3DSHOPPING COM, 424B4, 1999-07-21

3DSHOPPING COM
424B4, 1999-07-21
BUSINESS SERVICES, NEC

Previous: FT360, S-6, 1999-07-21

Next: GAMNA SERIES FUNDS INC, N-1A/A, 1999-07-21

<PAGE>
Rule 424(b)4
Registration No. 333-74795
Registration No. 333-83295

1,100,000 UNITS

EACH CONSISTING OF ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE WARRANT TO PURCHASE ONE SHARE OF COMMON STOCK

[LOGO]

We are offering units consisting of a share of common stock and a warrant to
purchase an additional share of common stock. The common stock and warrants will
trade as separate securities immediately after this offering. For a description
of the terms of the warrants, see "Prospectus Summary--The Offering--Warrants"
on page 6.

Our common stock is listed on the NASD OTC Bulletin Board under the symbol
"PGRX". On July 19, 1999, the closing bid price of the common stock was $13.13
per share. We have applied to list our common stock and warrants under the
symbols THD and THDW, respectively, on the American Stock Exchange after this
offering. We will price the units through negotiations with Paulson Investment
Company, Inc., but we expect that the units will be priced at or below the
market price of the common stock at the time of pricing.

INVESTING IN THE UNITS INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
9.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PER UNIT TOTAL
----------- -------------
<S> <C> <C>
Initial public offering price............................................................ $ 12.00 $ 13,200,000
Underwriting discounts and commissions................................................... $ 0.90 $ 990,000
Proceeds to 3Dshopping.com............................................................... $ 11.10 $ 12,210,000
</TABLE>

We expect total cash expenses to be approximately $725,000, which will
include a nonaccountable expense allowance of 2% of the gross proceeds of this
offering that will be paid to Paulson Investment Company, Inc., the managing
underwriter of this offering. We have granted to the underwriters a 45-day
option to purchase up to 165,000 additional units to cover over-allotments and
will grant to the underwriters a five-year warrant to purchase up to 110,000
additional units.

Paulson Investment Company, Inc. expects to deliver the units on or about
July 23, 1999 if payment is received.

PAULSON INVESTMENT COMPANY, INC.

July 20, 1999
<PAGE>
[ART]

Our home page (top) provides information about our company and is the starting
point for the 3Dshopping experience. Visitors to our Web site can choose between
a fast and slow Internet connection depending on the speed of modem they use
(bottom left). Shoppers can navigate to our customers' Web sites by clicking on
a product category that interests them (bottom right).
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary......................................................................................... 3
Risk Factors............................................................................................... 9
Use of Proceeds............................................................................................ 18
Price Range of the Common Stock............................................................................ 19
Dividend Policy............................................................................................ 19
Capitalization............................................................................................. 20
Dilution................................................................................................... 21
Selected Financial Data.................................................................................... 22
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 24
Business................................................................................................... 29
Management................................................................................................. 36
Principal Shareholders..................................................................................... 40
Description of Securities.................................................................................. 41
Shares Eligible for Future Sale............................................................................ 45
Underwriting............................................................................................... 47
Legal Matters.............................................................................................. 50
Experts.................................................................................................... 50
Additional Information..................................................................................... 51
Index to Financial Statements.............................................................................. F-1
</TABLE>

Information contained at any of the Web sites maintained by 3Dshopping.com
does not constitute a part of this prospectus.

3Dshopping.com is a trademark we have applied to register with the United
States Patent and Trademark Office. This prospectus also contains trademarks and
tradenames of other companies.
<PAGE>
PROSPECTUS SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY AND THE MORE DETAILED INFORMATION
ABOUT US AND THE UNITS AND OUR FINANCIAL STATEMENTS AND NOTES APPEARING
ELSEWHERE IN THIS PROSPECTUS. EXCEPT WHERE WE HAVE SPECIFICALLY INCLUDED OTHER
INFORMATION, THE INFORMATION IN THIS PROSPECTUS ABOUT SHARES OF COMMON STOCK
OUTSTANDING, NET OFFERING PROCEEDS AND CAPITAL RESOURCES ASSUMES THAT NONE OF
THE WARRANTS OR OPTIONS DESCRIBED IN THIS PROSPECTUS HAS BEEN EXERCISED.

3DSHOPPING.COM

OUR COMPANY

We have developed and are beginning to implement and market to e-commerce
retailers a Web-based marketing and display system that incorporates
sophisticated graphics and other visual features. To implement our system, we
design, build and maintain Web sites for retailers of apparel, jewelry, flowers
and antiques. We generate revenue through fees charged for these services and
fees based on the value of the product orders we process for our customers or
the number of visitors to our customers' Web sites.

A limited range of products is currently being successfully sold via
e-commerce. These include items such as books, CD's and DVD's, where the
customer usually knows what he or she is looking for before searching for it on
a vendor's Web site, or items such as computers or automobiles, where the
customer can make a final decision by choosing from a list of objectively
definable options. E-commerce sales of products that require a more subjective
decision process, such as clothing, have so far presented a challenge to
retailers and have achieved percentages of total e-commerce sales that are
substantially less than their percentages of sales through more traditional
channels, such as in-store sales and mail order catalogs.

We believe that e-commerce sales of products such as apparel where the
decision process has a substantial subjective and/or emotional content cannot be
effectively supported by the kind of Web sites used to sell more objectively
definable products like books and CDs. We have therefore developed the
technological and other resources that support our system with a view to
presenting the e-commerce shopper with an experience closer to what he or she
would experience by visiting a store. Instead of presenting a text-based
presentation that might include still pictures of an article of clothing, we are
able to provide an animated, graphical presentation in which a model is seen
from a series of positions throughout a full 360 degree spectrum. We also
provide viewer interactivity that permits the viewer to stop the motion at any
view. A viewer can also select from a menu of available colors and change the
image to reflect the selected color, or zoom in on selected features. We have
acquired and are developing additional presentation materials that will allow us
to incorporate a "cyber-salesperson", an animated character preselected by the
retailer or selected by the viewer from a menu of choices, that will make an
audiovisual presentation of the key features of the selected garment. For
viewers with access to the Internet through high-volume data delivery services,
we are developing the technology to support a complete virtual shopping
experience, including audiovisual features that will permit the viewer to enter
a store in which the various items for sale will be presented. This "virtual
store" will not be limited to the shelves, racks and walls found in traditional
retail outlets, but instead will permit the retailer to display these items in
their most favorable marketing context. For example, beachwear could be
presented by models posing on a beach. The shopper will be able to view the
various items offered, make inquiries of virtual sales persons and select and
purchase merchandise all at a level of virtual reality equivalent to that used
in sophisticated computer games and other animated presentations. We believe
that these features will enable the viewer to make a more informed choice and
therefore will attract shoppers for products traditionally sold only through
stores or mail order catalogs. For this reason we believe that our system is
attractive to retailers of products that require a compelling visual
presentation to be effectively sold on the Internet.

3
<PAGE>
OUR SYSTEM

We offer our system to clothing and other retailers who want to engage in
e-commerce through a Web site that we design and maintain. We offer a complete
package of services in support of this activity, including

- Web site design;

- model selection and photography;

- preparation and maintenance of specific customer offerings on their or our
Web sites;

- data services with respect to Web site activity; and

- electronic order processing.

While we maintain all of the Web sites we design, these sites are accessible
directly through our "home" page at www.3Dshopping.com, from electronic
"shopping malls" that we and others maintain to attract shoppers to our
customer-specific Web sites or from other Web sites maintained by the customer.
We charge fees for designing, setting up and maintaining our customers' Web
sites. Some of our customers, such as Nordstrom and K-Swiss, have chosen not to
use the electronic order processing portion of our system. For these customers,
we expect to charge a fee for the number of visitors to those web sites. We also
receive a percentage of the value of product orders we process for our
customers.

We provide an Internet-based marketing and display system to retailers who
wish to engage in e-commerce and who believe that they require sophisticated
presentation technology to do so. Currently, we do not intend to sell retail
products for our own account, nor do we intend to offer "banner" advertising or
other promotional space to advertisers, other than our retailer customers, on
any of our Web sites.

OUR MARKETS AND CUSTOMERS

We believe that our principal market consists of retailers of apparel and
accessories. Clients who have accounted for sales of $3,500 or more during the
current fiscal year include ProvenanceLA, Manix, K-Swiss, SHC Incorporated,
Cobra Golf and Flowers in Hours. We have recently begun to provide our system to
Nordstrom as well. We also design, implement and maintain corporate Intranets
for companies that participate in the Leavens Awards Program, a supplier and
administrator of employee awards programs. We also have customers in other
markets, including flowers, antiques and jewelry and expect to examine other
market areas as opportunities arise.

OUR STRATEGY

Our goal is to be the leading provider of Web-based marketing and display
services to e-commerce retailers that require a high level of technical
sophistication and presentation quality to attract and serve the needs of their
customers. e-commerce is becoming more widely accepted as a retail channel by
both sellers and consumers. As the volume and range of products sold in
e-commerce increases, the channel will require ever increasing levels of
sophistication to support consumer demand over a variety of product categories.
Because our Internet-based marketing and display system allows retailers to use
a sophisticated presentation format for their products, we believe that we are
well positioned, from both a technological and a marketing point of view, to
offer state-of-the-art Web site design and maintenance services to customers
across a broad spectrum of product categories. We believe that, for the
foreseeable future, our core market will be in the area of apparel and
accessories, where we believe the market potential is great enough to support
substantial growth.

4
<PAGE>
In order to compete as a relatively small participant in the emerging and
highly competitive market enabled by the Internet, we have positioned ourselves
as a service provider to larger and more recognized entities in their respective
market areas. We intend to enable our customers to capitalize on their own
market presence and brand recognition in a new sales channel or to support
intracompany communication at a high level of sophistication. While our goal is
ultimately to become a recognized name in e-commerce, we expect for the
immediate future to depend on the name recognition of retailers that become our
customers to attract viewers to our Web sites.

In order to more fully integrate the range of services we offer, we recently
acquired the assets of Design Bas, Incorporated, a designer and producer of
print advertising, direct mail catalogs, brochures and other printed advertising
and promotional materials, which we refer to in this document as DBLA.

RISKS ASSOCIATED WITH OUR COMPANY

There are several risks associated with an investment in our company,
including:

- we have a history of significant losses and have cash losses of over $3
million since inception,

- we operate in highly competitive markets and

- we have no long term customer contracts.

For more information about these and other risks associated with an investment
in our company, see "Risk Factors" beginning on page 9.

We were incorporated in California under the name Pi Graphix, Inc. and
commenced business in August 1996. We changed our name to 3Dshopping.com on
March 10, 1999. The mailing address and telephone number of our principal
executive offices are 517 Boccaccio Avenue, Venice, California 90291 and (310)
301-6733.

5
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered................ 1,100,000 units. Each unit consists of one share of
common stock and one warrant to purchase one additional
share of common stock. The common stock and warrants
will trade separately immediately after the offering.
For more information, see "Description of Securities"
beginning on page 41.

Warrants.......................... The warrants will be exercisable at an exercise price of
$18 at any time until they expire on the fifth
anniversary of the date of this prospectus. We may not
redeem the warrants for at least 180 days after the date
of this prospectus. After that date, if the closing bid
price of our common stock on each of the 10 consecutive
trading days preceding our notice of redemption is
greater than or equal to $24, we may redeem some or all
of the outstanding warrants if we provide the holders
with 30 days' prior written notice. The redemption price
will be $0.25 per warrant. If we give notice of
redemption, holders of warrants will have 30 days during
which they may elect to exercise the warrants, sell the
warrants or allow the warrants to be redeemed for the
redemption price. Please refer to "Description of
Securities-- Unit Warrants" beginning on page 41 for
more information.

Common Stock Outstanding.......... 3,645,747 shares of common stock were outstanding on
March 31, 1999. After the offering, there will be
4,755,747 shares outstanding. Both of these numbers
exclude up to 662,333 shares of common stock issuable on
exercise of outstanding options and warrants including
100,000 shares issuable upon exercise of a warrant held
by Generation Capital Associates. The number of shares
outstanding after the offering includes 10,000 shares of
common stock issued to the owners of DBLA in connection
with our acquisition of DBLA's assets and liabilities.
For more information on the number of warrants and
options outstanding please refer to "Capitalization"
beginning on page 20 and "Description of
Securities--Other Options and Warrants" beginning on
page 42.

Risk Factors...................... An investment in the units involves a high degree of
risk. You should not consider this offer if you cannot
afford to lose your entire investment. Please refer to
"Risk Factors" beginning on page 9 for factors you
should consider.

Use of Proceeds................... The net proceeds from the offering, estimated to be
approximately $11,485,000, will be used to repay debt,
fund expansion of sales and marketing activities,
continue research and development efforts, acquire
capital equipment and Internet infrastructure and
acquire content and technology and for working capital
and general corporate purposes. For more information,
please refer to "Use of Proceeds" beginning on page 18.
</TABLE>

6
<PAGE>
SUMMARY FINANCIAL INFORMATION

3DSHOPPING.COM

Amounts for the eleven months ended June 30, 1997 reflect eleven months of
operations from August 13, 1996 (inception) to June 30, 1997.

The line item "Weighted average shares used in computing net loss per share"
is based on the weighted average shares of common stock outstanding for the
eleven months ended June 30, 1997, the year ended June 30, 1998 and the nine
months ended March 31, 1998 and 1999. It excludes 0, 32,609, 32,609 and 32,609
shares, respectively, of common stock issuable upon exercise of outstanding
options, warrants and convertible debt. Note 1 of Notes to Financial Statements
includes an explanation of the determination of the number of shares used in
computing net loss per share.

The amounts in the "As Adjusted" column of the Balance Sheet Data have been
adjusted to give effect to the sale of the 1,100,000 units offered by this
prospectus, at the initial public offering price of $12.00, after deducting the
underwriting discount and estimated offering expenses, and the receipt of the
net proceeds from the offering.

<TABLE>
<CAPTION>
ELEVEN MONTHS YEAR ENDED
ENDED JUNE 30, JUNE 30, NINE MONTHS ENDED MARCH 31,
-------------- -------------- ----------------------------
1997 1998 1998 1999
-------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues....................................... $ -- $ 18,404 $ 644 $ 50,311
Operating expenses:
Sales and marketing.............................. 973,283 473,665 312,757 652,049
Research and development......................... 294,360 170,259 162,214 346,131
General and administrative....................... 644,993 460,220 273,969 2,073,491
-------------- -------------- ------------ --------------
Total costs and expenses......................... 1,912,636 1,104,144 748,940 3,071,671
-------------- -------------- ------------ --------------
Loss from operations............................... (1,912,636) (1,085,740) (748,296) (3,021,360)
Interest expense................................... 3,089 10,373 5,708 61,269
Other income....................................... 10,000 13,500 13,500 3,250
-------------- -------------- ------------ --------------
Net loss........................................... $ (1,905,725) $ (1,082,613) $ (740,504) $ (3,079,379)
-------------- -------------- ------------ --------------
-------------- -------------- ------------ --------------
Net loss per share................................. $ (.59) $ (.28) $ (.20) $ (.77)
-------------- -------------- ------------ --------------
-------------- -------------- ------------ --------------
Weighted average shares used in computing net loss
per share........................................ 3,210,651 3,823,228 3,774,038 4,024,482
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------------
ACTUAL AS ADJUSTED
------------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................................... $ 469,793 $ 11,954,793
Working capital (deficit)........................................................... (257,914) 11,227,086
Total assets........................................................................ 841,388 12,114,999
Accumulated deficit................................................................. (6,067,717) (6,067,717)
Shareholders' equity................................................................ 54,471 11,539,471
</TABLE>

7
<PAGE>
DBLA

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------
STATEMENT OF OPERATIONS DATA: 1997 1998 1998 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues......................................... $1,342,500 $2,228,298 $ 459,331 $ 231,574
Cost of sales.................................... 816,437 1,638,251 397,530 123,260
--------- --------- --------- ---------
Gross profit..................................... 526,063 590,047 61,801 108,314
--------- --------- --------- ---------
Cost and expenses:
General and administrative..................... 450,347 567,200 148,441 137,096
--------- --------- --------- ---------
Total costs and expenses....................... 450,347 567,200 148,441 137,096
--------- --------- --------- ---------
Income (loss) from operations.................... 75,716 22,847 (86,640) (28,782)
Interest expense................................. 2,989 4,733 661 4,082
--------- --------- --------- ---------
Income (loss) before income taxes.............. 72,727 18,114 (87,301) (32,864)
Income taxes................................... 1,500 800 800 800
--------- --------- --------- ---------
Net income (loss).............................. $ 71,227 $ 17,314 $ (88,101) $ (33,664)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
MARCH 31,
BALANCE SHEET DATA: 1999
---------
<S> <C>
Cash.............................................................................. $ (1,795)
Working capital (deficit)......................................................... (93,221)
Total assets...................................................................... 208,075
Retained earnings (deficit)....................................................... (30,850)
Shareholders' equity (deficit).................................................... (850)
</TABLE>

8
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE UNITS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER THE FOLLOWING DISCUSSION OF RISKS IN ADDITION TO THE OTHER INFORMATION
IN THIS PROSPECTUS BEFORE PURCHASING ANY OF THE UNITS. IN ADDITION TO HISTORICAL
INFORMATION, THE INFORMATION IN THIS PROSPECTUS CONTAINS "FORWARD-LOOKING"
STATEMENTS ABOUT OUR FUTURE BUSINESS AND PERFORMANCE. OUR ACTUAL OPERATING
RESULTS AND FINANCIAL PERFORMANCE MAY BE VERY DIFFERENT FROM WHAT WE EXPECT AS
OF THE DATE OF THIS PROSPECTUS. THE RISKS BELOW ADDRESS, INSOFAR AS WE ARE ABLE
TO FORESEE THEM, THE MATERIAL FACTORS THAT MAY AFFECT OUR FUTURE OPERATING
RESULTS AND FINANCIAL PERFORMANCE.

OUR SYSTEM DEPENDS ON RAPID DATA TRANSMISSION TO ACHIEVE ITS FULL POTENTIAL AND
IF RAPID DATA TRANSMISSION DOES NOT BECOME WIDELY AVAILABLE OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED

Our system has the ability to display products in a moving format, to
incorporate audio tracks and to support substantial interactivity between the
shopper and the display. While we believe that these features distinguish us
from traditional creators of static Web site displays, the volume of electronic
data required to support this process is substantially greater than for a
traditional static display. Shoppers accessing our Web sites using a
conventional modem hooked up to a conventional telephone line will be limited to
viewing options that do not make full use of our display potential or will be
required to accept long download times. Even customers using a high-speed data
delivery system, such as ISDN, cable or DSL systems may be subject to delays
generated within the Internet itself. In order to make full use of our
technology without experiencing frustrating download times, shoppers will have
to access our Web sites through high speed connections, such as cable modems and
we will be required to feed data directly from broadband communications
providers, such as MediaOne, Inc., rather than through conventional Internet
channels. Cable modems are commercially available to an estimated 20 million
homes in North America but are currently used by only approximately 500,000
Internet users. Direct feeds from broadband communications providers are
currently under development but are not in current commercial use. We believe
high volume data delivery systems will be increasingly available both to
business and individual Internet users but we cannot predict with confidence the
speed with which such systems will become widely available nor can we guarantee
that these systems will be widely used by consumers. If the availability of high
speed data transmission does not increase as expected or is substantially
delayed, our business, financial condition and results of operations could be
adversely affected.

MANY OF OUR POTENTIAL CUSTOMERS AND SHOPPERS, WHO ARE UNFAMILIAR WITH THE
INTERNET AND E-COMMERCE, MAY BE UNWILLING TO USE OUR SYSTEM WHICH COULD HAVE
AN ADVERSE IMPACT ON OUR BUSINESS

Most potential retail customers have only limited experience with e-commerce
and have not spent a significant amount of their time or income purchasing
products offered through e-commerce. Similarly, most sellers of consumer
products do not, or have only recently begun to, sell their products through
e-commerce. We cannot guarantee that consumers will use e-commerce for a
significant portion of their shopping needs or that retailers will use this
method widely to reach consumers. If e-commerce and the Internet are not widely
used by retailers and consumers, our ability to sustain growth could be
adversely affected.

IF SHOPPERS WHO ACCESS OUR WEB SITES USING OLDER TECHNOLOGY EXPERIENCE
FRUSTRATING DELAYS AND OTHER PROBLEMS, OUR RELATIONSHIPS WITH OUR CUSTOMERS
AND OUR BUSINESS COULD BE MATERIALLY NEGATIVELY IMPACTED

Our system incorporates graphics that require the downloading of substantial
amounts of data and requires support from software that is on the user's
computer. The amount of data downloadable from our Web sites will increase as
new features are developed and implemented. Shoppers who access our

9
<PAGE>
Web sites using older modems with slow download speeds, older telephone lines
with poor transmission quality or Internet connections that are slow or
overloaded will experience download times that they may find frustrating if they
are trying to access all of the features of our system, including moving images.
We have provided a limited-access option for shoppers who prefer faster download
times and are willing to do without some features of our system, but we believe
that our principal attractiveness will be to those who access our Web sites
using more current technology. Users of older technology may also experience
compatibility problems. For example, users of early versions of Java, a widely
available program that runs our graphics and is available free of charge on the
Internet, may experience compatibility problems with the more popular Web
browsers. If a substantial number of Internet shoppers continue to use older
technology to access our Web site and our customers' Web sites, they may become
dissatisfied with the slow download times and may cease visiting these Web
sites. If this were to occur, it could have a material negative impact on our
relations with our customers which in turn could negatively impact our business
and results of operations.

WE HAVE A NEW AND UNPROVEN BUSINESS MODEL WHICH COULD FAIL

The manner in which we conduct our business and charge for our services is
new and unproven and may fail. The model depends on our ability to generate
revenue from multiple sources through our Web sites. These sources include:

- fees paid for designing and building Web sites showcasing apparel and
accessories;

- fees paid for maintenance of the Web sites;

- revenue sharing with retail customers who use the Web sites to sell
apparel and accessories through e-commerce;

- fees paid by retailers based on the number of shoppers who visit the Web
site when a customer does not use its site to directly sell product; and

- fees for updating the Web site, including product offerings.

Our ability to generate revenue also will depend on the following variables,
among others:

- the continued development of the Internet as an e-commerce medium;

- our continuing ability to provide our customers with the highest quality
of service and support;

- the availability of comparable e-commerce products and services on other
Web sites;

- sales volume on Web sites that we maintain;

- our ability to achieve and demonstrate user demographic characteristics
that are attractive to our customers; and

- the establishment and maintenance of desirable relationships with our
customers.

For us to be successful, we must convince a large number of retailers to use
our system. Furthermore, we and our customers must convince shoppers to visit
our Web sites regularly. We must persuade retailers and their customers that the
shopping experience provided by our Web sites is compelling, innovative,
informative and easy to use. To date, apparel sales on the Internet have been
minimal compared to sales of other kinds of products such as books and CDs.
Accordingly, we cannot guarantee that we will be able to change the buying
habits of consumers or the perception of retailers as to the usefulness of our
system to them either for advertising or for sale distribution. If our business
model fails, our business may be adversely impacted.

