INFORMATION HIGHWAY COM INC, 10SB12G/A, 1999-10-12

INFORMATION HIGHWAY COM INC
10SB12G/A, 1999-10-12
BUSINESS SERVICES, NEC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________________

FORM 10-SB/A

AMENDMENT NO. 1 TO

GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g)

COMMISSION FILE NO. 0-25773

INFORMATION-HIGHWAY.COM, INC.
(Name of small business issuer as specified in its charter)

Florida 65-0154103
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

185 - 10751 Shellbridge Way
Richmond, British Columbia V6X 2W8, Canada
(Address, including postal code, of registrant's principal executive offices)

(604) 278-5996
(Telephone number including area code)

Securities to be registered under Section 12(b) of the Exchange Act: None

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

________________________________________________________________________________

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INFORMATION-HIGHWAY.COM, INC.

FORM 10-SB

TABLE OF CONTENTS

PART I Page
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<S> <C> <C>
Item 1. Description of Business........................................................... 1

Item 2. Management's Discussion and Analysis or Plan of Operations........................ 12

Item 3. Property.......................................................................... 26

Item 4. Security Ownership of Certain Beneficial Owners and Management.................... 26

Item 5. Directors, Executive Officers, Promoters and Control Persons of the Company....... 27

Item 6. Executive Compensation............................................................ 28

Item 7. Certain Relationships and Related Transactions.................................... 29

Item 8. Description of Securities......................................................... 29

PART II

Item 1. Market Price of and Dividends on the Company's Common Equity
and Other Shareholder Matters..................................................... 30

Item 2. Legal Proceedings................................................................. 30

Item 3. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.......................................................... 30

Item 4. Recent Sales of Unregistered Securities........................................... 30

Item 5. Indemnification of Directors and Officers......................................... 34

PART F/S

Index to Consolidated Financial Statements................................................. 35

PART III

Item 1. Index to Exhibits................................................................. 36
</TABLE>

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PART I

Item 1. Description of Business.

Information-Highway.com, Inc. (the "Company") serves as an Internet Service
Provider (referred to as an "ISP" in the industry) for companies and individuals
that need access to the Internet in exchange for a recurring fee. The Company
has also developed and begun providing a compilation of Internet-based services
and information catering to business professionals known collectively as the
"Executive Site(TM)". The Company conducts its operations through the following
three wholly-owned Canadian subsidiaries:

. YesIC, Communications, Inc., acquired in February 1997;
. World Tel Internet (Toronto) Ltd., acquired in February 1997; and
. Blue Crow Internet Company, Ltd., acquired in December 1996.

Information Highway, Inc., a Washington corporation, actually acquired these
subsidiaries. Then, in February 1999, Information Highway, Inc. engaged in a
reverse takeover of Florida Venture Fund, Inc., a Florida corporation. As a
result of the reverse takeover, the shareholders of Information Highway, Inc.
came to own approximately 95% of the outstanding shares of Florida Venture Fund,
Inc. In connection with the reverse takeover, Florida Venture Fund, Inc.
changed its name to Information-Highway.com, Inc.

Information-Highway.com, Inc. is now the ultimate parent company whose shares
are traded on the OTC bulletin board (symbol: IHWY). Information-Highway.com,
Inc.'s executive offices are located at 10751 Shellbridge Way, Suite 185,
Richmond, British Columbia V6X 2W8, Canada, its telephone number is (604) 278-
5996 and its facsimile number is (604) 278-3409.

Business Development

The Company was incorporated in Florida in December 1988 as Florida Venture
Fund, Inc. The Company had not conducted any business prior to February, 1999,
when it engaged in a reverse takeover with Information Highway, Inc., a
Washington corporation ("IHI"). IHI was formed in October 1996. IHI began to
build the basis for the current business of the Company by undertaking the
following acquisitions:

. YesIC, Communications, Inc., acquired in February 1997;
. World Tel Internet (Toronto) Ltd., acquired in February 1997; and
. Blue Crow Internet Company, Ltd., acquired in December 1996.

In a reverse takeover, the shareholders of an acquired company generally end up
owning all or most of the resulting combined company. The reverse takeover of
the Company by IHI was conducted pursuant to an Agreement and Plan of
Reorganization entered into on February 17, 1999 and closed on February 23, 1999
between the Company, IHI and certain shareholders of IHI. The Company acquired
3,235,000 common shares of IHI (out of a total of 5,639,650 issued and
outstanding common shares) in exchange for 3,235,000 common shares of the
Company. It is the Company's intention to complete the exchange of shares of its
common stock for the remaining and outstanding common shares of IHI on a one for
one basis. As of August 31, 1999, 2,240,150 of the remaining 2,404,650 IHI
shares had been exchanged for the same number of Company shares. In total, to
August 31, 1999, approximately 97% of IHI shares had been exchanged. The Company
has allotted 164,500

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shares in anticipation of the remaining shares being exchanged. As part of the
Agreement and Plan of Reorganization, the Company caused 1,659,833 of its
1,979,500 common shares that were issued and outstanding prior to the closing to
be cancelled and assumed the obligations of IHI to issue common shares pursuant
to warrants and stock options issued by IHI. IHI paid $100,000 to the
controlling shareholder of the Company as a finder's fee and to effect the
Agreement and Plan of Reorganization. In connection with the reverse takeover,
the Company changed its name from Florida Venture Fund, Inc. to Information-
Highway.com, Inc.

Overview of Information-Highway.com's Business

The Company serves as an Internet Service Provider (referred to as an "ISP" in
the industry) for companies and individuals that need access to the Internet in
exchange for a recurring fee. The Company intends to provide ISP services to a
steadily growing number of cities in North America as a "Virtual ISP". A
Virtual ISP provides Internet access to its customers using the underlying
telecommunications infrastructure of another company, such as a telephone
company. The Virtual ISP business model should enable the Company to avoid
purchasing and installing "backbone" communications equipment and infrastructure
in each city where it plans to offer ISP services.

The Company's goal is to expand its ISP business throughout North America by
negotiating access to Virtual ISP "backbone" facilities and then repackaging
that access for sale to its customers and resellers (licensees). The Company
has entered into agreements that permit it to market access to the Internet in
the Northeast United States and 20 cities (some in the Northeast) across the
United States, and in Canada. Toronto, Ontario is the first market in which the
Company provided ISP services, beginning about four years ago.

The Company believes that Internet users will begin to base their selection of
an ISP in part on the value-added services that their ISP provides. Through its
"Executive Site(TM)" compilation of Internet-based services and information, the
Company provides localized and portal content catering to business
professionals. Through research, design, programming, co-branding, and
licensing, the Company has compiled Internet services and content in its
Executive Site that it believes are useful to companies, associations and
professionals. Executive Site web pages are designed specifically for targeted
user groups, and the Company believes they provide friendly, easy to navigate
interfaces. The Company's basic Executive Site may be accessed through the
Internet at www.theexecutive.com. Other Executive Sites are customized to the
needs of specific Internet subscriber groups (whether by geographic location or
entity affiliation) and have different Internet addresses.

References in this report to the "Executive Site" mean the basic Executive Site
as well as all customized Executive Sites, unless the discussion refers
specifically to basic or customized Executive Sites.

The Company plans to market the Executive Site throughout North America,
starting with its Virtual ISP locations. It may also let other ISPs display
customized Executive Sites in certain markets. The Company also offers its
commercial clients the ability to market their products and services to
Executive Site users through its newly developed Virtual Mall.

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The Company believes the Executive Site will be popular because most business
professionals don't want to spend their own time searching the Internet for the
information that they need. The Executive Site has assembled a functional
business site to enable users to immediately find what they need. Executive
Site users will be able to:
. monitor and research the stock market;
. plan and book their next business trip;
. check the local news and weather;
. participate in online forums;
. carry out electronic transactions via e-commerce; and
. find a suitable restaurant in their area.
The Company does not plan to charge a fee for access to the basic Executive
Site. It plans to charge a design fee and a recurring user fee for Executive
Sites that it customizes for companies or associations. It also plans to charge
a monthly fee when it allows other ISPs to display a customized Executive Site.
The Company expects to receive advertising and e-commerce commission revenues
from the Executive Site.

Industry Background - The Internet

The Internet is a global collection of thousands of interconnected computer
networks that links computers around the world and enables commercial
organizations, educational institutions, governmental agencies and individuals
to communicate electronically, access and share information and conduct
commerce. Unlike other public and private telecommunications networks that are
managed by businesses, governmental agencies or other entities, the Internet is
a cooperative interconnection of many such public and private networks. The
networks that comprise the Internet are connected in a variety of ways,
including the public-switched telephone network and dedicated high-speed leased
lines. Open communications on the Internet are enabled by TCP/IP, the common
Internet communications protocol, which enables communication across the
Internet regardless of the hardware and software used.

Recent technological advances, combined with cultural changes and evolving
business practices, have led to integration of the Internet into the activities
of individuals and the operations and strategies of commercial organizations.
Use of the Internet by individuals and relatively small businesses and other
organizations has been accelerated by dramatic increases in cost-effective
processing power and data storage capabilities in personal computers, as well as
widespread availability of multimedia, fax/modem, and networking capabilities to
the home computing market. According to CyberAtlas, the Computer Industry
Almanac conducted a study that found that North America will remain the leading
region for Internet users until at least 2005, projecting that it will grow from
about 83 million Internet users at the end of 1998 to nearly 230 million by the
end of 2005. By the end of the year 2000, the Computer Industry Almanac projects
that Internet users in North America will number almost 149 million. The
Computer Industry Almanac defines Internet users as adults with weekly usage in
businesses and homes.

Much of the recent growth in Internet use by businesses and individuals has been
driven by the emergence of a network of servers and information available on the
worldwide web. The

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worldwide web, which is based on a client/server model and a set of standards
for information access and navigation, can be accessed using software that
allows non-technical users to exploit the capabilities of the Internet. The
worldwide web enables users to find, retrieve and link information on the
Internet easily and consistently. The development of worldwide web technology
and associated easy-to-use software has made the Internet easier to navigate and
more accessible to a larger number of users and for a broader range of
applications.

Until recently, individuals could access the Internet only through an
organization with a direct Internet connection, or through traditional online
services employing closed, proprietary networks that allow Internet access only
to limited Internet resources. With the growth and increasing commercialization
of the Internet, a number of Internet Service Providers, or ISPs, including the
Company, have emerged to provide direct access to individuals. Traditional
online services also have begun to increase the scope and capacity of their
access to the Internet. Access providers vary widely in geographic coverage,
subscriber focus and levels of Internet access. For example, access providers
may concentrate on certain types of subscribers (such as businesses or
individuals) that differ substantially in the type of service and support
required. Providers may also differ according to whether they provide direct or
non-direct access to the Internet. Direct access through Internet protocol such
as PPP (Point-to-Point Protocol) enable users to establish direct connections to
other computers on the Internet, including worldwide web sites or computers
operated by other users, and thereby have access to the full range of Internet
resources. The Company, like most regional and national ISPs, offers direct
Internet access.

Principal Services

The Company currently derives the overwhelming majority of its revenues
(approximately 98%) from its ISP business. Over the past 18 months, the Company
has devoted significant resources to developing its "Executive Site(TM)" web
sites, which provide localized and portal content catering to business
professionals. The Company believes that the Executive Site will ultimately
produce significant revenues, as well as complement the Company's ISP services
by functioning as an Internet access gateway.

Key strategic developments to date have included equipment, software and robust
network infrastructure acquisitions, acquisitions of licenses for web content,
research and development and marketing plan development. The Company possesses
what management considers to be the latest in high-end computer management
systems. Hardware systems have been installed, tested, and are operating with
comprehensive redundancy and contingency plans (although the Company cannot
guarantee that it would maintain service in the face of every kind of natural
disaster or man-made disruption). The Company has the capacity to increase
hardware storage capabilities due to the modular nature of its equipment and
without system downtime.

ISP Services

The Company serves as an ISP for companies and individuals that need access to
the Internet in exchange for a recurring fee. The Company began as a local ISP
in Toronto and Vancouver, purchasing and installing the "backbone"
communications equipment and infrastructure necessary to be a stand-alone ISP.
The Company's costs of providing ISP services have historically included
equipment installation and ongoing service and maintenance charges. The Company
intends to provide ISP services to a steadily growing

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number of cities in North America as a Virtual ISP by providing Internet access
to its customers using the underlying telecommunications infrastructure of other
companies, such as telephone companies. The Virtual ISP business model should
enable the Company to avoid purchasing hardware and installing "backbone"
communications equipment and infrastructure in each city where it plans to offer
ISP services. As the Company introduces its Virtual ISP presence in additional
cities, each city will represent an increased lease charge under the Company's
agreements with Internet access providers due to the need to add bandwidth to
accommodate the customer base in the new market. As the Company expands its
presence in a particular market, it will require additional increases in
bandwidth depending on data transmission volumes.

The Company's goal is to expand its ISP business throughout North America by
negotiating access to the telecommunications "backbone" facilities of Internet
access providers and then repackaging that access for sale to its customers and
resellers (licensees). The Company has entered into agreements that permit it to
market access to the Internet in the Northeast United States and 20 cities (some
in the Northeast) across the United States, and in Canada. In September 1999 the
Company entered into an agreement with Bell Atlantic that lets the Company
provide Internet access in the Northeast United States on high-speed Digital
Subscriber Lines ("DSLs"). The agreement has a three-year term and is subject to
renewal annually thereafter. Under the agreement, the Company pays fees to Bell
Atlantic monthly based on bandwidth used and Bell Atlantic's then-current price
schedule. In March 1999 the Company entered into an agreement with Level 3
Communications that lets the Company provide Internet access in 20 cities across
the United States using their fiber-optic backbone (a phone line). The agreement
does not have a specific term and is on a month-to-month basis. Under the
agreement, the Company pays fees to Level 3 Communications based on a per-port
fee (each port provides capacity for a certain volume of data transmission). In
November 1998 the Company entered into an agreement with MetroNet
Communications, recently acquired by AT&T, which permits the Company to use
their Canadian network of high-speed, fiber-optic ATM links. The agreement has a
five-year term and no stated renewal clause. Under the agreement, the Company
pays fees to MetroNet Communications based on a per-port fee. The Company will
continue to pursue agreements with additional Internet access providers based on
the markets the Company seeks to serve and the acceptability of the terms
offered by Internet access providers serving those markets. The Company must
develop and maintain its relationships with owners of telecommunications
networks in order to implement its "Virtual ISP" business model and facilitate
broad market acceptance of its services and enhance its sales.

The Company selects certain target markets in which it will offer its services
and commit corresponding resources for marketing and infrastructure. The Company
bases its target market assessment on two years of research and development
through its involvement in the Internet industry. Because the Company does not
have a universal presence on the Internet as an ISP, its ability to achieve
market penetration in the target markets it selects to serve has a significant
effect on the Company's ability to maintain and increase its revenues. As of
August 31, 1999, the Company had approximately 23,000 ISP customers.

Maintaining market penetration successes by minimizing customer turnover also
has a significant effect on the Company's ability to maintain and increase its
revenues. The Company believes it has had a very satisfactory overall rate of
customer turnover. During the past two years, approximately 2,500 ISP customers
stopped using the Company as their ISP. The bulk of this turnover occurred in a
six-month period of time from November 1998 to May 1999, when the Company had
some technical difficulties rolling out new MetroNet leased lines. During this
period, a higher percentage of customers than usual, approximately two percent
of existing customers per month, terminated service, due principally to slow
transmission speeds and inadvertent disconnection of transmissions. The Company
has worked with MetroNet to correct these problems, and its turnover rate since
May 1999 is now back below the industry standard of one percent of existing
customers per month. The Company expects customer turnover to increase in the
future as competition intensifies. The Company expects that service quality
(i.e., data transmission speed and periods of down time) and

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price will be the major factors that influence ISP customers to switch their
ISP. The Company believes that the availability of customized Executive Sites
(and other such similar Internet link compilations targeted to specific user
groups) with their value-added services will increasingly become another factor
that ISP customers will consider in their assessment of service quality. See
"Principal Services--The Executive Site".

The Company currently has a significant market presence (more than 20,000 ISP
customers) in Toronto. In addition, the Company has begun to provide ISP
services in Vancouver and Calgary as a Virtual ISP. Within the next six months,
the Company plans to begin offering ISP services in Seattle, Washington, D.C.,
Dallas, Houston, Philadelphia, San Francisco, Miami, New York and Los Angeles.
The Company will add additional cities to its service area as it assesses the
market opportunities and the terms available from Internet access providers.

