operations,  and cash flows for the
years then ended, in conformity with generally accepted accounting principles.



                                            /s/ George Brenner

                                            George Brenner, CPA

Beverly Hills, California
August 10, 1998

                                       F-2

<PAGE>





                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1999




                                     ASSETS
<TABLE>

CURRENT ASSETS
<S>                                                              <C>
    Cash                                                         $       64,458
    Accounts receivable, net of allowance for
     doubtful accounts of  $10,000                                      129,537
    Inventory (Note 2)                                                   59,918
    Note receivable - related company - current                          36,526
(Note 7)
    Net current deferred tax asset (Note 10)                             36,414
                                                              -----------------

               Total Current Assets                                     326,853
                                                              -----------------

PROPERTY AND EQUIPMENT, AT COST (Note 2)
    Office equipment                                                     16,955
    Office furniture                                                     15,366
                                                              -----------------
                                                                         32,321
               Less Accumulated Depreciation                           ( 32,321)
                                                              -----------------

               Net Property and Equipment                                    --
                                                              -----------------

OTHER ASSETS
    Note receivable - related company (Note 7)                            3,468
    Programming costs, net (Note 5)                                       5,969
                                                              -----------------

               Total Other Assets                                         9,437
                                                              -----------------

               Total Assets                                      $      336,290
                                                              =================
</TABLE>




                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements


                                      F - 3







<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                                 MARCH 31, 1999




                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>

CURRENT LIABILITIES
<S>                                                           <C>
  Notes payable (Note 6)                                       $         92,386
  Accounts payable and accrued expenses                                  51,123
  Accrued payroll                                                         4,127
  Interest payable                                                        3,190
  Due to officer - current (Note 8)                                      71,856
  Due to related company (Note 7)                                         2,000
                                                              -----------------

          Total Current Liabilities                                     224,682

LONG-TERM LIABILITIES
  Due to officer - non-current (Note 8)                                 144,708
                                                              -----------------

          Total Liabilities                                             369,390
                                                              -----------------

STOCKHOLDERS' EQUITY  (DEFICIT) (Page F-7)
  Preferred stock, par value $.001;
   authorized 1,000,000 shares; issued
   and outstanding  0 shares                                                 --
  Common stock, par value $.001;
   authorized 20,000,000 shares; issued
   and outstanding 10,010,196 shares                                     10,010
  Paid-in capital                                                       909,659
  Retained earnings (deficit)                                          (445,886)
  Unpaid stock subscription                                            (506,883)
                                                              -----------------

          Total Stockholders' Equity (Deficit)                          (33,100)

                                                              -----------------

          Total Liabilities and Stockholders' Equity (Deficit) $        336,290

                                                              =================
</TABLE>




                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements


                                     F - 4



<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE YEARS ENDED MARCH 31, 1999 AND 1998


<TABLE>


                                      1999                           1998
                              -------------------           -------------------

<S>                           <C>                           <C>
REVENUE (NET)                 $        1,312,452            $          828,023
                              -------------------           -------------------

COST OF SALES
   Beginning inventory                    65,175                        85,124
   Purchases                             961,923                       622,338
   Labor and video costs                   5,725                         2,354
                              -------------------           -------------------
                                       1,032,823                       709,816
   Less ending inventory                  59,918                        65,175
                              -------------------           -------------------

   Total cost of sales                   972,905                       644,641
                              -------------------           -------------------

          Gross Profit                   339,547                       183,382

OPERATING EXPENSES (Page F-20)           253,666                       251,954
                              -------------------           -------------------

          Net Income (loss)
            Before Income Taxes           85,881                      ( 68,572)

(PROVISION) BENEFIT FOR INCOME
 TAXES  (Note 11)
          Current                           (800)                         (800)
          Deferred                        36,414                            --
                               -------------------          -------------------

          Net Income (loss)    $         121,495            $         ( 69,372)
                               ===================          ===================

         Basic net income
          (loss)per share      $             .01            $             (.01)
          (Note 12)
                               ===================          ===================

         Diluted net income
           (loss) per share    $             .01            $             (.01)
           (Note 12)           ===================          ===================



</TABLE>



                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F - 5


<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  FOR THE YEARS ENDED MARCH 31, 1999 AND 1998


<TABLE>


                                                  Additional                   Unpaid        Total
                                                   Paid-In    Accumulated      Stock      Stockholders'
                             Shares      Amount    Capital     (Deficit)    Subscription     Equity
                           -----------  --------  ----------  ------------  ------------   ------------

<S>                         <C>         <C>       <C>         <C>           <C>            <C>
Balance April 1, 1997       3,400,000   $  3,400  $  319,100  $  (498,009)         --      $  (175,509)

Issued in connection
  with exercise of            140,000        140      49,860           --          --           50,000
warrants

Issued in consideration
  for note conversion         400,000        400      49,600           --          --           50,000

Issued in consideration
  for services rendered       100,000        100       6,900           --          --            7,000

Issued in consideration
  for prepaid royalties     4,535,714      4,536     370,464           --          --          375,000
(Note 3)
Net (loss) at March 31,            --         --          --      (69,372)         --          (69,372)
1998
                           ----------   --------   ---------   -----------   ---------     -----------

Balance March 31, 1998      8,575,714      8,576     795,924     (567,381)         --          237,119

Reclassification of
unpaid
  portion of stock
subscriptions
  (Note 3)                         --        --          --           --     (356,883)        (356,883)

Issued in consideration
  for note conversion         300,000       300       37,200          --           --           37,500

Issued in consideration
  for prepaid royalties     1,034,482     1,034      148,966          --     (150,000)              --
(Note 3)

Common stock for cash         100,000       100       24,900          --           --           25,000

Non cash dividend (Note 4)         --        --     (108,131)         --           --         (108,131)

Fair market value for
expenses                           --        --       10,800          --           --           10,800
  (Note 7)

Net Income at March 31,            --        --           --      121,495          --          121,495
1999
                           ----------   --------   ---------   -----------  ----------    ------------

Balance March 31, 1999     10,010,196   $ 10,010   $ 909,659   $ (445,886)   (506,883)    $    (33,100)
                           ==========   ========   =========   ===========   =========    ============


</TABLE>

                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F - 6

<PAGE>
                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEARS ENDED MARCH 31, 1999 AND 1998

<TABLE>
                                                1999                1998
                                           ----------------  ------------------
CASH FLOWS PROVIDED (USED ) BY OPERATING
 ACTIVITIES:
<S>                                        <C>               <C>
  Net income (loss)                        $       121,495   $       (  69,372)
  Adjustment to reconcile net income to
     cash provided(used) by operating
     activities:
  Rent, telephone and utilities related
     to paid in capital increase                    10,800                  --
  Legal fees related to stock issued                    --               7,000
  Amortization of programming costs                  5,970               5,969
  Royalty expense used against unpaid stock          7,368              10,749
subscription
  (Increase) in accounts receivable               ( 36,076)           ( 65,618)
  Increase in allowance for doubtful accounts      (15,000)             15,000
  Decrease in inventory                              5,257              19,949
  Increase in accrued payroll                        4,127                  --
  (Increase) interest payable                        3,190                  --
  Increase (decrease) in accounts payable          (68,863)             19,037
  Increase in income taxes payable                      --                (428)
  (Increase) in deferred tax asset                 (36,414)                 --
                                          -----------------   -----------------

