WATTAGE MONITOR INC, 10KSB, 2000-03-15

WATTAGE MONITOR INC
10KSB, 2000-03-15
ELECTRIC SERVICES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission file number: 0-26381

WATTAGE MONITOR INC.
(Name of Small Business Issuer as Specified in Its Charter)

NEVADA 86-0882633
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

1100 KIETZKE LANE, RENO, NEVADA 89502
(Address of Principal Executive Offices)

(775) 327-6000
(Issuer's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

Securities registered pursuant to Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not be contained,
to the best of registrant's knowledge, in any amendment to this Form 10-KSB. [ ]

Transitional Small Business Disclosure Format (check one): Yes [ ]
No [ X ]

On March 1, 2000, the aggregate market value of the voting stock of
Wattage Monitor Inc. held by non-affiliates of the registrant was approximately
$8,740,000 based on the average of the high bid and low asked prices of such
stock as reported by OTC Electronic Bulletin Board on such date. An affiliate
for this purpose is defined as the company's directors and executive officers
and beneficial owners of more than 5% of the company's common stock.

The registrant had 13,421,520 shares of common stock, $.01 par value
per share, outstanding at March 1, 2000.

Documents Incorporated by Reference: None.

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WATTAGE MONITOR INC.
ANNUAL REPORT ON FORM 10-KSB

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I...................................................................................... 3

ITEM 1 - DESCRIPTION OF BUSINESS....................................................... 3
ITEM 2 - DESCRIPTION OF PROPERTY....................................................... 10
ITEM 3 - LEGAL PROCEEDINGS............................................................. 10
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................... 10

PART II..................................................................................... 11

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...................... 11
ITEM 6 - PLAN OF OPERATION............................................................. 13
ITEM 7 - FINANCIAL STATEMENTS.......................................................... 15
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.................................... 28

PART III.................................................................................... 29

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT......................... 29
ITEM 10 - EXECUTIVE COMPENSATION....................................................... 31
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............... 33
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................... 35
ITEM 13 - EXHIBITS, LIST AND REPORTS ON FORM 8-K....................................... 36

SIGNATURES.................................................................................. 37

EXHIBIT INDEX............................................................................... 38

</TABLE>

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PART I

ITEM 1 - DESCRIPTION OF BUSINESS.

BUSINESS DEVELOPMENT.

WattMonitor LLC, the predecessor to Wattage Monitor, was formed
under the laws of the State of Delaware on July 1, 1997. In February 1999, in
anticipation of the acquisition of WattMonitor LLC, Knowledge Networks Inc.,
a publicly held corporation, changed its name to "Wattage Monitor Inc." On
February 26, 1999, Wattage Monitor Inc., a Nevada corporation, acquired
WattMonitor LLC, a Delaware company. The business of Wattage Monitor is
identical to that of WattMonitor LLC. For financial statement purposes, the
transaction has been treated as a recapitalization of WattMonitor LLC, with
WattMonitor LLC as the acquirer, a reverse acquisition. For tax purposes, the
acquisition was a tax-free exchange of equity securities. Subsequent to the
acquisition, the sole activities of Wattage Monitor have been, and will
continue to be, those previously conducted by WattMonitor LLC. The historical
activities of the acquiring company's predecessor, Knowledge Networks, were
limited to certain immaterial software consulting contracts, all of which
were completed prior to the acquisition. Accordingly, the following
discussion of our business relates to the business previously conducted by
WattMonitor LLC.

BUSINESS OF WATTAGE MONITOR.

OUR BUSINESS.

Our goal is to be recognized as the preeminent electric rate and
service information source in the evolving, competitive United States
electricity market. To do so, our initial focus is to be seen as the industry
standard for objective information regarding an electric consumer's specific
choices. We expect to derive our revenue principally from fees charged to
electricity suppliers for presenting consumers with information about electric
rates. In addition, while not an electricity supplier or broker itself, our
information system allows consumers to order electricity from their chosen
electricity supplier. We also expect to receive commissions for sales to
electric consumers, and provide electric marketing research, industry news and
information, and statistical indices reflecting industry performance.

From our inception, we thought and still believe there were three
requirements necessary to prove the business concept:

1. Creation of the information system itself;

2. Demonstration that consumers use the service; and

3. Supplier participation.

THE ELECTRIC INDUSTRY.

The electric utility industry in the United States is vast, fragmented
and just beginning the process of deregulation through the introduction of
competition to a market previously structured as a regulated monopoly. There are
several large electric utilities, but none currently serves more than about 5%
of the national market. Unlike previously deregulated industries, such as
telecommunications or airlines, the electric industry has historically operated
locally, not nationally. Accordingly, there are no national franchises or
brands.

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There are approximately three trillion kilowatt hours used in this
country annually, divided almost equally between residential, commercial and
industrial consumers. The roughly 100,000,000 households in the United States
represent somewhere close to $90,000,000,000 of annual revenue for the
industry. Commercial consumers use approximately the same amount of
electricity and represent about 75% of the annual revenue as residential
consumers. Once these customers can choose a supplier, they are likely to
want an accurate, objective source of information. Serving that need is our
primary focus. Industrial customers, generally large-scale manufacturing
concerns, comprise the third category of electricity consumers. While they
use about the same volume of electricity as their residential and commercial
counterparts, they pay approximately half as much per unit consumed. Thus,
industrial consumers represent a $45,000,000,000 revenue industry segment. We
anticipate that most of our revenue will be derived from the residential and
commercial sectors.

Over 3,000 entities currently provide consumers with electricity.
Each must operate differently in a competitive business environment or
disappear. We intend to provide impartial information to electric consumers
and to be a communication channel to consumers for electricity suppliers. We
expect to derive our revenues principally from suppliers seeking customers.
Such revenues are expected to result from fixed fees, transaction fees and
marketing fees, or a combination thereof. The marketing fee is designed to be
less than the equivalent cost of the advertising, direct mail, or other
marketing programs required to reach potential customers. In practice, it is
structured to be 50-75% of the cost of a direct mail campaign. The
transaction fee results from a customer's decision to choose a particular
supplier when using our information system. The transaction fees are due
monthly.

The two primary market considerations that create the opportunity to
build a national organization offering customers information about their
electricity choices are:

- The electric utility industry is restructuring, which is likely to
result in consumers having the ability to choose their electricity
supplier; and

- The competition that will result from a deregulated electricity
market will cause electricity suppliers to seek an efficient and
cost-effective means to reach residential and commercial consumers.

Additionally, there are several secondary considerations that stand out
as important to the future demand for our services.

- The electric industry is fragmented. There are approximately 250
investor-owned utilities, which account for about three-quarters of
the industry's revenue. However, even the largest of these are
generally geographically isolated and have less than 5% of the
national market. Being able to provide or facilitate access to a
large number of new customers will likely be a valuable resource to
electricity suppliers.

- The electricity consumer's working knowledge of electricity is
limited. Once customers have a choice, some are likely to exercise
it. In many cases they will want information about more than just
their specific choices. We plan to serve this need as well.

- The deregulation of telecommunications, principally telephones, has
had a significant influence on consumer views, which may affect
electricity in two ways. First, consumers may become suspicious of
a profusion of pricing schemes which, given the large number of
anticipated new entrants, is likely to occur. Second, consumers may
perceive electric service as a network in which they may
conveniently and routinely switch suppliers. Yet, unlike telephone
usage, electricity use is consistent and predictable. This makes

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quantifying a consumer's choice of electricity suppliers
straightforward, enhancing comparison shopping while eliminating
complexity.

To the extent customers choose a new supplier, they are likely to need
information about their electric options. This information may be available from
traditional sources, such as advertising programs, general media coverage,
political discussion, and word of mouth. However, consumers wanting to exercise
their right to choose an electricity supplier may be hard-pressed to find an
established information source that can assist them in making an informed
decision. Our service intends to fill this void.

OUR SERVICE.

Our information system is designed to integrate a licensed data
management and electronic commerce search engine with a licensed text management
search engine to create an efficient information system. All information in the
system is organized by zip code or sub-zip code. (Sub-zip codes are used if more
than one regulated utility serves the area to ensure that the information is
directly relevant to each consumer.) The system was designed to create a
recognizable brand and convey objectivity, simplicity and consumer orientation.
The data management capability of our information system maintains numeric data,
including zip codes and prices; the text management capability provides topical
information and text.

Our efforts are centered around providing:

- A SERVICE TO INDIVIDUAL RESIDENTIAL CONSUMERS - We provide
residential consumers with objective, straightforward comparisons
of their electric choices. Our services are available both through
a toll-free telephone service and through the Internet at
www.wattagemonitor.com. Both services are free to consumers.

- A SERVICE TO INDIVIDUAL COMMERCIAL CONSUMERS - Commercial electric
consumers average approximately five times the electric consumption
of the average residential consumer. Therefore, they need more
detailed information than is provided to residential consumers.
Through use of our information system, suppliers can convey
information about themselves, their products and services and their
contractual requirements. Our service is also free to commercial
consumers.

- MARKET RESEARCH AND INFORMATION - We intend to become a leading
provider of analytical information regarding the electricity
industry. We provide research on a fee basis, publish industry
indices and distribute a newsletter. The latter activities are
(generally) free and are designed to assist in building our name
brand and industry recognition. The focus of this information is on
competition, pricing, competitive trends and consumer behavior.