The Executive Site

The Company believes that Internet users will begin to base their selection of
an ISP in part on the value-added services that their ISP provides. Through its
"Executive Site" compilation of Internet-based services and information, the
Company plans to provide localized and portal content catering to business
professionals. Through research, design, programming, co-branding, and
licensing, the Company has compiled Internet services and content in its
Executive Site that it believes are useful to companies, associations and
professionals. Executive Site web pages are designed specifically for targeted
user groups, and the Company believes they provide friendly, easy to navigate
interfaces. The Company's basic Executive Site may be accessed through the
Internet at www.theexecutive.com. Other Executive Sites are customized to the
needs of specific Internet subscriber groups (whether by geographic location or
entity affiliation) and have different Internet addresses.

The Company believes the Executive Site(TM) will be popular because most
business professionals don't want to spend their own time searching the Internet
for the information that they need. The Executive Site(TM) has assembled a
functional business site to enable users to immediately find what they need.
Executive Site(TM) users will be able to:

. monitor and research the stock market;
. plan and book their next business trip;
. check the local news and weather;
. participate in online forums;
. carry out electronic transactions via e-commerce; and
. find a suitable restaurant in their area.

The Company does not plan to charge a fee for access to the basic Executive
Site(TM). It plans to charge a design fee and a recurring user fee for Executive
Sites(TM) that it customizes for companies or associations. It also plans to
charge a monthly fee when it allows other ISPs to display a customized Executive
Site. The Company expects to receive advertising and e-commerce commission
revenues from the Executive Site(TM).

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The Executive Site has two main purposes. One important purpose of the
Executive Site is to complement the Company's ISP business. Thus far the
industry has focused on providing high speed access to the Internet and has
largely neglected the content development market. The greatest difficulty in
content development is encouraging people to pay for the information they need.
Some companies have attempted to charge for information. However, information
can always be found free on the Internet. While people will not pay for raw
information, the Company believes that when information and services are
properly bundled, ISP customers will find value in convenience, organization,
relevance, and meaningful communication. Internet content is now aimed at broad
target markets doing little to customize information to users needs. The
Executive Site aims to provide content customized to the needs of specific
interest groups, companies, and associations.

Although anyone with Internet access will be able to visit the basic Executive
Site or the customized regional sites maintained by the Company, only the
Company's (or one of its ISP licensee's) ISP customers will be able to access
certain value-added services available on the Executive Site. For example, the
Company currently offers its ISP customers e-mail without any additional charge
and plans to offer 100 minutes of voice-over Internet Protocol ("IP") phone
service without any additional charge. Anybody accessing an Executive Site who
is not an ISP customer of the Company (or one of its ISP licensees) cannot
access these value-added services without any additional charge. The Company
believes that by providing these value-added services, along with the other
useful services and content conveniently located at the Executive Site, it will
have a competitive advantage in attracting and retaining ISP customers.

The Executive Site's second main purpose is to be a profit center. The Company
believes that the Executive Site will ultimately become a profit center in its
own right. The Company believes it can generate non-ISP revenues by providing
information organized and packaged for consumers and businesses. While people
will not pay for raw information, the Company believes that when information and
services are properly bundled, two distinct revenue streams are available. One
revenue stream will be available from licensees that would like to customize an
Executive Site for their own targeted user group. Such licensees would include
other ISPs, companies and associations. The Company believes that they will pay
for the convenience, organization, relevance, and meaningful communication
provided by the pre-packaged Executive Site information and services, and the
tools required to organize and maintain them. A second distinct revenue stream
will be available by virtue of Internet users (whether they are ISP customers of
the Company and its licensees or of other unrelated ISPs) visiting the Executive
Site and accessing its information and services. This revenue stream would
include advertising and e-commerce commission revenues. The Executive Site is a
new concept and, while the Company has high hopes for its ultimate success, has
yet to provide material revenues to the Company.

The Company has committed significant resources to the development of the
Executive Site, and it intends to continue to commit significant resources to
its development and maintenance. Through research, design, programming, co-
branding, and licensing, the Company compiles a collection of the most
compelling and functional Internet services. These services are then
synthesized into a single web interface. Finally, this web interface is
customized to function as a dedicated service for dial-up communities, interest
groups, associations, and companies, who in turn sell access to the service to
their members, associates, or employees. In other words, the Executive Site
compiles

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some of the Internet's best stock quote systems, travel reservation systems,
shopping networks, and chat technologies, and then adds information and
directories unique to any given group or organization. In some cases, its
networks may even form the backbone of a corporate Intranet. Because of the
modular nature of the Executive Site's information and service components, the
Company can offer businesses and associations the components that they want as
the basis of their customized intranets or executive sites. An initial
development and licensing fee, together with monthly user fees, will be charged
for the development of a customized Executive Site. The modular nature of the
Executive Site's information and service components will also facilitate
establishing local customized Executive Sites in those markets where the Company
or one of its licensees seeks to establish or maintain an ISP presence. When the
Company licenses information and service components, the licensee then has the
ability to control access to the website on which it displays the components.

The Company has begun making the Executive Site, with its value-added services,
available to its own ISP customers, and a print and Internet advertising
campaign is currently underway to attract Internet users (prospective new ISP
customers) to the Executive Site. The Company also has succeeded in attracting
some business advertising, and it intends to seek additional advertising
customers. The Company has also introduced its Virtual Mall. The Virtual Mall
provides links to web pages where Internet users can view merchandise and make
purchases using their credit cards. The Company either receives a commission
from the vendor when an Internet user makes a purchase after entering a web page
through the Virtual Mall or it receives rent from the vendor for providing a
link to the vendor's web page from the Virtual Mall.

The Company also has begun licensing Executive Site information and service
components to third parties that want to display their own webpages. In March
1999, the Company licensed its Executive Site portal to MediaComm Broadcasting
Systems, an ISP in Englewood, Colorado. The Company developed a private-labeled
version of the Executive Site for MediaComm's Internet access customers in the
Denver, Colorado area at http://denver.theexecutive.com. MediaComm paid an
initial set up fee and pays a monthly user fee. MediaComm also shares
advertising and e-commerce revenues generated on the site's pages with the
Company. In April 1999, the Company licensed its Executive Site portal to
InfoABC S.A., an ISP in Mexico City, Mexico. The Company developed a private-
labeled version of the Executive Site for InfoABC's Internet access customers in
the Mexico City area. InfoABC paid an initial set up fee and pays a monthly user
fee. InfoABC also shares advertising and e-commerce revenues generated on the
site's pages with the Company. As of August 31, 1999, the Company had licensed
Executive Site components to three ISPs, but not yet to any companies,
associations or interest groups. The Company believes that it will enter into a
number of license agreements with other ISPs, companies and associations during
the coming year.

The Executive Site is still in its early phases. It does not yet provide a
material portion of the Company's revenues. The Company believes that in the
future the non-ISP revenues provided by the Executive Site will increase both in
terms of absolute dollars and as a percentage of total revenues.

The Company constantly assesses the content of the Executive Site, adding,
deleting or substituting information or services when warranted. Currently the
major components of the Executive Site include:
Demon Systems's stock quote and research system;

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Internet Travel Network's travel reservation system;
WeatherLabs, Inc.'s weather information;
Ichat Rooms's chat room system;
the Company's Virtual Mall;
Furle/Powertrader's business directory;
Some of this content is actually resident on the Company's web pages, and some
of it is accessed by links to other web sites. Compensation arrangements with
content providers are generally based on the number of Internet users that
access a particular item of content (known in the industry as "hits"). With
respect to advertising revenues derived from banner advertisements placed on
various web pages, the Company generally shares revenue with the content
provider for the web page. In addition, the Company entered into a two year
licensing and multicasting agreement with broadcast.com. The Company will sell
broadcast.com services to associations, local ISP's, Executive Site users, local
dial-up, and national virtual ISP customers. Services will include audio and
video hosting, and live event broadcasting (multicasting) including multimedia
presentations, trade shows and conferences. The Company will receive a
percentage of revenues generated by these services for a period of two years and
will have the option to renew this contract annually.

These components represent only a small sample of planned future content. The
Company anticipates entering into similar agreements in the future to fully
develop and expand the content in the Executive Site. New content suppliers are
constantly being identified for existing and potential Executive Sites.
Additional content will also be developed by associations and companies
themselves.

Competitive Conditions

The market for Internet products, services and advertising is new, rapidly
evolving and intensely competitive. The Company currently or potentially
competes with many other ISPs, providers of Web directories, search and
information services, as well as traditional media, for consumer attention and
advertising expenditures. The Company expects competition to intensify in the
future. Barriers to entry may not be significant, and current and new
competitors may be able to provide ISP services and to launch new Web sites at a
relatively low cost. Accordingly, the Company believes that its success will
depend heavily upon achieving significant market acceptance before its
competitors and potential competitors introduce competing services.

The Company competes with other ISPs for ISP customers. Although some
affirmative effort is required to change ISPs, there are no significant barriers
to ISP customers changing their ISP in response to service quality or price
considerations. The Company competes with online services and other Web sites,
as well as traditional offline media such as television, radio and print, for a
share of advertisers' total advertising budgets. The number of companies
offering e-commerce outlets and selling Web-based advertising, and the available
inventory of related space on webpages, has recently increased substantially.
Accordingly, the Company may face pricing pressure on its e-commerce commissions
and for the sale of advertisements.

Many of the Company's competitors, as well as potential entrants into its
markets, have longer operating histories, larger customer or user bases, greater
brand recognition and significantly greater financial, marketing and other
resources than the Company. Many of these current and potential competitors can
devote substantially greater resources to promotion and Web site and systems
development than the Company. In addition, as the use of the Internet and other
online services increases, larger, well-established and well-financed entities
may continue to acquire, invest in or form joint ventures with ISPs, providers
of Web directories, search and information

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services or advertising solutions, and existing ISPs, providers of Web
directories, search and information services or advertising solutions may
continue to consolidate. In addition, providers of Internet browsers and other
Internet products and services who are affiliated with ISPs or providers of web
directories and information services in competition with the Company's Executive
Site web site may more tightly integrate these affiliated offerings into their
browsers or other products or services. Any of these trends would increase the
competition the Company faces.

Governmental Regulation

The laws and regulations applicable to the Internet and the Company's services
are evolving and unclear and could damage the Company's business. There are
currently few laws or regulations directly applicable to access to, or commerce
on, the Internet. Due to the increasing popularity and use of the Internet, it
is possible that laws and regulations may be adopted, covering issues such as
user privacy, defamation, pricing, taxation, content regulation, quality of
products and services, and intellectual property ownership and infringement.
Such legislation could expose the Company to substantial liability as well as
dampen the growth in use of the Internet, decrease the acceptance of the
Internet as a communications and commercial medium, or require the Company to
incur significant expenses in complying with any new regulations. The European
Union has recently adopted privacy and copyright directives that may impose
additional burdens and costs on international operations. In addition, several
telecommunications carriers, including America's Carriers' Telecommunications
Association, are seeking to have telecommunications over the Internet regulated
by the Federal Communications Commission, or FCC, in the same manner as other
telecommunications services. Because the growing popularity and use of the
Internet has burdened the existing telecommunications infrastructure and many
areas with high Internet usage have begun to experience interruptions in phone
services, local telephone carriers, such as Pacific Bell, have petitioned the
FCC to regulate the Internet and to impose access fees. Increased regulation or
the imposition of access fees could substantially increase the costs of
communicating on the Internet, potentially decreasing the demand for the
Company's services. A number of proposals have been made at the federal, state
and local level that would impose additional taxes on the sale of goods and
services through the Internet. Such proposals, if adopted, could substantially
impair the growth of electronic commerce and could adversely affect the Company.
Also, Congress recently passed (and the President has signed into law) the
Digital Millenium Copyright Act, which is intended to reduce the liability of
online service providers for listing or linking to third-party Web sites that
include materials that infringe copyrights. Congress also recently passed (and
the President has signed into law) the Children's Online Protection Act and the
Children's Online Privacy Act, which will restrict the distribution of certain
materials deemed harmful to children and impose additional restrictions on the
ability of online services to collect user information from minors. Further,
Congress recently passed (and the President has signed into law) the Protection
of Children from Sexual Predators Act, which mandates that electronic
communication service providers report facts or circumstances from which a
violation of child pornography laws is apparent. The Company cannot currently
predict the effect, if any, that this legislation will have on its business.
There can be no assurance that this legislation will not impose significant
additional costs on the Company's business or subject it to additional
liabilities. Moreover, the applicability to the Internet of existing laws
governing issues such as property ownership, copyright, defamation, obscenity
and personal privacy is uncertain. The Company may be subject to claims that its
services violate such laws. Any new legislation or regulation in the

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United States or abroad or the application of existing laws and regulations to
the Internet could damage the Company's business.

Due to the global nature of the Internet, it is possible that the governments of
other states and foreign countries might attempt to regulate its transmissions
or prosecute the Company for violations of their laws. The Company might
unintentionally violate such laws. Such laws may be modified, or new laws may be
enacted, in the future. Any such development could damage the Company's
business.

Other Information

The Company's ability to successfully offer products and services and implement
its business plan in a rapidly evolving market requires an effective planning
and management process. The Company has increased, and plans to continue to
increase, the scope of its operations. Its headcount has grown and will
continue to grow substantially. At May 31, 1999, the Company had a total of 21
employees. It will need to expand its infrastructure, which will include hiring
certain key employees, including without limitation, key employees in marketing
and technology development. Hiring such employees has historically been
difficult.

Product development expenses increased by $11,000 to $156,000 as compared to
$145,000 in the previous year, an increase of 8%. The major component of product
development expenses was; salaries and consulting fees of $117,000, rent and
telephone of $25,000, and amortization of capital assets used directly in
product development activities of $13,000. Related expenses incurred in the
previous year were comparatively similar as incurred in fiscal 1999.

The Company does not believe that environmental laws have or will have a
significant effect on its business.

In their report on the Company's financial statements, the Company's auditors
have expressed doubt about the Company's ability to continue in business as a
going concern. The Company will need additional funds to continue in business
and to implement its business plan as proposed, which it may not be able to
obtain. Equity or debt financing may not be available to the Company on terms
acceptable to the Company, or at all.

The Company has undertaken steps to address Year 2000 Issues. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000 Issues".

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

This Form 10-SB contains forward-looking statements. The words, "anticipate",
"believe", expect", "plan", "intend", "estimate", "project", "could", "may",
"foresee", and similar expressions are intended to identify forward-looking
statements. The following discussion and analysis should be read in conjunction
with the Company's Financial Statements and Notes thereto and other financial
information included elsewhere in this Form 10-SB which contains, in addition to
historical information, forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below, as well as those
discussed elsewhere in this Form 10-SB.

Overview

The Company's goal is to expand its ISP business throughout North America by
negotiating access to Virtual ISP "backbone" facilities and then repackaging
that access for sale to its customers and resellers (licensees). The Company has
entered into agreements that permit it to market access to the Internet in the
Northeast United States and 20 cities (some in the Northeast) across the United
States, and in Canada. Toronto, Ontario is the first market in which the Company
provided ISP services, beginning about four years ago.

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believes are useful to companies, associations and professionals. Executive Site
web pages are designed specifically for targeted user groups, and the Company
believes they provide friendly, easy to navigate interfaces. The Company's basic
Executive Site may be accessed through the Internet at www.theexecutive.com.
Other Executive Sites are customized to the needs of specific Internet
subscriber groups (whether by geographic location or entity affiliation) and
have different Internet addresses.

References in this Form 10-SB to the "Executive Site" mean the basic Executive
Site as well as all customized Executive Sites, unless the discussion refers
specifically to basic or customized Executive Sites.

The Company conducts its operations through the following three wholly-owned
Canadian subsidiaries:

. YesIC, Communications, Inc., acquired in February 1997;
. World Tel, Internet (Toronto) Ltd., acquired in February 1997; and
. Blue Crow Internet Company, Ltd., acquired in December 1996.

Information Highway, Inc. ("IHI"), a Washington corporation, actually acquired
these subsidiaries. Then, in February 1999, IHI engaged in a reverse takeover of
Florida Venture Fund, Inc., a Florida corporation. As a result of the reverse
takeover, the shareholders of IHI came to own approximately 95% of the
outstanding shares of Florida Venture Fund, Inc. In connection with the reverse
takeover, Florida Venture Fund, Inc. changed its name to Information-
Highway.com, Inc. and is now the ultimate parent company whose shares are traded
on the OTC bulletin board (symbol: IHWY).