          Net Cash Flows Provided (Used)
          by Operating Activities                    1,854            ( 57,714)
                                          ------------------  -----------------

CASH FLOWS PROVIDED (USED) BY INVESTING
 ACTIVITIES:
  Deposit                                              600                  --
                                          ------------------  -----------------

          Net Cash Flows Provided by
          Investing Activities                         600                  --

                                         ------------------  ------------------

CASH FLOW PROVIDED (USED) BY
 FINANCING ACTIVITIES:
  Increase in note receivable -
    related company                                 31,906              53,265
  (Decrease) in due to officer                      (4,929)                 --
  Reduction in note pay                               (583)            ( 1,942)
  Common stock                                      25,000              50,000
                                         ------------------  ------------------

          Net Cash Flows Provided by
          Financing Activities                      51,394             101,323

                                         ------------------  ------------------

NET INCREASE IN CASH                                53,848              43,609

CASH - BEGINNING OF THE YEAR                        10,610            ( 32,999)
                                         ------------------  ------------------

CASH - END OF THE YEAR                   $          64,458   $          10,610
                                         ==================  ==================

ADDITIONAL DISCLOSURES:
    Interest paid                        $           5,000   $           9,244
                                         ==================  ==================
    Taxes paid                           $             800   $             800
                                         ==================  ==================
</TABLE>
                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F - 7

<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                   FOR THE YEARS ENDED MARCH 31, 1999 AND 1998



NON-CASH INVESTING AND FINANCING ACTIVITIES:
<TABLE>

                                                1999                  1998
                                        -------------------     ---------------

Unpaid stock subscription issued
for prepaid royalties
<S>                                    <C>                     <C>
  (Note 3)                              $          150,000      $      375,000
                                        ===================     ===============

  Note payable converted to stock       $           37,500      $       50,000
                                        ===================     ===============

  Non cash dividend (Note 4)            $                       $           --
                                                   108,131
                                        ===================     ===============


</TABLE>














                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F - 8


<PAGE>


                        INTERNET INFINITY, INC. AND SUBSIDIARIES
                       CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                     MARCH 31, 1999



NOTE 1 - ORGANIZATION AND PRESENTATION

Organization

Internet  Infinity, Inc. (III) was  incorporated in  the State  of Delaware  on
October 27, 1995.

On April 1,  1998,  Morris  and  Associates,  Inc.,  (M&A) was  incorporated  in
California.  Morris  and  Associates  Inc.  (formerly  a  division  of  Internet
Infinity,  Inc.) is owned 100% by III.  M&A is  licensed to  distribute  special
interest video  programming to educational and consumer  distributors for health
and medical titles,  computer software training including  Microsoft Windows and
Explorer, internet information, golf, sports, home and garden titles.

On April 1, 1998, Electronic Media Central Corporation (EMC) was incorporated in
California. Electronic Media Central Corporation (formerly a division of III) is
owned 100% by III. EMC is engaged in the sale of blank  electronic media such as
video tapes and the duplication, replication and packaging of DVD's, CD's, video
tapes and audio tapes.

The Company has registered the web address:  www.ib2b.com  for its new eCommerce
                                             ------------
trade  center.  The new  "ib2b.com"  site will offer a variety  of  productivity
increasing  products  and  services  for  business.  The site will  support both
distributors  and  manufacturers  offering  services in a cooperative  marketing
eCommerce environment.

The Company  declared a 2 for 1 stock split on March 17, 1999 to shareholders of
record on that date. The number of shares  increased by 5,005,098 to 10,010,196.
This split has been shown retroactively.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Internet Infinity,
Inc.  and  its  wholly  owned  subsidiaries,   Morris &  Associates,   Inc.  and
Electronic Media Central Corporation. All significant inter-company transactions
and balances have been eliminated in the consolidation.

Inventory

The  Company's  inventory  (all  on  the  books  of "M &  A"),  consists  of the
following:

        Duplicated tapes and display boxes         $  59,918

Duplicate  tapes and  display  boxes  are  valued at the lower of cost or market
(first-in,  first-out  basis).  Inventory  has been  written  down by $5,257 for
possible obsolescence.

Depreciation

The  Company's  equipment and  furniture  are carried at cost.  Depreciation  is
provided  over  the  estimated  useful  lives of the  assets,  which  are  fully
depreciated.

                                     F - 9
<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                  CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
                   FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
                                   (UNAUDITED)




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Long-Lived Assets

In 1998,  the  Company  adopted  SFAS 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of." In accordance
with SFAS 121,  long-lived  assets held and used by the Company are reviewed for
impairment  whenever  events or  changes  in  circumstances  indicated  that the
carrying  amount  of an asset  may not be fully  recoverable.  For  purposes  of
evaluating the  recoverability of long-lived  assets,  the estimated future cash
flows associated with the asset would be compared to the asset's carrying amount
to determine if a write-down  to market value or  discounted  cash flow value is
required.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers cash and cash
equivalents to include cash on hand,  bank balances and  short-term  investments
with a maturity of three months or less.

Deferred Income Tax Accounts

Deferred tax  provisions/benefits  are calculated for certain  transactions  and
events  because of differing  treatments  under  generally  accepted  accounting
principles  and the currently  enacted tax laws of the federal  government.  The
results  of  these  differences  on  a  cumulative  basis,  known  as  temporary
differences,  result in the  recognition  and measurement of deferred tax assets
and liabilities in the  accompanying  balance sheet.  The liability method (FASB
109) is used to account for these temporary differences.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities,  and disclosure of contingent
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues  and  expenses  during the  reporting  period.  Accordingly,
actual results could differ from those estimates.

Year 2000 Compliance

Management  does not believe any material  year 2000 problems with the Company's
vendors,  service  providers,  or other third  parties will affect the Company's
financial information.

Stock-Based Compensation

The Company has elected to follow  Accounting  Principles  Board Opinion  (APBO)
No. 25, Accounting for Stock Issued to  Employees,  and related  interpretations
in accounting for its stock-based compensation and to  provide  the  disclosures
required  under Statement of Financial Standards (SFAS)  No.  123,   "Accounting
for  Stock-Based Compensation."

APBO No. 25  requires no  recognition  of  compensation  expense for most of the
stock-based  compensation  agreements provided by the Company where the exercise
price is equal to the market  value at the date of grant.  However,  APBO No. 25
requires  recognition of compensation  expense for variable award plans over the
vesting periods of such plans, based upon the then-current  market values of the
underlying stock.