Our information system required approximately sixteen months and
several million dollars to develop. It was first released commercially in
Pennsylvania on October 19, 1998. As might be expected, some programming,
system design and hardware configuration problems became apparent once
broad-based usage of the system began. Any difficulties were exacerbated by
greater-than-anticipated use of the system by consumers. Two matters required
more effort than the others to resolve: the structure of how we access
certain data tables and an error in the coding of zip codes with more than
one regulated utility serving it. However, when viewed from the perspective
of launching a system as large and complicated as this, the release of the
system and its overall performance were acceptable. Ongoing enhancements, new
features, improved functionality, upgrades and maintenance cost approximately
$1 million annually.

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Similar to our experience with widespread use of the Wattage Monitor
system by consumers, recent decisions by several suppliers to actively
participate (the first time such use of the system by suppliers has occurred)
have illuminated several system improvements that should be made to facilitate
supplier participation. Unlike the experience with consumers, however, these
changes are more in the nature of fine tuning basic system capabilities to meet
specific supplier criteria. They are not something that requires a serious
system upgrade. All such currently identified improvements are expected to be
programmed, tested and incorporated in the system by March 31, 2000.

As has been the case since our system first launched in October 1998,
all United States zip codes are represented. If a consumer is in a state that
does not yet have competition, entering that zip code will inform the consumer
of his or her state's status, allow the consumer to register to receive periodic
updates, and permit the consumer to use our information system to express
opinions to governmental authorities regarding electricity competition. If the
zip code entered is for a state currently allowing competition, the specific
choices available to each consumer are presented. In both cases, information and
answers to frequently asked questions are available. Our system currently
supports six states - Pennsylvania, New York, New Jersey, Massachusetts, Montana
and California - and we expect it will be able to fully service all consumers in
all states with competition on an on-going basis. However, there can be no
assurance that certain operational problems or system deficiencies will not be
identified.

To date, we have applied to the Untied States Patent and Trademark
Office for registration of the service marks "Wattage Monitor," "WattMonitor,"
"Kilowatt Monitor," and "WM." On February 1, 2000, the U.S. Patent and Trademark
office registered the "WM" service marks. The remaining are currently pending.
We have also applied for a patent relating to our information system and
services. The law firm of Pennie & Edmonds, LLP acts as patent counsel. No
action has been taken, nor comments received, on the patent application, which
was filed on November 11, 1998. No assurances can be given when or if our patent
application will be approved.

CONSUMER USE

CONSUMER AWARENESS. We inform electricity consumers of the existence of
our information system by using billboards, drive time radio, links to other web
sites, complimentary sites we create such as ElectricEye, public relations and
word of mouth. Although our word of mouth success may be greater than any of
these other approaches, it is not possible to measure that success with any real
specificity. That aside, the most effective of the remaining methods has been
our public relations effort with the print media, particularly newspapers, and
links to other web sites. For example, through our public relations activity we
generated more than fifty major articles about our service in a one-month span
and established our initial credibility in Pennsylvania through editorial board
meetings with over 75% of the state's newspapers with circulation exceeding
20,000. Similarly when New Jersey launched competition in January 2000 we
actively supported the print media in their coverage of this story. The result
was over twenty articles in January and February 2000.

As we have increasingly established ourselves inside the industry as
the dominant information service for competitive electricity information, we
have found numerous other Internet sites which are willing to create links to
us. These include commercial sites, governmental sites and not-for-profit
consumer information sites. Approximately sixty such links have been
established in the last six months.

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Wattage Monitor's ElectricEye program, a complimentary site we created
and support, is a grass roots, consumer driven Internet program designed to give
people a stronger, clearer voice in the new and complicated marketplace of
electricity competition. Originally formed in response to grass roots consumer
interest in knowing and doing more about electricity competition, the
WM ElectricEye program was designed to meet those consumers' needs. For
consumers, the key components include:

1. It's absolutely free;

2. Awards are available;

3. It offers a way to voice opinions and get details - actively
seeking or providing information and participating in opinion
polls; and

4. Consumers in all 50 states already participate, allowing the
information and experience gained nationwide to be applied to
local decisions regarding the range and quality of electricity
choices available.

In the six months of its existence ElectricEye has gained over 200,000
members.

Billboards and radio are the final elements of our consumer awareness
programs. While somewhat effective, they have proven to be less useful than
newspapers or web site links in informing consumers of our service. It is clear
that consumer awareness and use of our system is also dependent upon the
advertising programs of suppliers. The more frequently suppliers approach
consumers, the greater the demand for the comparative information available from
our system. Accordingly, use of our system is dependent upon the active,
independent marketing efforts of suppliers.

Finally, we actively solicit commercial customers to use our system.
Informing commercial customers of our service involves out-bound telephone calls
in addition to the awareness programs described above. No such calls are made to
residential consumers. We cannot be certain that making consumers aware of our
service will not be more costly or take longer than is currently anticipated.

CONSUMER ACCEPTANCE. Consumer acceptance of our services has been quite
good. Results of our surveys and usage of our system have shown the following:

- High levels of satisfaction with our service;

- Great confusion about the process and consequences of switching
suppliers;

- A large majority of consumers (more than 70%) will simultaneously
shop and switch if given the opportunity;

- A lack of information about how electricity is supplied and how
competition is possible;

- Reluctance to tackle the complexities of choosing a supplier,
unfamiliar terms, unfamiliar suppliers, complicated rate
structures and offers;

- Approximately 10% of those who switched electricity suppliers in
Pennsylvania's first 90 days of competition used our system to
get their information; and

- Overwhelming support for competition as "a good thing."

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The rate at which consumers become familiar and comfortable with
competition in the electric market will determine when they are willing to
choose a supplier. This may determine when consumers decide to use our system.
At this point, there can be no assurance as to the rate of acceptance of our
service by consumers. Our system has also found supportive audiences among trade
associations, community-based organizations, church groups and similar
associations. It is anticipated that such groups will help create demand for our
service and influence suppliers to participate.

SUPPLIER PARTICIPATION

SUPPLIER AWARENESS. It is our view that virtually every competitive
electricity supplier is aware of Wattage Monitor. In fact, we have been told by
many of them that they routinely use our information system to stay abreast of
competitive conditions in the market. Based on such feedback we believe we are
the dominant and most well known information source of our type in the industry.

In addition to their use of our system to stay current competitively,
most suppliers are aware of us from the generally high level of consumer
acceptance of our system and the press exposure and support it has received.
They also recognize the wide array of other Internet sites which link their
users to us.

Further, we developed our Survey and Research Practice to maintain an
active relationship with competitive suppliers and other industry participants.
Individual research reports on Pennsylvania, New York, New Jersey, Nevada and an
overall look at competition in 1999 have been issued. The Wattage Monitor Survey
and Research Practice gathers information and input from a variety of outside
sources as well as from our own experience. Although initially formed to meet
our need for feedback and market information, these surveys paired with our
consulting services have grown into a sought after source for state specific
information, supplier marketing statistics and government consumer education
feedback. Over 6,000 of our reports have been provided to the companies and
organizations active in the competitive electricity market.

While awareness of Wattage Monitor is widespread throughout the
industry, we have found suppliers reluctant to contract with us for our
services.

SUPPLIER ACCEPTANCE. There are various factors that we believe affect
suppliers' reluctance to participate in our service. Four of the most important
are:

1. MARKET IMMATURITY - When legislation is enacted to create
competition, the details of the market structure and the operating
requirements to be met have generally been left to the Public
Utilities Commission (or like authority). That process, including
hearings and the issuing of additional regulations, is not
complete, even today, for the six states our system currently
supports. All this makes it difficult for suppliers to compete for
customers when the exact rules of engagement are not yet
established. One result is that at year end 1999 less than one in
four companies licensed to compete for customers were offering
programs to specifically gain customers. Many of those suppliers
were simply test marketing their product(s) while waiting for the
parameters of the industry to be defined. In such a fragmented
market environment, the need for our services arises only once
suppliers decide to proceed actively to attract customers.

2. CONSUMER BEHAVIOR - While 100,000,000 households and 15,000,000
businesses use electricity, virtually none has ever chosen its
electricity supplier. Accordingly, there is no confidence as to how
such customers will make those choices. Since our service
represents a novel distribution channel, we are uncertain whether

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suppliers will use us before our system demonstrates its
effectiveness. Most suppliers decided to begin their marketing
efforts using traditional marketing channels only.

3. ORGANIZATIONAL IMMATURITY - Most competing suppliers are newly
created. This start-up nature of the companies in the electricity
market indicates that most were created by their founders to
implement a particular approach to this market. Necessarily, we
were not part of those plans because we did not exist at the time.
Most suppliers concluded they needed to try their originally
adopted approach before they either change directions or add a
second approach, such as Wattage Monitor.

4. WATTAGE MONITOR'S CREDIBILITY - Until we introduced our services in
Pennsylvania, we could demonstrate our system for suppliers but had
no track record and no live consumer experience. Suppliers were
reluctant to contract for our services until we demonstrated our
operational existence. Though the reluctance of suppliers is
dissolving gradually, the marketing of our service has proven more
challenging than originally anticipated. There can be no assurance
that a sufficient number of suppliers can be enrolled to generate
sufficient revenue to allow us to implement our plan.

Supplier participation is gained principally through our direct
marketing efforts which are the responsibility of our direct sales force. In
late February of 2000, the first few suppliers agreed to participate in the
Wattage Monitor system. By the end of that month, four suppliers were working
with us to obtain customers through our system. Each has agreed to compensate us
both for the display of their information and their success in soliciting new
customers via our system. An additional four suppliers had indicated verbally
their desire to similarly participate. Further, approximately twenty additional
suppliers are currently in active conversations with us regarding their direct
participation in our system.