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Effect of Reorganization

The reverse takeover was conducted pursuant to an Agreement and Plan of
Reorganization entered into on February 17, 1999 and completed on February 23,
1999 between the Company, IHI and certain shareholders of IHI. The Company
acquired 3,235,000 common shares of IHI out of a total of 5,639,650 issued and
outstanding common shares in exchange for 3,235,000 common shares of the
Company. It is the Company's intention to complete the exchange of shares of its
common stock for the remaining and outstanding common shares of IHI on a one for
one basis. As of August 31, 1999, 2,240,150 of the remaining 2,404,650 IHI
shares had been exchanged for the same number of Company shares. In total, to
August 31, 1999, approximately 97% of IHI shares had been exchanged. The Company
has allotted 164,500 shares in anticipation of the remaining shares being
exchanged. As part of the Agreement and Plan of Reorganization the Company
caused 1,659,833 of its 1,979,500 common shares that were issued and outstanding
prior to the closing to be cancelled and assumed the obligations of IHI to issue
common shares pursuant to warrants and stock options issued by IHI. IHI paid
$100,000 to the controlling shareholder of the Company as a finder's fee and to
effect the Agreement and Plan of Reorganization.

For accounting purposes the acquirer is IHI as approximately 95% of the issued
and outstanding common shares of the Company are owned by the shareholders of
IHI and the entire Board of Directors of the Company is now comprised of the
entire Board of Directors of IHI. As IHI is the legal subsidiary of the Company
the nature of the business combination is a reverse takeover whereby the control
of the assets and the business of the Company is acquired by IHI and the
consolidated financial statements are issued under the name of the Company but
is a continuation of IHI and not the Company. The legal capital structure
remains that of the Company but the shareholders' equity of IHI has replaced the
shareholders' equity of the Company. Similarly, the Company's income statements
and statements of cash flows represent a continuation of IHI's consolidated
financial statements.

The accounting treatment of the reverse takeover takes into account $100,000 of
consideration that was paid to shareholders of the Company. The $100,000 payment
to the controlling shareholder of FVFI has been treated, for accounting
purposes, as a reduction of additional paid in capital and not as goodwill as
the nature of the transaction was for IHI to obtain a listing on the OTC
Bulletin Board by way of reverse takeover. The cost is associated with publicly
listing shares and not with any business associated with FVFI. FVFI had not
conducted any business prior to the reverse takeover.

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Factors Affecting Ongoing Operations

Prior to acquiring IHI, the Company had not conducted any business since
inception in 1988. The following discussion will relate to the Company as if the
reverse takeover had taken place as of the earliest date of the consolidated
financial statements presented.

Although planned principal activities have started producing significant
revenues, in its effort to rapidly expand infrastructure and network services
and develop the Executive Site(TM), the Company has suffered net losses for the
years ended May 31, 1999, 1998 and 1997 of $949,000, $557,000 and $151,000,
respectively. At May 31, 1999, its accumulated deficit was $1.7 million and its
working capital deficit was $314,000. The Company expects to incur substantial
operating losses, net losses and negative cash flow for the foreseeable future.

Revenues

Revenue consists of mainly the provision of Internet dial-up services. The
Company receives limited revenue from banner advertisements, web-site
development and hosting and e-commerce commission revenue.

Revenue is recognized at the time services are provided. All related costs are
recognized in the period in which they occur. Customer deposits for Internet
dial-up services to be provided in the future are treated as deferred revenues.

The following factors affect the Company's revenue:

. Service Offering - The Company derives most of its operating revenue from
the ISP service it provides to its customers;

. Penetration of Target Markets - The Company selects certain target markets
in which it will offer its services and commit corresponding resources for
marketing and infrastructure. The Company bases its target market
assessment on two years of research and development through its involvement
in the Internet industry. Because the Company does not have a universal
presence on the Internet as an ISP, its ability to achieve market
penetration in the target markets it selects to serve has a significant
effect on the Company's ability to maintain and increase its revenues;

. Turnover - Maintaining market penetration successes by minimizing customer
turnover also has a significant effect on the Company's ability to maintain
and increase its revenues. To date, customer turnover has been minimal. The
Company expects customer turnover to increase in the future as competition
intensifies. The Company expects that service quality (i.e., data
transmission speed and periods of down time) and price will be the major
factors that influence ISP customers to switch their ISP;

. Executive Site(TM) - Executive Site(TM) revenues, which to date are mostly
from advertising, are not yet material to the Company's total revenues. The
Company expects that advertising and e-commerce commission revenues related
to the Executive Site(TM), as well as fee based revenues from customized
Executive Site licensees, will grow in the future, both in dollar amount
and as a percentage of the Company's total revenues.

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Cost of Revenues

Cost of revenues consists primarily of the cost of serving the Company's
Internet dial-up service customers and the cost of developing web-sites for
customers. These costs include salaries for technical support and customer
service, depreciation of Internet dial-up and web-site hosting equipment,
license fees, equipment leasing costs, telephone line costs and rent to house
equipment and staff directly involved in serving customers.

The Company's network and service costs have historically included equipment
installation and ongoing service and maintenance charges. As the Company
introduces its Virtual ISP presence in additional cities, each city will
represent an increased lease charge under the Company's agreements with Internet
access providers due to the need to add bandwidth to accommodate the customer
base in the new market. As the Company expands its presence in a particular
market, it will require additional increases in bandwidth depending on data
transmission volumes.

Other Operating Expenses

The Company's other operating expenses include Executive Site(TM) development
and maintenance, information systems, billing and collections, general
management and overhead, and administrative functions. Head count in functional
areas, such as customer service, engineering and operations, along with
expansion of the Executive Site(TM) and the locations in which the Company
provides ISP services and increases in the number of its customers, will drive
increases in expenses.

Results of Operations

If Regulation S-B Item 310(g)(1) requires or permits the Company to include in
this Form 10-SB the financial statements included in the Company's Form 10-KSB
for the fiscal year ended May 31, 1999, then that portion of Item 6,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, under the caption Results of Operations for the Year Ended May 31,
1999 as Compared to the Year Ended May 31, 1998, on pages 18 through 21 of the
Company's annual report on Form 10-KSB for the fiscal year ended May 31, 1999,
is hereby incorporated by reference as though set forth here in its entirety.

If Regulation S-B Item 310(g)(1) does not require or permit the Company to
include in this Form 10-SB the financial statements included in the Company's
Form 10-KSB for the fiscal year ended May 31, 1999, then the following
discussion and analysis of the Company's results of operations applies:

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Results of Operations for the Quarter Ended February 28, 1999 as Compared
to the Quarter Ended February 28, 1998

Revenues

Revenues have increased by $47,000 (23%) to $255,000 from $208,000 in the
comparable quarter. This increase is due to an increased subscriber base in
Vancouver and Toronto. Based on assumptions about demand for its ISP services
and the Executive Site(TM), the Company anticipates that the dollar amount of
future revenues will increase over current levels.

The Company is beginning to receive small amounts of revenue from banner
advertisements, developing web-sites for customers and reselling Executive Site
information and service modules pursuant to license agreements.

Cost of Revenues

Cost of revenues has increased by $35,000 (25%) to $177,000 from $142,000 in the
comparable quarter. This increase is approximately the same as the increase in
revenues. The largest components of the increase in cost of revenues are
telephone costs, Internet and license fees, and salaries and consulting fees.
The increases in these costs are reflective of the increase in the Company's
subscriber base.

Gross Profit

Gross profit was $78,000 (31%) in the current quarter as compared to $66,000
(32%) in the comparable quarter. With increased competition in the Internet
Service Provider industry there has been increased pressure to reduce fees for
new subscribers and renewing subscribers. This reduction of fees results in
lower gross profit percentages as there is not a reciprocal decrease in cost to
service its customers. The Company intends to decrease the cost of telephone and
Internet switching fees with new agreements with backbone or bandwidth
providers.

Marketing and Sales Expenses

Marketing and sales expenses remained fairly stable on a quarter-to-quarter
comparison, $47,000 in the current quarter and $50,000 in the comparable
quarter. In general marketing and sales expenses have increased as a result of
a marketing plan to increase advertisements in industry specific publications.
There was not a quarter-to-quarter increase due to the timing of marketing
expenditures.

General and Administrative Expenses

General and administrative expenses for corporate overhead activities and
Internet business related activities have increased by $16,000 (12%) to $144,000
from $128,000 in the comparable quarter.

General and administrative expenses relating to corporate overhead activities,
and not Internet business related activities, have increased by $19,000 (38%) to
$69,000 from $50,000 in the comparable quarter. As a result of the reverse
takeover during February, 1999, the Company incurred one-time expenses relating
to professional fees and investor relations advertising and consulting.
Professional fees such as legal and accounting increased by $10,000 to $14,000
from $4,000 in the comparable quarter. This increase relates to costs incurred
to complete and file various documents with the NASD in addition to legal fees
to effect the reverse takeover. Investor relations advertising and consulting
increased by $17,000 to $22,000 from $5,000 in the comparable quarter. The
majority of this increase was due to services rendered by two non-related
companies for Internet-based marketing and investor communications services
including e-mails to their respective data bases of customers.

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General and administrative expenses relating to Internet business related
activities decreased by $3,000 to $75,000 from $78,000 in the comparable
quarter. The major components of general and administrative expenses were:
amortization of goodwill of $40,000; and salaries and consulting fees of
$20,000.

Product Development Expenses

Product development costs consist of expenses incurred by the Company in the
development and creation of its Executive Site(TM) web-site. Product development
costs include compensation and related expenses for programmers, depreciation of
computer hardware and software, rent, telephone and costs incurred in developing
features and functionality of the service. Product development costs are
expensed as incurred.

Product development expenses remained fairly stable on a quarter-to-quarter
comparison, $33,000 in the current quarter and $36,000 in the comparable
quarter. The major component of product development expenses was salaries and
consulting fees.

Net Loss for the Quarter Ended February 28, 1999 as Compared to the
Quarter Ended February 28, 1998

The Company's net losses have come mainly from overhead costs associated with
organization, restructuring and financing start-up operations in Toronto and
Vancouver, Canada and costs of developing new and improved services and
expanding its marketing plan into other North American markets. The only
operating activities conducted in the United States thus far were expenses
incurred in the going public process including investor relations and
professional fees. The Company's head office is in Richmond, BC, Canada, which
does not conduct any business related to the Internet. Its sole purpose is to
provide administration, investor relations services and services relating to
being a public company. Included in general and administrative expenses and net
loss is $69,000 for the current quarter as compared to $50,000 in the comparable
quarter, relating to such activities. The net loss relating to Internet
activities amounted to $77,000 for the current quarter as compared to $98,000 in
the comparable quarter.

Results of Operations for the Nine Months Ended February 28, 1999 as
Compared to the Nine Months Ended February 28, 1998

Revenues

Revenues have increased by $142,000 (23%) to $752,000 from $610,000 in the
comparable period. This increase is due to an increased subscriber base in
Vancouver and Toronto. Based on assumptions about demand for its ISP services
and the Executive Site(TM), the Company anticipates that the dollar amount of
future revenues will increase over current levels.

Cost of Revenues

Cost of revenues has increased by $106,000 (25%) to $522,000 from $416,000 in
the comparable period. This increase is approximately the same as the increase
in revenues. The largest components of the increase in cost of revenues are
telephone costs, Internet and license fees, and salaries and consulting fees.
The increases in these costs are reflective of the increase in the Company's
subscriber base.

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Gross Profit

Gross profit was $230,000 (31%) in the current period as compared to $194,000
(32%) in the comparable period. With increased competition in the Internet
Service Provider industry there has been increased pressure to reduce fees for
new subscribers and renewing subscribers. This reduction of fees results in
lower gross profit percentages as there is not a reciprocal decrease in cost to
service its customers. The Company intends to decrease the cost of telephone and
Internet switching fees with new agreements with backbone or bandwidth
providers.

Marketing and Sales Expenses

Marketing and sales expenses have increased by $27,000 (23%) to $143,000 from
$116,000 in the comparable period. The bulk of this increase was a result of a
marketing plan to increase advertisements in industry specific publications. The
other major component of marketing and sales is salaries, which increased only
slightly as compared to the comparable period.

General and Administrative Expenses

General and administrative expenses for corporate overhead activities and
Internet business related activities have increased by $135,000 (45%) to
$433,000 from $298,000 in the comparable period.

General and administrative expenses relating to corporate overhead activities,
and not Internet business related activities, have increased by $143,000 (213%)
to $210,000 as compared to $67,000 in the comparable period. As a result of the
reverse takeover during February, 1999, the Company incurred one-time expenses
relating to professional fees and investor relations advertising and consulting.
Professional fees such as legal and accounting increased by $37,000 to $47,000
from $10,000 in the comparable period. This increase relates to costs incurred
to complete and file various documents with the NASD in addition to legal fees
to effect the reverse takeover. Investor relations advertising and consulting
increased by $82,000 to $87,000 from $5,000 in the comparable period. The
majority of this increase was due to services rendered by two non-related
companies for Internet-based marketing and investor communications services
including e-mails to their respective data bases of customers. Office, rent and
telephone increased by $27,000 to $30,000 as a result of various office and
telephone costs incurred during and after becoming a public company.

General and administrative expenses relating to Internet business related
activities decreased by $8,000 to $223,000 from $231,000 in the comparable
period. The major component of general and administrative expenses was;
amortization of goodwill of $120,000; salaries and consulting fees of $60,000;
office, rent and telephone of $26,000; legal and accounting of $7,000, travel
and promotion of $5,000 and bank charges of $5,000.

Product Development Expenses

Product development expenses increased by $14,000 (16%) to $99,000 from $85,000
in the comparable period. The major component of product development expenses,
salaries and consulting fees, accounted for the bulk of product development
expense in each period.

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Net Loss for the Nine Months Ended February 28, 1999 as Compared to
the Nine Months Ended February 28, 1998

The Company's net losses have come mainly from overhead costs associated with
organization, restructuring and financing start-up operations in Toronto and
Vancouver, Canada and costs of developing new and improved services and
expanding its marketing plan into other North American markets. The only
operating activities conducted in the United States thus far were expenses
incurred in the going public process including investor relations and
professional fees. The Company's head office is in Richmond, BC, Canada, which
does not conduct any business related to the Internet. Its sole purpose is to
provide administration, investor relations services and services relating to
being a public company. Included in general and administrative expenses and net
loss is $210,000 for the current period as compared to $67,000 in the comparable
period, relating to such activities. The net loss relating to Internet
activities amounted to $234,000 for the current period as compared to $238,000
in the comparable period.

Results of Operations for the Year Ended May 31, 1998 as Compared to the
Year Ended May 31, 1997

The discussion for these two periods is based on the actual results for the
period from October 15, 1996 to May 31, 1997 of Information Highway, Inc.
combined with the actual results of the three operating Canadian subsidiaries
from acquisition date to May 31, 1997. In all cases, the fact that fiscal year
1997 was only a partial year because the Company was formed in October 1996
affects the comparability of its results with those from fiscal year 1998.

Revenues

Revenues have increased by $714,000 to $859,000 as compared to $145,000 in the
comparative period. This increase is due to an increased subscriber base in
Vancouver and Toronto and the fact that fiscal year 1997 was only a partial year
because the Company was formed in October 1996.

The Company's revenues in 1998 and 1997 were solely from the provision of
Internet services.

Cost of Revenues

Cost of revenues have increased by $538,000 to $650,000 as compared to $112,000
in the comparative period. This increase is slightly less than the percentage
increase in revenues. The largest components of cost of revenues are telephone
costs, Internet and license fees, and salaries and consulting fees. The increase
in telephone costs was a result of telephone leasing costs in Vancouver and the
[decrease] in salaries and benefits was due to a reassignment of job
responsibilities and overall streamlining of the services provided. The increase
in Internet and license fees was due to increased ISP transmission traffic and
the Executive Site being developed.

Gross Profit

Gross profit was $210,000 (24%) during fiscal 1998 as compared to 33,000 (23%)
during the comparative period. The increase in gross profit was a result of
increased volume, less manpower needed to service its customers, and the fact
that fiscal year 1997 was only a partial year because the Company was formed in
October 1996.

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Marketing and Sales Expenses

Marketing and sales expenses have increased by $146,000 to $171,000 as compared
to $25,000 in the comparative period, which is an increase related to the
increase in sales and the fact that fiscal year 1997 was only a partial year
because the Company was formed in October 1996. The major component of this
increase was a result of a marketing plan to increase advertisements in industry
specific publications. The other major component of marketing and sales is
salaries. Other costs relate to rent, telephone and amortization of capital
assets.

