Eurosoft Corporation

Notes to Consolidated Financial Statements

(2) Significant Acquisitions The Company acquired 100% of the issued and outstanding common stock of Newsoft, in exchange for 550,000 shares of common stock of the Company, 500,000 shares of common stock of Sicor, which became 1,000,000 shares of the Company, and a $300,000 cash investment in Newsoft. The Company acquired 100% of the issued and outstanding stock of Do It in exchange for 1,000,000 shares of common stock of the Company, and $100,000 in cash. The Company acquired 100% of the issued and outstanding common stock of Millennium Three in exchange for 4,000,000 shares of common stock of the Company and a $500,000 cash investment in Millennium Three. The Company acquired 100% of the issued and outstanding common stock of Sicor in exchange for 25,922,070 shares of common stock of the Company. The acquisitions were a multiple reverse merger accounted for as a reorganization of the four operating subsidiaries. In May 2000, the Company issued 100,000 shares of common stock to acquire Amenity Zone in exchange for 100% of its issued and outstanding common stock. This transaction was accounted for as a purchase. As a result, the Company recorded goodwill in the amount of $16,900, which the Company is amortizing over five years. The Company recorded $282 of amortization at June 30, 2000.

(3) Stockholders' Equity The Company has authorized 50,000,000 shares of $0.0001 par value common stock and 10,000,000 shares of $0.0001 par value preferred stock. Rights and privileges of the preferred stock are to be determined by the Board of Directors prior to issuance. At inception, the Company issued 2,000,000 shares to the founders for services valued at par. In 1997 the Company issued 2,000,000 shares in exchange for $50,000 in cash. In 1998 the Company issued 625,000 shares for services valued at $15,625. In 1998 the Company issued 3,490,000 shares for $790,000 in cash. In 1998 the Company issued 550,000 shares in connection with the acquisition of Newsoft, 1,000,000 shares for Do It, 4,000,000 for Millennium Three, and 19,472,070 for Sicor. 1,900,000 shares were contributed back to the Company and 2,800,000 shares previously owned by Sicor were retired at acquisition date. In 1999, the Company issued 74,250 shares in exchange for $530,000 in cash. In May 2000, the Company issued 100,000 shares of common stock to acquire 100% of the issued and outstanding common stock of Amenity Zone. In May 2000, under S-8 registration, the Company issued 60,000 shares of common stock to settle a legal bill in the amount of $24,000 and 2,500,000 shares of common stock for services valued at $875,000.

(4) Income Taxes The Company has a consolidated net operating loss carryforward for US income tax purposes, amounting to $13,294,000 at June 30, 1999, expiring $68,000 at December 31, 2014, $11,858,000 at December 31, 2018, $320,000 at December 31, 2019 and $1,048,000 at December 31, 2020. There may be certain limitations on the Company's ability to utilize the loss carry-forwards due to the change in control of the subsidiaries where the losses were incurred. At December 31, 1999, the Company had approximately $60,300 in operating loss carryforward for Finnish income tax purpose, $118,700 in Northen Ireland, and $5,700 in Germany. At June 30, 1999, the Company has a deferred U.S. tax asset of approximately $5,318,000, for which the Company has established a 100% valuation allowance, as the Company has no history of profitable operations.

(5) Commitments and Contingencies The Company is committed to operating leases in Northern Ireland, Germany and Finland. Under the exchange rates in effect at December 31, 1999, the Company is obligated to lease payments totaling $71,300 in 2000, $20,500 in 2001, $4,100 in 2002, $1,000 in 2003 and $0 thereafter, for an aggregate commitment of $96,900. The Company's office space in the US and Finland are leased under month to month lease agreements.

The Company is also obligated under two employment agreements with an officer and another employee for $72,700 and $56,600 per year at exchange rates in effect at December 31, 1999, for a total remaining commitment at December 31, 1999 of $258,600.

Eurosoft Corporation

Notes to Consolidated Financial Statements

(6) Advertising and Marketing In 1998, the Company undertook a very extensive and expensive advertising and marketing campaign with the expectation of generating substantial revenue from Y2K consulting and repair. This campaign failed to generate any material revenues or contracts beyond that which the Company's existing personnel were able to generate from their personal efforts. The Company expended approximately $10.5 million on this campaign.