10
<PAGE>
OUR BUSINESS COULD BE NEGATIVELY IMPACTED IF WE CANNOT COMPETE EFFECTIVELY FOR
RETAILERS THAT CHOOSE TO SELL OR MARKET PRODUCTS BY USING OUR INTERNET SYSTEM

We compete specifically with Web site designers and generally with suppliers
of other advertising media for business from retailers. Moreover, retailers may
employ people to design and maintain their own Web sites. Additionally, we
believe marketing companies could adopt our system, or one very similar to it,
as another means to promote the products and brands of their clients. We also
compete with other producers of print catalogs and advertising for retailers'
business. Many of these organizations have greater financial resources than we
have. As the Internet and e-commerce continue to expand, the number of people
and companies providing Web-based services will continue to increase and
competition will increase as well. Our business may be negatively impacted if we
are unable to compete effectively for retail customers.

IF WE ARE UNABLE TO COMPETE EFFECTIVELY FOR SHOPPERS INTERESTED IN PRODUCTS
FEATURED BY OUR CUSTOMERS, OUR BUSINESS MAY BE ADVERSELY IMPACTED

We compete with other companies for shoppers who visit our Web sites.
E-commerce is experiencing explosive growth fueled by extremely rapid
technological development, rapid changes in consumer habits and preferences,
massive infusions of capital and a large number of new and established companies
with aspirations to control virtually every aspect of e-commerce. A relatively
small number of these companies, including Microsoft, America Online/Netscape
and Yahoo!, currently control primary or secondary access of a significant
percentage of all Internet users. As a result, these companies and the companies
they sponsor or assist have a competitive advantage in marketing to Internet
shoppers. Other large and established companies, such as local and long distance
telephone companies, cable companies, satellite programming providers and others
have established relationships with large customer bases and are rapidly
expanding into the provision of Internet services. Almost all of these companies
have financial, technological, promotional and other resources that are much
greater than those available to us. Many of these companies could use or adapt
their current technology, or could purchase technology, to provide a service
directly competitive with ours. We cannot guarantee that we will be able to
compete effectively in our chosen markets and any failure to do so could
negatively impact our business.

WE HAVE A SHORT OPERATING HISTORY AND MAY NOT BE ABLE TO ADD OR RETAIN CUSTOMERS

We began to do business in August 1996. For most of our history, we were
developing and testing our system. We first made our Web sites available to our
customers on a test basis in November 1997 and achieved revenue only in the last
three months of calendar 1998. Many of our customers have not yet had an
opportunity to fully evaluate the benefit of using our Web sites. Our ability to
retain our current customers and to attract others will depend on the
performance of our customers using our Web sites, especially over the next few
months. Failure to retain and attract customers will adversely impact our
business.

WE HAVE NOT YET ACHIEVED PROFITABLE OPERATIONS AND EXPECT LOSSES TO INCREASE
WHICH MAY HAVE A NEGATIVE IMPACT ON OUR BUSINESS

We have operated at a loss since the start of our business and expect to
continue to operate at a loss for at least the next twelve months. As of June
30, 1997 and 1998, we had net losses of $1,905,725 and $1,082,613, and as of
March 31, 1999, we had a cumulative loss from inception and an accumulated
deficit of $6,067,717. We cannot guarantee that we will ever achieve profitable
operations. We expect to increase substantially our levels of expense in almost
all categories of our operations following this offering. As a result of these
increases, we expect our rate of loss will initially increase. In the long run,
these losses will be offset by increasing revenues only if we are successful in
achieving our sales goals by attracting an increasing number of customers and
shoppers to our Web sites. If we do not achieve

11
<PAGE>
profitable operations, we may be forced out of business or be forced to declare
bankruptcy, in which case you could lose your entire investment in the units.

OUR INDEPENDENT AUDITORS HAVE ISSUED A "GOING CONCERN" OPINION ON OUR FINANCIAL
STATEMENTS DUE TO OUR LOSSES FROM OPERATIONS AND NET CASH USED IN OPERATING
ACTIVITIES

We require the proceeds from this offering to continue to develop and market
our Web-based marketing and display systems to retailers. Since our
incorporation, we have not generated sufficient cash flow from our internal
operations to support our working capital needs or to fund our capital
expenditures. The report of independent auditors contains an explanatory
paragraph stating that the financial losses we have suffered raise a substantial
doubt about our ability to continue as a going concern.

OUR FUTURE OPERATING RESULTS MAY BE DIFFICULT TO PREDICT AND COULD BE NEGATIVE

Because of our very limited operating history and early stage of
development, we do not have historical financial data on which we, you or market
analysts can plan or base forecasts of revenues, earnings or capital
requirements with any accuracy. Because e-commerce is new, both we and others
will find it difficult to make predictions about our financial performance based
on the performance of other companies. One result of this unpredictability may
be that we will experience unanticipated capital requirements at a time when the
required capital is not available to us or is only available on terms that will
dilute your investment. Another possible result is that our stock price may
experience rapid and significant fluctuations as our financial performance
exceeds or falls short of market expectations.

WE HAVE NO LONG-TERM CONTRACTS WITH OUR CUSTOMERS AND CANCELLATIONS COULD
ADVERSELY AFFECT REVENUE AND OUR BUSINESS

Our arrangements with our customers are generally cancellable on short
notice or are entered into as work orders on a project-by-project basis. Many of
the projects that were transferred to us from DBLA are also cancellable on short
notice. We have suffered cancellations by customers who have accounted for a
total of approximately $9,800 in revenues during the current fiscal year. DBLA
has suffered cancellations by customers who accounted for approximately $1.2
million in revenues during the previous fiscal year. We cannot guarantee that
any of our customers will continue to use our services in the future.
Cancellation by a significant number of customers or the failure of a
significant number of customers to continue to employ us for projects would have
an adverse effect both on immediate revenues and on the marketability of our
system to other customers.

OUR BUSINESS WILL DEPEND ON THE PERFORMANCE OF OUR CUSTOMERS AND OTHERS AND POOR
PERFORMANCE BY THEM COULD ADVERSELY AFFECT OUR BUSINESS

Our ability to earn revenues from our customers will depend on the success
of these customers in increasing their business through the use of our service,
either by making e-commerce sales or by using our Web sites as an effective
advertising medium supporting sales in other channels. This in turn will depend
on our ability, and the ability of our customers, to present merchandise using
our system in a manner that is substantively informative, visually attractive,
responsive to consumer demand and user-friendly. Our ability to achieve these
goals depends in part on the availability of technology that we and our
customers do not own or control. In particular, we expect to depend on the
speed, quality and demographic coverage of data delivery systems offered by
various Internet service providers. Our success will also depend on the ability
of our customers to select and offer merchandise that is attractive to their
target markets. We cannot guarantee that we or our customers will succeed in
establishing a profitable, e-commerce-based sales channel. The failure of a
significant number of our

12
<PAGE>
customers to achieve satisfactory results using our Web sites could adversely
affect our business for those and other customers.

OUR FAILURE TO MAKE SIGNIFICANT ADDITIONS TO OUR MANAGEMENT TEAM COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS

Since we began our business, we have been a small company engaged in
developing a basic marketing concept for e-commerce. As a result, we have not
had to deal with many of the challenges facing a more mature business, such as
the management of a sophisticated sales organization, performing under a
substantial volume of service obligations to customers or the management of
significant financial resources. We expect to face all of these management
challenges in the near future. To do so, we expect to be required to add
additional members to our management team, particularly in the area of
operations and finance. We have retained Robert Vitamante to become President,
Chief Operating Officer and Chief Financial Officer upon completion of this
offering. In May 1999, we appointed Brian Smith, DBLA's president, as our
President, Creative Services. We must seek management level additions in other
areas. Competition for qualified management level personnel is intense and we
cannot guarantee that we will be successful in hiring qualified personnel or in
integrating them into our company. Our future performance will depend in part on
our ability to integrate our newly hired executive officers effectively into our
management team. Our ability to manage our business will be adversely affected
if we are unable to retain qualified management.

OUR BUSINESS MAY BE ADVERSELY AFFECTED IF WE ARE UNABLE TO MANAGE OUR GROWTH

Our business plan requires significant expansion of our operations to
address potential market opportunities. For example, we have just completed an
acquisition of the business of DBLA. We expect we will need to increase
personnel, including key management personnel, and other resources significantly
in the near future. We expect this growth to place a significant strain on our
managerial, operational and financial resources and systems. To manage our
growth, we must implement, improve and effectively use our operational,
management, marketing and financial systems and train and manage our new and
existing employees. We cannot guarantee we will be able to manage effectively
the expansion of our operations or that our personnel, systems, procedures and
controls will be adequate to meet our anticipated future operations. If we fail
to manage our growth, we could experience a wide variety of accounting,
administrative and other operational problems.

WE FACE A RISK OF FAILURE, DELAYS AND OVERLOADS ON OUR WEB SITES, ALL OF WHICH
COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS

The performance, reliability and availability of our Web sites and network
infrastructure are critical to our reputation and ability to attract and retain
retailers or shoppers. Our network and computer infrastructure is located at a
facility in Marina Del Rey, California. Our systems and operations are
vulnerable to damage or interruption from a variety of causes. We will not have
redundant facilities until August 1999 at the earliest and may be reliant on a
single facility for an indefinite period after that date. We carry only limited
business interruption insurance. Our computer systems are complex and under
rapid development. Undetected errors in new or existing programs or equipment
could cause a range of problems from temporary unavailability of data, to
slowdowns and overloads to complete system failures. A sudden and significant
increase in traffic on one of our Web sites could also strain the capacity of
our software, hardware and telecommunications systems, which could lead to
slower response times or system failures. Any system error or failure that
causes interruption in the availability of content or an increase in response
time could result in a loss of business for our customers and reduce the
popularity of our Web sites with shoppers. Since our ability to earn revenue
depends directly on our ability to attract customers and shoppers, any such
error or failure could have a material temporary or permanent effect on our
revenues.

13
<PAGE>
WE, OUR CUSTOMERS AND SHOPPERS USING OUR WEB SITES FACE SECURITY RISKS THAT
COULD REQUIRE US TO MAKE SIGNIFICANT EXPENDITURES

Despite the implementation of security measures, our networks may be
vulnerable to unauthorized access, computer viruses and other problems. A person
who is able to circumvent security measures could misappropriate proprietary
information or cause interruptions in our operations. Various Web sites and
Internet service providers have experienced, and our Web sites may experience,
interruptions in service as a result of the accidental or intentional actions of
Internet users, current and former employees or others. We may be required to
spend significant amounts to protect against the threat of security breaches or
to alleviate problems caused by such breaches. Although we intend to implement
industry-standard security measures, these measures may be circumvented.
Eliminating computer viruses and alleviating other security problems may require
service interruptions or unanticipated expense.

THE FUTURE OF THE INTERNET AS A COMMERCIAL MEDIUM IS UNCERTAIN AND IF IT FAILS
AS A COMMERCIAL MEDIUM, OUR BUSINESS AS IT IS NOW CONDUCTED WOULD CEASE TO
EXIST

Rapid growth in use of and interest in the Internet is a recent phenomenon.
Neither we nor others can predict with confidence whether acceptance and use of
the Internet will continue to develop or whether a sufficient base of users will
emerge to support our business. The Internet may not be accepted as a viable
commercial medium for any of a number of reasons, including:

- inadequate development of the necessary infrastructure;

- inadequate development of enabling technologies; and

- inadequate consumer support for e-commerce generally or in our targeted
market areas.

If the Internet continues to experience an increase in users, an increase in
frequency of use or an increase in the bandwidth requirements of users, the
Internet infrastructure may be unable to support the demands placed upon it,
specifically the demands of delivering the high volume of data necessary for the
optimum performance of our Web sites. The Internet could lose its viability as a
commercial medium due to delays in the development or adoption of new standards
and protocols required to handle increased levels of Internet activity, or due
to increased government regulation. Changes in or insufficient availability of
telecommunications services to support the Internet also could result in
unacceptable response times and could adversely affect use of the Internet
generally and of our Web sites in particular. If use of our Web sites decreases,
our business, financial condition and results of operations could be adversely
impacted.

MANY INTERNET USERS WHO DO NOT HAVE ACCESS TO HIGH SPEED INTERNET ACCESS AND
CANNOT CONVENIENTLY VIEW THE MOST NOVEL FEATURES OF OUR WEB SITES MAY NOT
VISIT OUR WEB SITES AND A LACK OF VISITORS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS

To take advantage of the full-motion, 3D features of the Web sites we
design, Internet users need high speed access to the Internet. This access is
currently provided through cable modems, digital subscriber lines and satellite
transmissions. Most Internet users still use analog modems and cannot
conveniently view our Web sites' most novel and innovative features. If more
people do not obtain high-speed Internet access, users may not find our Web
sites compelling and the traffic to those sites may decrease. Failure to attract
Internet users to our Web sites could have a material adverse effect on our
business and results of operations.

WE MAY NEED, AND MAY BE UNABLE TO OBTAIN, ADDITIONAL FINANCING

We may require additional capital to take full advantage of future growth
opportunities, fund our ongoing research and development efforts and continue to
upgrade our technology and network

14
<PAGE>
systems. The amount and timing of our future capital requirements will depend on
many factors, including, among others:

- consumer acceptance of and demand for our Web sites;

- the acceptance by customers and potential customers of our business
concept;

- the need to establish and continually upgrade our technology and computer
systems; and

- the need to establish and maintain an effective sales and marketing
program.

We have not arranged for any funding beyond the proceeds from this offering.
We believe these proceeds will satisfy our capital requirements for at least the
12 months following this offering but we cannot guarantee that additional
financing will not be required earlier than we expect. We also cannot guarantee
that additional financing, if required, will be available on acceptable terms or
at all.

WE DEPEND ON KEY PERSONNEL, THE LOSS OF WHOM COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS

Our success depends, to a significant extent, upon the continued involvement
of Mr. Weisdorn, our Chief Executive Officer, Mr. Vitamante, who has agreed to
serve as our President, Chief Operating Officer and Chief Financial Officer
after the completion of the offering, and Mr. Smith, our President, Creative
Design. The loss of the services of these officers, or the services of other key
employees, could have a material adverse effect on our business and prospects.
We do not currently maintain "key person" life insurance on the lives of any of
our officers or employees, nor do we have employment agreements with our key
personnel with the exception of Mr. Vitamante. Our future success also depends
on our continuing ability to attract and retain highly qualified technical
personnel and management. Competition for such personnel is intense and we
cannot guarantee that we will be able to retain our key management and technical
employees or that we will be able to attract or retain additional qualified
technical personnel and management in the future.

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, OUR BUSINESS COULD BE
NEGATIVELY AFFECTED

We consider our proprietary technology, trademarks, trade secrets, domain
names and other intellectual property to be critical to our success. We rely on
a combination of copyright and trademark laws, trade secret protection,
confidentiality and non-disclosure agreements and contractual provisions with
our employees and with third parties to establish and protect our proprietary
rights. We cannot guarantee the procedures that we employ or may employ in the
future to protect our intellectual property will provide us with adequate
protection. The defense of intellectual property rights can be expensive and the
outcome of any defense may be uncertain. If we cannot successfully defend our
intellectual property rights, our business may be adversely affected.

OUR INABILITY TO AVOID INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS
COULD ADVERSELY IMPACT OUR BUSINESS

We use a variety of proprietary technologies that we have developed
ourselves or licensed from others. We cannot guarantee that any particular
aspect of our technology will not be found to infringe the rights of other
companies. Other companies may acquire proprietary rights to technology useful
or necessary to our business or may establish trademarks, tradenames or domain
names that limit our ability to market our services or our customers' products.
We cannot predict how any such intellectual property, or the need to obtain
rights to use it, will affect our business.

15
<PAGE>
OTHERS MAY DEVELOP OR PURCHASE COMPARABLE OR SUPERIOR TECHNOLOGY AND MAY BE ABLE
TO COMPETE FOR CUSTOMERS AND SHOPPERS MORE EFFECTIVELY

We believe our technology reflects the current state of the art for online
merchandise display. We developed our technology by purchasing software from
third parties and using that software to build our own Web based display
software in-house. Others could purchase this third-party software and could
build display software similar to ours. It would be relatively easy for a
competitor to purchase comparable software and to create a competing display
technology. Moreover, others could develop, and may have developed, comparable
or superior technology. We cannot guarantee that future innovations in Internet
or computer technology, generally, or in online merchandising technology, will
not eliminate any technological advantage we may currently enjoy or render our
technology obsolete. We expect we will be required to maintain a continuous
program of technological innovation in order to take advantage of general
technological advances and to remain competitive. Our failure to do so may
negatively impact our business.

GOVERNMENT REGULATION OF THE INTERNET IS NEW, ITS FUTURE IS UNCERTAIN AND
CHANGES TO IT COULD HAVE A NEGATIVE EFFECT ON OUR BUSINESS

Although there are currently few laws and regulations directly applicable to
the Internet, new laws and regulations likely will be adopted in the United
States and elsewhere covering issues such as privacy, pricing, sales taxes and
characteristics and quality of Internet services. The adoption of restrictive
laws or regulations could slow Internet growth or expose us to significant
liabilities associated with the products available on our Web sites. The
application of existing laws and regulations governing Internet issues such as
property ownership, libel and personal privacy is also subject to substantial
uncertainty. We cannot guarantee that the application of new or existing laws
and regulations will not expose us to significant liabilities, significantly
slow Internet growth or otherwise have an adverse effect on our business.

The Communications Decency Act of 1996 was enacted in 1996. Although those
sections of the CDA that, among other things, proposed to impose criminal
penalties on anyone distributing "indecent" material to minors over the Internet
were held to be unconstitutional by the U.S. Supreme Court, we cannot guarantee
similar laws will not be proposed and adopted. Although we do not currently
distribute the types of materials that the CDA would have prohibited, similar
legislation in the future could limit our ability to market some products.

OUR STOCK HAS BEEN THINLY TRADED AND MAY EXPERIENCE PRICE VOLATILITY

Before this offering, our stock has been traded on the NASD OTC Bulletin
Board. We achieved a trading market for our stock through a series of small,
unregistered offerings and have not been required to file reports with the SEC
as do most companies whose securities are publicly traded. Historical market
prices for our stock may not be a reliable indication of our value for several
reasons, including the following:

- we have not regularly made available the kind of public information that
supports the markets for securities of more established companies;

- our company has not been covered by regular reports from financial
analysts of established standing;

- the limited amount and distribution of our stock has exacerbated the
effect of relatively small imbalances in supply and demand; and

- the number of stock brokerage firms through whom our stock could be traded
has been limited.

16
<PAGE>
We cannot guarantee that the market for our securities after this offering
will fairly reflect our value or that it will be active enough to provide
liquidity to you. The trading price of our securities could be subject to wide
fluctuations in response to quarterly variations in operating results, changes
in financial estimates by securities analysts, announcements of technological
innovations or new products by us or our competitors or other factors. In
addition, the stock market has experienced extreme price and volume fluctuations
that have particularly affected the market prices for many technology and small
capitalization companies. These broad market fluctuations may affect the market
price of our securities. Market valuations for companies offering Internet
services have recently experienced substantial increases and extreme volatility.
Any significant decrease in the market valuation of such companies generally
could cause a substantial decrease in the price of our securities unrelated to
our operating results.

YOUR WARRANTS CAN BE REDEEMED ON SHORT NOTICE

At any time after 180 days following the date of this prospectus, we could
redeem your warrants for $0.25 per warrant on 30 days' written notice, provided
that the closing price of our common stock has been at least $24 for the ten
consecutive trading days immediately preceding the date of notice of redemption.
If we give notice of redemption, a holder would be forced to sell or exercise
the warrants or accept the redemption price.

OUR MANAGEMENT WILL HAVE BROAD DISCRETION TO ALLOCATE OFFERING PROCEEDS AND THE
FINAL ALLOCATION MAY DIFFER FROM OUR CURRENT EXPECTATIONS

We expect to use approximately $776,500 of the net proceeds of this offering
to repay debt and approximately $6,100,000 for

- expanding sales and marketing activities,

- expanding research and development,

- purchasing capital equipment,

- funding anticipated growth in receivables,

- conducting the business of DBLA,

- funding business expansion, including possible acquisition,

- expanding our management team and

- other purposes described under "Use of Proceeds."

The remaining net proceeds, estimated to be approximately $4,608,500, will be
used for working capital and applied to general corporate purposes. Our
management will have broad discretion to allocate the proceeds of this offering,
including proceeds currently specifically allocated as described in this
prospectus, and any other cash resources to such uses as they determine to be in
the best interest of 3Dshopping.com. The amounts actually allocated to each
expense category, and the source of the cash so allocated, may vary
significantly, depending on a number of factors, including the amount of future
revenue growth, the amount of cash generated or used by our operations and the
progress of our marketing efforts.

17
<PAGE>
USE OF PROCEEDS

The net proceeds that we will receive from the sale of the 1,100,000 units
at the public offering price of $12.00 per unit, are estimated to be
approximately $11,485,000, after deducting underwriting discounts and
commissions and estimated offering expenses, and assuming no exercise of the
warrants or the underwriters' over-allotment option. The public offering price
of the units will be based on the market price of the common stock on the day
immediately preceding the date of this prospectus.

Immediately following this offering, we expect to use approximately $64,500
of the net proceeds to repay indebtedness we owe to our Chief Executive Officer,
Lawrence Weisdorn, Jr. and his father, Lawrence Weisdorn, Sr. As of May 7, 1999,
we owed Lawrence Weisdorn, Jr. $20,308 and Lawrence Weisdorn, Sr. $46,167,
including interest. The principal is payable on demand and bears interest at a
rate of 7% per annum. We also intend to use approximately $515,000 to pay the
outstanding principal and interest on a promissory note issued in March 1999 to
Generation Capital Associates, an institutional investor. The note evidences
indebtedness in the principal amount of $500,000. Interest accrues at a rate of
9% per year. In addition, we intend to use approximately $203,000 to repay the
outstanding principal and interest on a loan given to us by Paulson Investment
Company, Inc., the managing underwriter for this offering. The loan bears
interest at a rate of 7% per annum. We are using the proceeds from these loans
to fund our operations until we receive the proceeds from this offering. We
intend to use the remaining net proceeds, along with any other financing sources
that may become available to us, to support our anticipated growth over the next
two to three years. We expect to experience negative cash flow from operations
for at least the next 12 months. We expect that our cash requirements will exist
principally in the following areas:

<TABLE>
<CAPTION>
APPROXIMATE AMOUNT BUDGETED
FOR USE IN THE 12 MONTHS
USE OF CAPITAL FOLLOWING THE OFFERING
- ------------------------------------------------------------------------------------ ----------------------------
<S> <C>
Developing and rapidly expanding sales, marketing and advertising activities,
including the hiring of additional employees and consultants...................... $ 3,000,000
Continuing and expanding our internal research and development program.............. 500,000
Purchasing capital equipment, including computer, video, photographic and other
equipment required to support expanded operations................................. 500,000
Funding an anticipated growth in levels of receivables.............................. 750,000
Expansion of our management team.................................................... 850,000
Other uses not now expressly contemplated, such as the purchase of complementary
technology or businesses, the purchase or lease of real and personal property and
equipment; funding unanticipated negative cash flow from operations; or
repurchases of stock or redemption of warrants.................................... 500,000
</TABLE>

The amount and timing of any of the above expenses will depend on various
factors, including rates of business growth, specific technology, capital
equipment and other requirements imposed by our customers and opportunities
presented to us. While we have prepared internal forecasts to assist management
in planning, we believe that these forecasts, as they apply to periods extending
beyond the next few months, are inherently unreliable and that our actual cash
requirements will differ materially from those we presently forecast.