General and Administrative Expenses

General and administrative expenses for corporate overhead activities and
Internet business related activities increased by $313,000 to $451,000 as
compared to $138,000 in the comparative period.

General and administrative expenses relating to corporate overhead activities,
and not Internet business related activities, increased as a result of the head
office being formed in October, 1996 in Richmond, BC, Canada. These increases
were due to the acquisition of the subsidiaries, raising of capital and
organization of the business.

General and administrative expenses relating to Internet business related
activities include amortization of goodwill, salaries and consulting fees,
office rent and telephone and legal and accounting.

Product Development Expenses

Product development expenses increased by $124,000 to $145,000 as compared to
$21,000 in the previous year. The major components of product development
expenses were salaries and consulting fees and rent and telephone. The Company
devoted resources to the development of the Executive Site in Toronto.

Depreciation and Amortization Expenses

Depreciation and amortization expense has been allocated to cost of revenues,
marketing and sales, general and administrative, and product development based
on the use of each capital asset. During fiscal 1998 and 1997 approximately 60%
of capital assets was used in cost of revenues, 15% in marketing and sales, 10%
in general and administrative and 15% in product development.

Purchased goodwill has been amortized at $13,000 per month over its estimated
useful life of three years. The estimated useful life of three years was chosen
to reflect the short-term life of the related business because of increased
competition, the lack of a universal presence and technological advancements and
obsolescence in the industry. Amortization expense has been allocated to general
and administrative expense for the Internet business.

The Company anticipates entering into operating leases for any network equipment
and software in the future to minimize capital expenditures.

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Income Taxes

The Company generated US and Canadian net operating losses ("NOL") carried
forward of $424,000 during the current year as compared to $127,000 for the
comparative year. The Company expects some consolidated losses for the
foreseeable future which will generate additional NOLs. However, the Company's
ability to use NOLs is dependant on generating profits in the future and may
also be subject to annual limitations. In addition, income taxes may be payable
during this time due to operating income in certain tax jurisdictions. In the
future, if the Company achieves operating profits and the NOLs have been
exhausted or have expired, the Company may experience significant tax expense.
The Company recognized no provision for taxes because it operated at a loss from
inception through to May 31, 1998. The deferred tax asset value has been reduced
to nil because the Company can not be assured that it is more likely than not
that it will utilize the NOLs carried forward in future years. If it was more
likely than not to realize these losses the Company would have recorded a
deferred tax asset of $197,000.

Net Loss for the Year Ended May 31, 1998 as Compared to the Year Ended
May 31, 1997

Liquidity and Financial Resources

That portion of Item 6, Management's Discussion and Analysis of Financial
Condition and Results of Operations, under the caption Liquidity and Financial
Resources, on pages 21 through 22 of the Company's annual report on Form 10-KSB
for the fiscal year ended May 31, 1999, is hereby incorporated by reference as
though set forth here in its entirety.

Outlook: Issues and Uncertainties

The Company's success is dependent on a number of factors which should be
considered by prospective investors. The Company has only recently acquired Blue
Crow, Internet; World Tel Internet; and YesIC which constitute its principal
assets. The Company is a relatively young company and does not yet have

<PAGE>

a long history of earnings or profit and there is no assurance that it will
operate profitably in the future. As such, there is no assurance that the
Company will provide a return on investment in the future.

Business Risks

The Company operates in a highly competitive business which has a number of
inherent risks. These may be summarized as follows:

1. Competition: The Company's services compete against those of other
established companies, some of which have greater financial, marketing and
other resources than those of the Company. These competitors may be able to
institute and sustain price wars, or imitate the features of Company's
services, resulting in a reduction of Company's share of the market. In
addition, there are no significant barriers to new competitors entering the
market place.

2. Need for a Broad Customer Base: The Company will need to build and sustain
a large customer base and if it cannot do so this will have an adverse impact
on its revenues.

3. Reliance on New Products and Services: The Company's business and
financial plan focuses on products and services which are relatively new.
There can be no assurance that existing sales levels, which are still quite
small, can be maintained or that increased sales levels can be achieved.
Internal cash generated by operations may not permit the level of research and
development spending required to maintain the stream of new service
improvements that may become necessary and outside financing may not be
available. The Company is using certain relatively new software products and
the developers of this software are, in some cases, still working to improve
certain essential features of the software including a feature to allow the
transfer of data to be done on a secure and confidential basis.

4. Obsolescence: The Company is at risk if it does not continue to upgrade
and improve its services. Typically, the high technology industry is
characterized by a consistent flow of new improved products and services which
render existing products and services obsolete.

5. Marketplace: The marketplace for the Company's services is relatively new
and will be undergoing rapid and constant change. As a result, it is
difficult to predict the continued demand for the Company's services.

6. Cost Control: Success will be largely predicated upon the Company's
ability to develop, and sustain a large customer base for its services.
Failure to do so may result in smaller profit margins or losses.

7. Management: The Company is dependent on a relatively small number of key
employees, the loss of any of whom could have an adverse effect on the Company
and the Company does not have any key man insurance with respect to such
employees.

8. Marketing Plan: The Company's internal marketing plan including Executive
Site is based on a number of assumptions which may or may not prove valid.
Marketing expenditures are to be funded partly from the proceeds of this
offering and cash flow from operations. Poor market acceptance of the
Company's services or other unanticipated events may result in lower revenues
than anticipated, making the planned expenditures on marketing and promotion
unachievable.

23
<PAGE>

9. Growth in Volume: The growth in volume of Internet traffic may create
instabilities in its structure such as shortages in Internet addresses and
overworked search engines. Such instabilities may have an adverse affect on
the Company' s operations and business if they are not addressed.

10. Personnel and Resources: Limitations on the Company's personnel and
resources may affect the ability of the Company to provide the required
quality service and technical support to achieve and maintain a competitive
market position.

11. Third Parties: The Company utilizes the services of third party
contractors to provide certain technical services, telecommunications
hardware, computers, software and communication lines. Therefore, the
performance of the Company will be affected by the quality of the goods and
services provided by, and the reputations of, such third parties.

12. Insurance Risks: The Company has not acquired liability insurance with
respect to the provision of services by the Company.

13. Regulatory Risk: The communications, computer and publishing services
provided by the Company, including the access to the Internet, are relatively
new services and, in the future, these services could be subject to additional
regulation at local, state, provincial, federal and international levels.
Such regulation could affect the costs of the services provided by the Company
and its ability to deliver the services. Any such regulatory changes could
have an adverse effect on the Company.

14. Requirement of New Capital: As a growing business, the Company typically
needs more capital than it has available to it or can expect to generate
through the sale of its services. In its short history, the Company has had
to raise, by way of debt and equity financing, considerable funds to meet its
needs. There is no guarantee that the Company will be able to continue to
raise the funds needed for the Company's business. Failure to raise the
necessary funds in a timely fashion will limit the Company's growth.

15. Year 2000 Issues: The Company's products do not require any significant
modifications for the Year 2000. However, the Company may face Year 2000
issues as it seeks to coordinate with other entities with which it interacts
electronically, including suppliers, customers and distribution partners.
Although the Company is not currently aware of any material problems, an
assessment has not been made of the anticipated costs, problems and
uncertainties associated with the Year 2000 consequences.

16. General Factors: The Company's areas of business may be affected from
time to time by such matters as changes in general economic conditions,
changes in laws and regulations, taxes, tax laws, prices and costs; and other
factors of a general nature which may have an adverse effect on the Company's
business.

Risks Related to the Company's Securities

1. Issuance of Additional Shares: The substantial portion of the 50,000,000
authorized shares of Common Stock of the Company are unissued. The Board of
Directors has the power to issue such shares without shareholder approval.
None of the 10,000,000 authorized shares of Class A Preferred Stock have been
issued. The Class A Preferred Stock may be issued in series from time to time
with such designation, rights, preferences and limitations as the Board of
Directors may determine by resolution and without shareholder approval. There
are outstanding warrants and options whose

24
<PAGE>

holders may acquire additional shares of Common Stock. The Company fully
intends to issue additional shares of Common Stock or shares of Preferred
Stock if necessary in order to acquire products, properties, capital,
businesses or for any other corporate purposes. Any additional issuances by
the Company from its authorized but unissued shares would have the effect of
further diluting the percentage interest of existing shareholders.

2. Cumulative Voting and Preemptive Rights: There are no preemptive rights in
connection with the Company's Common Stock. Cumulative voting in the election
of directors is not permitted. Accordingly, the holders of a majority of the
shares of Common Stock, present in person or by proxy, will be able to elect
all of the Company's Board of Directors.

3. Concentration of Ownership: The Executive Officers and Directors own or
exercise full or partial control over more than 50% of the Company outstanding
shares. As a result, other investors in the Company's Common Stock may not
have any influence on corporate decisionmaking.

4. Estimates and Financial Statements: Some of the information in this Form
10-SB consists of and relies upon evaluations and estimates made by management
and other professionals. Even though management believes in good faith that
such estimates are reasonable, based upon market studies and data provided by
sources knowledgeable in the field, there can be no assurance that such
estimates will ultimately be found to be accurate or even based upon accurate
evaluations. Any management errors in evaluations or estimates could have a
significant negative effect upon the Company's profitability or even its
viability.

5. No Foreseeable Dividends: The Company has not paid dividends on its Common
Stock and does not anticipate paying dividends on its Common Stock in the
foreseeable future.

6. Possible Volatility of Securities Prices: The market for the Company's
stock is highly volatile and will likely continue to behave in this manner in
the future. Additionally, market prices for securities of many smaller
companies have experienced wide fluctuations not necessarily related to the
operating performance of the companies themselves.

7. Requirements of SEC With Regard to Low-Priced Securities: The Company's
securities are subject to Rule 15g-9 under the 1934 Act, which imposes
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and "accredited
investors" (generally, individuals with net worths in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses).
For transactions covered by this rule, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. Consequently, the rule may
adversely affect the ability of broker-dealers to sell the Company's
securities and may adversely affect the ability of shareholders to sell their
shares in the secondary market.

Year 2000 Issues

That portion of Item 6, Management's Discussion and Analysis of Financial
Condition and Results of Operations, under the caption Year 2000 Issues, on
pages 22 through 23 of the Company's annual report on Form 10-KSB for the fiscal
year ended May 31, 1999, is hereby incorporated by reference as though set forth
here in its entirety.

25
<PAGE>

Item 3. Property

The Company's headquarters and executive offices are located at #185-10751
Shellbridge Way, Richmond, British Columbia V6X 2W8 and the telephone number is
(604)278-5996. The Company leases, on a month-to-month basis, approximately 200
square feet of space at the aforementioned office from SMR Investments Ltd., a
private British Columbia company owned by Susanne Robertson, the wife of John G.
Robertson. The monthly rent fee is approximately $350.00 ($CN500).

The Company also leases facilities in Vancouver and Toronto. The Vancouver site
supports both ISP services and the Executive Site. The lease term is 28 months
with monthly payments of approximately $5000.00 ($CN7500). The Toronto offices
support ISP services. The lease term is 54 months with monthly payments of
approximately $2000.00 ($CN2950). The Company believes that its present
facilities will be suitable for the operation of its business for the
foreseeable future. The facilities are adequately insured against perils
commonly covered by business insurance policies. These locations could be
replaced without significant disruption to the Company.

Item 4. Security Ownership of Certain Beneficial Owners and Management

Item 11, Security Ownership of Certain Beneficial Owners and Management, on
pages 45 through 46 of the Company's annual report on Form 10-KSB for the fiscal
year ended May 31, 1999, is hereby incorporated by reference as though set forth
here in its entirety.

<PAGE>

Item 5. Directors, Executive Officers, Promoters and Control Persons of the
Company

Directors and Executive Officers

The following table sets forth the name, age and position of each Director of
the Company:

<TABLE>
NAME AGE POSITION
- - - ------------------------------------------------------------------------------------
<S> <C> <C>
John G. Robertson 57 President, Principal Executive Officer and a member of
the Board of Directors
- - - ------------------------------------------------------------------------------------
Jennifer Lorette 26 Executive Vice President, Secretary/Treasurer, Principal
Accounting Officer and Chief financial Officer and a
member of the Board of Directors
- - - ------------------------------------------------------------------------------------
James L. Vandeberg 55 Director, partner in Vandeberg Johnson & Gandara, the
Company's legal counsel
- - - ------------------------------------------------------------------------------------
</TABLE>

Mr. Robertson and Ms. Lorette have served as directors of PrivCo since the June
1997 Annual Meeting. Mr. Vandeberg was elected a director of PrivCo in January
1999. All were elected directors of the Company in February 1999. Each director
will serve until the next annual meeting of shareholders and their respective
successors are elected and qualified. All officers currently devote part-time to
the operation of the Company.

Executive Officers, Directors and Other Significant Employees of the Company:

John G. Robertson - President, Principal Executive Officer and a member of the
Board of Directors

Mr. Robertson is a founder, President, Principal Executive Officer and a member
of the Board of Directors of PrivCo. Since October 1984, Mr. Robertson has been
President and a Director of Reg Technologies, Inc., a British Columbia
corporation trading on the Vancouver Stock Exchange that, in cooperation with
certain controlled affiliates, is engaged in developing a rotary engine and
other devices utilizing Rand Cam Technology. Since May 1980, Mr. Robertson has
been President and a Director of Teryl Resources Corp., a British Columbia
corporation trading on the Vancouver Stock Exchange and engaged in exploring and
developing gold properties. Since February 1979, Mr. Robertson has been
President and Director of Flame Petro-Minerals Corp., a British Columbia
corporation trading on The Alberta Stock Exchange and engaged in exploration of
oil, gas and gold properties. Mr. Robertson is President, a director and CEO of
IAS Communications, Inc., an Oregon corporation traded over the

27
<PAGE>

counter in the United States that has developed a television antenna which is
14" in diameter and only 2 inches high that can replace existing outside log
periodic antennas and has the capability of receiving local television stations
within a 60-mile radius.

Jennifer Lorette - Executive Vice President, Secretary/Treasurer, Principal
Financial Officer and Principal Accounting Officer

Ms. Lorette is a founder, Secretary/Treasurer, Principal Financial Officer and
Principal Accounting Officer of PrivCo. Since April 1994, Ms. Lorette has been
Vice President of Administration of Reg Technologies Inc. Since June 1994, Ms.
Lorette has been a Vice President of REGI U.S. and Chief Financial Officer and
Vice President of Flame Petro-Minerals Corp. From February 1994 to April 1994,
Ms. Lorette was an executive assistant at Reg Technologies, Inc. Ms. Lorette is
also Secretary/Treasurer of IAS Communications, Inc.

James L. Vandeberg - Director

Mr. Vandeberg is a partner in the Seattle, Washington law firm of Vandeberg
Johnson & Gandara. He has served as counsel to the Company since 1996. Mr.
Vandeberg graduated cum laude from the University of Washington with a Bachelor
of Arts degree in accounting in 1966, and from New York University School of Law
in 1969, where he was a Root-Tilden Scholar. He became a member of the
Washington Bar Association in 1969 and of the California Bar Association in
1973. Mr. Vandeberg's practice focuses on the corporate finance area, and he
specializes in securities and acquisitions. He is a member and former director
of the American Society of Corporate Secretaries. Mr. Vandeberg was previously
general counsel and secretary of two NYSE companies and is a director of IAS
Communications, Inc.

Cristian Rodriguez - Manager of Information Systems and Senior Network System
Administrator

Mr. Rodriguez is 28 years old. He is the Manager of Information Systems and
Senior Network System Adminstrator of the Company, and has held that position
since joining the Company in 1996. Prior to that Mr. Rodriguez was a private
consultant assisting clients with Internet services, networking and computer
hardware. Mr. Rodriguez attended Vancouver Film School and received a
Certificate for 3D Animation.

Kevin Brook - President Toronto Operating Unit

Mr. Brook is 40 years old. He is President of the Toronto operating unit, and
has held that position since joining the Company in 1997. Prior to joining the
Company he was a vice president at Bell Canada in the Global Link division.

Jack Wasserman - Vice-President Toronto Operating Unit

Mr. Wasserman is 50 years old. He is Vice-President of the Toronto operating
unit and has held that position since joining the Company in 1995. Prior to that
Mr. Wasserman was an accountant with World Tel (Toronto) Internet, Inc. Mr.
Wasserman received his accounting designation with Arthur Andersen and Company,
in 1976 in the province of Ontario.