                                     F - 10
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                  CONSOLIDATED SCHEDULES OF OPERATING EXPENSES
                                 MARCH 31, 1999


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation (Continued)

In  contrast,  SFAS No. 123 requires  recognition  of  compensation  expense for
grants of stock,  stock options,  and other equity  instruments over the vesting
periods of such grants,  based on the estimated  grant-date fair values of those
grants.  See  Note  14 for  pro  forma  disclosures  required  by FAS  123  plus
additional information on the Company's stock options.

Revenue Recognition

Income and expenses are recorded on the accrual basis of accounting.  Revenue is
recognized  from sales when a product is shipped and  collection is probable and
the fee is fixed and determinable. Expenses are recognized when incurred.

Segment Reporting

The Company is a single segment  reporting entity. At the current time all sales
and related  expenses are from video media  programs,  which  includes tapes and
CD's.

Earnings Per Share of Common Stock

The  Company  adopted  Statement  of  Financial Accounting  Standards  No. 128-
Earnings Per Share  (SFAS No. 128) in the fourth  quarter of fiscal  1998.  SFAS
No. 128 is intended to simplify the  earnings  per share  computations  and make
them more comparable from company to company.  All prior year earnings per share
amounts have been  recalculated in  accordance   with  the  earnings  per  share
requirements  under SFAS No. 128;  however, such   recalculation  did not result
in any change to the Company's  previously  reported earnings  per share for all
years presented.

NOTE 3 - SUBSCRIPTION AND ROYALTY AGREEMENTS

The Company has royalty  agreements with two separate related entities.  In July
1997, the Company entered into an agreement with L&M Media,  Inc. for the rights
to market pre-recorded health and medical programs. The agreement specifies that
the Company shall pay a 15% royalty to L&M Media, Inc. on gross sales for all of
these  programs sold between April 1, 1998 and March 31, 2001. In  consideration
for these rights,  the Company entered into a stock  subscription  agreement for
2,267,857  shares of common stock,  with a trading value of $375,000.  Royalties
earned will go toward the reduction of the stock subscription obligation. George
Morris, President of Internet Infinity, Inc. owns 98% of the stock of L&M Media,
Inc.

In January 1999 the Company  entered into an agreement  with Apple Realty,  Inc.
(DBA Hollywood Riviera Studios) for the rights to market  pre-recorded  personal
and sales development  multimedia success programs. The agreement specifies that
the Company shall pay a 20% royalty to Apple Realty, Inc. on gross sales for all
of  these   programs  sold  between  April  1,  1999  and  March  31,  2001.  In
consideration  for these rights,  the Company entered into a stock  subscription
agreement for 517,241 shares of common stock,  with a trading value of $150,000.
In addition the Company issued  517,241  options at a market price of $.3135 per
share (See Note 13).  Royalties earned will go toward the reduction of the stock
subscription  obligation.  George Morris owns 100% of the stock of Apple Realty,
Inc.

                                     F - 11
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   CONSOLIDTED NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1999



NOTE 3 -ROYALTY AGREEMENTS (CONTINUED)

Currently,  the royalty  agreement  amounts of $375,000 and  $150,000,  less the
royalties  earned of $18,117 (total $506,883) are shown in the equity section as
unpaid subscription receivable.

In addition, the Company has a non-exclusive distribution license from L&M Media
Inc. for  approximately 200 special interest video programs for which it has not
prepaid any  royalties.  Royalties  owed to L&M Media Inc. from the sales of any
special interest programs are applied to the prepaid  royalties  associated with
the health and medical and the sales development training programs.

NOTE 4 - NON CASH DIVIDEND

At March 31, 1998,  the Company had an  investment of $108,131 in a wholly owned
subsidiary,  More Media, Inc. In 1999, the Company distributed its stock in More
Media, Inc. to the Company's stockholders as a non cash dividend.

NOTE 5 - PROGRAMMING COSTS

Programming costs,  consisting of video production and editing,  are capitalized
and amortized over three years.  Accumulated  amortization  was $11,938 at March
31, 1999.

NOTE 6 - NOTES PAYABLE

The Company has nine notes payable with various unrelated individuals,  totaling
$92,386. The notes are due upon 90 days written notice from the individuals. The
notes are unsecured, with interest ranging from 6% to 12% payable quarterly. The
notes have been outstanding since 1990.

NOTE 7 - RELATED COMPANY TRANSACTIONS

  Note receivable from L&M Media, Inc., payable at
  $36,526 per year, plus interest at 6% per annum.
  The first payment is due March 31, 2000.  L&M
  Media, Inc. is 98% owned by George Morris,
  President of Internet Infinity, Inc.                                $ 39,994
                                    Less current portion                36,526
                                    Long-term portion                 --------
                                                                      $  3,468
                                                                      ========

  Loan payable to Morris Financial, without interest.
  Loan was paid subsequent to year end. Morris Financial is
  owned 100% by George Morris.                              $  (2,000)
                                                            =========

There is no  interest  expense on the above  notes for the years ended March 31,
1999 or 1998.

L&M Media, Inc. owns 45.3% of the outstanding stock of Internet Infinity, Inc.

The above  note  receivable  from L&M  Media,  Inc.  for  $39,994  is secured by
George Morris,  President  of  the  Company.  Mr.  Morris  is  using  the  notes
due to him by Internet Infinity, Inc. (see Note 8) as the collateral.


                                     F - 12


<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   CONSOLIDTED NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1999


NOTE 7 - RELATED COMPANY TRANSACTIONS (CONTINUED)

The Company  utilizes  office space,  telephone and utilities  provided by Apple
Media  corporation  at no  charge.  An  estimate  of the  monthly  values of the
services are as follows:

                                                        Total       Internet
                                                                  Infinity Inc.
                                                   ----------     -------------
                                  Rent              $   2,620      $      400
                                  Telephone               500             400
                                  Utilities             1,000             100
                                                                   -----------
                                                                   $      900
                                                                   ===========

The annual charge of $10,800 for 1999 was credited against paid in capital.

NOTE 8 - DUE TO OFFICER

Unsecured note payable to George Morris, with simple
interest at 12% per annum beginning March 31, 1999.
Note is due and payable on May 1, 2001 (see Note 7)                 $   144,708

Two unsecured notes payable to George Morris,
due on demand  with 90 days notice, with interest
at 6% per annum.                                                         71,856
                                                                    -----------

                                                                        216,564
                                    Less current portion                 71,856
                                                                    -----------

                                    Long-term portion                $  144,708
                                                                     ==========

Maturities of due to officer are as follows:

                                    For Year Ended
                                       March 31,
                                    --------------

                                        2000            $   71,856

                                        2001               144,708
                                                        ----------

                                                        $  216,564
                                                        ==========


Interest charged to expense for the year ended March 31, 1999 on the above notes
was $8,680.

NOTE 9 - CONCENTRATION OF CREDIT RISK

Concentration  of credit  risk with  respect  to trade  accounts  receivable  is
limited  due  to  the  large  number  of  businesses  comprising  the  Company's
geographically dispersed customer base.

The Company's only supplier of products is Apple Media, Inc. The Company's  cost
for the  product is 80% of the selling  price.  Apple Media,  Inc.  is owned 98%
by George Morris (see Note 14).