Based on our experience in February 2000 - with four suppliers
agreeing to accept customers through the Wattage Monitor system - we
concluded a number of small changes to the operating characteristics of our
system were necessary to efficiently meet the needs of suppliers. The changes
are expected to take 4-6 weeks, being completed by the end of March 2000.
Additional suppliers who decide to participate in the system and complete the
necessary documentation will be added when these operational changes are
completed and this timing is not expected to have any significant unfavorable
consequence to us.

With the participation of the above noted suppliers, we have
successfully demonstrated we can implement the three criteria we initially
established as the threshold requirements for our success:

1. Creation of the information system itself;

2. Demonstration that consumers will use the service; and

3. Supplier participation.

EMPLOYEES

As of March 1, 2000, we employed 17 people and 20 contract employees to
staff our toll-free telephone service at 1-888-WATTAGE. We believe that our
relations with our employees are good.

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REPORTS TO SECURITY HOLDERS.

We will file reports, proxy statements and other information with the
Securities and Exchange Commission. Such reports (generally Forms 10-QSB, 10-KSB
and 8-K), proxy statements and other information can be inspected and copied, at
the Public Reference Room of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at the Northeast Regional Office of
the Commission located at Seven World Trade Center, Suite 1300, New York, New
York 10048 and at the Midwest Regional Office of the Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms. Our Commission filings will also be available to
the public from the Commission's web site at http://www.sec.gov.

ITEM 2 - DESCRIPTION OF PROPERTY.

We maintain offices in several locations, including:

- San Rafael, California (1999, 2000 annual lease payments of
$9,250, $7,950 respectively) 1348 Fourth Street, Suite 210
San Rafael, CA 94901

- Reno, Nevada (1999, 2000, 2001 annual lease payments of
$28,600, $29,350, $9,850 respectively) 1100 Kietzke Lane
Reno, NV 89502

- Philadelphia, Pennsylvania (month-to-month rental)
3300 Neshaminy Boulevard, Suite 325
Neshaminy Valley, PA 19020

- Washington, D.C. (month-to-month rental)
1401 New York Avenue NW, Suite 600
Washington, DC 20005

Our offices cover an aggregate of approximately 3,500 square feet.
Required annual lease payments are: $37,850 for 1999, $37,300 for 2000 and
$9,850 for 2001. In addition, we have offices provided by our employees in
Boston, Massachusetts; Helena, Montana; Las Vegas, Nevada; and Dallas, Texas. No
additional lease expenses are required under these arrangements with our
employees.

ITEM 3 - LEGAL PROCEEDINGS.

Not applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

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PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock is currently quoted on the OTC Electronic Bulletin
Board under the symbol "WMON." There was no active market for Wattage Monitor's
securities until February 26, 1999. Prior to the reverse acquisition of
WattMonitor LLC by Wattage Monitor, Wattage Monitor was listed on the OTC
Electronic Bulletin Board from February 18, 1999 through February 25, 1999.

The following table sets forth for the periods indicated the high and
low bid price information for the common stock as quoted on the OTC Electronic
Bulletin Board. The quotations reflect inter-dealer prices, without retail
mark-ups, mark-downs or commissions, and may not represent actual transactions.

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Common Stock
High Bid Low Bid
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February 26, 1999 through March 31, 1999................................. $ 7.25 $ 4.00
April 1, 1999 through June 30, 1999...................................... $16.00 $ 5.50
July 1, 1999 through September 30, 1999.................................. $ 6.75 $ 2.40
October 1, 1999 through December 31, 1999................................ $ 4.56 $ 1.03

</TABLE>

On March 1, 2000, the closing bid price as quoted by the OTC Electronic
Bulletin Board for our common stock was $1.69. As of March 1, 2000, there were
66 holders of record of our common stock.

There is no public trading market for any of our preferred stock,
warrants or options.

We have never declared or paid cash dividends on our common stock. We
presently intend to retain any earnings for use in the business and do not
anticipate paying cash dividends in the foreseeable future. Any future cash
dividends will be at the discretion of the board of directors and will depend on
our earnings, financial condition, cash flows, capital requirements and other
considerations that the board of directors may consider relevant.

On January 18, 1999, Wattage Monitor issued 980,000 shares of our
common stock. We raised $9,800 from that offering, which was made under Rule 506
of Regulation D, promulgated under the Securities Act of 1933 as a non-public
offering solely to accredited investors.

On February 5, 1999, Wattage Monitor entered into a Stock Purchase
Agreement in connection with the purchase of 2,750,000 shares of our common
stock. We raised $1,000,000 under the agreement, which was made under Rule 504
of Regulation D, promulgated under the Securities Act of 1933 as a non-public
offering solely to accredited investors.

On February 24, 1999, Wattage Monitor completed an offering of
1,000,000 units, consisting of one share of our Series A preferred stock and
one warrant to purchase our Series B preferred stock at a price of $1.00 per
share. We raised $3,000,000 from that offering, which was made pursuant to
Rule 506 of Regulation D, promulgated under the Securities Act of 1933 a
non-public offering solely to accredited investors. In addition, we received
$3,500,000 from the full exercise of the warrants between September 23, 1999
and November 10, 1999 for a total of $6,500,000. In exchange we issued
Preferred Stock convertible into 3,500,000 shares of common stock for a total
of 4,500,000 shares issued. The weighted average price of the underlying
common stock issued is $1.44 ($6,500,000 divided by 4,500,000).

<PAGE>

On February 26, 1999, we completed a reverse acquisition of WattMonitor
LLC. In connection with the merger, we converted all of the outstanding
membership interests in WattMonitor LLC into an aggregate of 7,550,450 shares of
our common stock. On February 26, 1999, we issued an additional 50,000 shares of
our common stock to Jonathan Cohen, an accredited investor. We received $50,000
as a result of the issuance. In connection with these transactions, we relied on
the statutory exemption provided by Section 4(2) of the Securities Act of 1933,
because the issuances did not involve public offerings. In addition, each
member, other than the controlling members, was entitled to acquire such number
of shares of our common stock at $1.00 per share as necessary to maintain the
same ownership percentage in Wattage Monitor as such members held in WattMonitor
LLC. In connection with this right, between February 26, 1999 and
March 31, 1999, 657,366 shares of our common stock were issued to our existing
shareholders. In connection with these transactions, we relied on the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because these
issuances did not involve public offerings.

In connection with the reverse acquisition, all of our employees
exchanged their contingent membership interests for stock options, exercisable
at $1.00 per share, totaling 918,000 shares of our common stock. In connection
with these transactions, we relied on the statutory exemption provided by
Section 4(2) of the Securities Act of 1933, because these issuances did not
involve public offerings.

On May 29, 1999, Anne Alderson, an employee, exercised 150 options
issued pursuant to our 1999 Incentive Compensation Plan at $1.00 per share. In
connection with this transaction, we relied upon the statutory exemption
provided by Section 4(2) of the Securities Act of 1933, because this issuance
did not involve a public offering.

On July 12, 1999, we issued a warrant to Camhy Karlinsky & Stein LLP
exercisable through July 11, 2009, to purchase 7,000 shares of our common stock
at an exercise price of $6.00 per share. The warrant was exercisable
immediately. In connection with this transaction, we relied upon the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because this
issuance did not involve a public offering.

On September 14, 1999, we issued 4,500 shares of our common stock to
Michael Benzian, one of our employees, as a result of the exercise of an option
to purchase such shares for an aggregate amount of $4,500. In connection with
this transaction we relied on the statutory exemption provided by Section 4(2)
of the Securities Act of 1933, because this issuance did not involve a public
offering.

Between September 23, 1999 and November 10, 1999, Valiant Growth Fund,
Orion Projects Limited, Delta Realty Limited, Bennet Finance Limited, Westin
Machineries Pension S.A. and Liegemen, S.A. exercised their warrants to purchase
an aggregate of 3,500,000 shares of Series B preferred stock for an aggregate
purchase price of $3,500,000. In connection with these transactions, we relied
upon the statutory exemption provided by Section 4(2) of the Securities Act of
1933, because these issuances did not involve public offerings.

Between September 23, 1999 and November 10, 1999, we issued 1,000,000
shares of our common stock upon the automatic conversion of 1,000,000 shares of
our Series A preferred stock, which occurred as a result of the exercise of our
warrants. In connection with this transaction, we relied upon the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because these
issuances did not involve public offerings.

<PAGE>

On October 1, 1999, we issued to ThorGroup Ventures an option to
purchase 40,000 shares of our common stock at an exercise price of $3.00 per
share. Of these options, 10,000 are exercisable immediately. In connection with
this transaction, we relied upon the statutory exemption provided by Section
4(2) of the Securities Act of 1933, because this issuance did not involve a
public offering.

On October 15, 1999, we issued a warrant to BlueGarni & Company,
exercisable through October 14, 2009, to purchase 6,500 shares of our common
stock at an exercise price of $6.00 per share. The warrant is exercisable at any
time. BlueGarni & Company has assisted in the recruitment of our management
personnel. In connection with this transaction, we relied upon the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because this
issuance did not involve a public offering.

Between October 20, 1999 and November 10, 1999, John D. Westfield, an
employee, exercised 9,000 options issued pursuant to our 1999 Incentive
Compensation Plan at $1.00 per share. In connection with this transaction, we
relied upon the statutory exemption provided by Section 4(2) of the Securities
Act of 1933, because this issuance did not involve a public offering.

ITEM 6 - PLAN OF OPERATION.

As of March 1, 2000, we had $2,875,600 of cash in our accounts. At
today's expenditure levels that will carry us through the year 2000, assuming no
revenue. Of course, we expect to begin to generate revenues during that period,
particularly having recently succeeded in getting the first suppliers to accept
customers who identify them as their supplier of choice by using our system.