We believe the net proceeds of this offering will be sufficient to fund our
operations for at least the next twelve months.

Pending the use of the proceeds of this offering for operational purposes,
we intend to invest the net proceeds of this offering not used for the immediate
repayment of debt in short-term, investment grade, interest-bearing securities.

18
<PAGE>
PRICE RANGE OF COMMON STOCK

Since June 25, 1997, 3Dshopping.com's common stock has been traded on the
NASD OTC Bulletin Board under the symbol "PGRX". The following table sets forth
the high and low bid prices for the common stock for the quarters indicated.
Prices reflect bids posted by market makers and may not necessarily reflect
actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
YEAR ENDED JUNE 30, 1998
First Quarter............................................................................. $ 1.8750 $ 1.1875
Second Quarter............................................................................ 2.2500 1.3750
Third Quarter............................................................................. 1.7656 0.9219
Fourth Quarter............................................................................ 1.8750 0.9531
YEAR ENDING JUNE 30, 1999
First Quarter............................................................................. 5.5000 1.6250
Second Quarter............................................................................ 19.7500 4.0625
Third Quarter............................................................................. 19.2500 13.0000
Fourth Quarter............................................................................ 18.0000 8.5000
YEAR ENDING JUNE 30, 2000
First Quarter (through July 19, 1999)..................................................... 15.8750 11.5000
</TABLE>

On July 19, 1999, the closing bid price of the common stock on the NASD OTC
Bulletin Board was $13.13 per share. As of June 11, 1999, there were 51 holders
of record of our common stock. This number does not reflect the number of
beneficial holders of the common stock, which we believe to be between 600 and
800 holders. We will price the units through negotiations with Paulson
Investment Company, but we expect the public offering price of the units will be
at or below the price of the common stock on the day preceding the date of this
prospectus. If the public offering price of the units differs materially from
the market price, the difference likely will be the result of the factors listed
in "Underwriting." The exercise price of the warrant will be 150% of the public
offering price and, therefore, it would be based on the same factors. The 150%
amount is the result of negotiations between us and Paulson Investment Company.

DIVIDEND POLICY

We have never declared or paid cash dividends on our common stock. Payment
of any cash dividends will depend on the results of our operations, our
financial condition and our capital expenditure plans, as well as other factors
our board of directors may consider relevant. We presently intend to retain any
earnings for use in our business and, therefore, do not anticipate paying any
cash dividends in the foreseeable future.

19
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization at March 31, 1999 on an
actual basis, on a pro forma basis to reflect the acquisition of the assets of
DBLA and as further adjusted to give effect to the sale of the 1,100,000 units
at a public offering price of $12.00 per unit and the receipt of the net
proceeds. This table should be read in conjunction with the Financial Statements
and related Notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1999
---------------------------------------------------
ACTUAL PRO FORMA PRO FORMA AS ADJUSTED
------------- ------------- ---------------------
<S> <C> <C> <C>
Short term debt............................................. $ 621,474 $ 694,367 $ 694,367
Long term debt.............................................. 10,629 15,704 15,704
Shareholders' equity (deficit):
Common stock, no par value: 10,000,000 shares authorized;
3,645,746 shares issued and outstanding; 3,655,746 pro
forma; 4,755,747 pro forma as adjusted shares issued and
outstanding............................................. 6,124,688 6,277,813 17,762,813
Stock subscriptions receivable............................ (2,500) (2,500) (2,500)
Accumulated deficit....................................... (6,067,717) (6,067,717) (6,067,717)
------------- ------------- ---------------------
Total shareholders' equity (deficit)........................ 54,471 207,596 11,692,596
------------- ------------- ---------------------
Total capitalization........................................ $ 686,574 $ 917,667 $ 12,402,667
------------- ------------- ---------------------
------------- ------------- ---------------------
</TABLE>

The shares issued and outstanding do not include 662,333 shares issuable
upon the exercise of outstanding options and warrants. This number includes
warrants to purchase 100,000 Units at a price equal to 90% of the initial public
offering price of the units issued to Generation Capital Associates in March
1999 as those warrants will be amended effective as of this offering.

20
<PAGE>
DILUTION

The difference between the initial public offering price per share of common
stock and the pro forma net tangible book value per share of common stock after
this offering constitutes the dilution to you. Net tangible book value per share
is determined by dividing our net tangible book value (total tangible assets
minus total liabilities) by the number of shares of common stock outstanding.

At March 31, 1999, our net tangible book deficit was $(164,030), or $(.04)
per share of common stock and would have been $(168,728) or $(.05) per share
after giving effect to the DBLA acquisition. After giving effect to the DBLA
acquisition and the sale of the 1,100,000 units, and the receipt of the
estimated net proceeds, at the public offering price of $12.00 (after deducting
the underwriting discount and the estimated offering expenses and attributing no
portion of the value of the unit to the warrant), our pro forma net tangible
book value as of March 31, 1999 would have been $11,316,272 or $2.38 per share
of common stock. This represents an immediate increase in the net tangible book
value of $2.43 per share to existing shareholders, including DBLA, and an
immediate dilution in net tangible book value of $9.62 per share to the
purchasers of the units in the offering.

The following table illustrates the per share dilution to you:

<TABLE>
<S> <C>
Assumed initial public offering price............................................... $ 12.00
Net tangible book deficit per share, after DBLA acquisition....................... (.05)
Increase attributable to new investors............................................ 2.43
---------
Adjusted net tangible book value after offering..................................... 2.38
---------
Dilution per share to new investors................................................. $ 9.62
---------
---------
Dilution as a percentage of offering price.......................................... 80.2%
</TABLE>

The following table sets forth on a pro forma basis as of March 31, 1999
after giving effect to the DBLA acquisition, the number of shares of common
stock purchased from 3Dshopping.com, the total consideration paid to
3Dshopping.com and the average price per share (1) paid by the existing
shareholders and (2) paid by the purchasers of the units in this offering,
reflecting the sale of 1,100,000 units at the public offering price of $12.00
per unit, before deduction of underwriting discounts and other estimated
offering expenses payable by us and ascribing no portion of the value of a unit
to the warrant.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CASH CONSIDERATION
----------------------- --------------------------
NUMBER PERCENT AMOUNT PERCENT AVERAGE PRICE PER SHARE
---------- ----------- ------------- ----------- -----------------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders..................... 3,655,747 77% $ 2,294,188 15% $ 0.63
New Investors............................. 1,100,000 23 13,200,000 85 12.00
---------- --- ------------- ---
Total..................................... 4,755,747 100% $ 15,494,188 100%
---------- --- ------------- ---
---------- --- ------------- ---
</TABLE>

The foregoing table assumes no exercise of the underwriters' over-allotment
option, outstanding options or warrants, the warrants we are offering through
this prospectus or the representative's warrants. At March 31, 1999, options and
warrants were outstanding to purchase up to a total of 662,333 shares of common
stock at exercise prices ranging from $1.25 to $1.75. This number includes
warrants to purchase 100,000 units at a price equal to 90% of the initial public
offering price of the units issued to Generation Capital Associates in March
1999 as those warrants will be amended effective as of this offering.

21
<PAGE>
SELECTED FINANCIAL DATA

3DSHOPPING.COM

We derived the following selected statement of operations data for the
eleven months ended June 30, 1997 and the year ended June 30, 1998 and the
selected balance sheet data at June 30, 1998 from financial statements included
elsewhere in this prospectus, which have been audited by Friedman, Minsk, Cole &
Fastovsky, independent auditors. We derived the selected statements of
operations data for the nine month periods ended March 31, 1998 and 1999 and the
selected balance sheet data at March 31, 1999 from our unaudited financial
statements included elsewhere in this prospectus. The financial statements
included elsewhere in this prospectus contain all material financial information
about us and we urge you to read them carefully. In the opinion of our
management, the unaudited financial statements have been prepared on a basis
consistent with the audited financial information and include all normal
recurring adjustments necessary for a fair presentation of the results for these
periods and as of such dates. The selected financial data provided below for the
nine months ended March 31, 1999 are not necessarily indicative of our future
results of operations or financial performance. The data shown below should be
read in conjunction with the financial statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other financial information appearing elsewhere in this
prospectus.

Amounts for the eleven months ended June 30, 1997 reflect eleven months of
operations from August 13, 1996 (inception) to June 30, 1997.

The line item "Weighted average shares used in computing net loss per share"
is based on the weighted average shares of common stock outstanding for the
eleven months ended June 30, 1997, the year ended June 30, 1998 and the nine
months ended March 31, 1998 and 1999. It excludes 0, 32,609, 32,609 and 32,609
shares, respectively, of common stock issuable upon exercise of outstanding
options, warrants and convertible debt. Additional information about these
options is provided under "Shares Eligible for Future Sale." Note 1 of Notes to
Financial Statements includes an explanation of the determination of the number
of shares used in computing net loss per share.

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
JUNE 30, MARCH 31,
---------------------- ----------------------
STATEMENT OF OPERATIONS DATA: 1997 1998 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues............................... $ -- $ 18,404 $ 644 $ 50,311
Operating expenses:
Sales and marketing...................... 973,283 473,665 312,757 652,049
Research and development................. 294,360 170,259 162,214 346,131
General and administrative............... 644,993 460,220 273,969 2,073,491
---------- ---------- ---------- ----------
Total costs and expenses................. 1,912,636 1,104,144 748,940 3,071,671
---------- ---------- ---------- ----------
Loss from operations....................... (1,912,636) (1,085,740) (748,296) (3,021,360)
Interest expense........................... 3,089 10,373 5,708 61,269
Other income............................... 10,000 13,500 13,500 3,250
---------- ---------- ---------- ----------
Net loss................................... $(1,905,725) $(1,082,613) $ (740,504) $(3,079,379)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net loss per share......................... $ (.59) $ (.28) $ (.20) $ (.77)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares used in computing
net loss per share....................... 3,210,651 3,823,228 3,774,038 4,024,482
</TABLE>

22
<PAGE>

<TABLE>
<CAPTION>
JUNE 30,
BALANCE SHEET DATA: 1998 MARCH 31, 1999
---------- --------------
<S> <C> <C>
Cash and cash equivalents....................................... $ 144,564 $ 469,793
Working capital (deficit)....................................... (165,096) (257,914)
Total assets.................................................... 229,529 841,388
Accumulated deficit............................................. (2,988,338) (6,067,717)
Shareholders' equity (deficit).................................. (98,626) 54,471
</TABLE>

DBLA

We derived the following selected statement of operations data for the years
ended December 31, 1997 and December 31, 1998 and the selected balance sheet
data at December 31, 1998 from financial statements included elsewhere in this
prospectus, which have been audited by Friedman, Minsk, Cole & Fastovsky,
independent auditors. We derived the selected statements of operations data for
the three month periods ended March 31, 1998 and 1999 and the selected balance
sheet data at March 31, 1999 from unaudited financial statements included
elsewhere in this prospectus. The financial statements included elsewhere in
this prospectus contain all material financial information about DBLA and we
urge you to read them carefully. In the opinion of DBLA's, management, the
unaudited fiancial statements have been prepared on a basis consistent with the
audited financial information and include all normal recurring adjustments
necessary for a fair presentation of the results for these periods and as of
such dates. The selected financial data provided below for the three months
ended March 31, 1999 are not necessarily indicative of our future results of
operations or financial performance. The data shown below should be read in
conjunction with the financial statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other financial information appearing elsewhere in this
prospectus.

<TABLE>
<CAPTION>
DECEMBER MARCH 31,
BALANCE SHEET DATA: 31, 1998 1998
----------- ---------
<S> <C> <C>
Cash.................................................................. $ 52,018 $ (1,795)
Working capital (deficit)............................................. (62,669) (93,221)
Total assets.......................................................... 217,341 208,075
Retained earnings (deficit)........................................... 2,814 (30,850)
Shareholders' equity (deficit......................................... 32,814 (850)
</TABLE>

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS PROVIDES INFORMATION THAT WE BELIEVE
IS RELEVANT TO AN ASSESSMENT AND UNDERSTANDING OF OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION FOR THE ELEVEN MONTHS ENDED JUNE 30, 1997, THE FISCAL YEAR
ENDED JUNE 30, 1998 AND THE NINE MONTH PERIODS ENDED MARCH 31, 1998 AND 1999.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

Since beginning operations in August 1996, we have devoted substantially all
of our resources to designing, implementing and introducing our marketing and
display system. From inception through March 31, 1999 we raised total equity
capital of $2,141,063 and had an accumulated deficit of $6,067,717 including
non-cash charges for our common stock issued as compensation. While still
developing our technology, we began to receive revenues from sales of services
in April 1998. Notwithstanding these revenues, we operated at a loss for fiscal
1998 and we are continuing to operate at a deficit as our expenditures for
marketing, product development and general and administrative costs exceed our
gross revenues. We expect the operating deficit to continue and to increase over
at least the next twelve months as we incur increasing levels of expense to
support growth.

We believe that our historical operating results are not indicative of
future performance for the following reasons, among others:

- The receipt of the proceeds of this offering and their use to fund our
anticipated growth will materially change expense levels in all major
categories and are expected to support substantial increases in revenues
from operations;

- The acquisition of DBLA has changed substantially the character and scope
of our existing business (see "Business--Acquisition of DBLA"); and

- We have recently emerged from the development stage and anticipate
substantial increases in the number and size of customer orders and
revenues from operations.

Although we expect substantial growth in both revenues and expenses, we
anticipate that increases in expenses will occur more rapidly than corresponding
increases in revenues. Also, while we are committed, at least in the short term,
to substantial increases in expenses, we cannot guarantee that revenues will
increase correspondingly. Like many companies attempting to build an
Internet-based business, we expect over at least the next year and for an
indeterminate period of time thereafter to follow a strategy of establishing
market share by making expenditures for marketing and infrastructure development
that exceed current revenues.

The DBLA assets that we have acquired relate to a business that is more
traditional than the core 3Dshopping.com business and had been fully operational
for three years. As a result, DBLA recorded larger revenues than ours in 1997
and 1998 and was profitable in both years. While we expect to use DBLA's assets
to continue and possibly expand the business it operated, we do not intend to
focus substantial future business development activities on the catalog and
print advertising production business as a business separate from our Web site
business. If our business development plans are successful, we expect that
revenues from Web site services will increase more rapidly than catalog and
print advertising sales. Because DBLA's catalog customers may also be good
prospects for Web site services, we may also develop business involving both
aspects of our business for a single customer. As a result of operating
synergies and differences between the operation of a closely held corporation
and a public company, we expect that some general and administrative expenses
attributable to the operation of the DBLA assets may decrease in the future.
Because DBLA operated as a Subchapter S corporation prior to our acquisition of
its business, it did not record significant tax expense. Future

24
<PAGE>
income from the assets acquired from DBLA will contribute to taxable earnings
and profits at the corporate level.

3DSHOPPING.COM

RESULTS OF OPERATIONS. For the eleven months ended June 30, 1997, we had no
revenues and incurred total expenses of $1,915,725. Expenses consisted of
$294,360 of research and development expense, $973,283 of sales and marketing
expense and $644,993 of general and administrative expenses. $1,365,808 of the
total expense amount resulted from expense attributable to the issuance to
employees and independent service providers of stock options exercisable at
below fair market value. Other income of $10,000, consisting principally of
payments under an Internet co-marketing agreement, resulted in a net loss for
the period of $1,905,725, or $0.59 per share of common stock.

For the year ended June 30, 1998, expenses declined to $1,114,517 and
consisted of $170,259 of research and development expense, $473,665 of sales and
marketing expense and $460,220 of general and administrative expense. The
decline in expenses was due primarily to decreases in purchases of supplies and
reductions in research and development and the effects in 1997 of a charge for
stock issued at below fair market value. Revenues of $18,404 and other income of
$13,500 resulted in a net loss for the year of $1,082,613, or $0.28 per share of
common stock.

For the nine months ended March 31, 1999, expenses increased substantially
from $748,940 for the nine months ended March 31, 1998 to $3,071,671 and
consisted of $346,131 of research and development expense, $652,049 of sales and
marketing expense and $2,073,491 of general and administrative expense. The
increase in expenses was due primarily to increases in payroll and compensation
expenses and fees paid to consultants. $2,290,646 of the total expense resulted
from expense attributable to the issuance to employees and independent service
providers of stock and stock options at below fair market value and does not
represent cash expense. Revenues of $50,311 and other income of $3,250 resulted
in a net loss for the nine month period ended March 31, 1999 of $3,074,379 or
$0.77 per share of common stock. Revenues and other income in the nine month
period ended March 31, 1998 were $644 and $13,500 resulting in a net loss for
the period of $740,504 or $0.20 per share of common stock.

At December 31, 1998, we had net operating loss carryforwards of
approximately $1,376,000 and research and development tax credits of $34,000 for
federal income tax purposes. State net operating loss carryforwards of
$1,396,000 and research and development tax credits of $13,200 will expire
beginning in 2002 and federal net loss carry forwards will expire beginning in
2012 if not used. As a result of changes in ownership, including changes
resulting from this offering, as defined in Section 282 of the Internal Revenue
Code of 1986, as amended, the annual deductibility of net operating loss
carryforwards is limited. A valuation allowance has been recorded against total
deferred tax assets of $484,250 because realization is primarily dependent on
generating sufficient taxable income prior to expiration of the net operating
loss carryforwards. The research and development tax credits expire beginning in
2012.

LIQUIDITY AND CAPITAL RESOURCES. We have funded our operations primarily
through the sale of common stock and to a lesser extent, by issuing notes and
other borrowings. From inception through March 31, 1999, we raised net proceeds
of approximately $2,095,758 from sales of common stock for cash. In some cases,
we have issued common stock in return for goods or services. As of March 31,
1999, we had a total of $632,103 of outstanding notes and other obligations for
money borrowed, cash and cash equivalents of $469,793 and a working capital
deficit of $257,914. We do not have any credit arrangements with any banks.

Our liquidity and capital needs relate primarily to working capital and
other general corporate requirements. Since inception, we have not received any
significant cash flow from operations or investing activities. We expect,
however, that the net proceeds from this offering will provide us with

25
<PAGE>
sufficient capital resources to fund our operations through June 30, 2000. Based
on our current plans, we believe the proceeds from this offering will provide us
with sufficient capital resources to fund our operations for at least the next
three years. Expectations about our long-term liquidity may prove inaccurate if
our plans change. As we increase sales, we expect increased cash flow from
operations.

On March 18, 1999, we borrowed $500,000 from an institutional lender to fund
expenses associated with this offering and to cover interim operating expenses
pending receipt of the offering proceeds. We issued an unsecured promissory
note, payable in a single payment on or before August 31, 1999 and bearing
interest at the rate of 9% per annum. If the note is not fully paid when due, it
is automatically exchanged for a new note that is convertible and is not
prepayable, provided that, as long as this offering is being actively pursued,
the new note shall remain prepayable and non-convertible until October 31, 1999.
The new note would become due and payable June 30, 2001 unless demanded earlier
by the lender on 10 days notice at any time after March 31, 2000. We also issued
to the lender common stock purchase warrants that, as amended effective the date
of this offering, are exercisable during a three-year period beginning on the
later of the first anniversary of the effective date of this offering and March
31, 2000. The warrants are exercisable to purchase 100,000 units for a price
equal to 90% of the initial public offering price of the units and are
redeemable by us between July 1, 1999 and July 1, 2000 for a price increasing
from $400,000 to $500,000 over the period. The notes and the warrants are
restricted from transfer other than transfers to members of a group under common
control or distributions to fund investors, pursuant to a bona fide pledge or
hypothecation or by will or pursuant to the laws of descent and distribution.
The units issuable on exercise of the warrants or conversion of the new note
will be "restricted securities" under Rule 144 under the Securities Act.

Net cash used in operating activities was $442,163 in 1997 and $751,091 in
1998. The net cash used in operating activities in 1998 was primarily
attributable to our net loss, as adjusted for common stock, options and warrants
issued for services and compensation. This loss, the increase in prepaid
expenses and accounts receivable, the decrease in accounts payable, and the
acquisition of property and equipment were funded partially by additional
borrowings under the shareholders loan and two loans from third parties, but
principally by cash received from the sale of stock. The net cash used in
operating activities in 1997 was primarily attributable to our net loss, as
adjusted for common stock issued for services. This loss, the increase in
prepaid expenses and accounts receivable, and the acquisition of property and
equipment was funded partially by accounts payable and a shareholders loan, but
principally by cash received from the sale of stock.

Net cash used in operating activities was $547,365 in the first nine months
of 1998 and $843,256 in the first nine months of 1999. The net cash used in
operating activities in the first nine months of 1999 was primarily attributable
to our net loss, as adjusted for depreciation and amortization and common stock,
options and warrants issued for services, compensation and financing. This loss,
the increase in prepaid expenses and accounts receivable, and the acquisition of
property and equipment were funded partially by increases in accounts payable
and customer prepayments, and additional borrowings under the shareholders loan,
but principally by a bridge loan of $500,000 and cash received from the sale of
stock. The net cash used in operating activities in the first nine months of
1998 was primarily attributable to our net loss, as adjusted for common stock,
options and warrants issued for services and compensation. This loss, the
increase in prepaid expenses and accounts receivable, the decrease in accounts
payable, and the acquisition of property and equipment was funded partially by
customer prepayments, additional borrowings under the shareholders loan and a
loan from a third party, but principally by cash received from the sale of
stock.

Net cash used in investing activities was $114,270 in 1997, $10,736 in 1998,
$7,313 in the first nine months of 1998 and $82,204 in the first nine months of
1999. The net cash used in investing activities in all periods was primarily
attributable to our acquisition of property and equipment.

26
<PAGE>
Net cash provided by financing activities was $553,864 in 1997 and $908,960
in 1998. The net cash provided by financing activities in 1998 was primarily
attributable to proceeds from the issuance of common stock and debt. The net
cash provided by financing activities in 1997 was primarily attributable to
proceeds from the issuance of common stock. Net cash provided by financing
activities was $522,692 in the first nine months of 1998 and $1,250,689 in the
first nine months of 1999. The net cash provided by financing activities in the
first nine months of 1999 was primarily attributable to proceeds from the
issuance of common stock and proceeds from the issuance of debt to an
institutional lender. The net cash provided by financing activities in the first
nine months of 1998 was primarily attributable to proceeds from the issuance of
common stock and proceeds from the issuance of debt.

DBLA

RESULTS OF OPERATIONS. DBLA achieved $1,342,500 of revenues in 1997 and
$2,228,298 of revenues in 1998. The difference was a result of increased revenue
from one new customer. Cost of sales of $816,437 in 1997 and $1,638,251 in 1998
resulted in gross profit of $526,063 in 1997 and $590,047 in 1998. Gross profit
declined as a percentage of sales from 39.1% in 1997 to 26.5% in 1998. The
decline was due principally to the lower margins on revenue from this new
customer.

General and administrative expenses increased from $450,347 in 1997 to
$567,200 in 1998 but declined as a percentage of revenues from 33.5% in 1997 to
25.5% in 1998. $52,906 of the increase resulted from our officers' compensation
while the percentage decline was a result of the increase in revenue without a
proportionate increase in administrative costs.