                                     F - 13
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1999


NOTE 10 - DEFERRRED INCOME TAXES

The net deferred tax amounts included in the accompanying  balance sheet include
the following amounts of deferred tax assets and liabilities:

        Deferred tax asset - current                                 $  36,414
        Deferred tax liability - current                                    --
                                                                     ---------

        Net asset - current                                          $  36,414
                                                                     =========

        Deferred tax asset - non-current                             $ 322,093
        Deferred tax liability - non-current                                --
        Less valuation allowance                                      (322,093)
                                                                     ---------
        Net asset  non current                                       $       0
                                                                     =========


The deferred tax asset results from  reserves for bad debts that are  deductible
when the account receivable is written off as an impairment of assets,  which is
not  currently  deductible  for tax  purposes,  and  from a net  operating  loss
carryforward for federal and state income tax purposes.

The Company has recorded a valuation  allowance to reflect the estimated  amount
of  deferred  tax  asset  which may not be  realized.  The  valuation  allowance
increased by $322,093.

NOTE 11 - (PROVISION) BENEFIT FOR INCOME TAXES

The components of the (provision) benefit for income taxes are as follows:
<TABLE>

                                                          1999          1998
                                                       ----------    ----------
        Current
<S>                                                    <C>           <C>
          Federal                                      $        0    $       0
          State                                              (800)        (800)
                                                       ----------    ----------
                                                       $     (800)   $    (800)
                                                       ==========    =========

        Deferred (Provision) Benefit
          Federal                                      $   28,900    $       0
          State                                             7,514            0
                                                       ----------    ---------
                                                       $   36,414    $       0
                                                       ==========    =========
</TABLE>

The Company has a net operating loss  carryforward of $519,000 for tax purposes.
For federal  income tax purposes,  the net operating loss  carryforwards  expire
through 2018.







                                     F - 14
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   CONSOLIDTED NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1999



NOTE 12 - NET INCOME (LOSS) PER SHARE

Following is a  reconciliation  of net income and weighted average common shares
outstanding for purposes calculating basic and diluted net income per share:
<TABLE>

                                                       1999           1998
                                                  --------------  ------------

<S>                                               <C>             <C>
         Basic net income (loss) per share        $     121,495   $   (69,372)
                                                  ==============  ============

         Weighted average common shares
           outstanding                                8,910,234     4,977,367
                                                  --------------  ------------

         Basic net income (loss) per share        $         .01   $      (0.1)
                                                  ==============  ============

         Weighted average common shares
           outstanding                                8,910,234     4,977,367

         Dilutive stock options                          53,424           N/A
                                                 --------------   ------------
         Weighted average common shares
           outstanding for purposes of
           computing diluted net income
           per share                                  8,963,658           N/A
                                                 ==============   ============

         Diluted net income per share                       .01            --
                                                 ==============   ============
</TABLE>

NOTE 13 - STOCK OPTIONS

The Company's 1996 stock option plans provide that  incentive  stock options and
nonqualified stock options to purchase common stock may be granted to directors,
officers key employees,  consultants,  and subsidiaries with a exercise price of
up to 110% of market price at date of grant. Generally,  options are exercisable
one or two years from the date of grant and  expire  three to ten years from the
date of grant.  As of March 31,  1999,  the  maximum  of 4  million  shares  was
approved  to be  issued  under the  plan,  of which  2.26  million  shares  were
available for future grants.

For the years ended March 31, 1999 and 1998, the Company  granted  1,017,241 and
400,000 shares to various  individuals  at the average  exercise price of $0.311
and  $.125,   including   its  officers   who  received   450,000  and  310,000,
respectively.  All options and exercise  prices had been adjusted to reflect a 2
for 1 stock split effective March 17, 1999.

In  electing  to follow  Accounting  Principles  Board  Opinion  (APBO)  No. 25,
Accounting for Stock Issued to Employees, the Company recognizes no compensation
expense  related to employee  stock  options for the fiscal year ended March 31,
1999 and 1998,  as no options are  granted at a price below the market  price on
the day of grant.

Of the 1,017,241  options  granted in the fiscal year ending March 31, 1999, the
Company granted 517,241 options to an affiliate  entity, in conjunction with the
stock issued (see Note 3).

                                     F - 15





<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1999



NOTE 13 - STOCK OPTIONS (CONTINUED)

Presented below is a summary of stock option plans activity for the year shown:


                                                                    Weight-
                                                                    Average
                                               Stock Options     Exercise Price
                                             ----------------   ---------------
      Outstanding at March 31, 1997                  320,000     $       0.125
        Granted                                      400,000             0.125
        Exercised                                          0             0.125
        Forfeited                                          0                --
        Expired                                            0                --
                                             ----------------   ---------------
      Outstanding at March 31, 1998                  720,000             0.125
        Granted                                    1,017,241            0.3080
        Exercised                                   (300,000)            0.125
        Forfeited                                          0                --
        Expired                                            0                --
                                             ================   ===============
      Outstanding at March 31, 1999                1,437,241     $       0.219
                                             ================   ===============

      Shares exercisable at March 31, 1997                 0                --
                                             ================   ===============

      Shares exercisable at March 31, 1998           720,000            $0.125
                                             ================   ===============

      Shares exercisable at March 31, 1999           420,000            $0.125
                                             ================   ===============

Exercise  prices for options  outstanding as of March 31, 1999 range from $0.125
to $0.3135.  The following table summarizes  information for options outstanding
and exercisable at March 3, 1999:

                          Options Outstanding             Options Exercisable
                 ------------------------------------   -----------------------
                                            Weighted
                               Weight-     Average                    Weight-
                    Stock      Average     Remaining       Stock       Average
Exercise           Options     Exercise    Contractual    Options      Exercise
Prices           Outstanding    Price         Life       Exercisable    Price
- -------------    -----------  ----------   -----------   -----------  ----------
$0.1250              420,000    $0.1250          1.9        420,000     $0.1250
$0.3080-$0.3135    1,017,241     0.3080          2.8              0          --
                 -----------                            -----------
                   1,437,241                                420,000

In electing to continue to follow APBO No. 25 for expense recognition  purposes,
the Company is obliged to provide the expanded  disclosures  required under SFAS
No. 123 for stock-based compensation granted since 1996, including if materially
different from reported results, disclosure of pro forma net income and earnings
per share had  compensation  expense relating to the fiscal year ended March 31,
1999 and 1998 grants been measured under the fair value  recognition  provisions
of SFAS No. 123.



                                     F - 16




<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1999



NOTE 13 - STOCK OPTIONS  (CONTINUED)

The weighted-average fair values at date of grant for options granted during the
fiscal year ended March 31, 1999 and 1998 were $0.2825 and $0.109,  respectively
and were  estimated  using the  Black-Scholes  option  valuation  model with the
following weighted-average assumptions:

                                                          3/31/1999   3/31/1998
                                                        ----------- -----------
      Expected life in years                                    3           3
      Interest Rate                                           5.0         5.9
      Volatility                                           110.2%      119.3%
      Dividend Yield                                           0%          0%

Because the  weighted-average  fair values at date of grant for options  granted
were the same as the market  values  during the fiscal year ended March 31, 1999
and 1998,  the  Company's  net income and earnings per share will be the same as
the pro forma net income and earnings per share.  Therefore,  the  Company's pro
forma information had not been presented.