In 1999, we focussed primarily on the following:

- Developing and refining the software and systems necessary to
support our information service, including the September 1, 1999
launch of our revised system WM v2.0;

- Testing the efficacy of our system and developing the necessary
related capabilities such as our toll free call center
(1-888-WATTAGE); and

- Introducing our service to consumers, electricity suppliers,
regulatory bodies and consumer advocate groups.

During the first six months of 2000, we expect monthly expenditures to
remain consistent with 1999 amounts, $300,000 to $325,000 per month. Current
monthly expenditures are approximately $60,000 for system development, $70,000
for marketing to suppliers, $65,000 to operate our toll free telephone service
and $120,000 for general and administrative expenses. Of these amounts
approximately $40,000, $35,000, $0 (these services are contracted to a third
party) and $40,000, respectively, are for salaries of our employees.

<PAGE>

With the participation of the above noted suppliers, we have
successfully demonstrated we can implement the three criteria we initially
established as the threshold requirements for our success:

1. Creation of the information system itself;

2. Demonstration that consumers will use the service; and

3. Supplier participation.

With a now demonstrated ability to succeed at each of these three we
have shown that the underlying business model will work. The task now becomes to
demonstrate that our business can be scaled to reach the mass necessary to
obtain and sustain profitability. Working toward that goal will dominate our
efforts through the balance of 2000, and may require additional capital and
staff in the second half of 2000 that may drive monthly spending levels above
the $300,000 to $325,000 we expect for the first six months of the year.

Specifically, we expect to focus in 2000 largely on the following:

- Maintaining current information about electric rates and services
in all states with active competition among suppliers.

- Offering Internet access and telephone service through our call
center for the entire year. Neither an increase in staffing nor a
significant purchase of equipment is required to do so.

- Realizing our first revenue from offering our service.

- Continuing to actively solicit supplier participation through our
direct sales force.

- Refining our information system, WM v2.0, to effectively support
the market's evolution and maturation.

<PAGE>

ITEM 7 - FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

BOARD OF DIRECTORS
WATTAGE MONITOR INC.

We have audited the accompanying balance sheet of Wattage Monitor Inc. (a
development stage company) as of December 31, 1999, and the related statements
of operations, stockholders' equity (deficit), and cash flows for the period
from inception (July 1, 1997) through December 31, 1999 and for the years ended
December 31, 1999 and 1998. 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 made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wattage Monitor Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
period from inception (July 1, 1997) through December 31, 1999 and for the years
ended December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.

GRANT THORNTON LLP

Reno, Nevada
February 2, 2000

15
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

December 31, 1999

ASSETS

<TABLE>

<S> <C>
CURRENT ASSETS

Cash and cash equivalents $ 3,556,723
Prepaid expenses 29,656
-----------------
Total current assets 3,586,379
-----------------
PROPERTY AND EQUIPMENT, NET 862,763
-----------------
OTHER ASSETS

Software licenses 26,250
Patents and trademarks 32,233
Deposits 3,533
-----------------
Total other assets 62,016
-----------------
$ 4,511,158
=================
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable $ 429,823
Accrued liabilities 47,036
-----------------
Total current liabilities 476,859
-----------------
COMMITMENTS -
-----------------
STOCKHOLDERS' EQUITY

Preferred stock, Series B, convertible; $0.01 par value,
5,000,000 shares authorized, 3,500,000 shares
issued and outstanding 35,000
Common stock, $0.01 par value, 25,000,000 shares
authorized, 12,546,520 shares issued and
outstanding 125,466
Additional paid-in capital 11,527,574
Deficit accumulated during the development stage (7,653,741)
-----------------
Total stockholders' equity 4,034,299
-----------------
$ 4,511,158
=================
</TABLE>

The accompanying notes are an integral part of these statements.

16
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
CUMULATIVE
FROM INCEPTION
YEAR ENDED DECEMBER 31, (JULY 1, 1997) TO
1998 1999 DECEMBER 31, 1999
------------ ------------ -----------------
<S> <C> <C> <C>
OPERATING EXPENSES

Telecommunications $ 349,246 $ 781,430 $ 1,130,676
System development 442,682 688,412 1,146,405
Marketing 462,464 675,360 1,137,824
General and administrative 797,617 1,362,638 2,323,128
Depreciation and amortization 28,493 164,692 194,244
------------ ------------ ------------

Net loss from operations (2,080,502) (3,672,532) (5,932,277)
------------ ------------ ------------

OTHER INCOME (EXPENSE)

Interest expense (520,389) (1,303,908) (1,824,297)
Interest and dividend income 9,492 107,352 118,152
Loss on disposal of assets -- (15,319) (15,319)
------------ ------------ ------------
(510,897) (1,211,875) (1,721,464)
------------ ------------ ------------

NET LOSS $ (2,591,399) $ (4,884,407) $ (7,653,741)
============ ============ ============

LOSS PER COMMON SHARE $ (0.36) $ (0.45) $ (0.89)
============ ============ ============

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,287,500 10,919,332 8,597,871
============ ============ ============

</TABLE>

The accompanying notes are an integral part of these statements.

17
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
CLASS I CLASS II
MEMBERSHIP UNITS MEMBERSHIP UNITS COMMON STOCK
---------------------- ---------------------- -------------------
UNITS AMOUNT UNITS AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

INCEPTION, JULY 1, 1997 -- $ -- -- $ -- -- $ --
Issuance of membership units 5,000,000 450,000 -- -- -- --
Net loss -- -- -- -- -- --

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

BALANCES, DECEMBER 31, 1997 5,000,000 450,000 -- -- -- --
Issuance of membership units,
net of offering costs -- -- 666,667 949,710 -- --
Beneficial conversion feature on debt -- -- -- -- -- --
Amortization of discount on debt -- -- -- -- -- --
Net loss -- -- -- -- -- --
Recapitalization (5,000,000) (450,000) (666,667) (949,710) 7,500,000 75,000

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

BALANCES, DECEMBER 31, 1998 -- $ -- -- $ -- 7,500,000 $ 75,000

- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

DEFICIT
SERIES A SERIES B ACCUMULATED
PREFERRED STOCK PREFERRED STOCK ADD'L UNAMORTIZED DURING THE
------------------- -------------------- PAID-IN DISCOUNT DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT CAPITAL ON DEBT STAGE TOTAL

- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION, JULY 1, 1997 -- $ -- -- $ -- $ -- $ -- $ -- $ --
Issuance of membership units -- -- -- -- -- -- -- 450,000
Net loss -- -- -- -- -- -- (177,935) (177,935)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1997 -- -- -- -- -- -- (177,935) 272,065
Issuance of membership units,
net of offering costs -- -- -- -- -- -- -- 949,710
Beneficial conversion
feature on debt -- -- -- -- 880,000 (880,000) -- --
Amortization of
discount on debt -- -- -- -- -- 495,000 -- 495,000
Net loss -- -- -- -- -- -- (2,591,399) (2,591,399)
Recapitalization -- -- -- -- 1,324,710 -- -- --

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

BALANCES, DECEMBER 31, 1998 -- $ -- -- $ -- $ 2,204,710 $ (385,000) $(2,769,334) $ (874,624)

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these statements.

18
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

CLASS I CLASS II
MEMBERSHIP UNITS MEMBERSHIP UNITS COMMON STOCK
-------------------- -------------------- -------------------
UNITS AMOUNT UNITS AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sale of common stock -- $ -- -- $ -- 707,366 $ 7,074
Exercise of stock options -- -- -- -- 14,100 141
Conversion of debt to common stock -- -- -- -- 3,075,054 30,751
Acquisition of Wattage Monitor Inc. -
net of offering costs -- -- -- -- 250,000 2,500
Beneficial conversion feature on debt -- -- -- -- -- --
Amortization of discount on debt -- -- -- -- -- --
Exercise of warrants -- -- -- -- -- --
Conversion of preferred stock to common stock -- -- -- -- 1,000,000 10,000
Net loss -- -- -- -- -- --

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

BALANCES, DECEMBER 31, 1999 -- $ -- -- $ -- 12,546,520 $ 125,466

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

DEFICIT
SERIES A SERIES B ACCUMULATED
PREFERRED STOCK PREFERRED STOCK ADD'L UNAMORTIZED DURING THE
------------------- ------------------- PAID-IN DISCOUNT DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT CAPITAL ON DEBT STAGE TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sale of common stock -- $ -- -- $ -- $ 700,292 $ -- $ -- $ 707,366
Exercise of stock options -- -- -- -- 13,959 -- -- 14,100
Conversion of debt to common
stock -- -- -- -- 1,456,829 -- -- 1,487,580
Acquisition of Wattage
Monitor Inc. - net of
offering costs 1,000,000 10,000 -- -- 2,806,784 -- -- 2,819,284
Beneficial conversion
feature on debt -- -- -- -- 880,000 (880,000) -- --
Amortization of
discount on debt -- -- -- -- -- 1,265,000 -- 1,265,000
Exercise of warrants -- -- 3,500,000 35,000 3,465,000 -- -- 3,500,000
Conversion of preferred
stock to common stock (1,000,000) (10,000) -- -- -- -- -- --
Net loss -- -- -- -- -- -- (4,884,407) (4,884,407)

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

BALANCES, DECEMBER 31, 1999 -- $ -- 3,500,000 $35,000 $11,527,574 $ -- $(7,653,741) $ 4,034,299

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

The accompanying notes are an integral part of these statements.