Interest expense of $2,989 in 1997 and $4,733 in 1998 resulted from
additional capital leases in 1998. Interest and taxes resulted in net income of
$71,227 in 1997 and $17,314 in 1998.

For the three months ended March 31, 1999, revenues of $231,574 decreased
from $459,331 for the three months ended March 31, 1998 because of the loss of
two major customers who accounted collectively for 69% of DBLA's revenues for
the year ended December 31, 1998. DBLA lost one of these customers because it
merged with another of DBLA's clients. Gross profit increased from $61,801, or
13.5% of revenue in the first quarter of 1998 to $108,314 or 46.8% of revenues
in the first quarter of 1999, because of higher profit margins on the 1999
revenues. This higher profit margin is attributable in part to the loss of
relatively low margin business for one of the customers referred to above.
General and administrative expenses decreased from $148,441 in 1998 to $137,096
in 1999.

In the fourth quarter of 1998 and the first quarter of 1999, DBLA lost two
customers who accounted for $1,291,500 and $225,200 of its revenues in fiscal
1998. Because business for the larger of the two accounts was at margins
substantially lower than DBLA's customary margins, the impact of the loss of
this business on earnings was less severe. In general, DBLA's revenues have
undergone significant fluctuations over short periods of time as the result of
DBLA's dependence on a relatively small number of orders each of which can have
a substantial impact on revenue levels. We expect these fluctuations to continue
with respect to the catalog business unless and until a broader catalog business
base is developed. The business operated by DBLA has traditionally been slower
in the first quarter than during the rest of the year. This seasonality
explains, to some extent, DBLA's loss of customers during the first quarter of
1999.

LIQUIDITY AND CAPITAL RESOURCES. DBLA has funded its operations from cash
flow from operations, shareholder loans and commercial credit, including
capitalized leases and financed purchase agreements. At March 31, 1999, DBLA had
an aggregate of $77,968 of indebtedness for money borrowed and capital lease
obligations, $39,000 of which consisted of current indebtedness under its
revolving credit line. After this offering, we expect that the capital
requirements of the DBLA business will be funded from cash flow from operations
and, if required, the net proceeds of this offering.

27
<PAGE>
PRO FORMA COMBINED

The value of the shares issued for the assets of DBLA exceeded the amounts
assigned to tangible assets, less liabilities assumed, by $153,975. This excess
is attributed to the intangible assets acquired, which are preliminarily
estimated to have a life of approximately three years. The annual amortization
on this asset will approximate $51,325. This amortization is included as an
adjustment to the pro forma statement of operations of the 3Dshopping and DBLA
for the year ended June 30, 1998 and the nine months ended March 31, 1999.
Actual amortization may differ, depending on the final allocation of the
purchase price and the evaluation of the lives of the assets acquired.

EXPOSURE TO MARKET RISKS

We do not have any financial instruments that are subject to market risk. We
expect to repay all of the amounts owed under our current financial instruments
with the proceeds from this offering.

YEAR 2000 COMPLIANCE

OUR PLAN. Our Year 2000 Compliance Plan relies on our third-party vendors'
representation as to their products' Year 2000 compliance. The manufacturers of
the principal software and hardware products on which our system is based have
provided us with statements of Year 2000 Compliance. We have not modified any of
the source code for these products.

We have assumed that basic utilities such as electric and telephone services
will continue to be available for our operations on and after January 1, 2000.
If this assumption proves incorrect, our operations would be materially
adversely affected for the duration of the utility interruption. Based on
communications to date, we do not believe a material Year 2000 deficiencies by
any of our suppliers exist.

COSTS. We believe costs incurred in responding to other parties' Year 2000
computer system deficiencies, together with the cost of any required
modifications to our systems, will not have a material impact on our results of
operations or financial condition. In the ordinary course we have improved our
Year 2000 readiness through recent system upgrades as part of our usual capital
improvement efforts. We have devoted management and technical resources to
address Year 2000 matters and expect to continue to do so. To date, however, no
specific expenditures have been made as a result of the Year 2000 issue and we
have not identified any specific future costs associated with Year 2000
readiness.

OUR MOST REASONABLY LIKELY WORST CASE SCENARIOS. Although we will continue
to devote resources if and as required to address our Year 2000 issues, these
efforts may not be effective in reducing or eliminating risks associated with
Year 2000 deficiencies. Moreover, our Web-based display system could contain
undetected Year 2000 problems or third-party products could contain such
problems. In addition, our assessment of third-party suppliers and vendors might
not be accurate and we may not have made inquiry of the appropriate vendor. Year
2000 problems could result in system failures, data corruption, the generation
of erroneous information and other significant disruptions of business
activities. Beyond risks related to product and vendor non-compliance, it is
possible that disruptions to the Internet itself will occur due to the
widespread failure of the Internet's hardware and software infrastructure.
Changes in buying and shopping patterns caused by other parties' efforts to
address Year 2000 problems could also disrupt our business. Furthermore, it has
been widely reported that a significant amount of litigation surrounding
business interruptions may arise out of Year 2000 issues. It is uncertain
whether, or to what extent, we may be affected by any of this litigation.

OUR CONTINGENCY PLAN. We do not have a contingency plan. We are in the
process of evaluating the need for a contingency plan and expect to finish the
evaluation and address any findings by early fall of 1999.

28
<PAGE>
BUSINESS

MARKET OPPORTUNITY

The Internet and other media facilitating electronic commerce have offered a
unique opportunity to market and sell products of varying kinds directly to the
ultimate consumer. From a single, central source, a vendor can offer product on
a worldwide basis, providing the consumer the opportunity to acquire information
about the product on his or her home or office computer and, ultimately, to
purchase the product entirely by keystroke entry while sitting at the computer.
Traditional retailing methods require distribution of inventory to a large
number of retail outlets that are expensive to build, maintain, stock and staff.
Mail order sales require expensive and widespread distribution of catalogs that
rapidly become obsolete and that are not necessarily available at the time the
buyer wants or needs to make a purchase. In contrast, e-commerce can offer the
consumer the information required to make a purchase decision and the ability to
make the actual purchase through a medium that can be kept constantly current,
that is available to the customer when needed and that does not require the
retailer to maintain expensive and widely distributed sales outlets, each of
which must be separately stocked with inventory.

Despite these obvious advantages, e-commerce has so far achieved significant
growth in only a relatively limited number of areas, including books, CDs, DVDs
and computers, securities, and travel. This is in part a result of consumer lack
of familiarity with the Internet and e-commerce generally but also, in part, a
result of limitations inherent in traditional e-commerce technology to provide
the customer with an experience that the customer perceives as similar to
in-store selection of merchandise or even to high-quality catalog sales. The
areas in which e-commerce has been successful have the common characteristic
that the customer either knew what he or she wanted before visiting the Web
site, as is often the case with book sales, or needed only to make a selection
from a limited number of objectively definable options, as with computers.
Merchandise, such as clothing, whose selection is more dependent on subjective
factors, has not, so far, achieved a high level of penetration into e-commerce.
According to Forrester Research and Forbes, online apparel sales for 1997 were
$89 million compared with $169.2 billion in the retail market. Total online
shopping revenue for 1997 was $1.14 billion with online apparel sales
representing less than 8% of that amount. According to the National Mail Order
Association, mail order sales were $169.5 billion in 1997. This amount indicates
that consumers do not need actually to touch the product. They do need, however,
to visually comprehend it in a way that does not apply to the kind of products
for which e-commerce has initially been the most successful.

Many clothing and accessory retailers are eager to expand their sales and
marketing efforts to include e-commerce but believe the electronic sale of
clothing and similar items will require a second generation of e-commerce
technology that is capable of providing the consumer with an experience closer
to the in-store experience. An e-commerce program that is successful in
providing this information can function both as an advertising medium, providing
information to shoppers that will lead them to visit the seller's store or to
call the seller's 800 number to order a product, or as a complete sales outlet
in which the entire decision and purchase occurs electronically.

THE 3DSHOPPING EXPERIENCE

We have developed technology and support Web sites that are capable of
delivering a complete visual package over the Internet or otherwise via
e-commerce. We provide this technology by designing, setting up and maintaining
Web sites primarily for retailers of apparel. We also provide services to seven
retailers of jewelry, flowers, antiques and other products. In contrast to
traditional static Web sites and retail catalogs, our Web sites support full
motion digital imaging and will support in the near future audio presentations
for viewers able to access the Web sites using a broadband connection or willing
to download data at a slower rate. This allows the shopper to view a model or
product through 360 degrees of rotation. It also allows a detailed examination
of the garment or accessory from several different angles. The technology is
also interactive, allowing the viewer to select a desired angle and

29
<PAGE>
freeze the frame. We have developed and expect to begin marketing in the near
future technology that will allow a viewer to zoom in on selected details, such
as buttons, stitching or other key features or to select and change colors from
a menu that includes all of the colors in which the garment is offered. We have
also received permission to use a technology that allows a 3D animation of a
human head to be placed on our Web sites. We are developing this technology to
create a "cyber-salesperson" that we can use in the future as a salesperson,
explaining the key features of the garment being viewed. This new technology
will support a menu of alternatives, allowing the shopper to choose from a list
of computer generated likenesses of customized and/or well-known product
spokespersons. We expect to make this technology available to our customers in
the third quarter of 1999.

Our typical Web site opens with a selection of 30 to 40 products displayed
on models that move slowly across the screen. It is possible to include up to 80
images on this Web page. The viewer can click on any model to go to a page that
features the displayed garment. This second page provides access to the various
visual features selected by the retailer and also provides data in traditional
format, such as price, size and other objective information about the garment.
At the retailer's option, the page may allow the shopper to add the item to a
"shopping cart" for later purchase. Once the shopper has completed his or her
selections, the Web site supports electronic product purchases by credit card,
can refer the shopper to a toll-free number from which the shopper can order the
product, or can provide the location of the nearest store.

OUR SYSTEM

We offer the following services to our customers as part of our marketing
and display system:

WEB SITE DESIGN AND SETUP. For a one-time fee, ranging from $3,000 to
$50,000 or more, depending on the size and complexity of the project, we will
design and build a complete Web site for our customer. The site can be accessed
through the customer's home page and/or directly through our home page. The
customer provides direction as to the size, features and other characteristics
of the desired site and furnishes the items of apparel that will be featured and
a detailed description of those items. We then create an inventory database,
provide the models, studio facilities and other requirements to create the
visual images and, using our proprietary technology, incorporate these images
into a Web presentation containing the visual features selected by the customer.
As a result of our acquisition of DBLA, we are able to use our own studio
facilities and to take advantage of DBLA's relationships with photographers,
models and other participants in production of photographs for use in our
display system, as well as catalogs and print advertising. Additional fees are
charged as changes are made in the customer's Web site, for example, to add new
items or to change presentation features.

WEB SITE MAINTENANCE. We charge a periodic fee for maintaining the
customer's Web site. In addition to making minor changes in Web site content, we
conduct general site maintenance functions, review the principal Internet search
engines to determine whether our Web sites are appropriately listed in response
to typical inquiries and perform other functions designed to make maximum use of
the Web sites' potential. Fees for this service currently range from $100 to
$750 per month depending on the size of the Web site, the number of visitors to
the site and the frequency with which we update the particular Web site. We
expect these fees to increase as Web site volume and traffic increases.

WEB SITE TRAFFIC CREATION. As an additional service at no extra fee, we
maintain online "shopping malls" at 3Dshopping.com and other Web sites. At these
malls, we have included hyperlinks to our customers' Web sites. The purpose of
the malls is to create shopping communities having shared interests. We believe
such online communities will draw more shoppers than individual Web sites. Our
malls have achieved steady growth, attracting 223,713 visitors in March 1999. We
plan to include brand name manufacturers, traditional brand retailers and
Web-only retailers with brand potential in our malls. We believe shoppers
eventually will be able to purchase apparel, jewelry, flowers, housewares,
gifts, antiques, ancient art, children's wear and toys at our malls. In addition
to our malls, we have

30
<PAGE>
agreements with malls operated by other companies under which those malls
include links to our Web sites. Links to our sites are also included on search
engines such as Lycos, Excite and HotBot.

ORDER PROCESSING. We offer our customers a complete range of electronic
order processing services. Many order processing service providers simply take
order and credit card information and transmit this data to the retailer by fax
or telephone. These systems have high error rates with respect to the credit
card and other data transmitted, requiring the retailer to sort out the errors
by attempting to contact the shopper. We have developed a fully computerized
order processing service that automatically processes and verifies credit card
data with the issuing bank and runs a fraud detection scan while the shopper is
still online. If the data is not entered correctly or if there is some other
problem, we can ask the shopper to re-enter data. Orders and credit data are
transmitted directly to the customer's fulfillment system, resulting in minimal
loss of time and reduced processing errors. Orders can be forwarded to our
customers by fax or e-mail or through a direct link to the customer's computer
system, depending on the customer's preferences and system capabilities. When
the orders are filled, our processing software automatically instructs the
credit card company to release the purchase money into the merchant's account.
For customers electing this service, we receive between 7% and 15% of the total
value of orders processed. The actual percentage we charge depends on the size
of the customer, the price of the goods being sold and the volume of goods sold.
Some customers may prefer to manage order processing themselves by referring
their customer to a Web site managed by them or a toll-free number. For these
customers, we will charge a fee based on the number of site visits. To date, no
customer has chosen this option.

In contrast to many Internet companies, we do not currently offer space for
"banner" advertising. We believe such advertisements detract from the overall
appearance of our Web sites, are distracting to shoppers and are therefore
inconsistent with our primary goal of providing an enhanced electronic
experience to support our customers' product presentation needs.

OUR CUSTOMERS

We market our Web-based marketing and display system to customers with
established brand names and to non-brand name customers. Customers who have
accounted for sales of $3,500 or more during the current fiscal year include
Leavens Awards Company, ProvenanceLA, Manix, K-Swiss, SHC Incorporated, Cobra
Golf and Flowers in Hours. We also have recently begun to provide our system to
Nordstrom. Our customer base consists primarily of apparel retailers and
manufacturers, but also includes sellers of antiques, flowers and nutritional
supplements. Many of our customers sell a substantial percentage of their
products through mail order catalogs and have shipping capability in place.
Based on past work with our customers, which has allowed us to test and refine
our Web-based marketing and display system, we expect to attract additional
customers with more recognizable brand names. We believe customers, with
national name recognition, may attract additional attention to our 3D shopping
system, benefiting our large and small customers.

Our customers have the option to use our Web sites for a variety of
purposes. Most of our customers use our system as a fully functional sales
channel, offering products directly to shoppers over the Internet. Some
customers use our Web sites as a marketing medium designed to attract shoppers
to other retail channels that they maintain. For example, Nordstrom has chosen
to use our system to display clothing offered in its stores but will not provide
electronic shopping cart e-commerce capability. Instead, Nordstrom intends to
use its Web site, which will incorporate our 3D display technology, to provide
information on products with a toll-free number that customers can call to order
products directly from Nordstrom. The toll-free number is serviced and
maintained by Nordstrom. Our arrangement with Nordstrom is currently limited to
designing a portion of its Web site to take advantage of our 3D display
services. This arrangement is cancellable on short notice by Nordstrom. We are
discussing other projects with Nordstrom but cannot guarantee that any such
projects will be agreed to by Nordstrom.

31
<PAGE>
We also provide Intranet design, implementation and maintenance services to
companies that participate in the Leavens Awards Program, a supplier and
administrator of employee awards programs. For example we have provided our
technology and services to Shell Oil Company for its internal employee benefits
program. We believe our 3D technology is well suited for displaying product
awards under these programs for items which need to be understood visually such
as jewelry, pens and clothing.

We expect that, for the foreseeable future, our target customer base will
consist of clothing and accessory retailers. We believe that this market segment
has sufficient potential to support significant growth in our business and that,
by concentrating in this area, we can position ourselves as the leading provider
of Web-based marketing and display systems in this market segment. We also serve
customers in other areas and expect to continue to do so as the opportunity
arises.

As a result of our acquisition of DBLA, we have added Gottschalk's
Department Stores, K-Swiss and House of Almonds as customers. Currently, we
produce catalogs and advertising for these customers. We expect to market our
Web-based display system to their customers. However, we cannot assure you that
we will persuade any of DBLA's customers to use our Web-based merchandizing and
display system.

MARKETING AND SALES

We have engaged a marketing firm to help us enhance our name recognition
both with potential clients and with consumers who visit our Web sites. We also
enter into cross-marketing relationships with other companies involved in
e-commerce, including MediaOne and work in cooperation with other Web site hosts
by putting click-through banners on each other's Web sites so that traffic
generated on one Web site has the ability to move easily to the cross-marketing
partner's Web site by simply clicking on the banner. Finally, we are gaining
recognition within the industry by participating in various tradeshows.

In addition to the sales efforts of Mr. Weisdorn and Mr. Smith, our in-house
sales force identifies and develops potential clients through cold calling and
other direct marketing techniques. As of April 15, 1999, we employed six people
to carry out our sales and marketing activities, three of whom came to us from
DBLA.

TECHNOLOGY

Wherever possible, our products are based on commercially available software
products which are linked in proprietary and innovative ways. Because there are
a number of alternative software programs that we can use to create our 3D
technology, we are not reliant on a single source of software. For example, the
rotation of our 3D images is created using Java. The 3D image itself is created
using a digital photography system that we developed. Compression for low speed
Internet connections is produced through industry standard programs. While we
have adapted industry standard technology to fit our own applications, and
expect to continue to do so, we do not anticipate that the service we provide
will require the development of substantial, independently developed computer
programs or other technology.

We believe that our use of Java provides an advantage over sites that
require multimedia plug-ins. Plug-ins are awkward and often difficult and
time-consuming to download and use. These difficulties may deter some users from
visiting the site or purchasing any merchandise once there. Java requires no
plug-ins and therefore does not require a shopper to download a plug-in file--a
process that can take several minutes. Although Java does have some
drawbacks--older browsers and text-based browsers may not be able to run Java
applets, there is no industry-standard version of Java and Java may cause a
computer to slow down or crash--we believe the benefits outweigh the drawbacks.
In addition, as faster computers become less expensive and more popular, the
limitations of Java may become less pronounced.

32
<PAGE>
RELATIONSHIP WITH MEDIAONE

We have entered into a Web site linking and promotion agreement with
MediaOne, Inc., a cable company with a presence in 22 metropolitan markets
nationwide. MediaOne provides an entertainment, education, and information
service as part of its business broadband information service on its numerous
Web sites on the Internet. The agreement with MediaOne is non-exclusive and
provides for MediaOne to feature the 3Dshopping.com Web site prominently in the
shopping section of its home pages and to provide links to our Web site from
MediaOne's Web site.

The agreement also provides for MediaOne and us to

- use each other's tradenames, service names, servicemarks, and trademarks
for promotional and demonstration purposes and

- pursue the development of co-marketing programs that will allow each of us
to access the other's customers and clients

To view conveniently all of the features we offer and plan to offer,
including full motion digital imaging and virtual reality, a shopper must have
access to the Internet via a broadband connection. Broadband connections include
cable, satellite and a variety of digital subscriber lines, also known as DSL.
Broadband connections are much faster than typical modem connections over a
standard telephone line. For example, a 3.5 megabyte file takes approximately 16
minutes to download using a standard modem operating at 14.4 kbps. The same file
will download in a few seconds over a high-speed cable modem. Although we have
designed our Web sites to accommodate differing connection speeds, we believe
the success of 3D-style e-commerce in the future will be dependent on the
availability of high-speed Internet access.

While download speed depends primarily on the speed of the connection
between the user and the Internet, the practical rate at which data can be
received by a user also depends on a variety of factors within the Internet
itself, including capacity and usage of the host site and the capacity of the
various links in the Internet through which the data passes from the host site
to the user. To deal with the dramatic increase in the volume of data being
transmitted over the Internet, various companies including MediaOne are working
on the process of speeding up data delivery by developing "backbones" or
proprietary communication channels that ensure the rapid processing of data
within the Internet itself. Web sites that have direct access to these backbones
will transmit data at very high volumes, permitting the effective use of the
high-speed downloading capabilities offered by broadband connections.

We entered into the agreement with MediaOne in order to take full advantage
of high-speed cable Internet access.

ACQUISITION OF DBLA

In order to more fully integrate the range of services we offer, we have
acquired the business operations and operating assets of DBLA in exchange for
10,000 shares of our common stock and the assumption of substantially all of the
known liabilities of DBLA. The excess of the purchase price over the asset value
is $153,975 and will be accounted for as goodwill which will be amortized over a
three year period. The acquisition occurred on May 21, 1999 but was deemed
effective for accounting purposes as of April 1, 1999. Prior to the acquisition,
DBLA designed and produced print advertising, direct mail catalogs, brochures
and other printed advertising and promotional materials. It operated from a
studio located in North Hollywood, California and had a staff of two management
and five other full time employees. In coordinating the production of a catalog
or print advertising, DBLA often increased its staff by four times or more
depending on the particular project. Coordinating this process requires hiring
and overseeing art directors, photographers, modelling agencies, hair and makeup
artists, set designers, location managers and other personnel that may be
required for any given production. We believe that having the ability to
coordinate such a complex process in-house, rather

33
<PAGE>
than contracting with a third party to provide these services, provides us with
a competitive advantage, both in terms of cost and efficiency, over other
potential providers of 3D display technology on the Internet. In January 1999,
we began producing digital images that support our Web sites using models
selected by DBLA and DBLA's studio facilities. The acquisition of DBLA gives us
direct access to studio facilities and trained studio staff for which we believe
our requirements will increase substantially over the next year to three years.

In addition to continuing to operate DBLA's traditional hard copy
advertising production business, we believe that we can increase our customer
base by offering to DBLA's traditional customers the opportunity to produce the
digital images necessary to support a Web site at little additional cost.
Substantially all of the time, and therefore the cost, of producing an apparel
catalog is taken up by facilitating the logistics of a photoshoot, such as
overseeing art directors, photographers and set designers, as well as dressing,
making up and otherwise preparing the models for each picture. In a typical
8-hour day, a model can display between 12 and 15 different items of clothing.
Once the model is ready for a static photo session, it takes only a few more
minutes to capture the digital imaging content using our proprietary digital
imaging technology. Because the additional time involved is relatively minor,
the incremental cost of producing the additional images is substantially lower
than if the images are produced on a stand-alone basis. We plan to offer the
opportunity to DBLA's customers to order the additional images so that they will
be prepared, either immediately or in the future, to sell clothing through
e-commerce through one of our Web sites. In this way, we intend to position
ourselves as a "one-stop" source for fashion product marketing using the latest
technology to create compelling and visually unique Web sites, mail order and
electronic catalogs and other advertising materials for the fashion industry.

COMPETITION

We compete with a broad range of marketing, Web page design and e-commerce
alternatives available to our customers. We also compete with a broad range of
other shopping alternatives to attract consumers to our Web sites.