NOTE 14 - SUBSEQUENT EVENTS

Subsequent to the balance sheet date,  Apple Media, Inc,  which was owned 98% by
George Morris,  became a subsidiary  of L&M  Media,  Inc.,  which is also  owned
98% by George Morris.  Apple  Media,  Inc. is  the major  supplier  of  products
to Internet  Infinity, Inc. and subsidiaries.


                                     F - 17

<PAGE>


                              BASIS OF PRESENTATION
                                       OF
                          INTERIM FINANCIAL STATEMENTS

The balance sheet as of September 30, 1999, and the statements of operations and
cash flows for the periods  ended  September  30,  1999 and 1998,  have not been
audited by independent  accountants but reflect all adjustments which are in the
opinion of  management  necessary  to a fair  statement  of the results for such
periods.  The results of operations for the six months ended September 30, 1999,
are not  necessarily  indicative  of results to be expected  for the year ending
March 31, 2000.



                                     F - 18
<PAGE>
                     INTERNET INFINITY, INC.AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                                    09-30-99           03-31-99
                                                   (Unaudited)         Audited
                                                   -----------        ---------
<TABLE>
ASSETS

Current assets:                                    (Unaudited)
<S>                                                 <C>              <C>
Cash                                                $  27,375        $  64,458
Accounts receivable -  net of allowance
  for doubtful accounts of $10,000                    146,541          129,537
Inventories                                            59,918           59,918
Prepaid Royalties                                           0           46,075
Note receivable - related company                                       36,526
Net Current    Deferred Tax Asset                      28,414           36,414
                                                    ---------        ---------
        TOTAL CURRENT ASSETS                          262,248          372,928

Due from Related Companies                            101,375          110,351
Programming Costs                                       2,983            5,969
Prepaid Royalties - Non-Current                             0           46,075
Property and Equipment, at cost
        Office Equipment                               16,955           16,955
        Office Furniture                               15,367           15,366
                                                       32,322           32,321
Less Accumulated Depreciation                         (32,322)         (32,322)
                                                    ---------        ---------
Net Property & Equipment                                    -                -
                                                    ---------        ---------
        TOTAL NON-CURRENT ASSETS                      104,358                -
                                                    ---------        ---------
        TOTAL ASSETS                                $ 366,606        $ 535,323
                                                    =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:                               (Unaudited)
        Notes payable                               $  87,142        $  92,386
        Accounts Payable                               51,840           51,123
        Accrued Payroll                                 4,127            4,127
        Due to Officer                                 71,856           71,856
        Other                                           7,284            2,000
                                                   ----------        ---------
        TOTAL CURRENT LIABILITIES                     222,249          224,682

Long-term Liabilities

    Due to Officer - Non Current                      144,303          144,708
                                                   ----------        ---------
        TOTAL LONG-TERM LIABILITIES                   144,303          144,708
                                                   ----------        ---------
        TOTAL LIABILITES                              366,552          369,390
                                                   ----------        ---------

STOCKHOLDERS' EQUITY:
        Preferred Stock, par value $.001;
          authorized 1,000,000 shares: issued
          and outstanding -0- shares
        Common stock, par value $0.001;
  Authorized 20,000,000 shares; issued and
  Outstanding 10,010,196                              10,010            10,010
Paid-in Capital                                      908,659           898,859
Retained Earnings (Deficit)                         (415,774)         (742,396)
                                                   ---------         ---------
        STOCKHOLDERS' EQUITY                              54           165,933
                                                   ---------         ---------
Unpaid Stock Subscription                           (503,841)
                                                   ---------
        TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY                       $ 366,606         $ 535,323
                                                   =========         =========
</TABLE>
                 See accompanying notes to financial statements.

                                     F - 19
<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS



                              Six months ended                Six months ended
                             September 30, 1999              September 30, 1998

                            Amount                          Amount
                          (Unaudited)    Percent         (Unaudited)    Percent

REVENUE
  Sales (Net)              $620,783       100.0           $583,033       100.0

COST OF SALE                470,483        75.8            395,423        67.8
                           --------       -----           --------       -----
GROSS PROFIT                150,300        24.2            187,610        32.2
                           --------       -----           --------       -----
OPERATING EXPENSES           97,778        15.8            124,443        21.4
                           --------       -----           --------       -----
OPERATING INCOME             52,522         8.0             63,167        10.8
                           --------       -----           --------       -----

OTHER EXPENSES
  Amortization Expense        2,986                             -
  Interest Expense           11,424                          4,810
                           --------       -----           --------       -----
                             14,410         2.4              4,810          .8
                           --------       -----           --------       -----

NET INCOME BEFORE
  INCOME TAXES               38,112         6.1             58,357        10.0
                           --------       -----           --------       -----
Provision for Income
  Taxes Deferred              8,000                             -
                           --------                       --------

NET INCOME                 $ 30,112          4.9          $ 58,357        10.0
                           ========        =====          ========       =====

Weighted Average of
  Shares Outstanding(1)  11,447,438                      9,259,714
                         ----------                      ---------

Per Share                  $0.003                          $0.006
                           ======                          ======



_________________________

(1)     Includes stock options

                                      F-20

<PAGE>


                     INTERNET INFINTY, INC.AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
                                                 Six months ended September 30,
                                                 ------------------------------
                                                    1999               1998
                                                 (Unaudited)        (Unaudited)
                                                 -----------        -----------

CASH FLOWS PROVIDED (USED)BY
  OPERATING ACTIVITIES:
<S>                                               <C>               <C>
  Net income (loss)                               $  30,112          $  58,357
                                                  ---------          ---------
Adjustments  to reconcile net loss to net
cash provided by (used for) operating
activities:
  Amortization of Programming Cost                    2,986
  Provision for doubtful accounts
  Other
Changes in assets and liabilities:
(Increase) decrease in assets:
  Accounts receivable                               (17,004)          (173,365)
  Deferred Tax Asset                                  8,000
  Inventory
  Notes Payable - current                            (5,244)            35,691
  Accounts Payable                                      717            (25,492)
  Interest Payable                                   (3,190)
  Due to Related Companies                           (2,000)             2,000
  Due from Related Companies                         36,526             50,238
  Other Current Liabilities                           7,284
                                                 ----------        -----------

NET CASH FLOWS PROVIDED (USED) BY
  0PERATING ACTIVITIES                              58,187             52,271

CASH FLOWS PROVIDED (USED) BY
  INVESTMENT ACTIVITIES                                 --

CASH FLOWS PROVIDED (USED) BY
  FINANCING ACTIVITIES
        Unpaid Stock Subscription                    3,042
        Capital Contributed                                            25,000
        Due to Officer                                (405)
        Due from Related Companies                 (97,907)