19
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
CUMULATIVE
FROM INCEPTION
YEAR ENDED DECEMBER 31, (JULY 1, 1997) TO
1998 1999 DECEMBER 31, 1999
------------ ------------ -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $(2,591,399) $(4,884,407) $(7,653,741)
----------- ----------- -----------
Adjustments to reconcile net loss to
net cash used in operating activities:
Write off of software license 184,875 -- 184,875
Loss on disposal of assets -- 15,319 15,319
Amortization of discount on debt 495,000 1,265,000 1,760,000
Depreciation and amortization 28,493 164,692 194,244
Changes in:
Prepaid expenses 61,865 (26,270) (29,655)
Other assets (20,258) (12,783) (35,766)
Accounts payable 113,059 75,442 188,501
Accrued liabilities 12,500 34,537 47,037
Accrued interest 25,389 37,191 62,580
----------- ----------- -----------
Total adjustments 900,923 1,553,128 2,387,135
----------- ----------- -----------
Net cash used in operating activities (1,690,476) (3,331,279) (5,266,606)
----------- ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisitions of property and equipment (397,670) (535,106) (1,042,131)
----------- ----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

Deferred offering costs (48,670) 48,670 --
Issuance of membership units 949,710 -- 1,399,710
Issuance of notes payable to related parties 1,229,000 500,000 1,729,000
Acquisition of Wattage Monitor, Inc. -- 2,819,284 2,819,284
Common stock issued -- 707,366 707,366
Series B preferred stock warrants exercised -- 3,500,000 3,500,000
Stock options exercised -- 14,100 14,100
Payments on notes payable to related parties -- (304,000) (304,000)
----------- ----------- -----------
Net cash provided by
financing activities 2,130,040 7,285,420 9,865,460
----------- ----------- -----------

NET INCREASE IN CASH AND
CASH EQUIVALENTS 41,894 3,419,035 3,556,723

Cash and cash equivalents beginning of period 95,794 137,688 --
----------- ----------- -----------

Cash and cash equivalents end of period $ 137,688 $ 3,556,723 $ 3,556,723
=========== =========== ===========

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:

Software license agreement and development
costs included in accounts payable $ 198,161 $ -- $ 373,129
=========== =========== ===========
Notes payable converted to common stock $ -- $ 1,487,580 $ 1,487,580
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

20
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

NOTE A - SUMMARY OF ACCOUNTING POLICIES AND NATURE OF BUSINESS

1. ORGANIZATION AND NATURE OF BUSINESS

The Company was organized by its members on July 1, 1997 in Delaware.
The Company is a development stage enterprise and provides electrical rate
information to commercial and residential consumers nationwide. Revenue is
anticipated to come primarily from referral fees and commissions charged to
electricity suppliers who offer their products and service through the Company.
On February 26, 1999, Wattage Monitor Inc. (a Nevada corporation) acquired all
of the membership units of the Company. For accounting purposes, the acquisition
is treated as a recapitalization with the Company as the acquirer (a reverse
acquisition). Pro forma information is not presented since the acquisition is
not a business combination. The financial statements give retroactive effect to
the conversion of members' equity into common stock to reflect the
recapitalization.

2. CASH EQUIVALENTS

The Company considers all short-term investments with original
maturities of ninety days or less to be cash equivalents.

3. DEPRECIATION AND AMORTIZATION

Depreciation and amortization sufficient to relate the cost of
depreciable assets to operations over their estimated service lives is provided
using the straight-line method of depreciation.

4. SOFTWARE LICENSE AND DEVELOPMENT COSTS

The Company has entered into several software license agreements to
enable customers to access information and order services provided via the
internet. Some of these agreements require the Company to pay an annual
maintenance fee. Additionally, the Company incurs software development costs to
tailor such software to its specific requirements. Such customization costs when
internally incurred or purchased from third parties are capitalized until the
project is substantially complete and ready for its intended use. License and
development costs are amortized straight-line over three years while maintenance
fees are charged to expense ratably over the contract period. Periodically,
management evaluates the estimated useful life of intangible assets based on
projected future undiscounted cash flows.

The Company intends to provide its information services principally
over the internet through both licensed and custom software. Licensee fees paid
were $45,000 and $0 for the years ended December 31, 1998 and 1999,
respectively. In addition, the Company capitalized third party payments for
software customization of $458,000 and $428,000 for the years ended December 31,
1998 and 1999, respectively. The Company capitalized internally incurred
customization costs of $-0- and $56,000 for the years ended December 31, 1998
and 1999, respectively.

21
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE A - SUMMARY OF ACCOUNTING POLICIES AND NATURE OF BUSINESS - (CONTINUED)

4. SOFTWARE LICENSE AND DEVELOPMENT COSTS - Continued

A major portion of the Company's payables at year end 1998 ($183,000)
is to a licensor of software used to operate one portion of the Company's
system. This licensor has also provided significant customization services. A
dispute existed as to whether or not the services provided by this licensor met
the agreed-upon specifications and the terms and conditions of the agreement
between the parties. The Company does not believe the capitalized software
license ($184,475) has any future value and, accordingly, has expensed the
unamortized portion of the licensee fee at December 31, 1998.

The dispute was settled during the year ended December 31, 1999. The
settlement resulted in the licensor of the software relieving approximately
$132,000 due from the Company. The Company reduced its capitalized software
development costs by the $132,000. This settlement had no effect on income for
the year ended December 31, 1999.

5. PATENTS AND TRADEMARKS

The Company has filed for a patent relating to its computer-based
system and methods for collecting and providing information regarding the
electric power industry and available electric supply options. The Company has
also applied for trademarks to limit the use by others of WM, Wattage Monitor,
Kilowatt Monitor and Watt Monitor. Subsequent to year end, the Company received
certificates of registration from the U.S. Patent and Trademark Office for WM.
Patent and trademark expenses will be amortized on the straight-line method over
ten years.

6. ADVERTISING

The Company expenses advertising costs as incurred. Advertising expense
was $67,051 and $108,344 for the years ended December 31, 1998 and 1999,
respectively.

7. USE OF ESTIMATES

In preparing these financial statements in conformity with generally
accepted accounting principles, management is required to make estimates and
assumptions. These affect the carrying value of the Company's assets and
liabilities, revenues and expenses during the reporting period and disclosures
relating to contingent assets and liabilities. Actual results may differ from
these estimates.

8. CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to credit
risk consist primarily of cash and cash equivalents. The Company maintains its
cash in bank deposit accounts which, at times, may exceed federally insured
limits. The Company believes it is not exposed to any significant credit risk
related thereto.

<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE A - SUMMARY OF ACCOUNTING POLICIES AND NATURE OF BUSINESS - (CONTINUED)

9. INCOME TAXES

The Company, through February 26, 1999, was not subject to income tax.
Income was taxed directly to its members. Accordingly, no provision has been
made for federal income tax. Further, because losses incurred have been reported
by the members, no operating losses are available to offset future income.

After February 26, 1999, the Company provides for income taxes based
upon income reported for financial reporting purposes. Certain charges to
earnings will differ as to timing from those deducted for tax purposes. The tax
effect of those differences will be recorded as deferred income taxes. At
December 31, 1999, the Company has a deferred tax asset of $1,072,000 resulting
from a net operating loss for the period February 27, 1999 through December 31,
1999. The Company has provided for a valuation allowance of $1,072,000 at
December 31, 1999.

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Management believes the fair value of financial instruments
approximates their carrying amounts.

11. DEFERRED OFFERING COSTS

Costs associated with the recapitalization are deferred to the period
in which the recapitalization occurs.

12. DISCOUNT ON DEBT

Costs incurred in connection with the issuance of debt are amortized
over the expected life of the debt. The beneficial conversion feature has been
accounted for as additional paid-in capital and associated unamortized discount
on debt recorded as a component of stockholders' equity.

13. LOSS PER SHARE

Loss per common share is computed based upon the weighted average
shares outstanding giving retroactive effect of common shares issued to members
of Watt Monitor LLC upon completion of the recapitalization. Convertible equity
instruments are not considered in the calculation of net loss per share as their
inclusion would be antidilutive at December 31, 1998 and 1999.

<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE B - RELATED PARTY TRANSACTIONS

The Company leased its office space in San Francisco through October
1998 from a company in which the President is a director and has a financial
interest. The total rent expense was $19,750 for the year ended December 31,
1998.

For the years ended December 31, 1998 and 1999, the Company paid
approximately $132,000 and $0 for software development to Kirschenbaum, Bond &
Partners, the principals of which have a financial interest in the Company, and
one partner is a director of the Company.

The Company also purchased approximately $112,000 and $14,800 of
equipment from Kirschenbaum, Bond & Partners during the years ended December 31,
1998 and 1999. The Company paid Kirschenbaum, Bond & Partners $5,600 and
$104,000 for advertising for the years ended December 31, 1998 and 1999,
respectively.

The Company purchased office equipment for approximately $13,000 and $0
from a company in which the President is a director and has a financial interest
during the years ended December 31, 1998 and 1999.

NOTE C - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1999 LIVES
------------------- -------------
<S> <C> <C>
Furniture and equipment $ 136,210 5-7 years
Software 892,391 3 years
-------------------
1,028,601

Less accumulated depreciation
and amortization (165,838)
-------------------

$ 862,763
===================

</TABLE>

<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE D - STOCKHOLDERS' EQUITY (DEFICIT)

The Company had two classes of membership interests. There were
10,000,000 authorized units of Class I membership interests, of which 5,000,000
units were outstanding as of both December 31, 1997 and 1998. There were
10,000,000 authorized units of Class II membership interests. No units were
outstanding as of December 31, 1997, and 666,667 were outstanding at December
31, 1998.

In January 1999, Watt Monitor LLC sold 37,777 membership units.