Although many of our retail customers use our Web sites as their primary
sales channel, we believe our larger, name-brand customers and potential
customers see us primarily as a marketing solution, competing for a share of the
customer's marketing and advertising budget. In that capacity, we compete
against all of the traditional marketing resources, including print and other
media advertising, mail order catalogs, in-store displays, coupon and other
incentive programs and phone-in or computer-based services maintained by the
customer. In a narrower sense, we compete against a large number of providers of
Web site design and related Internet services. Competitors for our retail
customers differentiate themselves on the basis of creativity, quality of
service, technical innovation and price. While we believe we are very
competitive in all of these areas, we are one of several participants in these
markets and several of our competitors have greater financial resources than we
do.

At the consumer level, we and our customers compete for the attention and
budget of consumers for the products that our customers sell. This competition
includes traditional retail stores, mail order catalogs and a growing number of
Internet-based alternatives. While we believe that our system offers significant
marketing advantages over other existing Internet-based systems, many factors
affect competition for Internet consumers, including affiliations with companies
that control or direct access to the Internet or to individual Web sites.
Competition for online shoppers is based largely on the ability to design
attractive Web sites that people want to visit. There are many competitors in
this market and many of them have far greater financial resources than we have.

We also compete with other producers of mail order catalogs for retail
customers. Some of these producers are much larger and have greater financial
resources than we do. Participants in this industry differentiate themselves
largely based on creative content and customer service. We cannot guarantee that
we will be able maintain our creative distinctiveness and desirability to
customers.

34
<PAGE>
EMPLOYEES

As of May 19, 1999, we had 24 full-time employees and two part-time
employees, 13 of whom were involved in Web site design and development, one in
research and development, six in sales and marketing and six in finance,
administration and operations. Seven of these employees are former employees of
DBLA. Our future success depends, in part, on our continuing ability to attract,
train and retain highly qualified technical, sales and managerial personnel.
Competition for such personnel is intense, and we do not assure you that we will
be able to recruit and retain sufficient numbers of qualified personnel. None of
our employees is represented by a labor union. We have not experienced any work
stoppages and consider our relations with employees to be good.

FACILITIES

We lease approximately 2,000 square feet of office space in two office
buildings located in Venice, California. One of our leases will expire on May
31, 2000, with an option to renew for an additional year. We believe our current
facilities will be adequate through calendar year 1999. We are in the process of
locating additional space to meet our expected requirements beyond 1999. We also
occupy on a month-to-month basis approximately 10,000 square feet of office and
photography studio space located in North Hollywood, California from a limited
liability company whose members are also the shareholders of DBLA. This facility
was formerly occupied by DBLA. We believe these facilities will be adequate
through calendar year 1999.

LITIGATION

We are not engaged in any litigation that, singly or in the aggregate, will
have a material adverse effect on our business, financial condition or results
of operations.

35
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information about our officers, directors,
executive officers and certain other key employees as of the date of this
prospectus:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Lawrence Weisdorn.................. 41 Chairman of the Board and Chief Executive Officer
and Director
Robert J. Vitamante................ 53 President, Chief Operating Officer and acting Chief
Financial Officer
Brian A. Smith..................... 53 President, Creative Services
Robert J. Grant.................... 49 Treasurer and Secretary and Director
C. Michael Mellin.................. 56 Senior Vice President, Technology Operations
Donald R. Westland................. 40 Vice President of Technical Operations
Donald L. Hejmanowski.............. 39 Director
Joel F. McIntyre................... 60 Director
</TABLE>

LAWRENCE WEISDORN has been our Chairman of the Board and Chief Executive
Officer since May 1999. Prior to that time, he served as our President and a
director since our inception in August 1996. From January 1995 to August 1996,
Mr. Weisdorn was a founder and served as President and Chief Executive Officer
of Samuel Hamann Graphix, Inc. Samuel Hamann Graphix was formed in June 1996 to
develop technology for high-quality graphics usable in television commercials
and commercial operations. During the eight years before he joined Samuel Hamann
Graphix, Mr. Weisdorn worked as an independent marketing and sales consultant.

In December 1988, Mr. Weisdorn entered into an Agreement and Undertaking
with the British Columbia Securities Commission relating to various matters
concerning Mr. Weisdorn's management of two mining companies. Mr. Weisdorn and
one other member of management obtained salary advances and other benefits from
these companies without obtaining the prior approval of the disinterested
directors or of the Vancouver Stock Exchange. In obtaining the advances and
benefits, Mr. Weisdorn acted on advice of legal counsel which stated that such
advances and benefits were permitted but failed to add that the above-mentioned
approvals were required. The advances were made in the aftermath of the market
crash of October 1987, as a result of which Mr. Weisdorn incurred substantial
debts from losses in his margin accounts with four broker-dealers. The Agreement
prohibited Mr. Weisdorn from selling securities under certain exemptions
provided by British Columbia law or from being a director of a Vancouver Stock
Exchange company for a period of four years and required him to pay C$7,500 to
the British Columbia Minister of Finance. Mr. Weisdorn also acknowledged a
pledge of certain securities as security for repayment of the loans and the
payment to the Finance Minister described above. Mr. Weisdorn has fully complied
with the Agreement and he has advised us that he has fully repaid the companies
in question and his margin debts.

ROBERT J. VITAMANTE has agreed to join us as our President, Chief Operating
Officer and acting Chief Financial Officer upon completion of this offering.
From September 1994 to May 1999, Mr. Vitamante was self-employed as a business
and financial consultant assisting clients with strategic planning and business
development, acquisitions and mergers, management and operating systems, and
general business and tax advice. From September 1992 to October 1994, Mr.
Vitamante served as Executive Vice President--Finance and Administration and
Chief Financial Officer of Pinkerton's, Inc., a publicly traded international
security services company. In this capacity, Mr. Vitamante oversaw all
financial, administrative and information systems and supported an international
acquisition program. Other experience includes Senior Vice President and Chief
Financial Officer of The Olsten Corporation, a publicly traded temporary
services company, and accounting positions with Columbia Pictures Industries,
Inc. and KPMG Peat Marwick. Mr. Vitamante has been a licensed certified public
accountant since 1971.

36
<PAGE>
BRIAN A. SMITH has been our President, Creative Services since May 1999. Mr.
Smith has been President and Chief Executive Officer of DBLA since August 1993.
He managed DBLA as an independent business from January 1995 until the sale to
us of its assets. From 1990 to 1993, Mr. Smith was Vice President of Nobart,
Inc., a catalog design and production company, where he was in charge of all
West Coast operations. From 1987 to 1990, Mr. Smith served as Vice President,
General Merchandise Manager and Creative Director of Life Force Technologies, a
direct mail catalog company. From 1983 to 1987, Mr. Smith served as Vice
President of Creative Services for Harrison Service, a catalog design and
production company.

ROBERT J. GRANT has been our Treasurer and Secretary and a director since
August 1996. During this period of time until May 1999, Mr. Grant has also
served as our acting Chief Financial Officer. From April 1996 to August 1996,
Mr. Grant served as Office Manager of Samuel Hamann Graphix, Inc. From March
1995 to April 1996, he was a salesperson for two car dealerships. From January
1994 to March 1995, Mr. Grant was a principal of Grant & Associates, an
industrial real estate company. From January 1993 to January 1994, he worked in
corporate sales at Investors Title, a title insurance company. Mr. Grant
declared personal bankruptcy under Chapter 7 of the federal Bankruptcy Code in
1995.

C. MICHAEL MELLIN has been our Senior Vice President, Technology Operations
since June 1999. From March 1998 to June 1999, Mr. Mellin was the Vice
President, Technology and the Managing Director of the San Francisco operations
for Think New Ideas Inc., a publicly held interactive media and Internet
technology company. Prior to joining Think New Ideas Inc., and since May 1997,
Mr. Mellin was the Director of New Media and Advance Technology for Times Mirror
Company, where he assisted the company in evaluating technologies for
acquisition and supervising its corporate and subsidiary Web sites. From August
1995 until May 1997, Mr. Mellin was the Director of Technology & System
Integration for Prodigy Services Company, an Internet content and service
provider. Before joining Prodigy Services Company and since 1994, Mr. Mellin was
the Director of Engineering for Mosler Inc., an alarm and electronic business.

DONALD R. WESTLAND has been our Vice President of Technical Operations since
August 1997. Mr. Westland served as a consultant to us from August 1996 to
August 1997. During the seven years before joining us, Mr. Westland was a Senior
Project Engineer for Rubbermaid Inc. Mr. Westland declared personal bankruptcy
under Chapter 7 of the federal Bankruptcy Code in 1997.

DONALD L. HEJMANOWSKI has been a director of our company since August 1996.
Mr. Hejmanowski is President and a director of Genesis Oil & Gas. He has held
that position since April 1998. From 1990 to April 1998, Mr. Hejmanowski worked
as an independent corporate finance consultant, assisting companies with
financing, corporate strategy and financial public relations. From August 1996
to February 1997, Mr. Hejmanowski was employed by us as our investor relations
manager.

JOEL F. MCINTYRE became a director of the Company in June 1999. From 1963
through 1993, Mr. McIntyre was an attorney with the law firm of Paul, Hastings,
Janofsky and Walker. In 1993, Mr. McIntyre founded his own law firm specializing
in business law and transactional matters. Mr. McIntyre currently serves on the
Board of Directors of Hawker Pacific Aerospace and International Aluminum
Corporation, both publicly-held companies. Mr. McIntyre received a B.A. from
Stanford University in 1960 and a J.D. from University of California, Los
Angeles in 1963.

All members of the board of directors hold office until the next annual
meeting of shareholders and the election and qualification of their successors,
or until death, resignation, or removal. Officers serve at the discretion of the
board of directors. There are no family relationships among any of our directors
and executive officers. We are engaged in a search for additional independent
directors and expect to add at least one and possibly two independent directors
immediately following completion of this offering.

37
<PAGE>
BOARD COMMITTEES

We have an Audit Committee and a Compensation Committee. The Audit Committee
is composed entirely of independent directors and the Compensation Committee is
composed of a majority of independent directors. The Audit and Compensation
Committees consist of Mr. Hejmanowski and Mr. McIntyre. The Audit Committee
oversees actions taken by our independent auditors and reviews our external
audit. With respect to certain matters relating to accounting controls and our
external audit, our Chief Financial Officer reports directly to the Audit
Committee. The Compensation Committee reviews the compensation levels of our
executive officers and makes recommendations to the Board of Directors regarding
such compensation. The Compensation Committee also administers our 1999 Stock
Option Plan and recommends grants under the Plan to the Board of Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In the last fiscal year, our Board of Directors did not have a compensation
committee. Compensation decisions with respect to executive officers were made
by Lawrence Weisdorn.

EXECUTIVE COMPENSATION

DIRECTORS' COMPENSATION

Directors receive $1,000 for attendance at each board meeting, $500 for
attendance at each committee meeting and are reimbursed for the expenses they
actually incur in attending board meetings.

EXECUTIVE OFFICERS' COMPENSATION

The following table sets forth certain information regarding compensation
paid during our fiscal years ended June 30, 1997, 1998 and 1999 to our
President. No executive officer received salary and bonus in excess of $100,000
in those years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)
- ------------------------------------------------------------------------------------ --------- --------- -------------
<S> <C> <C> <C>
Lawrence Weisdorn, Chief Executive Officer.......................................... 1999 $ 53,000 $ 0
1998 $ 48,000 $ 0
1997 $ 41,000 $ 0
</TABLE>

We expect to pay Mr. Weisdorn a salary of $120,000 in fiscal 2000. Brian
Smith, our President, Creative Services, will be paid a salary of $120,000 per
year.

EMPLOYMENT AGREEMENT

We entered into an employment agreement with Mr. Vitamante in May 1999. Mr.
Vitamante's agreement provides that he will join us at the completion of the
offering as our President, Chief Operating Officer and acting Chief Financial
Officer. The agreement also provides for us to pay Mr. Vitamante a salary of
$200,000 a year, and he will be eligible for bonus compensation as determined by
our board of directors. The initial term of Mr. Vitamante's employment agreement
is two years. If he is terminated during that time--other than for cause--he
will be entitled to severance payments equal to the lesser of

- one year's salary or

- his salary for the balance of his two-year term.

We may terminate Mr. Vitamante for cause if he

- commits acts of gross negligence or worse in his duties,

- engages in misconduct that injures the company,

38
<PAGE>
- commits fraud or

- fails or refuses to discharge his duties with reasonable competence.

Until he joins our company, Mr. Vitamante has agreed to provide financial and
administrative services from time to time as requested by us and will be
compensated on an hourly basis.

STOCK OPTION GRANTS AND EXERCISES

We have adopted a 1999 Stock Option Plan, authorizing the grant of options
to purchase up to 1,000,000 shares of common stock. The plan was adopted to
promote and advance the interests of 3Dshopping.com and its shareholders by:

- enabling us to attract, retain and reward managerial and other key
employees, non-employees and directors; and

- strengthening the mutuality of interests between participants in the plan
and the shareholders in our long-term growth, profitability and financial
success by offering stock options.

We granted Mr. Smith incentive stock options to purchase 90,000 shares of
our common stock for $15.875 per share in April 1999. These options have a term
of ten years and become exercisable in equal installments over four years
beginning one year from the date of grant. In May 1999, we granted Mr. Vitamante
incentive stock options to purchase 142,940 shares for $16.875 per share. These
options have a term of ten years and vest over a two-year period beginning on
the date Mr. Vitamante commences employment with us. We have not granted options
to Mr. Weisdorn. In addition, we granted options to purchase 10,000 shares of
our common stock to the former employees of DBLA who have joined our operations.
These options have terms identical to the options granted to Mr. Smith.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We sublease approximately 425 square feet of office space from Donald
Westland, one of our executive officers. The rent on this sublease is $700 per
month. We believe this is a competitive lease rate for similar real estate in
the area where the office is located. Mr. Westland also maintains a Web site at
which he includes a link to our Web sites. We pay him a fee of $800 per month
for that link.

The studio which we have occupied since our acquisition of DBLA is owned by
a limited liability company of which Brian Smith is the principal member. We pay
this limited liability company approximately $3,600 per month for this
occupancy. We believe this is a competitive rate for similar real estate in the
area where the studio is located.

Our company was founded by Lawrence Weisdorn, Jr. in August 1996. At the
time of our inception, Mr. Weisdorn was the principal shareholder of Samuel
Hamann Graphix, Inc., a development stage company that had been in existence for
about one year at that time. We acquired property, equipment and other prepaid
assets from Samuel Hamann Graphix. In return for these assets, we assumed some
payroll and other liabilities of Samuel Hamann Graphix and liabilities of Mr.
Weisdorn in the amount of $18,500. The purchase price was allocated to the
tangible assets at their original cost. The balance of $5,306 was attributed to
goodwill.

From August 1996 to June 30, 1998, Mr. Weisdorn and his father, Lawrence
Weisdorn, Sr. advanced a total of $178,683 to our company. These advances were
made in the form of loans on which we pay annual interest of 7%. In fiscal 1998,
the Weisdorns advanced $108,860. We have repaid $118,095 of this indebtedness
from inception to June 30, 1998 and at May 7, 1999, we owed Lawrence Weisdorn,
Sr. $46,167, and our chief executive officer, Lawrence Weisdorn, Jr., a total of
$20,308. We expect to repay all remaining sums owing to Mr. Weisdorn and his
father with the proceeds of this offering. See "Use of Proceeds."

We have adopted a policy on future related party transactions. Under that
policy, any future transactions between us and any of our officers, directors or
affiliates will be approved or ratified by a majority of the independent outside
members of our board of directors who do not have an interest in the
transactions.

39
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth information, as of June 29, 1999, and as of
that date as adjusted to reflect the sale of the 1,000,000 units offered hereby,
with respect to the beneficial ownership of the common stock by (1) each
shareholder known by us to be the beneficial owner of more than 5% of our
outstanding common stock; (2) each of our directors; (3) the executive officer
named in the Summary Compensation Table; and (4) all current executive officers
and directors as a group. The address of each person listed below is: c/o
3Dshopping.com, 517 Boccaccio Avenue, Venice, California 90291. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of common stock issuable on exercise of currently
exercisable or convertible securities or securities exercisable or convertible
within 60 days of June 29, 1999 are deemed beneficially owned and outstanding
for computing the percentage owned by the person holding such securities, but
are not considered outstanding for computing the percentage of any other person.
Except as modified by applicable community property laws, each shareholder named
in the table has sole voting and investment power with respect to the shares set
forth opposite that shareholder's name.

<TABLE>
<CAPTION>
SHARES PERCENT OF SHARES OUTSTANDING
BENEFICIALLY ----------------------------------
NAME OF BENEFICIAL OWNER OWNED BEFORE OFFERING AFTER OFFERING
- --------------------------------------------------------------- ----------------- ----------------- ---------------
<S> <C> <C> <C>
Lawrence Weisdorn.............................................. 700,000 19.1% 14.7%
Donald L. Hejmanowski.......................................... 250,000 6.8% 5.3%
Robert J. Grant................................................ 117,000 3.2% 2.4%
Joel F. McIntyre............................................... 6,000 * *
All Executive Officers and Directors as a Group (8 persons).... 1,167,500 31.3% 24.1%
</TABLE>

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

* Less than 1%

The shares beneficially owned by each of Mr. Grant and another executive
officer include 37,000 shares subject to immediately exercisable options as of
June 29, 1999. The shares beneficially owned by Mr. McIntyre are shares subject
to immediately exercisable options as of June 29, 1999. The number of shares
beneficially owned by our executive officers and directors as a group does not
include options to purchase 25,000 shares granted to Mr. Vitamante that become
exercisable on the day he joins us as President, Chief Operating Officer and
Chief Financial Officer.

40
<PAGE>
DESCRIPTION OF SECURITIES

As of the date of this prospectus, our authorized capital stock consists of
10,000,000 shares of common stock and 5,000,000 shares of preferred stock.

UNITS

Each unit consists of one share of common stock and one warrant. The common
stock and warrants will be separately transferable following this offering.

COMMON STOCK

As of May 19, 1999, there were 3,655,747 shares of common stock outstanding.
The common stock was held of record by 53 shareholders. There will be 4,755,747
shares of common stock outstanding after the sale of the 1,100,000 units we are
offering.

Holders of common stock are entitled to one vote per share. On giving proper
notice, shareholders can cumulate their votes in the election of directors.

Subject to any rights of the holders of outstanding shares of preferred
stock, the holders of common stock are entitled to receive such lawful dividends
as the board of directors may declare from time to time. In the event we
liquidate, dissolve or wind up, and subject to the rights of the holders of
outstanding shares of preferred stock, the holders of shares of common stock
will be entitled to receive PRO RATA all of our remaining assets available for
distribution to our shareholders. There are no redemption or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are fully paid and nonassessable, and shares of common stock to be issued
pursuant to this offering will be, upon issuance, fully paid and nonassessable.

UNIT WARRANTS

Each warrant will entitle the holder to purchase one share of common stock
at an exercise price of $18 per share (150% of the initial public offering price
of the units). The warrants will generally be exercisable at any time for five
years after the date of this prospectus, unless earlier redeemed. The warrants
are redeemable by us, at a price of $0.25 per warrant

- upon 30 days' prior written notice,

- no earlier than 180 days from the date of this prospectus

and then

- only if the closing bid price defined in the Warrant Agreement, which we
describe below, equals or exceeds $24 (200% of the initial public offering
price of the units)

per share of the common stock for the 10 consecutive trading days immediately
preceding the date of notice of redemption. If we give notice of our intention
to redeem, a holder will have the choice either to

- sell or exercise his or her warrants before the date specified in the
redemption notice or

- to accept the redemption price.

The warrants will be issued in registered form under a warrant agreement
between us and ChaseMellon Shareholder Services, L.L.C., as warrant agent. The
shares of common stock underlying the warrants, when issued upon exercise of a
warrant, will be fully paid and nonassessable. We will pay any transfer tax
incurred as a result of the issuance of common stock to the holder upon its
exercise.

The warrants contain provisions that protect the holders against dilution by
adjustment of the exercise price. These adjustments will occur if there is a
merger, stock split or reverse stock split, stock

41
<PAGE>
dividend or recapitalization and they could occur in other situations. We are
not required to issue fractional shares upon the exercise of a warrant. The
holder of a warrant will not possess any rights as our shareholder until he or
she exercises the warrant.

A warrant may be exercised by surrendering the warrant certificate

- on or before the expiration or redemption date of the warrant at the
offices of the warrant agent

with

- the form of "Election to Purchase" on the reverse side of the warrant
certificate completed and executed as indicated, and

- payment of the exercise price by certified or bank check payable to the
order of 3Dshopping.com for the number of shares for to which the warrant
is being exercised.

In order for a holder to exercise the warrants, there must be

- a current registration statement in effect with the Securities and
Exchange Commission and

- qualification in effect under applicable state securities laws or
applicable exemptions from state qualification requirements

with respect to the issuance of common stock or other securities underlying the
warrants. We have agreed to use all commercially reasonable efforts to cause a
registration statement with respect to such securities under the Securities Act
to be filed and to become and remain effective in anticipation of and before the
exercise of the warrants and to take such other actions under the laws of
various states as may be required to cause the sale of common stock or other
securities upon exercise of warrants to be lawful. Under certain circumstances,
we may redeem the warrant by paying to the holder cash equal to the difference
between the market price of the common stock on the exercise date and the
exercise price of the warrant. We will not be required to honor the exercise of
warrants if, in the opinion of our board of directors with the advice of
counsel, the sale of securities upon exercise would be unlawful.

The foregoing discussion of material terms and provisions of the warrants is
qualified in its entirety by reference to the detailed provisions of the warrant
agreement, the form of which has been filed as an exhibit to the Registration
Statement of which this prospectus is a part.

For the life of the warrants, the holders have the opportunity to profit
from a rise in the market price of the common stock without assuming the risk of
ownership of the shares of common stock underlying the warrants. The warrant
holders may be expected to exercise their warrants at a time when we would, in
all likelihood, be able to obtain any needed capital by an offering of common
stock on terms more favorable than those provided for by the warrants.
Furthermore, the terms on which we could obtain additional capital during the
life of the warrants may be adversely affected.

OTHER OPTIONS AND WARRANTS

As of March 31, 1999, we have issued outstanding options to purchase a total
of 323,000 shares of our common stock at exercise prices ranging from $1.25 to
$1.75. These options are fully exercisable. Options to purchase 130,000 shares
of our common stock expire in December 2000 and are subject to proportionate
adjustment in the event of an increase or decrease in the number of shares of
our common stock outstanding due to a recapitalization, stock split or payment
of stock dividends. The remaining options to purchase 193,000 shares of our
common stock expire in November 2003.

As of March 31, 1999, we have issued outstanding warrants to purchase a
total of 339,333 shares of our common stock at exercise prices ranging from
$1.25 to $11.25. The warrants to purchase 100,000 units issued to Generation
Capital Associates in connection with our financing in March 1999, as

42
<PAGE>
amended as of the date of this offering, are described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--3Dshopping.com--Liquidity and Capital Resources." For the remaining
warrants to purchase 239,333 shares, the exercise price and number of shares are
subject to adjustment proportionately for any increase or decrease in the number
of shares of our common stock outstanding due to a recapitalization, stock split
or the payment of stock dividends.

PREFERRED STOCK

No shares of preferred stock are outstanding. As of the date of this
prospectus, our board of directors has the authority, without further action by
the shareholders, to issue shares of preferred stock in one or more series and
to fix the rights, preferences, privileges and restrictions of the preferred
stock, including

- voting rights,

- terms of redemption,

- redemption prices,

- liquidation preferences,

- dividend preferences,

- conversion rights,

- number of shares constituting any series or

- the designation of such series.