NET CASH PROVIDED (USED) BY
  FINANCING ACTIVITIES                             (95,270)            25,000

NET INCREASE (DECREASE) IN CASH                    (37,083)           (37,083)
Cash:  Beginning of the year                        64,458             10,610
                                                ----------         ----------
                                                  $ 27,375           $(16,961)
                                                ==========         ==========
ADDITIONAL DISCLOSURES
        Interest Paid                             $  6,380                  -
                                                ==========         ==========
        Taxes Paid                                 $   800           $    800
                                                ==========         ==========
</TABLE>

                        See notes to financial statements

                                     F - 21

<PAGE>
                   INTERNET INFINITY, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



NOTE 1 - ORGANIZATION AND PRESENTATION

Organization

Internet  Infinity,  Inc.  (III) was  incorporated  in the State of  Delaware on
October 27,  1995.  On April 1, 1998,  Morris and  Associates,  Inc.,  (M&A) was
incorporated in California.  Morris and Associates Inc.  (formerly a division of
Internet  Infinity,  Inc.) is owned 100% by III.  M&A is licensed to  distribute
special interest video programming to educational and consumer  distributors for
health and  medical  titles,  computer  software  training  including  Microsoft
Windows  and  Explorer,  internet  information,  golf,  sports,  home and garden
titles.

On April 1, 1998, Electronic Media Central Corporation (EMC) was incorporated in
California. Electronic Media Central Corporation (formerly a division of III) is
owned 100% by III. EMC is engaged in the sale of blank  electronic media such as
video tapes and the duplication, replication and packaging of DVD's, CD's, video
tapes and audio tapes.

The Company has registered the web address:  www.ib2b.com  for its new eCommerce
trade  center.  The new  "ib2b.com"  site will offer a variety  of  productivity
increasing  products  and  services  for  business.  The site will  support both
distributors  and  manufacturers  offering  services in a cooperative  marketing
eCommerce environment.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Internet Infinity,
Inc. and its wholly   owned  subsidiaries,   Morris  &  Associates,   Inc.  and
Electronic Media Central Corporation. All significant inter-company transactions
and balances have been eliminated in the consolidation.

Inventory

The Company's  inventory (all on the books of Morris & Associates),  consists of
the following:

        Duplicated tapes and display boxes         $  59,918

Depreciation

The  Company's  equipment and  furniture  are carried at cost.  Depreciation  is
provided  over  the  estimated  useful  lives of the  assets,  which  are  fully
depreciated.


                                     F - 22

<PAGE>

                   INTERNET INFINITY, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers cash and cash
equivalents to include cash on hand,  bank balances and  short-term  investments
with a maturity of three months or less.

Deferred Income Tax Accounts

Deferred tax  provisions/benefits  are calculated for certain  transactions  and
events  because of differing  treatments  under  generally  accepted  accounting
principles  and the currently  enacted tax laws of the federal  government.  The
results  of  these  differences  on  a  cumulative  basis,  known  as  temporary
differences,  result in the  recognition  and measurement of deferred tax assets
and liabilities in the  accompanying  balance sheet.  The liability method (FASB
109) is used to account for these temporary differences.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities,  and disclosure of contingent
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues  and  expenses  during the  reporting  period.  Accordingly,
actual results could differ from those estimates.

Year 2000 Compliance

Management  does not believe any material  year 2000 problems with the Company's
vendors,  service  providers,  or other third  parties will affect the Company's
financial information. However, this has not yet been verified.

NOTE 3 - PREPAID ROYALTIES

The Company has royalty agreements with two separate related entities.  In April
1998, the Company entered into an agreement with L&M Media,  Inc. for the rights
to market pre-recorded health and medical programs. The agreement specifies that
the Company  shall pay a 15%  royalty to L&M Media,  Inc. on gross sales for all
programs  sold between April 1, 1998 and March 31, 2001.  In  consideration  for
these  rights,  the Company  issued  2,267,857  shares of common  stock,  with a
trading value of $375,000.  Any portion of prepaid  royalties under $125,000 per
year  unearned,  shall be  reclassified  to "due from  related  party".  For the
interim period ended September 30, 1999, no amount has been reclassified to "due
from related party" (see Note 6). George Morris, President of Internet Infinity,
Inc. owns 98% of the stock of L&M Media, Inc.

In April 1999 the Company  entered into an  agreement  with Apple  Realty,  Inc.
(d/b/a Hollywood Rivera Studios) for the rights to market pre-recorded  personal
and sales development  multimedia success programs. The agreement specifies that
the Company shall pay a 20% royalty to Apple Realty, Inc. on gross sales for all
programs  sold between April 1, 1999 and March 31, 2001.  In  consideration  for
these rights,  the Company issued 517,241 shares of common stock, with a trading
value of  $150,000.  Any  portion of prepaid  royalties  under  $75,000 per year
unearned,  shall be  reclassified to "due from related party" George Morris owns
100% of the stock of Apple  Realty,  Inc.  No amount  was  reclassified  for the
interim period ended September 30, 1999.

                                     F - 23

<PAGE>
                   INTERNET INFINITY, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


NOTE 4 - PROGRAMMING COSTS

Programming costs,  consisting of video production and editing,  are capitalized
and  amortized  over  three  years.  Accumulated  amortization  was  $14,924  at
September 30, 1999.


NOTE 5 - NOTES PAYABLE

The Company has nine notes payable with various unrelated individuals,  totaling
$93,116. The notes are due upon 90 days written notice from the individuals. The
notes are unsecured, with interest ranging from 6% to 12% payable quarterly. The
notes have been outstanding since 1990.


NOTE 6 - RELATED COMPANY TRANSACTIONS

  Note receivable from L&M Media, Inc., payable at
    $36,526 per year for four years, plus interest
    at 6% per annum.  The first payment is due
    March 31, 2000.  L&M Media, Inc. is 98% owned by
    George Morris, President of Internet Infinity, Inc.          $202,922
                                    Less current portion           36,526
                                                                 --------
                                    Long-term portion            $166,396
                                                                 ========

  Loan payable to Morris Financial,  without interest.
    Loan was paid subsequent to year end. Morris Financial
    is owned 100% by George Morris.                              $   (500)
                                                                 ========

The Company's only supplier of products is Apple Media, Inc. The Company's  cost
for the  product  is 80% of the  selling  price.  Apple  Media,  Inc.  is owned
98% by George Morris (see Note 13).

L&M Media, Inc. owns 45.3% of the outstanding stock of Internet Infinity, Inc.