On February 26, 1999, Wattage Monitor Inc. (a Nevada corporation)
acquired all of the equity (membership units) of the Company. For accounting
purposes, the acquisition is treated as a recapitalization with the Company as
the acquirer (a reverse acquisition). Pro forma information is not presented
since the acquisition is not a business combination. The members exchanged their
membership units for 7,550,450 shares of common stock (approximately 72% of the
outstanding common stock) of Wattage Monitor Inc. In addition, each member,
other than the controlling members, was entitled to acquire such number of
shares of common stock at $1.00 per share as necessary to maintain the same
ownership percentage in Wattage Monitor Inc. as such member held in the Company.
In connection with this right, 657,366 shares were issued. Also, in connection
with the recapitalization, all employees exchanged their contingent membership
interests for stock options to purchase 918,000 shares of Wattage Monitor Inc.
exercisable at $1.00 per share.

Certain stockholders of Wattage Monitor Inc. advanced approximately
$500,000 in January 1999, which, along with $500,000 advanced in 1998, were
converted into 2,750,000 shares of common stock in 1999. In October 1999, notes
payable and accrued interest of $487,580 were converted to 325,054 shares of
common stock.

In connection with its recapitalization, Wattage Monitor Inc. issued
1,000,000 shares of Series A 6% Convertible Preferred Stock for $3,000,000. The
Series A 6% Preferred Stock accrues dividends at 6% per annum, payable annually,
commencing on February 26, 2000. The dividend at the option of the Company may
be paid in common stock. Each share of Series A 6% Preferred Stock is
convertible into one share of common stock. Such shares convert: (1) upon the
exercise of the warrant to purchase Series B Preferred Stock; (2) upon Wattage
Monitor Inc. raising $5,000,000 in an offering of common stock at $1.00 per
share or greater; or (3) at the option of the holder. In connection with the
issuance of the Series A 6% Preferred Stock, each purchaser received one Series
B warrant to purchase 3.5 shares of Series B Preferred Stock at $1.00 per share
exercisable 181 days after closing through December 15, 1999 or within 30 days
of a notice of a sale of at least $7,000,000 in equity securities of Wattage
Monitor Inc. for each share of Series A 6% Preferred Stock purchase.

During the year ended December 31, 1999, 1,000,000 Series B warrants
were exercised to purchase 3,500,000 shares of Series B Convertible Preferred
Stock at $1.00 per share. Each share of Series B Preferred Stock is convertible
into one share of common stock. Upon exercise of the warrants the Series A
Convertible Preferred Stock was converted to 1,000,000 shares of common stock.

25
<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE D - STOCKHOLDERS' EQUITY (DEFICIT) - (CONTINUED)

In the event of liquidation, the Series A and B Preferred stock ranks
senior to all of the common stock. The preferred stockholders shall be entitled
to receive an amount equal to the sum of the original issue price and any
accrued but unpaid dividends.

In connection with the merger, a warrant was issued to the holder of
250,000 shares of preferred stock which represents the right to purchase 100,000
shares of common stock at $1.00 per share. Also, warrants to purchase 449,999
shares of common stock at $1.50 per share are outstanding. These warrants were
issued in connection with notes payable to related parties which were repaid
during the year ended December 31, 1999.

NOTE E - CONTINGENT MEMBERSHIP INTERESTS/STOCK OPTIONS

Contingent membership interests in an LLC are similar to stock options
in a corporation. Pursuant to a formal plan, the Board granted various employees
and other individuals contributing to the success of the organization,
contingent membership interests. In conjunction with the reverse acquisition of
Wattage Monitor Inc., all such contingent membership interests were exchanged
for stock options under Wattage Monitor Inc.'s incentive stock option plan. The
plan allows for 1,500,000 shares of common stock to be granted. In the three
months prior to the reverse acquisition, Wattage Monitor issued employee stock
options totaling 370,000 exercisable at $1.00 per share. Compensation expense
related thereto is immaterial.

The Company has adopted the disclosure-only provisions of SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, but applies Accounting Principles Board
Opinion No. 25 and related interpretations in accounting for stock options.

The fair value of the Company's stock options was estimated as of the
grant date using the Black-Scholes option pricing model with the following
weighted average assumptions for the years ended December 31, 1998 and 1999:
dividend yield of 0.0%, expected volatility of 0.0% and 150%, risk free interest
rate of 4.91% and 6%, respectively, and an expected holding period from three to
four years. Based on these assumptions, compensation expense was immaterial for
the years ended December 31, 1998 and 1999.

<PAGE>

WATTAGE MONITOR INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE E - CONTINGENT MEMBERSHIP INTERESTS/STOCK OPTIONS - (CONTINUED)

Presented below is a summary of the status of the stock options after
giving retroactive effect to the recapitalization.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
PRICE
--------------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1997 225,000 1.00
Granted 621,300 1.00
Forfeited/expired (450) 1.00
BALANCE AT DECEMBER 31, 1998 845,850 1.00
Granted 214,600 3.49
Forfeited/expired (66,200) 1.10
Exercised (14,100) 1.00
-------------

BALANCE AT DECEMBER 31, 1999 980,150
=============

</TABLE>

<TABLE>
<CAPTION>
WEIGHTED
RANGE OF AVERAGE
EXERCISE OPTIONS CONTRACTUAL OPTIONS
PRICES OUTSTANDING LIFE EXERCISABLE
---------------- ------------------ --------------- -------------------
<S> <C> <C> <C> <C>
December 31, 1999 $1.00 826,550 8.56 229,517
==== ======= ==== =========
$2.13-2.88 4,600 9.95 -0-
========= ======== ==== =========
$3.13-3.78 55,000 9.77 10,000
========= ======== ==== =========
$4.50 60,000 9.76 60,000
==== ======== ==== =========
$6.13 - 7.87 34,000 9.24 -0-
============ ======== ==== =========

</TABLE>

NOTE F - EMPLOYEE BENEFIT PLANS

The Company adopted a 401(k) retirement plan (the "plan") effective
January 1, 1998, which provides for employee salary deferrals limited to 25% of
a participant's compensation and discretionary Company contributions. The plan
year ends on December 31st. The plan covers employees who have completed one
month of service and have attained the minimum age requirement, as defined in
the plan. The Company made no contributions in the year ended December 31, 1998
and 1999.

<PAGE>

WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE G - LEASE COMMITMENTS

The Company leases its office space and certain computer equipment
under operating leases, which expire through 2002. The Company has options to
extend the leases for additional lease periods. The leases require monthly
rental payments totaling approximately $13,916. Total rent expense for the years
ended December 31, 1998 and 1999 was $52,700 and $91,893, respectively.

The following is a schedule of the future minimum lease payments under
the operating leases, as of December 31, 1999:

<TABLE>
<S> <C>
Year ending December 31,
2000 $119,824
2001 89,087
2002 20,339
-------------

Net minimum lease payments $229,250
=============
</TABLE>

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

<PAGE>

PART III

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following table sets forth certain information with respect to our
directors and executive officers as of December 31, 1999:

<TABLE>
<CAPTION>
NAME AGE COMPANY POSITION AND OFFICES HELD
------------------- --- -----------------------------------------------
<S> <C> <C>
Stephen D. Klein 40 Chairman of the Board of Directors
Gerald R. Alderson 53 President, Chief Executive Officer and Director
Joel Dumaresq 35 Director
Alexander Ellis III 49 Vice President - Marketing and Director
Ajmal Khan 38 Director
Daniel I. DeWolf 42 Secretary
Robert E. Forrest 31 Vice President - Operations
John D. Westfield 37 Vice President - Technology
</TABLE>

STEPHEN D. KLEIN, age 40, is the Chairman of the Board and a founder of
Wattage Monitor. He is not an employee. Since 1990, he has been a Managing
Partner and Director of Media and Interactive Services of Kirshenbaum Bond &
Partners, one of the country's most successful independent advertising agencies.
Mr. Klein is one of the advertising industry's pioneers in the integration of
Internet media into brand-building marketing efforts. Mr. Klein has a B.A. in
English from Columbia University.

GERALD R. ALDERSON, age 53, is a founder and President of Wattage
Monitor. Between 1982 and the founding of Wattage Monitor in mid-1997, Mr.
Alderson held a variety of positions with Kenetech Corporation, including as its
President and Chief Executive Officer. He received his B.A. from Occidental
College and his M.B.A. from Harvard University Graduate School of Business
Administration.

JOEL DUMARESQ, age 35, is a director of Wattage Monitor. Mr. Dumaresq
is an experienced business executive and investment banking specialist. Since
1996, Mr. Dumaresq has acted as an independent investor and currently sits on
the Board of Directors of a number of public and private companies. Since 1996,
Mr. Dumaresq has also served as a Vice President of Verus Capital Corp. From
1994 to 1996, Mr. Dumaresq was President and Chief Executive Officer of Westair
Aviation Inc., a full service, regional airline, and has served in various roles
for a large investment banking firm. From 1987 to 1994, Mr. Dumaresq served as
an institutional equity account representative with RDC Dominion Securities.

ALEXANDER ELLIS III, age 49, has served as Vice President - Marketing
for Wattage Monitor since its founding. Since 1990, Mr. Ellis held a number of
management positions at Kenetech Corporation, including as its Vice President -
Marketing. Between 1989 and 1990, he was Vice President Corporate Accounts at
Knoll International, Inc. Mr. Ellis received his B.A. from Colorado College and
his Masters in Public and Private Management from Yale School of Organization &
Management.

AJMAL KHAN, age 38, is a director of Wattage Monitor. In 1987 Mr. Khan
founded, and became the President of, Verus Capital Corp., a diversified
investment group. Verus is involved in the ownership of hotels; venture capital
financing; corporate acquisitions; and several joint ventures entailing name
brand franchising and licensing. Mr. Khan also has a joint venture interest in

<PAGE>

Barakaat Holdings Ltd., a sports marketing company. Since October of 1998, he
has also served as a director of Advanced Bodymetrics, Inc., a publicly
traded high-tech company dedicated to developing sports wristwatches that are
able to monitor and display various functions of the human body. Since July
of 1998, Mr. Khan has served as a director of iParty Corp., a publicly-traded
company dedicated to providing information and services with respect to
coordinating events.