Although it presently has no intention to do so, our board of directors, without
shareholder approval, could issue preferred stock with voting and conversion
rights that could adversely affect the voting power of the holders of common
stock. This provision may be deemed to have a potential anti-takeover effect and
the issuance of the preferred stock in accordance with such provision may delay
or prevent a change of control of 3Dshopping.com.

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

The following discussions set forth material federal income tax consequences
under current law applicable generally to purchasers of units who are
individual, resident United States taxpayers. The discussion is a summary and
does not purport to deal with all aspects of federal taxation that may be
applicable to an investor, nor does it consider specific facts and circumstances
that may be relevant to a particular investor's tax position. Some holders, such
as dealers in securities, insurance companies, tax exempt organizations, foreign
persons and those holding common stock or warrants as part of a straddle or
hedge transaction, may be subject to special rules that are not addressed in
this discussion. This discussion is based on current provisions of the Internal
Revenue Code of 1986, as amended, and on administrative and judicial
interpretations as of the date hereof, all of which are subject to change. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU
OF THIS OFFERING, INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS.

ALLOCATION OF PURCHASE PRICE

Each unit as a whole will have a tax basis equal to the cost of the unit.
The measure of income or loss from some of the transactions described below
depends on the tax basis in each of the warrant and the common stock comprising
the unit. The tax basis for each of the warrant and the common stock will be
determined by allocating the cost of the unit between the securities that
comprise the unit in proportion to the relative fair market values of these
elements at the time of acquisition.

43
<PAGE>
EXERCISE AND SALE OF WARRANTS

No gain or loss will be recognized by a holder of a warrant on the purchase
of shares of common stock for cash on an exercise of a warrant, except that gain
will be recognized to the extent cash is received in lieu of fractional shares.
The tax basis of common stock received upon exercise of a warrant will equal the
sum of the holder's tax basis for the exercised warrant and the exercise price.
The holding period of the common stock acquired will begin on the date the
warrant is exercised and the common stock is purchased. It does not include the
period during which the warrant was held.

Gain or loss from the sale or other disposition of a warrant, or loss in the
event the warrant expires unexercised, other than on a redemption by us, will be
capital gain or loss to its holder if the common stock to which the warrant
relates would have been a capital asset in the hands of such holder. This
capital gain or loss will be long-term capital gain or loss if the holder has
held the warrant for more than one year at the time of the sale, disposition or
lapse. On the redemption of a warrant by us, the holder generally will realize
capital gain or loss.

SALE OF COMMON STOCK

The sale of common stock should generally result in the recognition of gain
or loss to the holder in an amount equal to the difference between the amount
realized and such holder's tax basis in the common stock. If the common stock
constitutes a capital asset in the hands of the holder, gain or loss upon the
sale of the common stock will be characterized as long-term or short-term
capital gain or loss, depending on whether the common stock has been held for
more than one year.

EXPIRATION OF WARRANTS WITHOUT EXERCISE

If a holder of a warrant allows it to expire without exercise, the
expiration will be treated as a sale or exchange of the warrant on the
expiration date. The holder will have a loss equal to the amount of such
holder's tax basis in the lapsed warrant. If the warrant constitutes a capital
asset in the hands of the holder, the loss will be characterized as long-term or
short-term capital loss, depending on whether the warrant was held for more than
one year.

TRANSFER AGENT, REGISTRAR AND WARRANT AGENT

ChaseMellon Shareholder Services, L.L.C. will serve as the Transfer Agent
and Registrar for the common stock and warrant agent for the warrants.

44
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Before this offering, our common stock was thinly traded on the NASD OTC
Bulletin Board under the symbol "PGRX". Future sales of substantial amounts of
common stock in the public market or the prospect of such sales could adversely
effect prevailing market prices.

Upon completion of this offering, 4,755,747 shares of common stock will be
outstanding. Of these shares, the 1,100,000 shares issued as part of the units
will be freely tradable without restriction under the Securities Act, unless
purchased by an "affiliate" of the company, as that term is defined in Rule 144
under the Securities Act. In addition, 2,297,746 shares that were previously
issued under Rule 504 under the Securities Act will be freely tradable without
restriction. The remaining 1,355,500 shares outstanding after completion of this
offering are "restricted securities" or held by "affiliates" as defined in Rule
144. Restricted shares may be sold in the public market only if registered under
the Securities Act or if they qualify for an exemption from registration,
including an exemption under Rule 144.

Our company, our directors, officers (except Donald Westland) and
shareholders who beneficially own more than five percent of our outstanding
common stock all of whom held an aggregate of 1,043,500 shares of common stock
on June 29, 1999, have agreed that, for one year following the date of this
prospectus, they will not offer, sell, contract to sell or otherwise dispose of
any shares of common stock without the consent of Paulson Investment Company,
Inc. Officers and directors may make intra-family transfers or transfers to
trusts for estate planning purposes. Upon expiration of these agreements, all of
these shares will be eligible for immediate resale in the public market subject
to the limitations of Rule 144.

In general under Rule 144, a person, including an "affiliate" of the
company, who has beneficially owned restricted shares for at least one year is
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the then outstanding shares of common stock
(approximately 47,557 shares immediately following this offering) or the average
weekly trading volume of the common stock during the four calendar weeks
preceding the sale. Sales under Rule 144 are subject to manner of sale
restrictions, notice requirements and the availability of current public
information about us. Rule 144(k) provides that a person who is not an
"affiliate" of the issuer at any time during the three months preceding a sale
and who has beneficially owned shares for at least two years is entitled to sell
those shares at any time without compliance with the public information, volume
limitation, manner of sale and notice provisions of Rule 144.

As of May 19, 1999, immediately exercisable options to purchase 323,000
shares of common stock were outstanding. These options were granted before we
adopted our 1999 Stock Option Plan and under written compensation agreements
with some of our employees and consultants under the exemption provided by Rule
701. To the extent these options are exercised, the underlying common stock will
become freely tradable 90 days after the date of this prospectus subject to the
manner of sale requirements of Rule 144.

We have reserved 1,000,000 shares for issuance upon the exercise of options
under our 1999 Stock Option Plan. We intend to file as soon as practicable
following completion of this offering a registration statement on Form S-8 under
the Securities Act covering these shares of common stock. See "Management--Stock
Option Plan." The registration statement will become effective immediately upon
filing, whereupon, subject to the satisfaction of applicable exercisability
periods, Rule 144 volume limitations applicable to affiliates and, in some
cases, the agreements with the representative of the underwriters referred to
above, shares of common stock to be issued upon exercise of outstanding options
granted pursuant to the Stock Option Plan will be available for immediate resale
in the open market. As of the date of this prospectus, 242,940 options have been
granted under the 1999 Stock Option Plan.

45
<PAGE>
As of May 19, 1999, immediately exercisable warrants to purchase 239,333
shares of common stock were outstanding, not including the warrants issued to
Generation Capital discussed below. These warrants were issued under written
compensation agreements with consultants under the exemption provided by Rule
701. To the extent these warrants are exercised, the underlying common stock
will become freely tradable 90 days after the date of this prospectus subject to
the manner of sale requirements of Rule 144.

Generation Capital would receive 100,000 units upon exercise of its warrant.
These units will be considered "restricted" under Rule 144. As a result, resales
of this stock will need to comply with Rule 144 manner of sale restrictions and
notice requirements.

Some holders of our common stock and warrants to purchase our common stock
have registration rights. These people hold 346,000 restricted shares of common
stock and immediately exercisable warrants to purchase 239,333 shares of
restricted common stock. Under some conditions, these people may request that we
register these shares with the Securities and Exchange Commission. Once these
shares are registered, they will be freely tradable.

46
<PAGE>
UNDERWRITING

The underwriters named below for whom Paulson Investment Company, Inc. is
acting as representative, have severally agreed, under the terms and conditions
of an underwriting agreement with us and the underwriters, to purchase from us,
and we have agreed to sell to them, the number of units set forth in the table
below at the price set forth on the cover page of this prospectus.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER UNITS
- ----------------------------------------------------------------------------------------------------- ----------
<S> <C>
Paulson Investment Company, Inc...................................................................... 985,000
Kashner Davidson Securities Corporation.............................................................. 45,000
First Colonial Securities Group, Inc................................................................. 25,000
Marion Bass Securities Corporation................................................................... 25,000
F.A.S. Wealth Management Services, Inc............................................................... 25,000
----------
Total............................................................................................ 1,100,000
----------
----------
</TABLE>

The underwriting agreement provides that the obligations of the underwriters
to purchase the units are subject to conditions. If any units are purchased, the
underwriters are committed to purchase all of the 1,100,000 units offered by
this prospectus, but not the 165,000 units subject to their over-allotment
option. The underwriting agreement also provides that if an underwriter
defaults, the purchase commitments of non-defaulting underwriters may be
increased or this offering may be terminated.

Once the underwriters have purchased the units at the initial public
offering price of $12.00, less the 7.5% underwriting discount, they will offer
the units to the public at the initial public offering price and to other
broker-dealers who are members of the selling group at that price minus a
concession of $0.54 per unit. The underwriters and selling group members may
allow a discount of $0.10 per unit on sales to other broker-dealers, including
the underwriters. After the initial public offering of the units, the public
offering price, the concessions to selling group members and the discount to
other broker-dealers may be changed by the representative.

We have granted the underwriters an option, expiring at the close of
business 45 days after the date of this prospectus, to purchase up to 165,000
additional units from us on the same terms as apply to the sale of the units set
forth above. The underwriters may exercise the option only to cover
over-allotments incurred in the sale of the units.

The representative has informed us that it does not expect the underwriters
to confirm sales of units on a discretionary basis.

The underwriters will receive compensation for their services in the form of
an underwriting discount, a nonaccountable expense allowance, warrants to
purchase units and reimbursement of $12,352 for the cost of a due diligence
investigation of the principals of our company. The compensation was determined
by negotiation between us and the representative within guidelines of the NASD's
Rules of Fair Practice, with which all NASD member firms must comply.

The following table summarizes the discounts and estimated expenses that we
will pay to the underwriters:

<TABLE>
<CAPTION>
TOTAL
------------------------------
WITHOUT OVER- WITH OVER-
PER UNIT ALLOTMENT ALLOTMENT
----------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions paid by us (7.5% of the
IPO price).................................................. $ 0.90 $ 990,000 $ 1,138,500
Nonaccountable expense allowance payable by us (2% of the IPO
price)...................................................... $ 0.24 $ 264,000 $ 303,600
</TABLE>

47
<PAGE>
We have also agreed to issue to the representative warrants that entitle the
holder to purchase up to 110,000 units at an exercise price of $14.40 per unit.
The NASD values this warrant at 2.75% of the aggregate offering price and
includes that value as part of the permissible underwriting compensation. The
representative's warrants may not be exercised for at least one year and are not
transferable for one year from the date of issuance, except to individuals who
are either a partner or an officer of an underwriter, by will or by the laws of
descent and distribution. The representative's warrants are not redeemable by
us. We have agreed to maintain an effective registration statement with respect
to the issuance of the securities underlying the representative's warrants, if
necessary, to allow their public resale without restriction, at all times during
the period in which the representative's warrants are exercisable, beginning one
year after the date of this prospectus. Such securities are being registered on
the registration statement of which this prospectus is a part.

In June and July 1999, Paulson loaned us a total of $200,000. This loan
bears interest at 7% per annum and will be repaid on the date of the closing of
this offering; provided, however, if the offering has not occurred on or before
September 30, 1999, the loan will convert to a demand note, payable within 30
days of a demand for payment. Paulson has the option to deduct the repayment of
the loan from the proceeds of the offering.

The underwriting agreement provides for indemnification between us and the
underwriters against some liabilities, including liabilities under the
Securities Act of 1933 and for contribution by us and the underwriters to
payments that may be required to be made in respect of those liabilities.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to our directors, officers and controlling persons under the agreement
between us and the underwriters, or otherwise, we have been advised that in the
opinion of the SEC this indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.

We have agreed that, for a period of one year following the completion of
this offering, we generally will not offer, sell, contract to sell, grant any
option for the sale or otherwise dispose of any of our common stock without the
consent of the representative. Our officers, directors and the holders of 5% or
more of our outstanding common stock (aggregating 1,111,500 shares) have agreed
that for a period of one year following this offering, they will not offer,
sell, contract to sell, grant any option for the sale or otherwise dispose of
any of our common stock, other than intra-family transfers or transfers to
trusts for estate planning purposes, without the consent of the representative,
which will not be unreasonably withheld. After the one year period, these
persons will give the representative prior notice of sales under Rule 144 for
five years from the date of this prospectus.

Our common stock and warrants have been approved for listing on the American
Stock Exchange. Our common stock will trade under the symbol "THD" and our
warrants will trade under the symbol "THDW."

Prior to this offering, our common stock has traded on the NASD OTC Bulletin
Board and there has been no public market for our warrants. Stock that trades on
the OTC Bulletin Board can experience a relatively inactive trading market, or
low trading volume, high volatility and/or trading prices that may not bear any
reasonable relationship to the financial condition or book value of the company.
As a result, the initial public offering of the units will be determined by
negotiation between us and the representative. The price may not reflect the
market price for our securities following the offering. Among the principal
factors that we will consider in determining the initial public offering price
are:

- the information set forth in this prospectus and otherwise available to
the representative;

- market conditions for Internet company public offerings;

- the history and prospects for the industry in which we compete;

48
<PAGE>
- our past and present operations;

- our past and present earnings and current financial condition;

- the ability of our management;

- our prospects for future earnings;

- the present state of our development;

- the recent market prices of, and the demand for, publicly-traded stock of
generally comparable companies;

- the general condition of the securities markets at the time of this
offering; and

- other relevant factors.

We can offer no assurances that the initial public offering price will
correspond to the price at which the common stock and warrants will trade in the
public market subsequent to the offering or that an active trading market for
the common stock and warrants will develop and continue after the offering.

The representative on behalf of the underwriters may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

- Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.

- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

- Syndicate covering transactions involve purchases of the common stock and
warrants in the open market after the distribution has been completed in
order to cover syndicate short positions.

- Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the units originally sold by the syndicate
member are purchased in a syndicate covering transaction to cover
syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock and warrants to be higher than it
would otherwise be in the absence of such transactions. These transactions may
be effected on the American Stock Exchange or otherwise and, if commenced, may
be discontinued at any time.

49
<PAGE>
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities being registered, excluding the
representative's nonaccountable expense allowance, all of which expenses will be
paid by the company:

<TABLE>
<S> <C>
SEC registration fee.............................................................. $ 26,229
NASD filing fees.................................................................. 9,935
Accounting fees and expenses...................................................... 100,000*
Legal fees and expenses........................................................... 175,000*
Printing and related expenses..................................................... 125,000*
Blue sky legal fees and expenses.................................................. 5,000*
Transfer agent and expenses....................................................... 2,000*
Miscellaneous expenses............................................................ 17,836*
---------
Total......................................................................... $ 461,000*
---------
---------
</TABLE>

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

* Estimated expenses

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by
Stoel Rives LLP, Portland, Oregon. Certain legal matters in connection with the
offering will be passed upon for the underwriters by Grover T. Wickersham, P.C.,
Palo Alto, California.

EXPERTS

The balance sheet as of June 30, 1997 and 1998, and the statements of
operations, stockholders' deficit, and cash flows for the eleven months ended
June 30, 1997 and the year ended June 30, 1998 for 3Dshopping.com, have been
audited by Friedman, Minsk, Cole & Fastovsky, independent certified public
accountants, as set forth in their report appearing elsewhere in this prospectus
and in the registration statement, and are included in reliance upon that report
given upon the authority of that firm as experts in accounting and auditing.

The balance sheets as of December 31, 1997 and 1998, and the statements of
operations, retained earnings and cash flows for the years then ended for Design
Bas, Incorporated have been audited by Friedman, Minsk, Cole & Fastovsky,
independent certified public accountants, as set forth in their report appearing
elsewhere in this prospectus and in the registration statement, and are included
in reliance upon that report given upon the authority of that firm as experts in
accounting and auditing.

50
<PAGE>
ADDITIONAL INFORMATION

We are not a reporting company under the Securities Exchange Act of 1934. We
have filed with the Securities and Exchange Commission a registration statement
on Form S-1 under the Securities Act of 1933 with respect to the units, common
stock and warrants. This prospectus omits some information contained in the
registration statement and its exhibits, as permitted by the rules and
regulations of the SEC. For further information with respect to us and our
securities, you should review the registration statement and its exhibits, which
may be inspected, without charge, at the Public Reference Section of the SEC at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the SEC located at 7 World Trade Center, Suite 1300,
New York, NY 10048, and the Kluczynski Federal Building, 500 West Madison
Street, Suite 1400, Chicago, IL 60661. Copies of all or any portion of the
Registration Statement may be obtained from the Public Reference Section of the
SEC, upon payment of prescribed fees. The SEC maintains a World Wide Web site
that contains reports, proxy and information statements and other information
about registrants that file electronically with the SEC, including the
registration statement. The address of the SEC's World Wide Web site is
HTTP://WWW.SEC.GOV.

Statements contained in this prospectus as to the contents of any contract
or other document referred to in this prospectus are not necessarily complete
and, in each instance, reference is made to the copy of that contract or other
document filed as an exhibit to the registration statement, each statement being
qualified in all respects by that reference.

51
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
3DSHOPPING.COM

Report of Independent Certified Public Accountants..................................................... F-2

Financial Statements:

Balance Sheets as of June 30, 1997, and 1998 and March 31, 1999 (unaudited)............................ F-3

Statements of Operations for the period August 1, 1996 (Inception) through June 30, 1997, for the year
ended June 30, 1998, for the period August 1, 1996 (Inception) through June 30, 1998 and for the nine
months ended March 31, 1998 and 1999 (unaudited)..................................................... F-4

Statements of Shareholders' Equity (Deficit) for the period August 1, 1996 (Inception) through March
31, 1999 (unaudited)................................................................................. F-5

Statements of Cash Flows for the period August 1, 1996 (Inception) through June 30, 1997, for the year
ended June 30, 1998, for the period August 1, 1996 (Inception) through June 30, 1998 and for the nine
months ended March 31, 1998 and 1999 (unaudited)..................................................... F-6

Notes to Financial Statements.......................................................................... F-7-16

DESIGN BAS, INCORPORATED

Report of Independent Certified Public Accountants..................................................... F-17

Financial Statements:

Balance Sheets as of December 31, 1997, and 1998 and March 31, 1999 (unaudited)........................ F-18

Statements of Operations and Retained Earnings (Deficit)
For the years ended December 31, 1997 and December 31, 1998 and for the three months ended March 31,
1998 and 1999 (unaudited)............................................................................ F-19

Statements of Cash Flows
For the years ended December 31, 1997 and December 31, 1998 and for the three months ended March 31,
1998 and 1999 (unaudited)............................................................................ F-20

Notes to Financial Statements.......................................................................... F-21-25

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS...................................................... F-26-29
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS
3DSHOPPING.COM

We have audited the accompanying Balance Sheets of 3Dshopping.com (a
development stage enterprise) as of June 30, 1997 and 1998 and the related
Statements of Operations, Shareholders' Deficit, and Cash Flows for the period
from August 1, 1996 (Inception) to June 30, 1997, the year ended June 30, 1998
and for the period from August 1, 1996 (Inception) to June 30, 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 3Dshopping.com (a
development stage enterprise) as of June 30, 1997 and 1998 and the results of
its operations and its cash flows for the period from August 1, 1996 (Inception)
to June 30, 1997, the year ended June 30, 1998 and from August 1, 1996
(Inception) to June 30, 1998 in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered losses from operations that
raises substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

FRIEDMAN, MINSK, COLE & FASTOVSKY
Los Angeles, California
January 15, 1999, except for Note 9 as to
which the date is March 9, 1999 and Note 12
as to which the date is June 28, 1999

F-2
<PAGE>
3DSHOPPING.COM

BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, JUNE 30, MARCH 31,
1997 1998 1999
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents........................................... $ -- $ 144,564 $ 469,793
Accounts receivable (net of allowance for doubtful accounts of
$1,000 in 1999)................................................... 719 4,999 18,736
Other receivables................................................... -- -- 2,470
Contracts in progress............................................... -- -- 20,263
Prepaid expenses.................................................... 6,066 13,496 7,112
----------- ----------- -----------
Total current assets.............................................. 6,785 163,059 518,374
Property and equipment-net.......................................... 93,736 66,470 111,625
Prepaid offering costs.............................................. -- -- 211,389
Goodwill............................................................ 2,875 -- --
Organization costs, net............................................. 1,282 -- --
----------- ----------- -----------
Total assets...................................................... $ 104,678 $ 229,529 $ 841,388
----------- ----------- -----------
----------- ----------- -----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Bank overdraft...................................................... $ 2,569 $ -- $ --
Current maturities of capital lease obligation...................... -- -- 5,450
Notes payable--current.............................................. 22,728 260,588 616,024
Accounts payable and accrued expenses............................... 88,162 64,567 132,481
Customer deposits................................................... -- 3,000 22,333
----------- ----------- -----------
Total current liabilities......................................... 113,459 328,155 776,288
Capital lease obligation............................................ -- -- 10,629

Shareholders' equity (deficit):
Common Stock, no par value:10,000,000 shares authorized: 2,527,333
(June 30, 1997), 3,191,400 (June 30, 1998), and 3,645,746 (March)
shares issued and outstanding..................................... 1,940,819 2,997,112 6,124,688
Stock subscriptions received in advance............................. 39,500 -- --
Stock subscriptions receivable...................................... (83,375) (107,400) (2,500)
Accumulated deficit................................................. (1,905,725) (2,988,338) (6,067,717)
----------- ----------- -----------
Total shareholders' equity (deficit).............................. (8,781) (98,626) 54,471
----------- ----------- -----------
Total liabilities and shareholders' equity (deficit).............. $ 104,678 $ 229,529 $ 841,388
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>
3DSHOPPING.COM

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
AUGUST 1,
1996 NINE MONTHS ENDED
YEAR ENDED JUNE 30, (INCEPTION) MARCH 31,
---------------------------- TO JUNE 30, ---------------------------
1997 1998 1998 1998 1999
------------- ------------- ------------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues........................... $ -- $ 18,404 $ 18,404 $ 644 $ 50,311
------------- ------------- ------------- ------------ -------------
Costs and expenses:
Sales and marketing.................. 973,283 473,665 1,446,948 312,757 652,049
Research and development............. 294,360 170,259 464,619 162,214 346,131
General and administrative........... 644,993 460,220 1,105,213 273,969 2,073,491
------------- ------------- ------------- ------------ -------------
Total costs and expenses............. 1,912,636 1,104,144 3,016,780 748,940 3,071,671
------------- ------------- ------------- ------------ -------------
Loss from operations................... (1,912,636) (1,085,740) (2,998,376) (748,296) (3,021,360)
Interest expense....................... 3,089 10,373 13,462 5,708 61,269
Other income........................... 10,000 13,500 23,500 13,500 3,250
------------- ------------- ------------- ------------ -------------
Net loss............................. $ (1,905,725) $ (1,082,613) $(2,988,338) $ (740,504) $ (3,079,379)
------------- ------------- ------------- ------------ -------------
------------- ------------- ------------- ------------ -------------
Net loss per share..................... $ (0.59) $ (0.28) $ (0.85) $ (0.20) $ (0.77)
------------- ------------- ------------- ------------ -------------
------------- ------------- ------------- ------------ -------------
Weighted average number of shares used
in computing net loss per share...... 3,210,651 3,823,228 3,530,256 3,774,038 4,024,482
------------- ------------- ------------- ------------ -------------
------------- ------------- ------------- ------------ -------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>
3DSHOPPING.COM