NOTE 7 - DUE TO OFFICER

  Unsecured note payable to George Morris, with simple
    interest at 12% per annum beginning March 31, 1999.
    Note is due and payable on April 1, 2001                     $133,753

  Two  unsecured  notes  payable to George  Morris,
    due on demand  with 90 days notice, with interest
    at 6% per annum.                                               71,856
                                                                 --------
                                                                  205,609
               Less current portion                                71,856
                                                                 --------

               Long-term portion                                 $133,753
                                                                 ========

Maturities of due to officer are as follows:
                                           For Year Ended
                                              March 31,
                                           --------------
                                                2000            $ 71,856

                                                2001             133,753
                                                                --------

                                                                $205,609
                                                                ========

                                     F - 24
<PAGE>

                   INTERNET INFINITY, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


NOTE 8 - CONCENTRATION OF CREDIT RISK

Concentration  of credit  risk with  respect  to trade  accounts  receivable  is
limited  due  to  the  large  number  of  businesses  comprising  the  Company's
geographically dispersed customer base.


NOTE 9 - DEFERRED INCOME TAXES

The net deferred tax amounts included in the accompanying  balance sheet include
the following amounts of deferred tax assets and liabilities:

        Deferred tax asset - current                            $  28,814
        Deferred tax liability - current                               --
                                                                ---------
        Net asset - current                                     $  28,814
                                                                =========

        Deferred tax asset - non-current                         $190,210
        Deferred tax liability - non-current                           --
        Less valuation allowance                                 (190,210)
                                                                ---------

        Net asset - non current                                 $       0
                                                                =========

The Company has recorded a valuation  allowance to reflect the estimated  amount
of  deferred  tax  asset  which may not be  realized.  The  valuation  allowance
increased by $199,210.


NOTE 10 - (PROVISION) BENEFIT FOR INCOME TAXES

The components of the provision benefit for income taxes are as follows:

                                                      1999          1998
                                                    --------      --------
        Deferred (Provision) Benefit
          Federal                                    $5,200        $    0
          State                                       1,300             0
                                                     ------        ------
                                                     $6,500        $    0
                                                     ======        ======

The Company has a net operating loss  carryforward of $473,000 for tax purposes.
For federal  income tax purposes,  the net operating loss  carryforwards  expire
through 2018.


NOTE 11 - NET (INCOME) PER SHARE

Net income per share for the interim period ended September 30, 1999 and 1998 is
based on the weighted average of shares outstanding which were 11,447,408 shares
and 9,295,714  shares,  respectively.  Stock options have been considered in the
calculation of income per share.

                                     F - 25
<PAGE>

                   INTERNET INFINITY, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


NOTE 12 - STOCK OPTIONS

For the years ended March 31, 1999 and 1998, the Company  granted  1,017,241 and
400,000  shares to various  individuals at the exercise price of $.19 and $.125,
including its officers who received 450,000 and 310,000, respectively.

Of the 1,017,241  options  granted in the fiscal year ending March 31, 1999, the
Company granted 517,241 options to an affiliate  entity, in conjunction with the
stock issued (see Note 3).

On February 25, 1999, the President and the CEO exercised 300,000 options, which
were  granted in 1997,  reducing the  outstanding  options for March 31, 1997 to
20,000. As of March 31, 1999, and September 30, 1999, the following options have
not been exercised:

                                        Exercise      Exercisable   Expiration
          Options       Date Granted      Price          Date          Date
      -------------------------------------------------------------------------

           20,000       3/31/1997       $  .125       04/01/1998    03/31/2000
          400,000       3/31/1998          .125       04/01/1999    03/31/2001
        1,017,241       3/31/1999          .190       04/01/2000    03/31/2002
        ---------
        1,437,241
        =========



NOTE 13 - MAJOR SUPPLIER

Apple  Media,  Inc. is a wholly owned  subsidiary of L&M Media,  Inc., which is
owned 98% by George  Morris.   Apple  Media,   Inc.  is the major  supplier  of
products to Internet Infinity, Inc. and subsidiaries.





                                     F - 26
<PAGE>

                            INDEX TO EXHIBITS

              Internet Infinity, Inc. Amendment No. 2 to Form 10-SB


Number                              Description
- ------                              -----------

10.4           -      Fulfillment  Supply  Agreement  between Internet Infinity,
                      Inc. and Ingram Book Company

16             -      Letter  of  resignation  from  George Brenner, CPA,  dated
                      August 25, 1999




                          FULFILLMENT SUPPLY AGREEMENT


        This Fulfillment  Supply Agreement (the "Agreement") is made and entered
into as of August 24, 1999, between INTERNET INFINITY, INC. ("Internet Infinity,
Inc."), and INGRAM BOOK COMPANY ("Ingram Book").

        A.     Internet  Infinity,   Inc.  intends  to  maintain  an  electronic
               commerce site "Web Store" on computer  systems owned and operated
               by Internet Infinity,  Inc., utilizing the World Wide Web service
               to sell various book products (the "Products").  Products consist
               of items purchased by Internet  Infinity,  Inc.'s  customers from
               Internet Infinity,  Inc.'s Web Store. Internet Infinity, Inc. may
               also  seek  supply  of  Products  under  this  Agreement  for its
               customer orders received from sources other than its Web Store.

        B.     Ingram Book is in the  business of  providing  Products  and will
               accept  Product  orders from Internet  Infinity,  Inc. under this
               Agreement.

        C.     Internet Infinity, Inc. desires that Ingram Book provide Products
on the terms and conditions set forth herein.

AGREEMENT

        In consideration of the mutual agreements  contained herein, the parties
agree as follows:

               1.   SERVICES  TO BE  RENDERED.  Ingram Book agrees to process at
                    -------------------------
its  facilities  ("Facility")  Internet  Infinity,  Inc.  customer  orders  for
Products, which will include the following:

               1.1  Order Processing.   Internet  Infinity, Inc. has established
                    ----------------
an  account  with  Ingram  Book.   Terms  of sale  will  be  pursuant  to Ingram
Book's standard  published terms.  Ingram Book will accept  electronic  customer
orders submitted  by Internet  Infinity,  Inc.,  in Ingram  Book's  standard FTP
format.  Internet Infinity,  Inc.  will be  responsible  for the completeness of
information conveyed  in  the electronic  orders,  including  shipping  charges,
sales taxes, shipping  addresses,  postal  codes,  billing  addresses,  and ISBN
numbers for Products  selected by the customer.  If the Internet Infinity,  Inc.
fails to provide  complete or adequate  customer  information,  Ingram Book will
reject the order.  Orders  will  be  processed within  24  business hours Monday
through Friday.  If  the  Product  is  not available  Internet  Infinity,   Inc.
will  receive notification  from Ingram Book that the order is canceled.  Ingram
Book will not be responsible for backorders.

                                                                    Exhibit 10.4
                                                               Page 1 of 4 Pages
<PAGE>

Daily, Ingram  Book  will send an FTP transmission to  Internet Infinity,  Inc.,
confirming orders that have been completed.

               1.2  Delivery.  Ingram  Book will  deliver  the Product to Ingram
                    --------
Fulfillment  Services  Inc. ("IFSI") for shipment.

               1.3   Returns  Processing.   Ingram  Book  will  accept  returned
                     -------------------
Product from  Internet  Infinity,  Inc.  When credit is due  Internet  Infinity,
Inc.'s account, Ingram Book will issue a credit memo.