DANIEL I. DEWOLF, age 42, is Secretary of Wattage Monitor. Since
January 2000, Mr. DeWolf has served as Director of the Venture Capital Group of
Wit Capital Corporation. From 1994 to January 2000, Mr. DeWolf was an attorney
with Camhy Karlinsky & Stein LLP where he established and headed the Firm's New
Media and E-Law Group. From 1998 to January 2000, Mr. DeWolf also served as a
Managing Director of Dawntreader Fund I LP, a venture capital fund. Mr. DeWolf
is a graduate of the University of Pennsylvania (cum laude) and the University
of Pennsylvania School of Law.

ROBERT E. FORREST, age 31, has served as Vice President - Operations
for Wattage Monitor since March of 1998. Between May 1993 and his joining
Wattage Monitor, Mr. Forrest held a variety of finance positions, including cost
control and system development, principally in the food products industry. Since
October 1995, in his most recent position, Mr. Forrest was the finance lead for
all United States trade agreement negotiations for Burns Philp, Inc., a global
food company. Mr. Forrest received his B.A. from the University of California at
Los Angeles (magna cum laude).

JOHN D. WESTFIELD, age 37, has served as Vice President - Technology
for Wattage Monitor since April of 1998. Between December, 1996 and April, 1998,
Mr. Westfield was a Director of Special Programs for Computer Sciences
Corporation. Between April, 1989 and November, 1996, he held a variety of
management and information technology positions with American Airlines including
responsibility for the design of the SABRE reservation system's internet
interface. Mr. Westfield holds both a Bachelor's and Master's degree from The
University of Texas, at Austin.

All directors hold office until the next annual meeting of shareholders
and until their successors are duly elected and qualified. All directors have
held office since the Company's merger with WattMonitor LLC on February 26,
1999. Officers are elected on an annual basis by the Board of Directors and
serve at the discretion of the Board.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.

During the last five years, none of the directors, executive officers
or control persons of Wattage Monitor have been:

- A party to a bankruptcy proceeding;

- Convicted in a criminal proceeding;

- Subject to any order, judgment or decree permanently or
temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking
activities; or

- Found to have violated a federal or state securities or
commodities law.

<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT.

Section 16 of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and beneficial owners of more than
10% of any class of the Company's registered equity securities to file with
the Securities and Exchange Commission initial reports of beneficial
ownership (Form 3) and reports of changes in beneficial ownership (Forms 4
and 5) of the Company's common stock and other equity securities of the
Company. Officers, directors and greater than 10% beneficial owners are
required by Securities and Exchange Commission regulation to furnish the
Company with copies of all Section 16(a) reports they file.

To the Company's knowledge, all directors, officers and beneficial
owners of more than 10% of any class of the Company's registered equity
securities, filed all reports required of Section 16(a) of the Securities
Exchange Act of 1934 during the fiscal year ending December 31, 1999.

ITEM 10 - EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE.

The following table sets forth all compensation awarded to our Chief
Executive Officer, all of our executive officers who received compensation in
excess of $100,000 for the fiscal year ended December 31, 1999:

<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation Awards
Name and Principal Position Year Salary Securities Underlying Options
-------------------------------------- ---- ------ -----------------------------
<S> <C> <C> <C>
Gerald R. Alderson.................... 1999 $ 150,000 10,000
President, Chief Executive 1998 $ 137,500 ---
Officer and Director

Alexander Ellis, III.................. 1999 $ 125,000 10,000
Vice President - Marketing 1998 $ 125,000 75,000
1997 $ 62,500 225,000

John D. Westfield..................... 1999 $ 195,000 ---
Vice President - Technology 1998 $ 136,500 125,000
</TABLE>

<PAGE>

OPTION GRANTS IN 1999.

Set forth below is information on grants of stock options for our
executive officers for the fiscal year ended December 31, 1999.

<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------
Number of % of Total
Securities Options Granted
Underlying to Employees Exercise Expiration
Name Options Granted in 1999 Price per Share Date
------------------------------- --------------- ------- --------------- ----
<S> <C> <C> <C> <C>
Gerald R. Alderson (1)
Granted Sept. 1999......... 10,000 8% $ 4.50 10/1/09
Alexander Ellis, III (1)
Granted Sept. 1999......... 10,000 8% $ 4.50 10/1/09
</TABLE>

(1) Options were granted on September 30, 1999 and were fully exercisable
on October 1, 1999.

AGGREGATED OPTION EXERCISES IN 1999 AND YEAR END OPTION VALUES.

Set forth below is information with respect to the stock options held
by our executive officers at December 31, 1999.

<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Shares Unexercised Options In-The-Money Options
Acquired Value at December 31, 1999 at December 31, 1999
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable (1)
- --------- ----------- -------- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerald R. Alderson......... --- --- 10,000 / 0 $ 0 / $ 0

Alexander Ellis, III....... --- --- 160,000 / 150,000 $ 121,500 / $ 121,500

John D. Westfield.......... 9,000 $ 20,445 16,000 / 100,000 $ 12,960 / $ 81,000
</TABLE>

(1) Calculated on a per share value of $1.81 per share at December 31, 1999
vs. an exercise price of $1.00 per share.

DIRECTOR COMPENSATION.

Compensation of directors consists solely of reimbursement of their
expenses for attending meetings. Additionally, each director receives
immediately exercisable stock options to purchase 10,000 shares of our common
stock on the date of the annual meeting of our shareholders except that in 1999
the grant occurred on September 30, 1999.

<PAGE>

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.

On January 1, 1998, WattMonitor LLC, as our predecessor, entered into
an Employment Agreement with Mr. Alderson. On February 26, 1999, we assumed Mr.
Alderson's employment agreement. Mr. Alderson's initial employment term expires
on December 31, 2000, but will be automatically renewed for an unlimited series
of one-year periods unless either party notifies the other.

Mr. Alderson currently receives a base salary of $150,000 per year,
which is subject to an annual adjustment at the discretion of our board of
directors. Under the terms of the agreement, Mr. Alderson is eligible to receive
a bonus for services rendered, subject to the discretion of our board of
directors. In the event we terminate Mr. Alderson's employment for any reason
other than "for cause", then Mr. Alderson will be entitled to receive a lump sum
termination payment equal to two years' base salary.

In the event we experience a change in control and Mr. Alderson
resigns, or is terminated, within six months of the change in control Mr.
Alderson will be entitled to receive two years base salary, payable in one lump
sum. He will also be entitled to receive a payment equal to the greater of his
bonuses for the three years prior to the termination or eighteen months base
salary. In no event will this termination payment exceed 2.99 times Mr.
Alderson's average annual cash compensation during the five years prior to his
termination.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information regarding beneficial
ownership of our common stock as of March 1, 2000 as follows:

- By each person who is known by Wattage Monitor to beneficially own
more than 5% of Wattage Monitor's common stock, fully diluted;

- By each of Wattage Monitor's directors;

- By each officer named under "Directors, Executive Officers,
Promoters and Control Persons"; and

- By all officers and directors as a group.

Beneficial ownership is determined in accordance with the rules
promulgated by the SEC and the information is not necessarily indicative of
beneficial ownership for any other purpose. This table is based upon information
supplied to us by officers, directors and principal stockholders. Except as
otherwise indicated, we believe that the persons or entities named in the table
have sole voting power with respect to all shares of our common stock shown as
beneficially owned by them, subject to community property laws where applicable.

The table should be read in conjunction with the information that
follows it. The percentages set forth in the table assume 13,421,520 shares of
common stock outstanding as of March 1, 2000.

Mr. Lessin's beneficial ownership column includes 564,706 shares of
common stock beneficially owned through RHL Ventures LLC, warrants (exercisable
at any time) to purchase an aggregate of 383,333 shares of common stock
beneficially owned through RHL Ventures LLC, and 2,541,963 shares of common
stock owned directly.

<PAGE>

The aggregate beneficial ownership of Salomon Smith Barney Inc.,
Salomon Brothers Holding Company Inc., Salomon Smith Barney Holdings Inc., and
Citigroup Inc. (identified in the table below as Salomon Smith Barney/Citigroup)
of 2,217,409 shares of the Company's common stock is evidenced by the filing of
a Schedule 13(g) on November 30, 1999. We are relying solely on that filing for
the purposes of this table.

Mr. Alderson's and Mr. Klein's beneficial ownership columns include
warrants (exercisable at any time) to purchase an aggregate of 66,666 shares of
common stock beneficially owned.

The aggregate amount for Mr. Dumaresq and Mr. Khan includes shares
beneficially owned by Verus Capital Corp. which includes warrants (exercisable
at any time) to purchase 100,000 shares of common stock from Valiant Growth
Fund, options to purchase 50,000 shares of common stock and options to purchase
250,000 shares of common stock underlying our Series B preferred stock. Mr.
Dumaresq and Mr. Khan have the right to acquire 30% and 70% respectively, of the
options or the underlying shares. Mr. Dumaresq and Mr. Khan each disclaim
beneficial ownership of such shares.

The numbers in Mr. Ellis', and Mr. Westfield's beneficial ownership
columns represent options to purchase an aggregate of 191,000 shares of common
stock, which are immediately exercisable. The numbers do not include options to
purchase an additional 450,000 shares of common stock, which are not currently
exercisable.