Item 6. Executive Compensation

Item 10, Executive Compensation, on pages 42 through 45 of the Company's annual
report on Form 10-KSB for the fiscal year ended May 31, 1999, is hereby
incorporated by reference as though set forth here in its entirety.

28
<PAGE>

Item 7. Certain Relationships and Related Transactions

Item 12, Certain Relationships and Related Transactions, on pages 46 through 47
of the Company's annual report on Form 10-KSB for the fiscal year ended May 31,
1999, is hereby incorporated by reference as though set forth here in its
entirety.

Item 8. Description of Securities

The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, $0.0001 par value per share and 10,000,000 shares of Class A
Preferred Stock, $0.0001 par value per share.

The holders of shares of common stock are entitled to dividends, out of funds
legally available therefore, when and as declared by the Board of Directors.
The Board of Directors has never declared a dividend and does not anticipate
declaring a dividend in the future. Each outstanding share of common stock
entitles the holder thereof to one vote per share on all matters and cumulative
voting is not provided for in connection with the election of the Board of
Directors. The holders of the shares of common stock have no preemptive or
subscription rights.

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

The Class A Preferred Stock may be issued in series from time to time with such
designation, rights, preferences and limitations as the Board of Directors may
determine by resolution. The Board of Directors could use an issuance of Class
A Preferred Stock with dilutive or voting preferences to delay, defer or prevent
a change in control of the Company. In addition, the concentration of control
over the Company's common stock in the Directors and Executive Officers could
prevent any change in control of the Company not acceptable to the existing
Directors and Executive Officers.

29
<PAGE>

PART II

Item 1. Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters

There is a limited public market for the Common Stock of the Company which
currently trades on the OTC Bulletin Board under the symbol "IHWY" where it has
been traded since February 24, 1999. The high and low bid prices for the
Company's stock each quarter, through May 31, 1999, as reported by Nasdaq
Trading & Market Services, are as follows:

<TABLE>
<CAPTION>
Bid Price
High Low
----- -----
<S> <C> <C>
Quarter ended February 28, 1999 $ 7.375 $0.00
Quarter ended May 31, 1999 $12.50 $3.375
</TABLE>

These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.

As of August 31, 1999, there were 6,868,901 shares of Common Stock outstanding,
held by 169 shareholders of record and by various broker/dealers on behalf of an
indeterminate number of street name shareholders. As of August 31, 1999,
1,327,666 shares of common stock were subject to issuance pursuant to
outstanding options at prices ranging from $0.50 to $5.00 per share and 632,150
shares of common stock were subject to issuance pursuant to outstanding warrants
at prices ranging from $1.00 to $6.00 per share. The Company has not issued any
other securities convertible into common stock.

To date the Company has not paid any dividends on its Common Stock and does not
expect to declare or pay any dividends on such Common Stock in the foreseeable
future. Payment of any dividends will be dependent upon future earnings, if
any, the financial condition of the Company, and other factors as deemed
relevant by the Company's Board of Directors.

Item 2. Legal Proceedings

Item 3, Legal Proceedings, on page 12 of the Company's annual report on Form 10-
KSB for the fiscal year ended May 31, 1999, is hereby incorporated by reference
as though set forth here in its entirety.

Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None

Item 4.Recent Sales of Unregistered Securities

Set forth below is information regarding the issuance and sales of securities of
the Company without registration during the past three years. No such sales
involved the use of an underwriter and no commissions were paid in connection
with the sale of any securities.

(a) Beginning March 31, 1999, the Company conducted an offering of units
pursuant to an Offering Memorandum. Each unit consisted of one common
share, one Series "A" Warrant to acquire one additional share at $4.00 per
share expiring April 30, 2000, and one Series "B" Warrant to acquire one
additional share at $6.00 per share expiring April 30, 2001. The offering
was completed on August 11, 1999. On completion of the offering, a total
of 129,750 units were issued at $4.00 per unit for total proceeds of
$519,000. Through May 31, 1999, 5000 units were issued at $4.00 per unit
for total proceeds of $20,000. The offer and sale of the units were exempt
from registration under Rule 506 under and Section 4(2) of the Securities
Act of 1933. The Company furnished to purchasers in a timely manner an
Offering Memorandum and financial information, limited the manner of the
offering, promptly filed notices of sales, and limited the number of non-
accredited investors to 5 investors. If the foregoing exemptions are not

30
<PAGE>

available, the Company believes that $72,600 of these sales were also
exempt under Regulation S under the Securities Act of 1933, as amended, due
to the foreign nationality of the relevant purchasers.

(b) In connection with the reorganization of the Company in February 1999, the
Company assumed contractual obligations of one of its subsidiaries under
outstanding warrants to issue shares of common stock for $1.00 per share.
During the quarter ended May 31, 1999, the Company issued 270,300 shares
pursuant to warrants exercised at $1.00 per share for total proceeds of
$270,300. The sale of the shares was exempt from registration under
Regulation S and under Rule 506 under and Section 4(2) of the Securities
Act of 1933. The Company provided disclosure to each of the warrant holders
in connection with the reorganization of Information Highway, Inc. ("IHI")
and the Company. Each of the warrant holders owned shares of IHI that they
have now exchanged for shares of the Company. Through May 31, 1999, the
Company issued shares to 30 purchasers, of which 7 were accredited
investors and 6 were foreign citizens whose purchases were covered by
Regulation S. Through September 30, 1999, when the Company determined not
to issue any further shares to non-accredited investors pursuant to the
warrants until such time as the shares could be registered, the Company
issued shares to 45 purchasers, of which 7 were accredited investors and 7
were foreign citizens whose purchases were covered by Regulation S. All of
the shares issued pursuant to the warrant exercises bear a legend
indicating that they are restricted securities. $53,000 of these sales were
exempt under Regulation S under the Securities Act of 1933, as amended, due
to the foreign nationality of the relevant purchasers.

(c) During the quarter ended May 31, 1999, the Company issued 237,334 shares
pursuant to options exercised at between $0.50 and $0.75 per share for
total proceeds of $125,500. The sale of the shares was exempt from
registration under Rule 701 under Section 3(b) of the Securities Act of
1933. The sales were made on exercise of grants under the Company's written
stock option plan, a copy of which the Company has provided to its
participants. The 150,000 shares issued to John Robertson were also exempt
from registration under Rule 506 under and Section 4(2) of the Securities
Act of 1933. Mr. Robertson is an accredited investor by virtue of his
positions with the Company as a director and executive officer. If the
foregoing exemptions are not available, the Company believes that all
$125,500 of these sales were also exempt under Regulation S under the
Securities Act of 1933, as amended, due to the foreign nationality of the
relevant purchasers.

(d) On February 23, 1999 the Company issued a total of 499,000 shares of common
stock to certain shareholders of PrivCo in exchange for 499,000 shares of
IHI. The issuance of the common

31
<PAGE>

stock was exempt from registration under Rule 504 of Regulation D under
Section 3(b) of the Securities Act of 1933, as amended. The Company's
shares were valued at $0.75 per share, the price per Unit that IHI had
obtained in its most recent offering of securities, in which IHI offered
Units consisting of one share of unrestricted common stock and one warrant
for $0.75 per Unit. If the exemption under Rule 504 of Regulation D is not
available, the Company believes that this offering was also exempt under
Regulation S and Section 4(2) under the Securities Act of 1933, as amended,
due to the foreign nationality of the relevant shareholders of IHI, their
prior contacts with IHI and its management, and the limited number of
investors (four).

(e) On February 23, 1999, the Company issued a total of 2,736,000 shares of
common stock to certain shareholders in exchange for 2,736,000 shares of
IHI common stock. The issuance of the shares was exempt from registration
under Rule 506 of Regulation D, Regulation S and Section 4(2) of the
Securities Act of 1933, as amended, due to the foreign nationality of the
relevant shareholders of IHI, their prior contacts with IHI and its
management, and the limited number of investors (six).

(f) On February 23, 1999 the Company began an offer to certain shareholders of
IHI to exchange 834,000 shares of their unrestricted IHI common stock for
834,000 shares of the Company's common stock exempt from registration under
Rule 504 of Regulation D under Section 3(b) of the Securities Act of 1933,
as amended. Upon discovery that three investors who had made deposits in
the IHI offering set forth in item (a) below had not been issued their IHI
shares, this offering was expanded to 854,000 shares to include the 20,000
shares purchased by those investors. Of the 20,000 shares identified,
15,000 were issued in the fiscal year ended May 31, 1999, and 5,000 were
issued after May 31, 1999. The Company's shares were valued at $0.75 per
share, the price per Unit that IHI had obtained in its most recent
offering of securities, in which IHI offered Units consisting of one
share of unrestricted common stock and one warrant for $0.75 per Unit. As
of August 31, 1999, all but 37,000 shares had been exchanged. The
offerees consisted of the IHI shareholders who purchased units in IHI as
described in item (a), below, and two affiliates who had acquired IHI
shares in the Yes IC acquisition (February 1997). If the exemption under
Rule 504 of Regulation D is not available, the Company believes that
221,000 shares (which includes the shares of the two affiliates) from this
offering will also be exempt under Regulation S due to the foreign
nationality of the shareholders.

(g) On February 23, 1999, the Company began an offer to certain shareholders of
IHI to exchange 1,570,650 shares of their restricted IHI common stock
for 1,570,650 shares of the Company's common stock exempt from registration
under Rule 506 of Regulation D, Regulation S and Section 4(2) of the
Securities Act of 1933, as amended. The Company furnished to purchasers in
a timely manner an Exchange Offering Memorandum and financial information,
limited the manner of the offering, promptly filed notices of sales, and
limited the number of domestic non-accredited investors to 2. If the
exemptions under Rule 506 and Section 4(2) are not available, the Company
believes that 1,151,000 shares from this offering will also be exempt under
Regulation S due to the foreign nationality of the shareholders.

(h) In February 1999, the Company issued 5,000 shares to David Williamson
Associates Ltd. for marketing and investor relations services in the UK.
The offer and sale of the shares were exempt from registration under
Section 4(2) of the Securities Act of 1933. If the foregoing exemption is
not available, this sale was exempt under Regulation S under the Securities
Act of 1933 due to the purchaser's foreign nationality.

(i) In March 1999, the Company issued 10,000 shares to its affiliate Access
Information Services in exchange for services rendered. The offer and sale
of the shares were exempt from registration under Section 4(2) of the
Securities Act of 1933. If the foregoing exemption is not available, this
sale was exempt under Regulation S under the Securities Act of 1933 due the
foreign nationality of the ultimate beneficial owners of Access Information
Services.

(j) In March 1999, the Company issued 3,000 shares to Erik Lagerway in
connection with its acquisition of Mr. Lagerway's Internet portal telephony
businesses. The offer and sale of the shares were exempt from registration
under Section 4(2) of the Securities Act of 1933. If the foregoing
exemption is not available, this sale was exempt under Regulation S under
the Securities Act of 1933 due the foreign nationality of the purchaser.

In addition, set forth below is information regarding the issuance and sales of
securities of Information Highway, Inc. without registration during the past
three years. No such sales involved the use of an underwriter and no
commissions were paid in connection with the sale of any securities.

<PAGE>

(a) In January 1999, IHI concluded an offering of units pursuant to an
Offering Memorandum. Each unit consisted of one common share and one
warrant to acquire an additional share at $1.00 per share by December 30,
1999. Due to a mixup in connection with changing its bank, the Company
inadvertently overlooked deposits of $15,000 received during the offering
for an additional 20,000 units. Including these units that should have
been issued at the closing of the offering, a total of 754,000 units were
issued at $0.75 per unit for total proceeds of $565,500. The offer and sale
of the units were exempt from registration under Rule 504 of Regulation D
under Section 3(b) of the Securities Act of 1933. If the exemption under
Rule 504 of Regulation D is not available, $90,750 of these sales were
exempt under Regulation S under the Securities Act of 1933 due to the
foreign nationality of the purchasers.

(b) In April 1998, IHI concluded an offering of units pursuant to an Offering
Memorandum. Each unit consisted of one common share and one warrant to
acquire an additional share at $1.00 per share by December 30, 1999. On
completion of the offering, a total of 139,650 units were issued at $0.75
per unit for total proceeds of $100,987.50. The offer and sale of the
units were exempt from registration under Rule 504 and Rule 506 of
Regulation D under Sections 3(b) and 4(2), respectively, of the Securities
Act of 1933. IHI furnished to purchasers in a timely manner an Offering
Memorandum and financial information, limited the manner of the offering,
promptly filed notices of sales, and limited the number of non-accredited
investors to 1 investor.

(c) In December 1996, IHI commenced an offering of common stock pursuant to an
Offering Memorandum. On completion of the offering in March 1997, a total
of 500,000 shares were issued at $0.50 per share for total proceeds of
$250,000. The offer and sale of the units were exempt from registration
under Rule 504 and Rule 506 of Regulation D under Sections 3(b) and 4(2),
respectively, of the Securities Act of 1933. IHI furnished to purchasers
in a timely manner an Offering Memorandum and financial information,
limited the manner of the offering, promptly filed notices of sales, and
limited the number of non-accredited investors to 14 investors. If the
foregoing exemptions are not available, $89,750 of these sales were exempt
under Regulation S under the Securities Act of 1933 due to the foreign
nationality of the purchasers.

(d) IHI conducted three acquisitions that were exempt from registration under
Regulation S under the Securities Act of 1933 due to the foreign
nationality of the persons who accepted shares of IHI in exchange for their
holdings in the acquired companies:
(i) In February 1997, of YesIC, Communications, Inc., in exchange for the
issue of 3,105,000 shares to 17 foreign persons;
(ii) In February 1997, of World Tel, Internet (Toronto) Ltd., in exchange
for the issue of 387,000 shares to 5 foreign persons; and
(iii) In December 1996, of Blue Crow Internet Company, Ltd., in exchange
for the issue of 149,000 shares to 4 foreign persons.

If the exemption under Regulation S under the Securities Act of 1933 due to
the foreign nationality of the persons who accepted shares of IHI in
exchange for their holdings in the acquired companies is not available, the
Company believes that each of the offerings is exempt under Rule 506 under
Section 4(2) of the Securities Act of 1933 and that offerings (ii) and
(iii) are exempt under Rule 504 under Section 3(b) of the Securities Act of
1933.

33
<PAGE>

(e) IHI conducted an offering to its founders, some of whom purchased through
controlled affiliates, beginning in December 1996. On completion of the
offering in March 1997, a total of 600,000 shares were issued at $0.10 per
share for total proceeds of $60,000. The offer and sale of the shares were
exempt from registration under Rule 504 and Rule 506 of Regulation D under
Sections 3(b) and 4(2), respectively, of the Securities Act of 1933, and
under Section 4(2) of the Securities Act of 1933. If the foregoing
exemptions are not available, these sales were exempt under Regulation S
under the Securities Act of 1933 due to the foreign nationality of the
purchasers or their ultimate beneficial owners.

(f) In April 1997, Mr. Robertson purchased 1,000 shares at $0.50 per share,
which he then gifted to a family friend as a bar mitzvah present. In
October 1996 Mr. Robertson purchased 15,000 shares at $0.10 per share as a
founder of IHI. The offer and sale of the shares were exempt from
registration under Rule 506 of Regulation D under Section 4(2) of the
Securities Act of 1933 and under Section 4(2) of the Securities Act of
1933. If the foregoing exemptions are not available, these sales were
exempt under Regulation S under the Securities Act of 1933 due Mr.
Robertson's foreign nationality.

Item 5. Indemnification of Directors and Officers

The Company's Articles of Incorporation provide that the Company must indemnify
its directors and officers, to the fullest extent permitted under the Florida
Business Corporation Act against all liabilities incurred by reason of the fact
that the person is or was a director or officer of the Company or a fiduciary of
an employee benefit plan, or is or was serving at the request of the Company as
a director or officer, or fiduciary of an employee benefit plan, of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise.

The effect of these provisions is potentially to indemnify the Company's
directors and officers from all costs and expenses of liability incurred by them
in connection with any action, suit or proceeding in which they are involved by
reason of their affiliation with the Company.

<PAGE>

PART F/S

Consolidated Financial Statements

If Regulation S-B Item 310(g)(1) requires or permits the Company to include in
this Form 10-SB the financial statements included in the Company's Form 10-KSB
for the fiscal year ended May 31, 1999, then that portion of Item 7, Financial
Statements, under the caption Index to Consolidated Financial Statements, on
page 24 of the Company's annual report on Form 10-KSB for the fiscal year ended
May 31, 1999, is hereby incorporated by reference as though set forth here in
its entirety.