               2.    COMPENSATION  FOR  PRODUCT.  Internet  Infinity,  Inc. will
                     --------------------------
purchase  Product from Ingram  Book under  the terms  previously  agreed between
Internet Infinity, Inc. and Ingram Book. There are no minimum order requirements
under this Agreement.

               3.    GENERAL RIGHTS AND  OBLIGATIONS OF INGRAM BOOK. In addition
                     ----------------------------------------------
to the rights and obligations of Ingram Book set forth elsewhere herein,  Ingram
Book will have the following rights and obligations.

               3.1   Service.  Ingram Book will  render  the  Services  required
                     -------
hereunder in a  professional  manner and will provide all personnel and supplies
necessary to fulfill its obligations hereunder.

               3.2   Liability.  Ingram Book will have no liability  to Internet
                     ---------
Infinity,  Inc.  under the terms of this  Agreement,  or for any alleged  breach
thereof,  for direct,  indirect,  punitive,  consequential,  or special damages,
including damages for lost profits.

               4.    GENERAL RIGHTS AND OBLIGATIONS OF INTERNET  INFINITY,  INC.
                     -----------------------------------------------------------
In addition to the rights  and obligations of Internet Infinity,  Inc. set forth
elsewhere herein,  Internet Infinity,  Inc. will  have the  following rights and
obligations.

               4.1   Seller of Products.  Internet Infinity,  Inc.  agrees to be
                     ------------------
the seller of the  Products, including for sales and use tax purposes,  and will
be responsible for reporting and remitting sales and use taxes to the applicable
authorities.

               4.2   Title  to  Product.   Internet  Infinity,  Inc.  will  take
                     ------------------
title of  product  upon  Ingram Book's delivery to IFSI.

               5.    CONFIDENTIALITY.   Ingram Book  recognizes and acknowledges
                     ---------------
that  the  names  and  addresses  of  Internet  Infinity,  Inc.  customers   and
information and  records  respecting  Internet Infinity,  Inc.  or its customers
maintained by Ingram Book are confidential  and  constitute  valuable and unique
assets of Internet Infinity,  Inc.'s business.  Ingram Book will  maintain  such

                                                                    Exhibit 10.4
                                                               Page 2 of 4 Pages
<PAGE>

information  as confidential.  Additionally, in performing its obligations under
this Agreement, Ingram  Book or Internet  Infinity,   Inc.  may   receive  other
confidential  information  about  the other  party,  which may  include  but not
be  limited  to financial  information,  business  plans,  technical  data,  and
identity of Ingram Book's  Internet Infinity,  Inc.'s. Ingram Books and Internet
Infinity,  Inc.   will   respect   the   confidentiality  of  such  confidential
information and will make no disclosure  thereof to  third parties or use it for
its own purposes, except upon written permission of the disclosing  party.  This
obligation  does  not  apply  to  any  information, which is publicly available.
Ingram Book and Internet Infinity, Inc. will cause its  employees to comply with
this section.  This section 5 will survive any termination or expiration of this
Agreement.

               6.    TERM.  This Agreement will be  effective  on the date it is
                     ----
executed by all parties and will remain in effect until canceled by a party. Any
party may cancel this Agreement upon 90 days written notice.

               7.    MISCELLANEOUS.
                     -------------

               7.1   Assignment Binding Effect. With the exception of affiliated
                     -------------------------
entities, no party may assign or otherwise transfer this Agreement or any of its
rights and  obligations  hereunder or any portion  thereof without prior written
approval of the other which will not be reasonable withheld. This Agreement will
be binding on and inure to the benefit of  Internet  Infinity,  Inc.  and Ingram
Book and their respective permitted successors and permitted assigns.

               7.2   Notices.  All notices given the parties hereunder  relation
                     -------
to the terms of this Agreement will be in writing or by telephone  confirmed  in
writing and will be personally  delivered or mailed,  by registered or certified
mail, return receipt requested postage prepaid or overnight delivery,  addressed
to the respective parties at the addresses of such parties as specified below or
at such address as either party will designate in notice to the other. Notice by
telephone later  confirmed  promptly in writing will be deemed given at the time
of the telephone  call.  Send  notifications  to the following  individuals  for
communications concerning this Agreement, other than day-to-day business:

               INTERNET INFINITY, INC.:
                      George Morris, chairman & CEO
                      663 The Village
                      Redondo Beach, CA 90277

               INGRAM BOOK COMPANY:
                      James E. Chandler, President
                      One Ingram Blvd.
                      La Vergne, TN 37086-1986

                                                                    Exhibit 10.4
                                                               Page 3 of 4 Pages
<PAGE>

               7.3   Entire  Agreement:  Waiver.  This Agreement  sets forth the
                     --------------------------
entire  understanding  of the parties with respect to the subject matter hereof.
No  modification  or  amendment  or  waiver  of any of the  provisions  of  this
Agreement  will be  effective  unless in  writing  and signed by the party to be
charged.

               7.4   Captions.  Paragraph  headings  herein  are for convenience
                     --------
only and will not affect the construction of this Agreement.

               7.5   Governing Law.  This Agreement will be governed by the laws
                     -------------
of the State of Tennessee.

        IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement on
the date first written above.

               INTERNET INFINITY, INC.



               BY:   /s/ George Morris        hereunto duly authorized
                     -------------------------
               Name:  George Morris
               Title: Chairman & CEO


               INGRAM BOOK COMPANY



               BY:   /s/ James E. Chandler    hereunto duly authorized
                     -------------------------
               Name:  James E. Chandler
               Title: President

                                                                    Exhibit 10.4
                                                               Page 4 of 4 Pages


                                 George Brenner
                           Certified Public Accountant
                       9300 Wilshire Boulevard, Suite 480
                         Beverly Hills, California 90212
                          310-276-8845 Fax 310-276-5933



August 25, 1999





Mr. George Morris, CEO
Internet Infinity, Inc.
3303 Harbor Blvd., Suite K-5
Costa Mesa, CA 92626

Dear Mr. Morris,

Effective as of today, I must resign as the  independent  accountant of Internet
Infinity.  My  reason  for  this  action  is  due  to my  inability,  as a  sole
practitioner,  to obtain adequate and price competitive  professional  liability
insurance.

My audits for the periods  March 31,  1998 and 1997 did not have any  accounting
differences  among you,  your counsel and myself.  All invoices were timely paid
and there are no fees outstanding.

I understand the Caldwell,  Becker,  Dervin,  Petrick & Co., L.L.P. firm will be
your new independent accountant.  I will, of course, be available to assist your
new auditors.

Much success for your new venture.

                                            Very truly yours,


                                            /s/ George Brenner

                                            George Brenner, CPA

cc:     Larry Becker, CPA
        Caldwell, Becker, Dervin, Petrick & Co., L.L.P.
        Office of the Chief Accountant (Via Fax:  202-942-9656)
        Attn:  SECPS Letter File/Mail Stop 9-5



                                                                      Exhibit 16
                                                                Page 1 of 1 Page




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