Mr. DeWolf is married to Pamela Ehrenkranz DeWolf, who owns 12,500
shares of common stock. Mr. DeWolf disclaims beneficial ownership of his wife's
shares.

The aggregate amounts for Mr. Alderson, Mr. Klein, Mr. Khan, Mr. Ellis
and Mr. Dumaresq, and Mr. DeWolf each include 10,000 options to purchase an
aggregate of 60,000 shares of our common stock, granted to them. The options are
exercisable immediately.

<TABLE>
<CAPTION>
Number of Shares of
Common Stock Percentage of
Name and Address of Beneficial Owner Beneficially Owned Beneficial Ownership
------------------------------------ ------------------- --------------------
<S> <C> <C>
Robert H. Lessin 3,490,002 25.3%
c/o Wit Capital
826 Broadway, 6th Floor
New York, NY 10003

Salomon Smith Barney/Citigroup 2,217,409 16.5%

Gerald R. Alderson 1,713,243 12.7%
c/o Wattage Monitor
1100 Kietzke Lane
Reno, NV 89502

Stephen D. Klein 1,313,920 9.8%
c/o Kirshenbaum Bond & Partners
145 6th Avenue
New York, NY 10013
</TABLE>

<PAGE>

Alexander Ellis, III 160,000 1.2%

Joel Dumaresq 130,000 1.0%

Daniel I. DeWolf 22,500 *

John D. Westfield 16,000 *

All Officers and Directors (7 persons) 3,645,663 25.9%
</TABLE>
* Less than one percent (1.0%)

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On August 14, 1998, RHL Ventures LLC loaned us $425,000. The loan is
evidenced by a promissory note for $425,000, bearing interest at 12% per annum.
The principal balance of the note, plus accrued interest of $62,581 was
converted into 325,054 shares of our common stock, at an exercise price of $1.50
per share, on October 29, 1999. On August 14, 1998, we also issued a warrant to
RHL Ventures exercisable through August 1, 2005, to purchase 283,333 shares of
our common stock at an exercise price of $1.50 per share. The warrant is
exercisable immediately but has not yet been exercised. RHL Ventures is one of
our shareholders. Mr. Lessin, one of our shareholders, is the President and
Chief Executive Officer of RHL Ventures.

Between October 7, 1998 and January 18, 1999, Verus Capital Corp., on
behalf of investors, advanced us an aggregate of $1,000,000. The right to this
advance was subsequently assigned by the investors to Wattage Monitor Inc. prior
to our merger in exchange for 2,750,000 shares of common stock. Upon the merger
of Wattage Monitor Inc. and WattMonitor LLC, the advance became a payable to
ourselves and was canceled. Mr. Khan is the President of Verus and one of our
directors.

On December 29, 1998, RHL Ventures loaned us $150,000, with interest at
12% per annum. The note was repaid in February of 1999. On December 29, 1998, we
also issued a warrant to RHL Ventures exercisable through December 29, 2005, to
purchase 100,000 shares of our common stock at an exercise price of $1.50 per
share. The warrant was exercisable immediately. Mr. Lessin, one of our
shareholders, is the President and Chief Executive Officer of RHL Ventures.

On December 29, 1998, Gerald R. Alderson loaned us $50,000, with
interest at 12% per annum. The note was repaid in March of 1999. On December 29,
1998, we also issued a warrant to Mr. Alderson exercisable through December 29,
2005, to purchase 33,333 shares of our common stock at an exercise price of
$1.50 per share. The warrant was exercisable immediately. Mr. Alderson is our
President and Chief Executive Officer, as well as one of our directors.

On December 29, 1998, Stephen D. Klein loaned us $50,000, with interest
at 12% per annum. The note was repaid in February of 1999. On December 29, 1998,
we also issued a warrant to Mr. Klein exercisable through December 29, 2005, to
purchase 33,333 shares of our common stock at an exercise

<PAGE>

price of $1.50 per share. The warrant was exercisable immediately. Mr. Klein
is the Chairman of our Board of Directors and a shareholder.

For the period ended December 31, 1998, we paid approximately $132,000
for software development to Kirshenbaum Bond & Partners. During the same period,
we also purchased approximately $112,000 of equipment from Kirshenbaum. Stephen
D. Klein, a partner of Kirshenbaum, is one of our directors.

ITEM 13 - EXHIBITS, LIST AND REPORTS ON FORM 8-K.

(a) 1. Financial Statements - See Financial Statements included herein.

2. Financial Statement Schedules - Not Applicable.

3. Exhibits - Incorporated by reference to the Exhibit Index at the
end of this Report.

(b) Reports on Form 8-K - None.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 15, 2000.

WATTAGE MONITOR INC.

By: /s/ Gerald R. Alderson
----------------------
Gerald R. Alderson
President, Chief Executive Officer and
Principal Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ Gerald R. Alderson March 15, 2000
-----------------------------
Gerald R. Alderson, Director, President,
Chief Executive Officer and
Principal Financial Officer

/s/ Joel Dumaresq March 15, 2000
-----------------------------
Joel Dumaresq, Director

/s/ Alexander Ellis III March 15, 2000
-----------------------------
Alexander Ellis III, Director

<PAGE>

EXHIBIT INDEX

EXHIBIT
NO. DESCRIPTION PAGE
------- ----------------
2.1* Agreement and Plan of Merger by and between WattMonitor LLC and
Wattage Monitor, dated as of February 26, 1999 (filed without
exhibits or schedules) (filed as Exhibit 2.1 to Amendment No. 4
to Form SB-2 Registration Statement, filed October 13, 1999).

3.1* Amended and Restated Articles of Incorporation of Wattage Monitor
as filed with the Secretary of State of the State of Nevada on
February 24, 1999 (filed as Exhibit 3.1 to Amendment No. 4 to Form
SB-2 Registration Statement, filed October 13, 1999).

3.2* Amended and Restated By-Laws of Wattage Monitor, adopted as of
February 19, 1999 (filed as Exhibit 3.2 to Amendment No. 4 to Form
SB-2 Registration Statement, filed October 13, 1999).

4.1* Specimen Common Stock certificate (filed as Exhibit 4.1 to
Amendment No. 4 to Form SB-2 Registration Statement, filed
October 13, 1999).

4.2* Certificate of Designation of Series A Preferred Stock, as filed
with the Secretary of State of the State of Nevada on February 24,
1999 (filed as Exhibit 4.2 to Amendment No. 4 to Form SB-2
Registration Statement, filed October 13, 1999).

4.3* Certificate of Amendment of Certificate of Designation of Series A
Preferred Stock, as filed with the Secretary of State of the State
of Nevada on February 26, 1999 (filed as Exhibit 4.3 to Amendment
No. 4 to Form SB-2 Registration Statement, filed October 13,
1999).

4.4* Certificate of Designation of Series B Preferred Stock, as filed
with the Secretary of State of the State of Nevada on September 9,
1999 (filed as Exhibit 4.4. to Amendment No. 4 to Form SB-2
Registration Statement, filed October 13, 1999).

10.1* Stock Purchase Agreement by and among Knowledge Networks
Acquisitions, Inc., Intrepid International S.A. and Certain
Purchasers, dated February 5, 1999 (filed as Exhibit 10.1 to
Amendment No. 4 to Form SB-2 Registration Statement, filed October
13, 1999).

10.2* Registration Rights Agreement by and among Wattage Monitor and
Certain Shareholders, dated as of February 26, 1999 (filed as
Exhibit 10.3 to Amendment No. 4 to Form SB-2 Registration
Statement, filed October 13, 1999).

10.3* Employment Agreement by and between WattMonitor LLC and Gerald R.
Alderson, dated January 1, 1998, as assumed by Wattage Monitor on
February 26, 1999 (filed as Exhibit 10.4 to Amendment No. 4 to
Form SB-2 Registration Statement, filed October 13, 1999).

10.4* Warrant to Stephen D. Klein to purchase 33,333 Class II Membership
Units of WattMonitor LLC, dated December 29, 1998 (filed as
Exhibit 10.5 to Amendment No. 4 to Form SB-2 Registration
Statement, filed October 13, 1999).

10.5* Warrant to RHL Ventures LLC to purchase 100,000 Class II
Membership Units of WattMonitor LLC, dated December 29, 1998
(filed as Exhibit 10.6 to Amendment No. 4 to Form SB-2
Registration Statement, filed October 13, 1999).

<PAGE>

10.6* Warrant to Gerald R. Alderson to purchase 33,333 Class II
Membership Units of WattMonitor LLC, dated December 29, 1998
(filed as Exhibit 10.7 to Amendment No. 4 to Form SB-2
Registration Statement, filed October 13, 1999).

10.7* Warrant to RHL Ventures LLC to purchase 283,333 Class II
Membership Units of WattMonitor LLC, dated August 14, 1998 (filed
as Exhibit 10.8 to Amendment No. 4 to Form SB-2 Registration
Statement, filed October 13, 1999).

10.8* Form of Lock-Up Agreement, executed by Gerald R. Alderson, Stephen
D. Klein, Robert H. Lessin and RHL Ventures LLC (filed as Exhibit
10.9 to Amendment No. 4 to Form SB-2 Registration Statement, filed
October 13, 1999).

10.9* Wattage Monitor 1999 Incentive Compensation Plan (filed as Exhibit
10.10 to Amendment No. 4 to Form SB-2 Registration Statement,
filed October 13, 1999).

27 Financial Data Schedule.
- ------------------------------

* Exhibits designated with an asterisk (*) have previously been
filed with the Commission and are incorporated herein by reference
to the document referenced in parentheticals following the
descriptions of such exhibits.

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DECEMBER 31,
1999 ANNUAL REPORT ON FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
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