If Regulation S-B Item 310(g)(1) does not require or permit the Company to
include in this Form 10-SB the financial statements included in the Company's
Form 10-KSB for the fiscal year ended May 31, 1999, then the following Index to
Consolidated Financial Statements applies:

Index to Consolidated Financial Statements

<TABLE>
<S> <C>
Report of Independent Auditors............................................................ F-1

Consolidated Balance Sheets as of February 28, 1999 (unaudited), May 31, 1998 and 1997.... F-2

Consolidated Statements of Operations For the Quarters and For the Nine Months
Ended February 28, 1999 and 1998 (unaudited) and For the Year Ended May 31, 1998
and the Period from October 15, 1996 (Date of Inception) to May 31, 1997.................. F-3

Consolidated Statements of Changes in Stockholders' Equity Accumulated
from October 15, 1996 (Date of Inception) to February 28, 1999............................ F-4

Consolidated Statements of Cash Flows for the Nine Months Ended February 28, 1999
and 1998 (unaudited) and For the Year Ended May 31, 1998 and the Period from
October 15, 1996 (Date of Inception) to May 31, 1997...................................... F-6

Notes to the Consolidated Financial Statements (unaudited as to information
subsequent to May 31, 1998)............................................................... F-7 - F-14
</TABLE>

35
<PAGE>

PART III

Item 1. Index to Exhibits

<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- - - -------------- -------------------------------------------------------------------- ---------
<S> <C> <C>
2.1* Articles of Incorporation, restated as amended on February 23, 1999
and November 1, 1989

2.2* Bylaws

3.1* Specimen Share Certificate for Common Stock

3.2* Form of Warrants

3.3* Stock Option Plan

3.4* Form of Stock Option Agreement

3.5 Form of Warrants

6.1** VPOP Service Agreement between MetroNet Communications and YesIC
Communications

6.2** Level 3 Communications Terms and Conditions for Delivery of Service

6.3** ADSL Service Agreement dated August 24, 1999, by and between Bell
Atlantic Network Integration, Inc. and Information-Highway.com, Inc.

8.1* Agreement and Plan of Reorganization between the Company and
Information Highway, Inc.

12.1** Annual report on Form 10-KSB for the fiscal year ended May 31, 1999

27.1*** Financial Data Schedule
</TABLE>

* Previously filed.

** Incorporated by reference from the Company's annual report on Form 10-
KSB for the fiscal year ended May 31, 1999, filed with the Securities
and Exchange Commission on October 6, 1999.

*** Previously filed or incorporated by reference from the Company's
annual report on Form 10-KSB for the fiscal year ended May 31, 1999,
filed with the Securities and Exchange Commission on October 6, 1999,
or incorporated by reference from the Company's quarterly report on
Form 10-QSB for the quarterly period ended February 28, 1999, filed
with the Securities and Exchange Commission on September 10, 1999.

<PAGE>

SIGNATURES

Pursuant to the requirements Section 12 of the Securities Exchange Act of 1934,
the Registrant has duly caused this report or amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.

INFORMATION-HIGHWAY.COM, INC.

By: /s/ John G. Robertson
---------------------
John G. Robertson, President
Chief Executive Officer and Director

Dated: October 11, 1999

37
<PAGE>

If Regulation S-B Item 310(g)(1) requires or permits the Company to include in
this Form 10-SB the financial statements included in the Company's Form 10-KSB
for the fiscal year ended May 31, 1999, then that portion of Item 7, Financial
Statements, which includes the Report of Independent Auditors and the Company's
audited consolidated financial statements, on pages 25 through 39 of the
Company's annual report on Form 10-KSB for the fiscal year ended May 31, 1999,
is hereby incorporated by reference as though set forth here in its entirety.

If Regulation S-B Item 310(g)(1) does not require or permit the Company to
include in this Form 10-SB the financial statements included in the Company's
Form 10-KSB for the fiscal year ended May 31, 1999, then the following Report of
Independent Auditors and audited consolidated financial statements apply:

Report of Independent Auditors

The Board of Directors and Stockholders
Information-Highway.com, Inc. (formerly Florida Venture Fund, Inc.)

We have audited the accompanying consolidated balance sheets of Information-
Highway.com, Inc. (formerly Florida Venture Fund, Inc.) as of May 31, 1998 and
1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for the year ended May 31, 1998 and the period from
October 15, 1996 (Date of Inception) to May 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates 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, such consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Information-
Highway.com, Inc. (formerly Florida Venture Fund, Inc.) as of May 31, 1998 and
1997, and the results of their operations and their cash flows for the year
ended May 31, 1998 and the period from October 15, 1996 (Date of Inception) to
May 31, 1997 in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not achieved profitable operations since
inception and has a working capital deficit. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note 1. These financial
statements do not include any adjustments which might result from the outcome of
this uncertainty.

/s/ "Elliott, Tulk, Pryce, Anderson"

Chartered Accountants
Vancouver, Canada
April 13, 1999 except as to Note 3
which is as of August 23, 1999

F-1
<PAGE>

Information-Highway.com, Inc.
(formerly Florida Venture Fund, Inc.)
Consolidated Balance Sheets

February 28, May 31,

------------------------
1999 1998 1997
(unaudited)
$ $ $
Assets
<S> <C> <C> <C>
Current Assets

Cash 83,225 35,699 4,947
Accounts receivable 16,644 4,442 1,628
Prepaid expenses 6,581 3,001 5,276
- - - -----------------------------------------------------------------------------------------------------------
Total Current Assets 106,450 43,142 11,851

Fixed Assets (Note 5) 171,468 209,353 157,981

Goodwill (Note 4) 154,785 274,598 434,343
- - - -----------------------------------------------------------------------------------------------------------
Total Assets 432,703 527,093 604,175
- - - -----------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable 210,654 206,608 59,475
Unearned revenue - - 4,495
- - - -----------------------------------------------------------------------------------------------------------
Total Current Liabilities 210,654 206,608 63,970

Advances from Affiliated Companies (Note 6) - 239,542 120,448

Advances from Directors (Note 6) - 22,242 30,991

- - - -----------------------------------------------------------------------------------------------------------
Total Liabilities 210,654 468,392 215,409
- - - -----------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Notes 1 and 8)
- - - -----------------------------------------------------------------------------------------------------------
Stockholders' Equity

Common Stock (Notes 7 and 9), no par value, 50,000,000
shares authorized par value $0.0001, 6,178,151, 4,766,000
and 3,667,000 issued and outstanding respectively 618 477 367

Additional paid-in capital on common stock 1,364,026 700,483 391,093

Common stock allotted and issued subsequently (nil,
82,650 and 776,000 respectively) - 61,988 148,000

Preferred Stock, no par value, 10,000,000 shares
authorized, par value $.0001 per share, none issued - - -

Translation Adjustments 9,413 3,654 -
- - - -----------------------------------------------------------------------------------------------------------
1,374,057 766,602 539,460

Accumulated Deficit (1,152,008) (707,901) (150,694)
- - - -----------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 222,049 58,701 388,766
- - - -----------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity 432,703 527,093 604,175
===========================================================================================================
</TABLE>
(See accompanying notes)

F-2
<PAGE>

Information-Highway.com, Inc.
(formerly Florida Venture Fund, Inc.)
Consolidated Statements of Operation

<TABLE>
<CAPTION>
Period from
October 16, 1996
Three months ended Nine months ended Year ended (Inception) to
February 28, February 28, May 31, May 31,
----------------
1999 1998 1999 1998 1998 1997
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
Revenues 254,853 208,083 752,470 609,782 859,184 145,449
Cost of Revenues 176,927 142,029 522,389 416,212 649,584 111,999
- - - -------------------------------------------------------------------------------------------------------------------------------
Gross Profit 77,926 66,054 230,081 193,570 209,600 33,450
- - - -------------------------------------------------------------------------------------------------------------------------------

Operating Expenses

Marketing and sales 47,412 49,719 142,814 115,831 171,047 24,857
General and administrative 143,621 128,004 432,613 298,216 450,595 137,867
Product development 32,787 36,296 98,761 84,560 145,165 21,420
- - - -------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 223,820 214,019 674,188 498,607 766,807 184,144

- - - -------------------------------------------------------------------------------------------------------------------------------
Net loss (145,894) (147,965) (444,107) (305,037) (557,207) (150,694)

- - - -------------------------------------------------------------------------------------------------------------------------------
Historical basic and dilutive net
loss per share (0.03) (0.03) (0.04) (0.07) (0.14) (0.10)
- - - -------------------------------------------------------------------------------------------------------------------------------
Weighted average shares used to
compute basic and historical
net loss per share 5,500,000 4,600,000 5,000,000 4,500,000 3,896,000 1,519,000
===============================================================================================================================
Diluted loss per share has not been presented separately as the result is anti
dilutive.
</TABLE>

(See accompanying notes)

F-3
<PAGE>

Information-Highway.com, Inc.
(formerly Florida Venture Fund, Inc.)
Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
Additional
Information Highway, Inc. - stockholders' equity section No. of Par Value Paid-in
from October 15, 1996 (Inception) to February 17, 1999 Shares $0.0001 Capital Total Deficit
(prior to reverse takeover) Issued $ $ $
<S> <C> <C> <C> <C> <C>
Balance as at October 15, 1996 (Date of Inception of
Information Highway, Inc.) - - - - -

Issued for cash:
$0.10 per share pursuant to a subscription
received in October, 1996 15,000 2 1,498 1,500 -

$0.50 per share pursuant to a subscription
received in April, 1997 1,000 1 499 500 -

Issued for settlement of debt:
$0.365 per share agreed price - February, 1997 24,000 2 8,758 8,760 -
$0.50 per share - April, 1997 45,000 4 22,496 22,500 -

Issuance of stock in acquisitions of subsidiaries (Note 4):

At a fair value of $0.10 per share to acquire a
100% interest in:
Blue Crow Internet Co. Ltd. 125,000 13 12,487 12,500 -
World-Tel Internet (Toronto) Ltd. 342,000 34 34,166 34,200 -
YesIC Communications Inc. 3,115,000 311 311,189 311,500 -

Net loss for the period - - - - (150,694)
----------------------------------------------------------------------------------------------------------------------------
Balance as at May 31, 1997 3,667,000 367 391,093 391,460 (150,694)

Issued for cash:
$0.10 per share pursuant to a private placement 600,000 60 59,940 60,000 -
$0.50 per share pursuant to a private placement 499,000 50 249,450 249,500 -

Net loss for the year - - - - (557,207)
----------------------------------------------------------------------------------------------------------------------------
Balance as at May 31, 1998 4,766,000 477 700,483 700,960 (707,901)

Issued for cash pursuant to two private placements at
$0.75 per share 797,150 80 597,782 597,862 -

Issued for services at a fair market value at $0.75 per share 76,500 7 57,368 57,375 -
----------------------------------------------------------------------------------------------------------------------------
Balance as at February 17, 1999, prior to reverse takeover 5,639,650 564 1,355,633 1,356,197 (707,901)
============================================================================================================================
</TABLE>

(See accompanying notes)

F-4
<PAGE>

Information-Highway.com, Inc.
(formerly Florida Venture Fund, Inc.)
Consolidated Statements of Stockholders' Equity (continued)

<TABLE>
<CAPTION>
Common Stock
-----------------------------------------
Information-Highway.com, Inc. - capital stock section No. of Additional
from May 31, 1996 to February 28, 1999 Shares Par Value Paid-in
Issued $.0001 Capital Total Deficit
$ $ $ $
<S> <C> <C> <C> <C> <C>
Balance May 31, 1996, 1997, 1998 and prior to
reverse takeover on February 17, 1999 1,979,500 198 7,852 8,050 (28,728)
Reverse takeover adjustments (Note 3)
Cancellation of shares for no
consideration (1,659,833) (166) 166 - -
Elimination of deficit - - (28,728) (28,728) 28,728
Deficit of Information Highway,
Inc. as at May 31, 1998 (707,901)
Issuance or allotment of shares to effect
reverse takeover (see table above) 5,639,650 564 1,355,633 1,356,197 -
Cost of reverse takeover transaction - - (100,000) (100,000) -
Shares issued for cash pursuant to a private
placement at $0.75 per share 15,000 1 11,249 11,250 -
Shares issued pursuant to stock options
exercised at $0.75 per share 27,334 3 20,497 20,500 -
Shares issued pursuant to stock options
exercised at $0.50 per share 150,000 15 74,985 75,000 -
Shares issued for services at a fair market
value of $0.75 per share 16,500 2 12,373 12,375 -
Shares issued pursuant to warrants
exercised at $1.00 per share 10,000 1 9,999 10,000 -
Net loss for the year (444,107)
- - - ------------------------------------------------------------------------------------------------------------------------------
Balance as at February 28, 1999 6,178,151 618 1,364,026 1,364,644 (1,152,008)
==============================================================================================================================
</TABLE>

(See accompanying notes)

F-5
<PAGE>

Information-Highway.com, Inc.
(formerly Florida Venture Fund, Inc.)
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
Period from
October 16, 1996
Nine months ended Year ended (Inception) to
February 28, May 31, May 31,
----------------
1999 1998 1998 1997
(unaudited) (unaudited)
$ $ $ $
<S> <C> <C> <C> <C>
Cash Flows to Operating Activities
Net loss (444,107) (305,037) (557,207) (150,694)
Adjustments to reconcile net loss to cash
Depreciation and amortization 41,717 44,835 57,611 14,335
Amortization of goodwill 119,811 119,811 159,745 44,900
Royalty expenses settled by issuing shares - - - 20,696
Change in non-cash working capital items
(Increase) decrease in accounts receivable (12,202) 2,671 (2,814) 83
(Increase) decrease in prepaid expenses (3,580) 1,284 2,275 (5,037)
Increase (decrease) in accounts payable 4,046 (23,945) 147,133 18,199
Increase (decrease) in unearned revenue - 1,190 (4,495) 4,495

- - - ---------------------------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities (294,315) (159,191) (197,752) (53,023)
- - - ---------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Common stock issued net of reverse takeover costs 601,697 184,550 223,488 150,000
Increase (decrease) in advances from
affiliated companies (239,542) 58,735 119,094 (7,043)
Increase (decrease) in advances from directors (22,242) (7,554) (8,749) 1,898

- - - ---------------------------------------------------------------------------------------------------------------------
Net Cash from Financing Activities 339,913 235,731 333,833 144,855
- - - ---------------------------------------------------------------------------------------------------------------------
Cash Flows to Investing Activities
Increase in capital assets acquired (3,831) (78,449) (108,983) (66,560)
Acquisition of subsidiaries (Note 4) - - - (20,325)

- - - ---------------------------------------------------------------------------------------------------------------------
Net Cash to Investing Activities (3,831) (78,449) (108,983) (86,885)
- - - ---------------------------------------------------------------------------------------------------------------------
Translation Adjustments 5,759 (5,214) 3,654 -
- - - ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash during the period 47,526 (7,123) 30,752 4,947

Cash - beginning of period 35,699 4,947 4,947 -
- - - ---------------------------------------------------------------------------------------------------------------------
Cash (deficiency) - end of period 83,225 (2,176) 35,699 4,947
=====================================================================================================================
Non-Cash Financing Activities
The Company issued 3,582,000 shares at
a deemed value of $0.10 per share to acquire
subsidiaries (Note 4) - - - 358,200
The Company issued 69,000 shares to
settle debts - - - 31,260

- - - ---------------------------------------------------------------------------------------------------------------------
- - - 389,460
=====================================================================================================================
Supplemental cash flow information:
Cash paid for interest 5,786 294 - -
Cash paid for income taxes - - - -
=====================================================================================================================
</TABLE>

(See accompanying notes)

F-6
<PAGE>

Information-Highway.com, Inc.
(formerly Florida Venture Fund, Inc.)
Notes to Consolidated Financial Statements

1. Nature of Operations, Reorganization and Continuance of Business

Florida Venture Fund, Inc. (the "Company" or "FVFI") was incorporated
December 5, 1988 in the state of Florida. The Company has the authority to
issue 50,000,000 common shares of $.0001 par value. The Company may transact
any and all lawful business for which corporations may be incorporated under
the Florida General Corporation Act.

During 1997, the Company's common stock was submitted for quotation on the
OTC Bulletin Board System and was assigned the trading symbol FVFL.

From incorporation to February 17, 1999 the Company did not engage in any
business activity other than initial organization, initial financing and some
business investigation activities.