(7) VAT Tax Receivable In Germany, Finland and Northern Ireland, as in many other countries, the government charges a Value Added Tax, (VAT), that is similar in nature to sales tax in the U.S. There are three major differences. First is that VAT is charged at each point of sale. Second is that there are no exemptions from the collection of VAT. Finally, each company files a VAT return with the government monthly reflecting the gross VAT collected and VAT paid. If the VAT paid is greater than the amount collected, the Company receives a refund from the government approximately two to five months later.

(8) Going Concern As reflected in the accompanying financial statements, the Company incurred a significant net loss of approximately $11,858,000 in 1998, and $320,000 in 1999, resulting in an accumulated deficit of approximately $12,092,000 at December 31, 1999. The ability of the Company to continue as a going concern is dependent upon achieving profitability in its ongoing operations and potentially obtaining additional capital and/or financing. The Company is currently seeking to raise additional equity in order to expand its existing operations. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations

Forward-Looking Statements

Forward-looking statements, based on management's current views and assumptions, are made throughout the Management's Discussion and Analysis and elsewhere in this report to stockholders. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected. Among the factors that may affect operating results are the following: success of the Company's change in focus; competitive environment; and general economic conditions.

Results of Operations:

The Company achieved limited revenues for the six months ended June 30, 2000 of $286,301 compared to $1,580,127 for the six months ended June 30, 1999. The Company's core competencies as an IT services provider/software provider and management consulting firm provided the majority of the revenue for the six month period ended June 30, 2000. The decrease in revenues was a result of the Company redefining its initiatives after leaving the disappointing Y2K remediation business behind. The Company's operating expenses decreased nominally for the six month period ending June 30, 2000 ($1,160,739) from the six month period ending June 30, 1999 ($1,213,760). This was based on the following factors: (i) The Company's general and administrative expenses decreased from $433,200 (for period ending June 30, 1999) to $92,789 (for period ending June 30, 2000) due to a nominal amount of expenses for Y2K remediation work; (ii) The Company's operating expenses for consultants increased from $462,763 (for period ending June 30, 1999) to $917,617 (for period ending June 30, 2000) due to the Company hiring additional consultants to reinvent itself and increase its competencies in IT and management consulting; (iii) The Company's expenses for Officers and others decreased from $277,628 (for period ending June 30, 1999) to $119,273 (for period ending June 30, 2000) based on a decrease in Y2K remediation work. The above increases and decreases basically offset each other. Therefore, this resulted in a nominal decrease in operating expenses for the Company during the six month period ending June 30, 2000 from the six month period ending June 30, 1999.

Liquidity:

Net cash provided (used) by operating activities increased from ($177,199) for the six month period ending June 30, 1999 to $113,030 for the six month period ending June 30, 2000. This was due mainly to the Company issuing its common stock for services rendered

Future Outlook:

The Company intends to reinvent itself over the next several months through a modification in business plan. The Company will continue in its core competencies, IT and management consulting, but begin a new marketing initiative, which will allow the Company to tap into new revenue streams. The Company will launch this initiative sometime in the fiscal third quarter of 2000. The primary basis is to capitalize on the Company's broad global diversity and technology skills. The initiative will be an offering of services to aid businesses in the development of their foreign markets in an efficient and affordable scale. US Companies will be able to launch German based commerce sites for less than $2,000. The Company also has premium products developed for this market, as well as the planned addition of Swedish and Finnish before year-end and Spanish, French and Italian during Fiscal 2001. The Company's marketing strategy will initially seek a partnership with a US based Internet marketing firm and will expand as resources allow.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings. Not applicable

Item 2. Changes in Securities.

On June 2, 2000, the Company issued the following shares under an S-8 Registration Statement:

Richard I. Anslow- 50,000 shares

Gregg E. Jaclin- 10,000 shares

On June 16, 2000, the Company issued the following shares under an S-8 Registration Statement:

Darin S. Reubel-100,000 shares

Mark A. Mintmire-300,000 shares

Donald F. Mintmire-700,000 shares

Item 3. Defaults Upon Senior Securities. Not Applicable

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

None.

Item 5. Other Information. None

Item 6. Exhibits and Reports of Form 8-K. On May 10, 2000, the Company filed an 8-K12g3 for the Stock Acquisition and Reorganization Agreement between the Company and Amenity Zone, Inc. ("Amenity) dated May 8, 2000.

Exhibit 27 - Financial Date Schedule - Electronic Filing Only

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this 10-QSB report to be signed on its behalf by the undersigned there unto duly authorized.

EUROSOFT CORPORATION

(Registrant)

By: /s/ William H. Luckman

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

William H. Luckman

Executive Vice President

Date: August 16, 2000