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK STOCK STOCK
---------------------- SUBSCRIPTIONS SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT RECEIVABLE IN ADVANCE DEFICIT TOTAL
--------- ----------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Sales of Common Stock........................ 707,333 $ 591,750 $ (83,375) $ 508,375
Issuance of Common Stock for services........ 1,820,000 1,365,000 1,365,000
Costs of stock offering...................... (15,931) (15,931)
Stock subscriptions received in advance...... $ 39,500 39,500
Net loss..................................... -- -- -- -- $(1,905,725) (1,905,725)
--------- ----------- ------------ ------------ ------------ ----------
Balance at June 30, 1997..................... 2,527,333 1,940,819 (83,375) 39,500 (1,905,725) (8,781)
Prior stock subscriptions received........... 83,375 83,375
Issuance of Common Stock for services........ 53,700 174,972 174,972
Sales of Common Stock........................ 354,817 494,997 (132,750) (39,500) 322,747
Costs of stock offering...................... (7,500) (7,500)
Net loss..................................... -- -- -- -- (740,504) (740,504)
--------- ----------- ------------ ------------ ------------ ----------
Balance at March 31, 1998 (unaudited)........ 2,935,850 2,603,288 (132,750) -- (2,646,229) (175,691)
Issuance of Common Stock for services........ 15,000 20,630 20,630
Sales of Common Stock........................ 240,550 269,000 25,350 294,350
Costs of stock offering...................... (21,874) (21,874)
Fair market value of stock options........... 126,068 126,068
Net loss..................................... -- -- -- -- (342,109) (342,109)
--------- ----------- ------------ ------------ ------------ ----------
Balance at June 30, 1998..................... 3,191,400 2,997,112 (107,400) (2,988,338) (98,626)
Stock subscriptions received................. 107,400 107,400
Stock options exercised...................... 203,000 574,250 (2,500) 571,750
Issuance of Common Stock for services........ 25,000 306,250 306,250
Exercise of cashless warrants................ 30,346 --
Employee stock options....................... 1,629,921 1,629,921
Non-employee stock options................... 354,500 354,500
Conversion of notes payable.................. 196,000 217,200 217,200
Issuance of Common Stock for interest on
debt....................................... 45,455 45,455
Net loss..................................... -- -- -- -- (3,079,379) (3,079,379)
--------- ----------- ------------ ------------ ------------ ----------
Balance at March 31, 1999 (unaudited)........ 3,645,746 $ 6,124,688 $ (2,500) $ -- $(6,067,717) $ 54,471
--------- ----------- ------------ ------------ ------------ ----------
--------- ----------- ------------ ------------ ------------ ----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>
3DSHOPPING.COM

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED AUGUST 1, 1996 NINE MONTHS ENDED
JUNE 30, (INCEPTION) MARCH 31,
------------------------ TO JUNE 30, -----------------------
1997 1998 1998 1998 1999
----------- ----------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net loss................................. $(1,905,725) $(1,082,613) $ (2,988,338) $ (740,504) $(3,079,379)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization.......... 23,253 43,208 66,461 32,436 37,049
Gain on sale of assets................. -- (1,049) (1,049) (1,049) --
Common Stock issued for services....... 1,365,808 103,213 1,469,021 82,585 --
Common Stock issued for financing...... -- -- -- -- 45,455
Options and warrants issued for
services and compensation............ -- 218,455 218,455 92,387 2,290,646
Changes in assets and liabilities:
Accounts receivable.................... (719) (4,280) (4,999) (3,846) (16,206)
Prepaid expenses....................... (6,066) (7,430) (13,496) (6,185) (205,005)
Contracts in progress.................. -- -- -- -- (20,263)
Customer deposits...................... 6,250 19,333
Accounts payable and other
liabilities.......................... 88,162 (20,595) 67,567 (9,439) 85,114
Goodwill............................... (5,306) -- (5,306) -- --
Organization costs..................... (1,570) -- (1,570) -- --
----------- ----------- --------------- ---------- -----------
Net cash used in operating
activities......................... (442,163) (751,091) (1,193,254) (547,365) (843,256)
----------- ----------- --------------- ---------- -----------
Cash flows from investing activities:
Acquisition of property and equipment.... (114,270) (13,250) (127,520) (9,827) (82,204)
Proceeds from sale of property........... -- 2,514 2,514 2,514 --
----------- ----------- --------------- ---------- -----------
Net cash used in investing
activities........................... (114,270) (10,736) (125,006) (7,313) (82,204)
----------- ----------- --------------- ---------- -----------
Cash flows from financing activities:
Proceeds from issuance of Common Stock... 547,067 700,474 1,247,541 406,124 679,175
Costs of issuance of Common Stock........ (15,931) (29,374) (45,305) (7,500) --
Proceeds from issuance of debt........... 22,728 237,860 260,588 124,068 5,436
Proceeds from issuance of debt-bank...... -- -- -- -- 550,000
Capital lease............................ -- -- -- -- 17,758
Repayment of capital lease............... -- -- -- -- (1,680)
----------- ----------- --------------- ---------- -----------
Net cash provided by financing
activities........................... 553,864 908,960 1,462,824 522,692 1,250,689
----------- ----------- --------------- ---------- -----------
Net change in cash and cash
equivalents.......................... (2,569) 147,133 144,564 (31,986) 325,229
Cash and equivalents at beginning of
period................................... -- (2,569) -- (2,569) 144,564
----------- ----------- --------------- ---------- -----------
Cash and cash equivalents at end of
period................................... $ (2,569) $ 144,564 $ 144,564 $ (34,555) $ 469,793
----------- ----------- --------------- ---------- -----------
----------- ----------- --------------- ---------- -----------
Cash paid during period for:
Interest................................. $ 2,980 $ 3,001 $ 5,981 $ 5,708 $ 15,814
Income taxes............................. -- 1,600 1,600 800 800
Noncash financing activities:
Stock and options issued for services.... $ 1,365,808 $ 321,668 $ 1,687,476 $ 174,972 $ 2,290,646
Common Stock issued for financing........ -- -- -- -- 45,455
Redemption of notes for stock............ -- -- -- -- 217,200
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

3Dshopping.com, formerly Pi Graphix, Inc., (the "Company") commenced
operations effective August 1, 1996. The Company was formed to design and
develop high end internet applications using 3D modeling software and
interactive databases. The company has developed and is beginning to implement
and market to e-commerce retailers a Web-based marketing and merchandising
system that incorporates sophisticated graphics and other audio-visual features.

The Company was in the development stage through June 30, 1998 and its
efforts through that time were principally devoted to organizational activities,
raising capital and research and development efforts.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The Company depreciates its
property and equipment using the straight-line method. The principal useful
lives in computing depreciation are as follows:

<TABLE>
<CAPTION>
ASSET USEFUL LIFE
- ------------------------------------------------------------------------------ --------------
<S> <C>
Machinery and equipment....................................................... 3-5 Years
Furniture and fixtures........................................................ 5-10 Years
Software...................................................................... 1-3 Years
</TABLE>

INCOME TAXES

The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS 109). SFAS 109 requires a company to recognize deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the financial statement carrying amounts and tax basis of
assets and liabilities and operating losses available to offset future taxable
income, using enacted tax rates in effect in the years in which the differences
are expected to reverse.

DEVELOPMENT COSTS

Expenditures during the research and development stage are expensed as
incurred. Development costs, including direct labor, incurred subsequent to
establishing technological feasibility are capitalized. Development costs for
each product are carried on the balance sheet at the lower of unamortized cost
or net realizable value.

ORGANIZATION COSTS

In accordance with the provisions of Statement of Position 98-5, the Company
expensed organization costs in the year ended June 30, 1998. For the year ended
June 30, 1997, the Company amortized organization costs by the straight-line
method over a five year period. The effect of the change in accounting is not
material.

F-7
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ESTIMATES

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

LOSS PER SHARE OF COMMON STOCK

The loss per share of common stock is based on the weighted average number
of common shares outstanding during the period, in conformance with SFAS
Statement 128 issued by the Financial Accounting Standards Board and nominal
issuances of potential common shares as required by the Securities and Exchange
Commission. Loss per common share assuming dilution has not been presented as
the effect would be anti-dilutive.

CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION

Revenue for software products is recognized when an arrangement exists, the
fee is determinable, collectibility is probable, and delivery has occurred.
Revenue from maintenance services is recognized when the service has been
performed.

STOCK-BASED COMPENSATION

The Company has adopted SFAS Statement 123 for stock-based compensation
plans. This statement encourages companies to adopt a fair value approach to
valuing stock options that would require compensation cost to be recognized
based on the fair value of stock options granted.

This statement also establishes fair value as the measurement basis for
transactions in which an entity acquires goods or services from non-employees in
exchange for equity instruments.

UNAUDITED INTERIM FINANCIAL INFORMATION

The financial information as of March 31, 1999 and for the nine months ended
March 31, 1998 and 1999 is unaudited, but includes all adjustments (consisting
only of normal recurring adjustments) that the Company considers necessary for
fair presentation of the financial position at such dates and the results of
operations and cash flows for the periods then ended. Operating results for the
nine months ended March 31, 1999 are not necessarily indicative of results that
may be expected for the entire year.

F-8
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 2 GOING CONCERN

The Company's continued existence is dependent upon its ability to obtain
additional debt financing and equity capital until the Company's operations
generate positive cash flow.

Through June 30, 1998 the Company has incurred a net loss of $2,988,338 and
has used net cash of $1,193,254 in its operating activities.

Management believes that the collection of stock subscriptions, additional
principal stockholder advances and deposits from customers will enable the
Company to meet its obligations until it generates sufficient cash flow from
sales.

NOTE 3 COMMON STOCK

The Company issued 1,820,000 shares of common stock at a price of $0.001 per
share on August 15, 1996 to its founders and certain key employees. The
difference between the price paid ($0.001) and the estimated value of this stock
($0.75) was reported as compensation expense.

The Company issued 462,333 shares of common stock at $0.75 per share between
August 30, 1996 and November 26, 1996, 245,000 shares of common stock at $1.00
per share between June 24, 1997 and June 27, 1997 for cash, and 36,000 shares at
$1.00 per share in exchange for financial and advisory business services. In
accordance with recommendation 96-18 of the FASB's Emerging Issues Task Force,
the shares issued were recorded over the period of the contract at the then
current fair value when the shares were earned.

The company issued 56,600 shares at $1.25 per share, 233,333 shares at $1.50
per share and 50,000 shares at $1.00 per share for cash, and 32,700 shares for
services at $1.19 to $1.88 per share in the year ended June 30, 1998.

The Company issued 255,434 shares for $1.15 per share from February through
June 30, 1998. These shareholders also received warrants to purchase 127,717
additional common shares at $1.50 per share. The warrants expire one year after
issue.

NOTE 4 STOCK OPTIONS

(a) EMPLOYEE OPTIONS

During the year ended June 30, 1998 the Company granted options to one
employee and recognized compensation expense of $15,378 as the options were
granted.

F-9
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 4 STOCK OPTIONS (CONTINUED)
A summary of the status of the Company's stock options as of June 30, 1998,
and changes during the year then ended is as follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- -----------------
<S> <C> <C>
Outstanding at Beginning of Year.................................. -- --
Granted........................................................... 36,000 $ 1.75
Exercised......................................................... -- --
Forfeited......................................................... -- --
--------- -----
Outstanding at End of Year........................................ 36,000 $ 1.75
---------
---------
Options exercisable at year-end................................... --
Weighted-average fair value of options granted during the year.... $ .43
</TABLE>

The following summarizes information about stock options at June 30, 1998:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------- --------------------------------------
RANGE OF WEIGHTED-AVERAGE WEIGHTED AVERAGE
EXERCISE NUMBER REMAINING WEIGHTED-AVERAGE NUMBER EXERCISE
PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE PRICE
- ----------- ----------- ---------------- ----------------- --------------- ---------------------
<C> <C> <S> <C> <C> <C>
$ 1.75 36,000 18.5 months $ 1.75 -- --
</TABLE>

The fair value of the option grant was estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions for 1998:
Risk-free interest rate of 5.32 to 5.83%: Dividend yield of 0%: Expected life of
2.0 years: and Volatility of 61.4%.

In July 1997 the directors authorized the adoption of an employee stock
option plan a for total of 230,000 shares. 90,000 shares are designated for six
named officers/directors/employees. The plan was revised in November 1998 and
225,000 options were granted to employees at that time.

(b) NON-EMPLOYEE OPTIONS

During the year ended June 30, 1998 the Company granted options and warrants
to certain non-employees and recognized $203,077 of expense as the options were
granted.

F-10
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 4 STOCK OPTIONS (CONTINUED)
A summary of the status of the Company's stock options and warrants as of
June 30, 1998, and changes during the year then ended is as follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- -----------------
<S> <C> <C>
Outstanding at Beginning of Year................................. -- --
Granted.......................................................... 497,717 $ 1.85
Exercised........................................................ -- --
Forfeited........................................................ -- --
--------- -----
Outstanding at End of Year....................................... 497,717 $ 1.85
---------
---------
Options and warrants excisable at year year-end.................. 497,717
Weighted-average fair value of options granted during the year... $ .41
</TABLE>

The following summarizes information about non-employee stock options and
warrants at June 30, 1998:

<TABLE>
<CAPTION>
OPTIONS AND WARRANTS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------- ------------------------------
RANGE OF WEIGHTED-AVERAGE WEIGHTED AVERAGE
EXERCISE NUMBER REMAINING WEIGHTED-AVERAGE NUMBER EXERCISE
PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE PRICE
- ----------- ----------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
$1.25-3.00 497,717 23.4 months $ 1.85 370,000 $ 1.45
</TABLE>

The fair value of the option or warrant grant was estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions for 1998: Risk-free interest rate of 5.32% to 5.45%: Dividend yield
of 0%: Expected life of .67 to 2.4 years: and Volatility of 61.4%.

Stock Options and Warrant activity during the nine months ended March 31,
1999 is summarized as follows:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE
OUTSTANDING EXERCISE PRICE
----------- ---------------
<S> <C> <C>
Balance at June 30, 1998......................................... 533,717 $ 1.84
Granted........................................................ 270,000 2.33
Exercised...................................................... (97,384) 3.06
----------- -----
Balance at March 31,1999......................................... 706,333 $ 1.86
-----------
-----------
</TABLE>

F-11
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 5 INCOME TAXES

Deferred tax assets are comprised of the following:

<TABLE>
<CAPTION>
JUNE 30, 1997 JUNE 30, 1998
------------- -------------
<S> <C> <C>
Federal net operating loss...................................... $ 116,500 $ 306,250
State net operating loss........................................ 47,000 123,500
R & D credit carryforward....................................... 21,000 47,250
Property and equipment.......................................... 1,000 2,500
Stock Compensation.............................................. -- 4,500
Other........................................................... -- 250
------------- -------------
185,500 484,250
Less valuation allowance........................................ (185,500) (484,250)
------------- -------------
Net deferred tax asset.......................................... $ 0 $ 0
------------- -------------
------------- -------------
</TABLE>

The valuation allowance increased by $185,500, $298,750 and $484,250 in the
period from August 1, 1996 to June 30, 1997,the year ended June 30, 1998, and
the period from August 1, 1996 to June 30, 1998, respectively.

At June 30, 1998 the Company has incurred loss carryforwards for income tax
purposes and earned research and development credits which expire as follows:

<TABLE>
<CAPTION>
FEDERAL STATE
---------- ----------
<S> <C> <C> <C>
NET OPERATING LOSSES
Expiring.................................................... 2002 $ 531,000
2003 865,000
2012 $ 518,000
2013 858,000

RESEARCH AND DEVELOPMENT CREDITS
Expiring.................................................... 2012 17,000 3,800
2013 17,000 9,400
</TABLE>

The principal difference between the loss for financial statement and tax
purposes is that approximately $182,000 and $1,363,000 compensation expense from
the issuance of shares in 1998 and
1997, respectively (see Note 3) is not recognized as an expense for income tax
purposes.

The Internal Revenue Code contains provisions which may limit the loss
carryforwards available if significant changes in stockholder ownership of the
Company occur.

F-12
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 6 NOTES PAYABLE

Notes payable at June 30, 1998 is comprised of:

<TABLE>
<S> <C>
Note dated June 8, 1998 due December 8, 1998 with interest at 10%
per annum. Convertible to common stock at $1.25 per share....... $ 100,000
Note dated November 27, 1997 due May 22, 1998 with interest at 10%
per annum. Convertible to common stock at $1.00 per share....... 100,000
---------
$ 200,000
---------
---------
</TABLE>

The notes were not paid when due and continue earning interest at 18% until
paid.

NOTE 7 RELATED PARTY TRANSACTIONS

The Company acquired the property and equipment and certain other prepaid
assets and assumed certain payroll and other liabilities of Samuel Hamann
Graphix, Inc. ("Hamann") from the Company's principal shareholder/president for
$18,500.

The purchase price was allocated to the tangible assets at their original
cost, with the balance ($5,306) attributed to goodwill which was amortized over
two years.

Hamann, a Public Company, was a Development Stage Corporation which had been
in existence for approximately one year. A founder and principal shareholder of
the Company was the principal shareholder of Hamann.

The principal shareholder and a minor shareholder have advanced funds
(including the $18,500 above) to the Company, at 7% per annum interest, which
the Company has partially repaid. A director and minor shareholder has received
consulting fees from the Company.

<TABLE>
<CAPTION>
AUGUST 1, 1996
(INCEPTION)
TO JUNE 30,
YEAR ENDED ---------------------
JUNE 30, 1998 1997 1998
------------- --------- ----------
<S> <C> <C> <C>
Advances by Shareholders................................ $ 108,860 $ 69,823 $ 178,683
Repayment to Shareholders............................... 71,000 47,095 118,095
Interest on Advances.................................... 2,427 2,972 5,399
Consulting Fees Paid.................................... -- 60,540 60,540
</TABLE>

The balance due on the advances was $22,728 and $60,588 at June 30, 1997 and
1998, respectively.

F-13
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 8 PROPERTY AND EQUIPMENT

Property and Equipment is comprised of:

<TABLE>
<CAPTION>
JUNE 30,
---------------------
1997 1998 MARCH 31, 1999
--------- ---------- --------------
<S> <C> <C> <C>
Machinery and Equipment............................... $ 62,527 $ 69,779 $ 103,313
Furniture and Fixtures................................ 14,280 17,057 35,007
Software.............................................. 12,463 38,173 51,135
Leased computers...................................... -- -- 17,758
--------- ---------- --------------
89,270 125,009 207,213
Accumulated Depreciation.............................. 20,534 58,539 95,588
--------- ---------- --------------
Net................................................... $ 68,736 $ 66,470 $ 111,625
--------- ---------- --------------
--------- ---------- --------------
</TABLE>

NOTE 9 COMMITMENTS AND CONTINGENT LIABILITIES

LEASES

The Company leases its office facilities under an operating lease, which
expires May 31, 1999. Future minimum annual lease payments, as of June 30, 1998,
were as follows:

<TABLE>
<CAPTION>
YEAR ENDING
- ---------------------------------------------------------------
<S> <C>
June 30, 1999.................................................. $ 31,845
---------
Total.......................................................... $ 31,845
---------
---------
</TABLE>

The monthly rent includes a standard charge for utilities. Rent expense for
the period from August 1, 1996 through June 30, 1997 the year ended June 30,
1998, and the period from August 1, 1998 through June 30, 1998 amounted to
$28,870, $35,325 and $64,195, respectively.

Rent expense for the nine months ended March 31, 1998 and 1999 amounted to
$19,350 and $22,235, respectively.

INSURANCE

The Company did not have workers compensation insurance from April 9, 1998
to June 30, 1998 and was not covered for risks formerly covered by this policy.
The policy was renewed effective July 1, 1998.

F-14
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 10 LOSS PER SHARE

The loss per common share is determined by dividing the net loss for the
period by the weighted average number of common shares outstanding during the
period.

<TABLE>
<CAPTION>
AUGUST 1, AUGUST 1,
1996 1996
(INCEPTION) (INCEPTION)
TO YEAR ENDED TO
JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Common Stock
Outstanding Beginning of Period(1).................................. 0 2,432,666 0
Issued during the period(1)....................................... 2,432,666 687,134 3,119,800
------------- ------------- -------------
End of the Period(1).............................................. 2,432,666 3,119,800 3,119,800
------------- ------------- -------------
------------- ------------- -------------
Nominal Issuances................................................... 1,064,233 1,064,233 1,064,233
Weighted Average number of shares................................... 3,210,651 3,823,228 3,530,256
</TABLE>

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

(1) net of stock subscriptions

The Securities and Exchange Commission requires nominal issuances of
potential common shares issued within one year prior to the Initial Public
Offering filing date to be included in earnings per share calculations as if
outstanding for all periods presented. These calculations include all such
shares.

Loss per common share assuming dilution has not been presented as the result
would have been anti-dilutive.

The following securities, which were not included because the result would
have been anti-dilutive, could potentially dilute earnings per share in the
future:

<TABLE>
<CAPTION>
SHARES
---------
<S> <C>
Stock warrants........................................................................................... 65,217
</TABLE>

F-15
<PAGE>
3DSHOPPING.COM
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 11 FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of financial instruments for which a fair value can be
determined are as follows. Fair value approximates carrying amount because of
the short term maturity of these instruments:

<TABLE>
<CAPTION>
JUNE 30, 1997 JUNE 30, 1998
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Financial Assets
Cash................................................. $ -- $ -- $ 144,564 $ 144,564
Other receivable..................................... 719 719 3,176 3,176
Accounts Receivable.................................. -- -- 1,823 1,823
Financial Liabilities
Bank overdraft....................................... 2,569 2,569 -- --
Accounts payable and accrued expenses................ 88,162 88,162 67,567 67,567
Shareholder loan..................................... 22,728 22,728 60,588 60,588
Notes payable........................................ -- -- 200,000 200,000
</TABLE>

NOTE 12 SUBSEQUENT EVENTS

Effective March 10, 1999 the Company amended its Articles of Incorporation
to change the Company's name to 3Dshopping.com, authorize 5,000,000 shares of a
class of Preferred Stock, and to eliminate the par value of its Common Stock.

In addition, effective February 21, 1999, the Company approved the adoption
of a Stock Option Plan and reserved 1,000,000 shares of Common Stock for
issuance under the plan.

In February 1999 the noteholders converted notes payable of $200,000 and
accrued interest of $17,200 into 196,000 shares of Common Stock at $1 and $1.15
per share.