Pursuant to a letter agreement dated February 17, 1999, the Company completed
an Agreement and Plan of Reorganization with Information Highway, Inc.,
herein "IHI", whereby a business combination was completed and all of the
outstanding common stock of Information Highway, Inc. was, or will be,
exchanged for common shares of the Company representing a change of control
of the Company by way of reverse takeover, see Note 3. As part of the Plan of
Reorganization the Company's name was changed to Information-Highway.com,
Inc.

IHI was incorporated in the State of Washington on October 15, 1996. See Note
4 regarding IHI's acquisition of three Canadian operating subsidiaries in the
business of providing access to the Internet and providing services,
including on-line publishing, to individual and corporate subscribers.

IHI emerged from being a development stage company during its fiscal year
ended May 31, 1998. In a development stage company, management devoted most
of its activities to establishing the business. Planned principal activities
have started producing significant revenues, however, the Company has
experienced start-up losses from October 15, 1996 (Inception) to February 28,
1999 totalling $1,152,008 and has a working capital deficit as at February
28, 1999 of $104,204. There is risk that the Company's ability to continue as
a going concern could be in jeopardy based on these factors. The ability of
the Company to continue as a going concern is dependent upon its successful
efforts to raise additional equity financing, and further develop the market
for its products and services.

2. Significant Accounting Policies

Consolidated Financial Statements

These consolidated financial statements include the accounts of the Company
and its wholly owned US subsidiary, Information Highway, Inc. which owns
three consolidated, wholly-owned, Canadian subsidiaries, see Note 4. As IHI
was the acquirer in a reverse takeover business combination culminating on
February 17, 1999 the business of IHI will be the business reported for all
comparative purposes, including the statements of operations and cash flows.
See Note 3 for a discussion on this business combination and reverse takeover
accounting.

Estimates and Assumptions

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

Reclassification

Certain amounts in the financial statements have been reclassified to be
consistent and comparable from year-to-year.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, in banks and all highly
liquid investments with a maturity of three months or less when purchased.

F-7
<PAGE>

2. Significant Accounting Policies (continued)
Concentration of Credit Risk

The Company does not have any concentrations of credit risk as the majority
of its customers prepay for services. For those instances when credit is
extended it is based on an evaluation of the customer's financial condition,
and generally collateral is not required. The Company does not have any
customers that account for in excess of 10% of income.

The Company places its temporary cash investments with high credit quality
financial institutions and limits the amount of credit exposure to any one
financial institution.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed
utilizing the declining balance method over an estimated useful life of the
related asset category. Computer equipment and software and production
equipment is depreciated at 30% per annum and furniture and office equipment
at 20%. Leasehold improvements are amortized over ten years utilizing the
straight-line method.

Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets in
accordance with Statement of Financial Accounting Standards (SFAS) No. 121
"Accounting for the Impairment of Long-Lived Assets".

Goodwill is a long-lived asset representing the excess of purchase
consideration over fair market value of net identifiable assets acquired, and
is amortized on a straight-line basis over its estimated useful life.
Goodwill is evaluated in each reporting period to determine if there were
events or circumstances which would indicate a possible inability to recover
the carrying amount. Such evaluation is based on various analyses including
undiscounted future cash flows which necessarily involves significant
management judgement.

Financial Instruments

The fair value of the Company's current assets and current liabilities were
estimated to approximate their carrying values due to the immediate or short-
term maturity of these financial instruments. The Company operates in Canada
and virtually all of its assets and liabilities are giving rise to
significant exposure to market risks from changes in foreign currency rates.
The financial risk is the risk to the Company's operations that arise from
fluctuations in foreign exchange rates and the degree of volatility of these
rates. Currently, the Company does not use derivative instruments to reduce
its exposure to foreign currency risk.

Revenue Recognition and Deferred Revenues

Revenue consists of the provision of Internet dial-up services, banner
advertisements, web-site development and hosting and E-Commerce revenue
sharing with various Internet partners.

Revenue is recognized at the time services are provided. All related costs
are recognized in the period in which they occur. Customers deposits for
Internet dial-up services to be provided in the future are treated as
deferred revenues.

Cost of Revenue

Cost of revenue consists primarily of the cost of serving the Company's
Internet dial-up service customers and the cost of developing web-sites for
customers. Cost associated with above revenue generating activities consists
of salaries for technical support and customer service, depreciation of
Internet dial-up and web-site hosting equipment, license fees, equipment
leasing costs, telephone line costs and rent to house equipment and staff
directly involved in serving customers.

Product Development Costs

Product development costs consist of expenses incurred by the Company in the
development and creation of its Executive Site /TM/ Web-Site. Product
development costs include compensation and related expenses for programmers,
depreciation of computer hardware and software, rent, telephone and costs
Web-Site. Product development costs include compensation and related expenses
for programmers, depreciation of computer hardware and software, rent,
telephone and costs incurred in developing features and functionality of the
service. Product development costs are expensed as incurred.

F-8
<PAGE>

2. Significant Accounting Policies (continued)

Accounting for Stock-Based Compensation

SFAS No. 123, "Accounting for Stock-Based Compensation," requires that stock
awards granted subsequent to January 1, 1995, be recognized as compensation
expense based on their fair value at the date of grant. Alternatively, a
company may account for granted stock awards under Accounting Principles
Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees," and
disclose pro forma income amounts which would have resulted from recognizing
such awards at their fair value. The Company has elected to account for
stock-based compensation expense under APB No. 25 and make the required pro
forma disclosures for compensation expense (see Note 7).

Foreign Exchange

All of the Company's Canadian operating subsidiaries are operationally and
financially independent of the parent and are considered self-sustaining. As
such, the current rate method is used whereby assets and liabilities are
translated into United States dollars at exchange rates in effect at the
balance sheet dates. Shareholders' equity accounts are translated using
historical exchange rates. Income and expense items are translated at average
exchange rates for the periods. Accumulated net translation adjustments are
included as a separate component of shareholders' equity.

Current monetary assets and liabilities of the Company which are denominated
in foreign currencies are translated at the exchange rate in effect at the
balance sheet dates. Revenues and expenses are translated at rates of
exchange prevailing on the transaction dates. Exchange gains or losses on the
realization of current monetary assets and the settlement of current monetary
liabilities are recognized currently to operations.

Income Taxes

The Company has adopted the provisions of Financial Accounting Standards
Board Statement No. 109 (SFAS 109), Accounting for Income Taxes. SFAS 109
requires that deferred taxes reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities and their
financial reporting amounts. At the date of adoption of SFAS 109, there was
no material effect on the Company's financial statements.

Pursuant to SFAS 109 the Company is required to compute tax asset benefits
for net operating loss carry forwards. Potential benefit of net operating
losses has not been recognized in the financial statements because the
Company cannot be assured that it is more likely than not that it will
utilize the net operating loss carry forwards in future years.

The Company's Canadian subsidiaries have Canadian tax losses of $207,000 to
offset future years Canadian taxable income. These losses expire as follows:

2003 3,000
2004 66,000
2005 138,000

The Company and the Company's US subsidiary have US tax losses of $347,000 to
offset future years US taxable income. These losses expire as follows:

2012 61,000
2013 286,000

The components of the net deferred tax asset, the statutory tax rate, the
effective tax rate and the elected amount of the valuation allowance are
scheduled below:

<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Net Combined Operating Losses 424,000 127,000
Statutory Combined Canadian and US Tax Rate 37% 32%
Effective Tax Rate - -
Deferred Tax Asset 157,000 40,000
Valuation Allowance (157,000) (40,000)

Net Deferred Tax Asset - -
----------------------
</TABLE>

F-9
<PAGE>

2. Significant Accounting Policies (continued)

Basic and Diluted Net Income (Loss) per Share

The Company computes net income (loss) per share in accordance with SFAS No.
128, "Earnings per Share" (SFAS 128). SFAS 128 requires presentation of both
basic an diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net income (loss) available to
common shareholders (numerator) by the weighted average number of common
shares outstanding (denominator) during the period. Diluted EPS gives effect
to all dilutive potential common shares outstanding during the period
including stock options, using the treasury stock method, and convertible
preferred stock, using the if-converted method. In computing Diluted EPS, the
average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all dilutive potential common shares if their
effect is anti dilutive.

New Accounting Pronouncements

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive Income. This
statement requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income is the same as net income for all
periods presented.

Effective January 1, 1998, the Company adopted Statement of Accounting
Standards No. 131 (SFAS 131), Disclosures about Segments of an Enterprise and
Related Information. This statement requires the Company to report
income/loss, revenue, expense and assets by business segment including
information regarding the revenues derived from specific products and
services and about the countries in which the Company is operating. The
Statement also requires that the Company report descriptive information about
the way that operating segments were determined, the products and services
provided by the operating segments, differences between the measurements used
in reporting segment information and those used in the Company's general-
purpose financial statements and changes in the measurement of segment
amounts from period to period. As noted above this statement establishes
standards for reporting and display and has no material effect on the
Company's financial condition or results of operations.

In February 1998, the FASB issued Statement of Financial Accounting Standards
No. 132 (SFAS 132), Employers' Disclosures about Pensions and other Post
Retirement Benefits. This statement standardizes the disclosure requirements
for pension and other post retirement benefits. The Company typically does
not offer the types of benefit programs that fall under the guidelines of
this statement.

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities.
This statement establishes accounting and reporting standards for derivative
instruments and requires recognition of all derivatives as assets or
liabilities in the statement of financial position and measurement of those
instruments at fair value. The statement is effective for fiscal years
beginning after June 15, 1999. The Company does not have any derivative
instruments and has not entered into any hedging activities.

3. Business Combination

Pursuant to an Agreement and Plan of Reorganization entered into on February
17, 1999 and completed on February 23, 1999 between the Company, Information
Highway, Inc. ("IHI") and certain shareholders of IHI, the Company acquired
3,235,000 common shares of IHI out of a total of 5,639,650 issued and
outstanding common shares in exchange for 3,235,000 common shares of the
Company. It is the Company's intention to complete the exchange of shares of
its common stock for the remaining and outstanding common shares of IHI on a
one for one basis. As of August 23, 1999, 2,225,150 of the 2,404,650 IHI
shares had been exchanged for the same number of Company shares. In total, to
August 23, 1999, 97% of IHI shares had been exchanged. The Company has
allotted 179,500 shares in anticipation of the remaining shares of IHI being
exchanged. As part of the Agreement and Plan of Reorganization the Company
caused 1,659,833 of its 1,979,500 common shares that were issued and
outstanding, prior to the closing, to be cancelled and assumed the
obligations of IHI to issue common shares pursuant to warrants and stock
options issued by IHI. IHI paid $100,000 to the controlling shareholder of
the Company to effect the Agreement and Plan of Reorganization including the
cancellation of 1,659,833 shares.

F-10
<PAGE>

3. Business Combination (continued)

For accounting purposes the acquirer is IHI, as 95% of the issued and
outstanding common shares of the Company are owned by the shareholders of IHI
and the entire Board of Directors of the Company is now comprised of the
entire Board of Directors of IHI. As IHI is the legal subsidiary of the
Company the nature of the business combination is a reverse takeover whereby
the control of the Company is acquired by IHI and the consolidated financial
statements are issued under the name of the Company but is a continuation of
IHI and not the Company. The legal capital structure remains that of the
Company but the shareholders' equity of IHI has replaced the shareholders'
equity of the Company. Similarly, the Company's income statements and
statements of cash flows represent a continuation of IHI's consolidated
financial statements.

The accounting treatment of the reverse takeover is based on the following
consideration that was paid to shareholders of the Company:

<TABLE>
<CAPTION>
$
<S> <C>
Cash paid to the controlling shareholder of FVFI 100,000
Net liabilities of FVFI assumed at book value -
Value attributed to the 319,667 shares of FVFI not cancelled -
--------
100,000
========
</TABLE>

The $100,000 payment to the controlling shareholder of FVFI has been treated,
for accounting purposes, as a reduction of additional paid in capital and not
as goodwill as the nature of the transaction was for IHI to obtain a listing
on the OTC Bulletin Board by way of reverse takeover. The cost is associated
with publicly listing shares and not with any business associated with FVFI.

4. Business acquisitions

On December 11, 1996, the Company acquired 100% of Blue Crow and on February
23, 1997 the Company acquired 100% of World-Tel and YesIC. See Note 1
regarding nature of their business. The acquisitions were accounted for using
the purchase method of accounting for business combinations. The Company
issued 3,582,000 common shares at a deemed fair market value of $0.10 per
share and US$27,380 as cash consideration for all three acquisitions. In
total, the Company assumed net liabilities of $93,663. The excess of the
purchase price over the fair market value of net liabilities assumed,
totalling $479,243 was allocated to goodwill. Details of liabilities assumed
and assets acquired are as follows:

<TABLE>
<CAPTION>
$
<S> <C>
(i) Consideration

Capital stock issued (3,582,000 at $.10) 358,200
Cash paid 27,380
----------------------------------------------------------------------------
385,580
----------------------------------------------------------------------------
(ii) Net liabilities assumed
Liabilities assumed
Accounts payable 43,080
Loans from directors 37,853
Loans from affiliated companies 127,491
----------------------------------------------------------------------------
208,424
----------------------------------------------------------------------------
Assets acquired
Cash received in combination (7,055)
Accounts receivable (1,711)
Capital assets (105,995)
----------------------------------------------------------------------------
(114,761)

Net liabilities assumed 93,663
----------------------------------------------------------------------------
(iii) Excess of costs over book values 479,243
============================================================================
</TABLE>

F-11
<PAGE>

4. Business acquisitions (continued)

The excess of costs over book values were allocated to goodwill as there were
no other fair market value adjustments to non-monetary assets or other
identifiable intangible assets. Goodwill has been capitalized and is being
amortized over its estimated useful life of three years. Amortization of
$44,900 was charged to operations in 1997 and $159,745 was charged in 1998.

5. Fixed assets

<TABLE>
<CAPTION>
Fixed assets are stated at cost less accumulated depreciation.
1998 1997
Accumulated Net Book Net Book
Cost Amortization Value Value
$ $ $ $
<S> <C> <C> <C> <C>
Computer equipment and software 252,075 79,248 172,827 135,469
Office furniture and equipment 33,984 7,869 26,115 22,512
Leasehold improvements 11,567 1,156 10,411 -
--------------------------------------------------------------------------------------------------
297,626 88,273 209,353 157,987
==================================================================================================
Depreciation per class of asset:
1998 1997
$ $
Computer equipment and software 51,833 12,263
Office furniture and equipment 4,622 2,072
Leasehold improvements 1,156 -
-------------------------------------------------------------------------------------------------
57,611 14,335
=================================================================================================
</TABLE>

6. Related party balances and transactions

Amounts owing to the President and director and affiliated companies will not
be demanded prior to November 30, 1999, are unsecured and non-interest
bearing. The Company intends on repaying a portion of these debts in the next
fiscal year.

The President and director of the Company was also President and director of
World-Tel and Chief Executive Officer and director of YesIC prior to their
acquisition. (See Note 4).

7. Common Stock Issuances and Related Commitments

Pursuant to the Agreement and Plan of Reorganization the Company assumed all
common stock obligations of IHI as they relate to stock based compensation
plans and warrants issued to acquire common shares.

Private Placements

IHI approved and completed two private placements of units and issued 812,150
units at $0.75 per unit to raise $609,112. These units were issued between
October and December, 1998. Each unit contained one share and one warrant to
acquire one additional share at $1.00 if exercised between October and
December, 1999. Of the 812,150 warrants issued 10,000 warrants were exercised
as at February 28, 1999 for proceeds of $10,000.

The proceeds of the above private placements were allocated 100% to the
common shares issued; no amount was allocated to warrants as the warrant
price was set higher than fair market value and there is a one year hold
period on these shares and no market for the warrants.

F-12
<PAGE>

7. Common Stock Issuances and Related Commitments (continued)

Stock Option Plan

On June 30, 1997, and amended on May 21, 1999, IHI reserved 2,500,000 common
shares pursuant to a stock option plan. On January 26, 1998 the Company
granted stock options to certain directors and employees to acquire 725,000
shares at $0.50 per share expiring January 26, 2003. Stock options granted to
certain employees to acquire 145,000 common shares at $0.50 per share were
cancelled. Stock options were granted to certain directors, officers and
employees to acquire 295,000 common shares at $0.75 per share expiring five
years after grant date being between August 14, 2003 and February 23, 2004.

May 31, 1998

<TABLE>
<CAPTION>
May 31, Price Granted Cancelled May 31, Expiry Date
1997 $ # 1998
# #
<S> <C> <C> <C> <C> <C>
Nil 0.50 725,000 (145,000) 580,000 January 26, 2003
======= ======= ========= ===========
May 31, 1999

May 31, Price Granted Exercised February 28, Expiry Date
1998 $ # 1999
# #

580,000 0.50 - (150,000) 430,000 January 26, 2003
- 0.75 295,000 (27,334) 267,666 August, 2003 to February, 2004
------- ------- --------- -----------
580,000 295,000 (177,334) 697,666
======= ======= ========= ===========
</TABLE>

The options are granted for services provided to the Company. Statement of
Financial Accounting Standards No. 123 ("SFAS 123") requires that an
enterprise recognize, or at its option, disclose the impact of the fair value
of stock options and other forms of stock based compensation in the
determination of income. The Company has elected under SFAS 123 to continue
to measure compensation cost on the intrinsic value basis set out in APB
Opinion No. 25. As options are granted at exercise prices based on the market
price of the Company's shares at the date of grant, no compensation cost is
recognized. However, under SFAS 123, the impact on net income and income per
share of the fair value of stock options must be measured and disclosed on a
fair value based method on a pro forma basis.

The fair value of the employee's purchase rights under SFAS 123, was
estimated using the Black-Scholes model with the following assumptions used
for grants on January 26, 1998: risk free interest rate was 5.47%, expected
volatility of 20%, an expected option life of six months and no expected
dividends; and for grants between August 14, 1998 and February 23, 1999, as a
group: risk free interest rate was 5.27%, expected volatility of 20%, an
expected option life of six months and no expected dividends.

If compensation expense had been determined pursuant to SFAS 123, the
Company's net loss and net loss per share for the years ended May 31, 1998
would have been as follows:

<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Net loss
As reported (557,207) (150,694)
Pro forma (570,779) (150,694)

Basic net loss per share
As reported (.14) (.10)
Pro forma (.15) (.10)
</TABLE>

8. Commitment

The Company is committed to making monthly operating lease payments to March
15, 2000 of $1,947 for computer equipment.

F-13
<PAGE>

9. Segmented information

The Company has adopted SFAS No. 131 Disclosure About Segments of an
Enterprise and related information.

The business of the Company is carried on in one industry segment being the
provision of access to the Internet and providing services, including on-
line publishing, to individual and corporate subscribers.

The Company operates in one geographic segment, being Canada, located in
Vancouver, BC and Toronto, Ontario.

The Company's head office is in Richmond, BC, Canada. The head office does
not conduct any business specifically related to the Internet. Its sole
purpose is to provide administration, investor relations services and
services relating to being a public company. Included in general and
administrative expenses and net loss is $159,031 (1997 - $61,627) relating
to such activities. The net loss relating to Internet activities in Canada
amounted to $398,176 (1997 - $89,067).

10. Uncertainty Due to the Year 2000 Issue

The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the Company,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.

F-14
<PAGE>

EXHIBIT INDEX

Exhibit No. Description
- - - ----------- --------------------------------------------------
2.1* Articles of Incorporation, restated as amended on February
23, 1999 and November 1, 1989

2.2* Bylaws

3.1* Specimen Share Certificate for Common Stock

3.2* Form of Warrants

3.3* Stock Option Plan

3.4* Form of Stock Option Agreement

3.5 Form of Warrants

6.1** VPOP Service Agreement between MetroNet Communications and
YesIC Communications

6.2** Level 3 Communications Terms and Conditions for Delivery of
Service

6.3** ADSL Service Agreement dated August 24, 1999, by and between
Bell Atlantic Network Integration, Inc. and Information-
Highway.com, Inc.

8.1* Agreement and Plan of Reorganization between the Company and
Information Highway, Inc.

12.1** Annual report on Form 10-KSB for the fiscal year ended May
31, 1999

27.1*** Financial Data Schedule

* Previously filed.

** Incorporated by reference from the Company's annual report
on Form 10-KSB for the fiscal year ended May 31, 1999, filed
with the Securities and Exchange Commission on October 6,
1999.

*** Previously filed or incorporated by reference from the
Company's annual report on Form 10-KSB for the fiscal year
ended May 31, 1999, filed with the Securities and Exchange
Commission on October 6, 1999, or incorporated by reference
from the Company's quarterly report on Form 10-QSB for the
quarterly period ended February 28, 1999, filed with the
Securities and Exchange Commission on September 10, 1999.

<PAGE>

EXHIBIT 3.5

TERMS AND CONDITIONS dated July 26th, 1999, attached to the Series "A" and
Series "B" Warrant Certificates issued by INFORMATION-HIGHWAY.COM, INC. for an
aggregate of 129,750 Series "A" Warrants and 129,750 Series "B" Warrants.

ARTICLE 1 - INTERPRETATION
- - - -------------------------

Section 1.1 - Definitions

In these Terms and Conditions, unless there is something in the subject matter
or context inconsistent therewith:

(a) "Company" means Information-Highway.com, Inc. until a successor
corporation will have become such as a result of consolidation,
amalgamation or merger with or into any other corporation or
corporations, or as a result of the conveyance or transfer of all or
substantially all of the properties and estates of the Company as an
entirety to any other corporation and thereafter "Company" will mean
such successor corporation;

(b) "Company's Auditors" means an independent firm of accountants duly
appointed as auditors of the Company;

(c) "Director" means a director of the Company for the time being, and
reference, without more, to action by the directors means action by
the directors of the Company as a Board, or whenever duly empowered,
action by an executive committee of the Board;

(d) "herein", "hereby" and similar expressions refer to these Terms and
Conditions as the same may be amended or modified from time to time;
and the expression "Article" and "Section", followed by a number refer
to the specified Article or Section of these Terms and Conditions;

(e) "person" means an individual, corporation, partnership, trustee or any
unincorporated organization and words importing persons have a similar
meaning;

(f) "Series "A" Warrants" means the Series "A" warrants of the Company
issued and presently authorized, as set out in Section 2.1 hereof and
for the time being outstanding;

(g) "Series "B" Warrants" means the Series "B" warrants of the Company
issued and presently authorized, as set out in Section 2.2 hereof and
for the time being outstanding.
<PAGE>

-2-

(h) "shares" means the common shares in the capital stock of the Company
as constituted at the date hereof and any shares resulting from any
subdivision or consolidation of the shares;

(i) "Transfer Agent" means Nevada Agency & Trust Company, at its head
office in Reno, Nevada or its successors;

(j) "Warrant Holders" or "Holders" means the holders of the Warrants; and

(k) "Warrants" means the Series "A" Warrants and the Series "B" Warrants
collectively.

Section 1.2 - Gender

Words importing the singular number include the plural and vice versa and words
importing the masculine gender include the feminine and neuter genders.

Section 1.3 - Interpretation not affected by Headings

The division of these Terms and Conditions into Articles and Sections, and the
insertion of headings are for convenience of reference only and will not affect
the construction or interpretation thereof.

Section 1.4 - Applicable Law

The Warrants will be construed in accordance with the laws of the State of
Washington and the laws of the United States of America applicable thereto and
will be treated in all respects as Washington contracts.

ARTICLE II - ISSUE OF WARRANTS
- - - ----------------------------

Section 2.1 - Issue of Series "A" Warrants

Series "A" Warrants entitling the Holders thereof to purchase up to an aggregate
of 129,750 common shares are authorized to be issued by the Company. The Series
"A" Warrant certificates represent an aggregate of 129,750 Series "A" Warrants.

Section 2.2 - Issue of Series "B" Warrants

Series "B" Warrants entitling the Holders thereof to purchase up to an aggregate
of 129,750 common shares are authorized to be issued by the Company. The Series
"B" Warrant certificates represent an aggregate of 129,750 Series "B" Warrants.

<PAGE>

-3-

Section 2.3 - Additional Warrants

The Company may at any time and from time to time issue additional warrants or
grant options or similar rights to purchase shares of its capital stock.

Section 2.4 - Warrant to Rank Pari-Passu

All Warrants and additional warrants, options or similar rights to purchase
shares from time to time issued or granted by the Company, will rank pari-passu
whatever may be the actual dates of issue or grant thereof, or of the dates of
the certificates by which they are evidenced.

Section 2.5 - Issue in substitution for Lost Warrants

(1) In case a Warrant becomes mutilated, lost, destroyed or stolen, the
Company, at its discretion, may issue and deliver a new Warrant of like
date and tenor as the one mutilated, lost, destroyed or stolen, in exchange
for and in place of and upon cancellation of such mutilated Warrant, or in
lieu of, and in substitution for such lost, destroyed or stolen Warrant and
the substituted Warrant will be entitled to the benefit hereof and rank
equally in accordance with its terms with all other Warrants issued or to
be issued by the Company.

(2) The applicant for the issue of a new Warrant pursuant hereto will bear the
cost of the issue thereof and in case of loss, destruction or theft furnish
to the Company such evidence of ownership and of loss, destruction, or
theft of the Warrant so lost, destroyed or stolen as will be satisfactory
to the Company in its discretion and such applicant may also be required to
furnish indemnity in an amount and form satisfactory to the Company in its
discretion, and will pay the reasonable charges of the Company in
connection therewith.

Section 2.6 - Warrant Holder Not a Shareholder

The holding of a Warrant will not constitute the holder thereof a shareholder of
the Company, nor entitle him to any right or interest in respect thereof except
as in the Warrant expressly provided.
<PAGE>

-4-

ARTICLE III - NOTICE
- - - --------------------

Section 3.1 - Notice to Warrant Holders

Any notice to be given to the Holders will be sent by prepaid registered post
and will be deemed to have been received by the Holder on the fourth day
following the mailing thereof. Any such notice will be addressed to the Holder
at the address of the Holder appearing on the Holder's Warrant or to such other
address as the Holder may advise the Company by notice in writing.

Section 3.2 - Notice to the Company

Any notice to be given to the Company will be sent by prepaid registered post
addressed to the Company at its registered office and will be deemed to have
been received by the Company on the fourth day following the mailing thereof,
provided that if there shall be at the time of mailing or between the time of
mailing and the actual receipt of the notice a labour dispute, slow down, or
other disruption which might effect the normal delivery of such notice by the
mails, then such notice shall only be effective if and when received by the
Company.

ARTICLE IV - EXERCISE OF WARRANTS
- - - ---------------------------------

Section 4.1 - Method of Exercise of Warrants

The right to purchase shares conferred by the Warrants may be exercised by the
Holder of such Warrant surrendering it, with a duly completed and executed
subscription form attached to the Warrant certificate, together with cash or a
certified cheque payable to or to the order of the Company, at par, in Richmond,
British Columbia, for the purchase price applicable at the time of surrender in
respect of the shares subscribed for in lawful money of the United States of
America, to the Company at its head office in Richmond, British Columbia.

Section 4.2 - Effect of Exercise of Warrants

(1) Upon surrender and payment as aforesaid the shares so subscribed for will
be deemed to have been issued and such person or persons will be deemed to
have become the holder or holders of record of such shares on the date of
such surrender and payment, and such shares will be issued at the
subscription price in effect on the date of such surrender and payment.

(2) Within ten business days after surrender and payment as aforesaid, the
Company will forthwith cause to be delivered to the person or persons in
whose name or names the shares so subscribed for are to be issued as
specified in such subscription or mailed to him or them at his or their
respective addresses specified in such subscription, a

<PAGE>

-5-

certificate or certificates for the appropriate number of shares not
exceeding those which the Warrant Holder is entitled to purchase pursuant
to the Warrant surrendered.

Section 4.3 - Subscription for Less Than Entitlement

The holder of any Warrant may subscribe for and purchase a number of shares less
than the number which he is entitled to purchase pursuant to the surrendered
Warrant. In the event of any purchase of a number of common shares less than the
number which can be purchased pursuant to a Warrant, the holder thereof upon
exercise thereof will in addition be entitled to receive a new Warrant in
respect of the balance of the shares which he was entitled to purchase pursuant
to the surrendered Warrant and which were not then purchased.

Section 4.4 - Warrants for Fractions of Shares

To the extent that the holder of any Warrant is entitled to receive on the
exercise or partial exercise thereof a fraction of a common share, such right
may be exercised in respect of such fraction only in combination with another
Warrant or other Warrants which in the aggregate entitle the holder to receive a
whole number of such common shares.

Section 4.5 - Expiration of Warrants

After the expiration of the period within which a Warrant is exercisable, all
rights thereunder will wholly cease and terminate and such Warrant will be void
and of no effect.

Section 4.6 - Time of Essence

Time will be of the essence hereof.

Section 4.7 - Subscription Price

(1) One Series "A" Warrant and $4.00 US are required to subscribe for each
share; and

(2) One Series "B" Warrant and $6.00 US are required to subscribe for each
share.

Section 4.8 - Adjustment of Exercise Price

The exercise price and the number of common shares deliverable upon the exercise
of the Warrants will be subject to adjustment in the event and in the manner
following:

(1) If and whenever the shares at any time outstanding are subdivided into a
greater or consolidated into a lesser number of shares the exercise price
will be decreased or increased proportionately as the case may be; upon any
such subdivision or consolidation the number of shares deliverable upon the
exercise of the Warrants will be increased or decreased proportionately as
the case may be.
<PAGE>

-6-

(a) In case of any capital reorganization or of any reclassification of
the capital of the Company or in the case of the consolidation, merger
or amalgamation of the Company with or into any other Company
(hereinafter collectively referred to as a "Reorganization"), each
Warrant will after such Reorganization confer the right to purchase
the number of shares or other securities of the Company (or of the
Company's resulting from such Reorganization) which the Warrant Holder
would have been entitled to upon Reorganization if the Warrant Holder
had been a shareholder at the time of such Reorganization;

(b) In any such case, if necessary, appropriate adjustments will be made
in the application of the provisions of this Article Four relating to
the rights and interest thereafter of the holders of the Warrants so
that the provisions of this Article Four will be made applicable as
nearly as reasonably possible to any shares or other securities
deliverable after the Reorganization on the exercise of the Warrants;

(c) The subdivision or consolidation of shares at any time outstanding
into a greater or lesser number of shares (whether with or without par
value) will not be deemed to be a Reorganization for the purposes of
this paragraph 4.8(2);

(2) The adjustments provided for in this Section are cumulative and will become
effective immediately after the record date or, if no record date is fixed,
the effective date of the event which results in such adjustments.

Section 4.9 - Determination of Adjustments

If any questions will at any time arise with respect to the exercise price or
any adjustment provided for in Section 4.8, such questions will be conclusively
determined by the Company's Auditors, or, if they decline to so act any other
firm of chartered accountants, in Vancouver, British Columbia that the Company
may designate and who will have access to all appropriate records and such
determination will be binding upon the Company and the holders of the Warrants.

ARTICLE V - COVENANTS BY THE COMPANY
- - - ------------------------------------

Section 5.1 - Reservation of Shares

The Company will reserve and there will remain unissued out of its authorized
capital a sufficient number of shares to satisfy the rights of purchase provided
for herein and in the Warrants should the holders of all the Warrants from time
to time outstanding determine to exercise such rights in respect of all shares
which they are or may be entitled to purchase pursuant thereto and hereto.

<PAGE>

-7-

Section 5.2 - Company May Purchase

The Company may from time to time offer to purchase and purchase, for
cancellation only, any Warrants in such manner, from such persons and on such
terms and conditions as it determines.

ARTICLE VI - WAIVER OF CERTAIN RIGHTS
- - - -------------------------------------

Section 6.1 - Immunity of Shareholders, etc.

The Warrant Holder, as part of the consideration for the issue of the Warrants,
waives and will not have any right, cause of action or remedy now or hereafter
existing in any jurisdiction against any past, present or future incorporator,
shareholder, Director or Officer (as such) of the Company for the issue of
shares pursuant to any Warrant or on any covenant, agreement, representation or
warranty by the Company herein contained or in the Warrant.

ARTICLE VII - MODIFICATION OF TERMS, MERGER, SUCCESSORS
- - - -------------------------------------------------------

Section 7.1 - Modification of Terms and Conditions for Certain Purposes

From time to time the Company may, subject to the provisions of these presents,
modify the Terms and Conditions hereof, for the purpose of correction or
rectification of any ambiguities, defective provisions, errors or omissions
herein.

Section 7.2 - Transferability

The Warrant and all rights attached to it are not transferable or assignable.

DATED this 26th day of July, 1999.

INFORMATION-HIGHWAY.COM, INC.

By:

Director