In March 1999 the Company received a bridge loan in the form of $500,000 of
unsecured promissory notes due August 31, 1999 with interest at 9%. If not paid
the notes become new notes convertible into the Company's Common Stock. The
noteholders also received warrants to acquire $2,000,000 of the Company's Common
Stock for $1,500,000. The $500,000 difference between the value of the stock and
the consideration to be paid will be accounted for as additional finance charges
for this loan and will be amortized over the period of the loan. $45,455 is
included in interest expense for the nine months ended March 31, 1999. Under an
amendment dated June 28, 1999 to the agreement, should a public offering become
effective on or before October 31, 1999, the right to receive warrants shall be
replaced by 100,000 units exercisable at 90% of the initial public offering
price.

The Company acquired the operating assets and liabilities of Design Bas,
Incorporated effective April 1, 1999 for 10,000 shares of the Company's common
stock. The assets and liabilities acquired will be valued at their fair values
at the acquisition date. The difference between these values and the value of
the stock issued will be assigned to goodwill. The preliminary calculation would
allocate $153,975 to goodwill to be amortized over three years. The actual
amount and amortization period may differ, depending on the final allocation of
the total consideration.

F-16
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
Design Bas, Incorporated

We have audited the accompanying Balance Sheets of Design Bas, Incorporated
as of December 31, 1997 and December 31, 1998 and the related Statements of
Operations, Retained Earnings, and Cash Flows for the years then ended. 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.

As more fully described in Note 4 to the financial statements, property and
equipment acquired from shareholders has been valued at the price paid to the
shareholders. In our opinion, purchases of property and equipment from
controlling shareholders are required to be recorded at historical cost. The
effects on the financial statements of the preceding practice are not reasonably
determinable.

In our opinion, except for the effects of the matters discussed in the
preceding paragraph, the financial statements referred to above present fairly,
in all material respects, the financial position of Design Bas, Incorporated as
of December 31, 1997 and December 31, 1998 and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

FRIEDMAN, MINSK, COLE & FASTOVSKY
Los Angeles, California
April 20, 1999

F-17
<PAGE>
DESIGN BAS INCORPORATED

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------ MARCH 31,
1999
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents............................................. $ 44,661 $ 52,018 $ (1,795)
Accounts receivable................................................... 89,494 54,194 97,113
Bad debt reserve...................................................... -- (5,786) (5,786)
Accounts receivable-shareholder....................................... -- 5,875 --
Contracts in progress................................................. 11,801 2,300 17,249
Prepaid expenses...................................................... 2,366 6,236 3,848
------------ ------------ -----------
Total current assets................................................ 148,322 114,837 110,629
Advance-related party................................................. -- 66,783 66,783
Property and equipment-net............................................ 49,270 35,721 30,663
------------ ------------ -----------
Total assets........................................................ $ 197,592 $ 217,341 $ 208,075
------------ ------------ -----------
------------ ------------ -----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Bank credit line...................................................... $ 27,500 $ 45,000 39,000
Current portion of capital lease obligation........................... 1,970 6,619 7,121
Current portion of long-term debt..................................... 3,968 2,829 1,772
Accounts payable...................................................... 44,040 86,987 93,473
Accrued expenses and other current liabilities........................ 27,221 34,571 35,984
Loan payable.......................................................... -- -- 25,000
Income taxes payable.................................................. 1,500 1,500 1,500
Customer deposits..................................................... 69,804 -- --
------------ ------------ -----------
Total current liabilities........................................... 176,003 177,506 203,850
Long-term liabilities:
Capital lease obligation (less current portion)....................... 3,260 7,021 5,075
Long-term debt (less current portion)................................. 2,829 -- --
------------ ------------ -----------
Total long-term liabilities......................................... 6,089 7,021 5,075
Shareholders' equity (deficit):
Common Stock, no par value:
1,000 shares authorized, issued and outstanding..................... 5,000 5,000 5,000
Additional paid in capital............................................ 25,000 25,000 25,000
Retained earnings (deficit)........................................... (14,500) 2,814 (30,850)
------------ ------------ -----------
Total shareholders' equity (deficit)................................ 15,500 32,814 (850)
------------ ------------ -----------
Total liabilities and shareholders' equity (deficit)................ $ 197,592 $ 217,341 $ 208,075
------------ ------------ -----------
------------ ------------ -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-18
<PAGE>
DESIGN BAS, INCORPORATED

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------- ------------------------
<S> <C> <C> <C> <C>
1997 1998 1998 1999
------------ ------------ ----------- -----------
(UNAUDITED)
Revenues................................................... $ 1,342,500 $ 2,228,298 $ 459,331 $ 231,574
Cost of sales.............................................. 816,437 1,638,251 397,530 123,260
------------ ------------ ----------- -----------
Gross profit............................................... 526,063 590,047 61,801 108,314
------------ ------------ ----------- -----------
Costs and expenses:
General and administrative............................... 450,347 567,200 149,241 137,896
------------ ------------ ----------- -----------
Total costs and expenses................................. 450,347 567,200 149,241 137,896
------------ ------------ ----------- -----------
Income (loss) from operations.............................. 75,716 22,847 (87,440) (29,582)
Interest expense........................................... 2,989 4,733 661 4,082
------------ ------------ ----------- -----------
Income before income taxes............................... 72,727 18,114 (88,101) (33,664)
Income taxes............................................. 1,500 800 -- --
------------ ------------ ----------- -----------
Net income (loss)........................................ $ 71,227 $ 17,314 $ (88,101) $ (33,664)
------------ ------------ ----------- -----------
Retained earnings (deficit), beginning..................... (85,727) (14,500) (14,500) 2,814
------------ ------------ ----------- -----------
Retained earnings (deficit), ending........................ $ (14,500) $ 2,814 $ (102,601) $ (30,850)
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-19
<PAGE>
DESIGN BAS, INCORPORATED

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------
1997 1998 1998 1999
--------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................... $ 71,227 $ 17,314 $ (88,101) $ (33,664)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization........................ 23,093 26,001 6,199 5,058
Bad debt reserve..................................... -- 5,786 -- --
Changes in assets and liabilities:
Accounts receivable.................................. (41,840) 35,300 31,050 (42,919)
Accounts receivable-shareholders..................... -- (5,875) -- 5,875
Prepaid expenses..................................... (2,366) (3,870) 861 2,388
Contracts in progress................................ 83,535 9,501 (74,087) (14,949)
Advances to related party............................ -- (66,783) (25,000) --
Accounts payable and other liabilities............... (41,414) 50,297 126,084 7,899
Customer deposits.................................... (63,194) (69,804) 30,314 --
--------- --------- --------- ---------
Net cash provided by (used in) operating
activities....................................... 29,041 (2,133) 7,320 (70,312)
--------- --------- --------- ---------
Cash flows from investing activities:
Acquisition of property and equipment................ (6,354) (12,453) (6,498) --
--------- --------- --------- ---------
Net cash used in investing activities.............. (6,354) (12,453) (6,498) --
--------- --------- --------- ---------
Cash flows from financing activities:
Financing to acquire assets.......................... 6,354 12,453 6,498 --
Repayment of shareholder loans....................... (37,141) -- -- --
Advances from credit line-net........................ 27,500 17,500 (22,538) (6,000)
Loan received........................................ -- -- -- 25,000
Payments on financing to acquire assets.............. (4,694) (8,010) (1,412) (2,501)
--------- --------- --------- ---------
Net cash provided by (used in) financing
activities....................................... (7,981) 21,943 (17,452) 16,499
--------- --------- --------- ---------
Net change in cash and cash equivalents............ 14,706 7,357 (16,630) (53,813)
Cash and equivalents at beginning of period............ 29,955 44,661 44,661 52,018
--------- --------- --------- ---------
Cash and cash equivalents at end of period............. $ 44,661 $ 52,018 $ 28,031 $ (1,795)
--------- --------- --------- ---------
--------- --------- --------- ---------
Cash paid during year for:
Interest............................................. $ 2,989 $ 4,733 $ 661 $ 4,082
Income taxes......................................... 1,948 800 1,500 --
</TABLE>

The accompanying notes are an integral part of these statements.

F-20
<PAGE>
Design Bas, Incorporated
NOTES TO FINANCIAL STATEMENTS
(Information relating to March 31, 1998 and 1999 is unaudited)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

Design Bas, Incorporated, (the "Company") commenced operations effective
January 1, 1996. The Company's office and studio facilities are located in North
Hollywood, California. The Company designs and produces print advertising direct
mail catalogs, brochures and other printed advertising materials for department
stores and apparel retailers, principally on the West Coast.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. (See Note 4). The Company
depreciates its property and equipment using the straight-line method. The
principal useful lives in computing depreciation are as follows:

<TABLE>
<CAPTION>
ASSET USEFUL LIFE
- -------------------------------------------------------------------------------- ------------
<S> <C>
Machinery and equipment......................................................... 3-5 Years
Furniture and fixtures.......................................................... 5-10 Years
Software........................................................................ 1-3 Years
</TABLE>

INCOME TAXES

The shareholders have elected that the Company be taxed as an S corporation,
effective January 1, 1996.

The income taxes for the years ended December 31, 1997 and 1998 and the
three months ended March 31, 1998 and 1999 represent California franchise tax at
a rate of 1.5% for S corporations. No provision has been made for Federal income
taxes, as the income is taxable to the individual shareholders.

MAJOR CUSTOMERS / SUPPLIERS

The Company's customers are located primarily on the West Coast. For the
year ended December 31, 1997, sales to two customers amounted to 19% and 45% of
total sales. For the year ended December 31, 1998, sales to three customers
amounted to 19%, 11%, and 58% of total sales. During late 1998 the customer who
accounted for 58% of sales was acquired by the customer who accounted for 19% of
sales. The 11% customer has suspended operations. One supplier accounted for 13%
of cost of sales for 1998. Loss of this supplier or these customers could have
an adverse effect upon the Company's operations.

F-21
<PAGE>
DESIGN BAS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ESTIMATES

CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION

Revenue is recognized upon completion of the project. On certain projects
the Company receives progress payments. Payments received prior to completion
are reported as customer deposits. Costs incurred prior to completion are
reported as contracts in progress.

UNAUDITED INTERIM FINANCIAL INFORMATION

The financial information as of March 31, 1999 and for the three months
ended March 31, 1998 and 1999 is unaudited, but includes all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for fair presentation of the financial position at such dates and the
results of operations and cash flows for the periods then ended. Operating
results for the three months ended March 31, 1999 are not necessarily indicative
of results that may be expected for the entire year.

NOTE 2 CONCENTRATIONS OF RISK

Credit risk for trade accounts receivable is concentrated as substantially
all of the balances are receivable from customers in one industry located in one
geographic region. The Company, generally, requires no collateral from its
customers. 100% of trade accounts receivable at December 31, 1997 are due from
two customers; 100% of trade accounts receivable at December 31, 1998 are due
from two customers; 79% of accounts receivable at March 31, 1999 are due from
two customers.

NOTE 3 RELATED PARTY TRANSACTIONS

During 1996, the two principal shareholders made non-interest bearing
advances to the Company which the Company repaid by December 31, 1997 (See Note
4).

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
Advances to Shareholders................................................. $ -- $ 5,875
Repayment to Shareholders................................................ 37,141 --
</TABLE>

Commencing on July 1, 1998 the Company began renting its premises on a month
to month basis from 10859 Burbank LLC, a company owned by the two shareholders
of Design Bas, Incorporated.

F-22
<PAGE>
DESIGN BAS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 3 RELATED PARTY TRANSACTIONS (CONTINUED)
Rent expense for the period July 1, 1998 to December 31, 1998 amounted to
$22,523. In addition the Company paid property taxes of $3,364 and repair
expenses of $7,436 related to this property. Rent expense for the three months
ended March 31, 1999 amounted to $10,899.

During 1998, the Company advanced $5,875 to a shareholder/officer. These
advances were repaid in 1999.

During 1998 the Company made non-interest bearing advances of $66,783 to
10859 Burbank LLC which was used principally as the downpayment on the building
the Company is currently leasing. There is no fixed repayment plan under the
terms of the agreement.

NOTE 4 PROPERTY AND EQUIPMENT

Property and Equipment is comprised of:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1998 MARCH 31, 1999
--------- ---------- --------------
<S> <C> <C> <C>
Machinery and equipment............................... $ 32,260 $ 32,260 $ 32,260
Furniture and fixtures................................ 33,884 33,884 33,884
Leased computers...................................... 6,354 18,806 18,806
Props and library..................................... 18,900 18,900 18,900
--------- ---------- --------------
91,398 103,850 103,850
Accumulated depreciation.............................. 42,128 68,129 73,187
--------- ---------- --------------
Net................................................... $ 49,270 $ 35,721 $ 30,663
--------- ---------- --------------
--------- ---------- --------------
</TABLE>

The Company purchased property and equipment for $54,632 and materials,
supplies, and props for $36,030 from the two shareholders at the inception of
the company for non-interest bearing advances. These assets were acquired at
values determined by the shareholders.

NOTE 5 CAPITAL LEASE OBLIGATIONS

The Company leases computers under long term capital leases. The leases bear
interest ranging from 20% to 29% per annum with current monthly payments of $911
expiring April 1999 through February 2001.

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
--------- --------- -----------
<S> <C> <C> <C>
Capital lease obligations-current............................. $ 1,970 $ 6,619 $ 7,121
Capital lease obligations-non-current......................... 3,260 7,021 5,075
--------- --------- -----------
$ 5,230 $ 13,640 $ 12,196
--------- --------- -----------
--------- --------- -----------
</TABLE>

F-23
<PAGE>
DESIGN BAS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 5 CAPITAL LEASE OBLIGATIONS (CONTINUED)
The future annual lease payments are as follows:

<TABLE>
<S> <C>
Year Ending:

December 31, 1999.................................................. $ 10,929
2000.................................................. 8,022
2001.................................................. 485
---------
Total lease payments............................................... 19,436
Less amount representing interest.................................. 5,796
---------
Total obligation under capital lease............................... $ 13,640
---------
---------
</TABLE>

Depreciation of these assets for the year ended December 31, 1997 and
December 31, 1998 and the three months ended March 31, 1998 and 1999 totaled
$5,337, $8,245, $1,760 and $2,527, respectively, and is included in depreciation
expense.

NOTE 6 SHORT-TERM BORROWINGS

The Company obtained a revolving line of credit in 1996 ($65,000 at December
31, 1998) with annual interest of 11% at December 31, 1997 and 10.25% at
December 31, 1998. Minimum monthly interest payments are calculated on the
average daily balance and are due currently. The outstanding principal balances
at December 31, 1997 and December 31, 1998 were $27,500 and $45,000,
respectively. The loan is guaranteed by each of the shareholders for $65,000 and
is collateralized by the assets of the Company to a maximum of $65,000.

NOTE 7 LONG-TERM DEBT

Long-term debt at December 31, 1997 and 1998 and March 31, 1999 consists of
the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
--------- --------- -----------
<S> <C> <C> <C>
Computer Equipment Purchase Agreement with annual interest rate
of 10.75%, due September 29, 1999............................ $ 6,797 $ 2,829 $ 1,772
Less current maturities........................................ 3,968 2,829 1,772
--------- --------- -----------
Total.......................................................... $ 2,829 $ -- $ --
--------- --------- -----------
--------- --------- -----------
</TABLE>

Under terms of the agreement, the Company granted a security interest in the
computer equipment purchased as collateral.

NOTE 8 COMMITMENTS AND CONTINGENT LIABILITIES

LEASES

The Company leased its office and production facilities under an operating
lease which expired June 30, 1998. Commencing July 1, 1998, the Company began
renting its office and production facilities from a related party on a month to
month basis (see Note 3).

F-24
<PAGE>
DESIGN BAS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(INFORMATION RELATING TO MARCH 31, 1998 AND 1999 IS UNAUDITED)

NOTE 8 COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
Rent expense for the years ended December 31, 1997 and 1998 and the three
months ended March 31, 1998 and 1999 amounted to $37,800 and $41,423, and $9,450
and $10,899, respectively.

INSURANCE

An insurance policy for workers' compensation insurance was acquired
effective June 13, 1997. The Company did not have workers' compensation
insurance from January 1, 1996 to June 12, 1997 and was not insured for risks
covered by this policy.

NOTE 9 SUBSEQUENT EVENTS

The Company has signed a letter of intent to sell principally all its assets
and liabilities to 3Dshopping.com effective April 1, 1999. The purchase price
will be 10,000 shares of 3Dshopping.com.

On March 1, 1999 a former employee loaned $25,000 to the Company, at 12% per
annum, with interest and principal due June 1, 1999. The loan is secured by
outstanding accounts receivable.

F-25
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The unaudited pro forma combined balance sheet data at March 31, 1999
presents adjustments for our acquisition of the assets and liabilities of Design
Bas, Incorporated for stock, as if we had acquired these assets and liabilities
at that date. The data presents the pro forma combined balance sheet of
3Dshopping.com and Design Bas, Incorporated.

The unaudited pro forma combined statements of operations data for the year
ended June 30, 1998 and the nine months ended March 31, 1999 presents
adjustments for our acquisition of the assets and liabilities of Design Bas,
Incorporated for stock, as if we had acquired these assets and liabilities at
the beginning of the respective periods. The data presents the pro forma
combined statements of operations of 3Dshopping.com and Design Bas,
Incorporated.

In the opinion of management, all adjustments have been made that are
necessary to present fairly the pro forma data.

F-26
<PAGE>
3DSHOPPING.COM AND DESIGN BAS, INCORPORATED
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1999

<TABLE>
<CAPTION>
3DSHOPPING.COM
3DSHOPPING.COM DESIGN BAS, PRO FORMA PRO FORMA
AS REPORTED INCORPORATED ADJUSTMENTS COMBINED
--------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $ 469,793 $ (1,795) $ -- $ 467,998
Accounts receivable........................... 18,736 91,327 -- 110,063
Other receivables............................. 2,470 -- -- 2,470
Contracts in progress......................... 20,263 17,249 -- 37,512
Prepaid expenses.............................. 7,112 3,848 -- 10,960
--------------- ------------ ----------- ---------------
Total current assets........................ 518,374 110,629 -- 629,003
Advance-related party........................... -- 66,783 -- 66,783
Property and equipment-net...................... 111,625 30,663 -- 142,288
Prepaid offering costs.......................... 211,389 -- -- 211,389
Goodwill........................................ -- -- 153,975(1) 153,975
--------------- ------------ ----------- ---------------
Total assets................................ $ 841,388 $ 208,075 $ 153,975 $ 1,203,438
--------------- ------------ ----------- ---------------
--------------- ------------ ----------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank credit line.............................. $ -- $ 39,000 $ -- $ 39,000
Current portion of capital lease obligation... 5,450 7,121 -- 12,571
Current portion of long-term debt............. -- 1,772 -- 1,772
Loan payable.................................. -- 25,000 -- 25,000
Notes payable-current......................... 616,024 -- -- 616,024
Accounts payable and accrued expenses......... 132,481 129,457 -- 261,938
Income taxes payable.......................... -- 1,500 -- 1,500
Customer deposits............................. 22,333 -- -- 22,333
--------------- ------------ ----------- ---------------
Total current liabilities................... 776,288 203,850 -- 980,138

Long-term liabilities:
Capital lease obligation (less current portion
included above)............................. 10,629 5,075 -- 15,704

Shareholders' equity:
Common Stock: 3,645,746 (As Reported) and
3,655,746 (Pro Forma)....................... 6,124,688 5,000 153,125(1)
(5,000) 6,277,813
Additional paid in capital.................... -- 25,000 (25,000) --
Stock subscriptions receivable................ (2,500) -- -- (2,500)
Accumulated earnings (deficit)................ (6,067,717) (30,850) 30,850 (6,067,717)
--------------- ------------ ----------- ---------------
Total shareholders' equity (deficit)........ 54,471 (850) 153,975 207,596
--------------- ------------ ----------- ---------------
Total liabilities and shareholders'
equity.................................... $ 841,388 $ 208,075 $ 153,975 $ 1,203,438
--------------- ------------ ----------- ---------------
--------------- ------------ ----------- ---------------
</TABLE>

F-27
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1999

(1) Reflects the issuance of 10,000 shares of our common stock, valued as of
April 1, 1999, the effective acquisition date. Values assigned to the assets
and liabilities acquired are based upon a preliminary allocation of the
total consideration. The common stock issued as consideration is valued for
this presentation at the value of the stock at April 1, 1999, which was
$15.3125 per share.

3DSHOPPING.COM AND DESIGN BAS, INCORPORATED
YEAR ENDED JUNE 30, 1998(1)
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
3DSHOPPING.COM
3DSHOPPING.COM DESIGN BAS, PRO FORMA PRO FORMA
AS REPORTED INCORPORATED ADJUSTMENTS(2) COMBINED
--------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Net revenues.................................. $ 18,404 $1,427,406 $ -- $ 1,445,810
--------------- ------------ -------------- ---------------

Cost of sales............................... -- 980,557 -- 980,557
--------------- ------------ -------------- ---------------
18,404 446,849 -- 465,253
--------------- ------------ -------------- ---------------

Costs and expenses:
Research and development.................... 170,259 -- -- 170,259
General and administrative.................. 933,885 475,190 51,325(3) 1,460,400
--------------- ------------ -------------- ---------------

Total costs and expenses.................... 1,104,144 475,190 51,325 1,630,659
--------------- ------------ -------------- ---------------

Loss from operations.......................... (1,085,740) (28,341) (51,325) (1,165,406)
Interest expense.............................. 10,373 2,658 -- 13,031

Other income.................................. 13,500 -- -- 13,500
--------------- ------------ -------------- ---------------
Net loss.................................... $ (1,082,613) $ (30,999) $ (51,325) $ (1,164,937)
--------------- ------------ -------------- ---------------
--------------- ------------ -------------- ---------------
Net loss per share............................ $ (0.28) $ -- $ -- $ (0.30)
--------------- ------------ -------------- ---------------
--------------- ------------ -------------- ---------------

Weighted average number of shares used in
computing net loss per share................ 3,823,228 -- 10,000 3,833,228
--------------- ------------ -------------- ---------------
--------------- ------------ -------------- ---------------
</TABLE>

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1998

(1) Includes the operations of 3Dshopping.com for the year ended June 30, 1998
and Design Bas, Incorporated for the twelve months ended March 31, 1998.

(2) Reflects adjustments for the acquisition of the assets and liabilities of
Design Bas, Incorporated, as if it had taken place at the beginning of the
period.

(3) Depreciation and amortization are based upon the preliminary allocation of
the consideration as follows: Intangible assets of approximately $153,975
over three years, and property and equipment of approximately $30,663 over
five years. Actual depreciation and amortization may differ, depending on
the final allocation of the total consideration.

F-28
<PAGE>
3DSHOPPING.COM AND DESIGN BAS, INCORPORATED
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1999(1)

<TABLE>
<CAPTION>
3DSHOPPING.COM
3DSHOPPING.COM DESIGN BAS PRO FORMA PRO FORMA
AS REPORTED INCORPORATED ADJUSTMENTS(2) COMBINED
--------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Net revenues.................................. $ 50,311 $1,346,344 $ -- $ 1,396,655
--------------- ------------ -------------- ---------------

Cost of sales............................... -- 973,840 -- 973,840
--------------- ------------ -------------- ---------------
50,311 372,504 422,815
--------------- ------------ ---------------

Costs and expenses:
Research and development.................... 346,131 -- -- 346,131
General and administrative.................. 2,725,540 426,714 38,494(3) 3,190,748
--------------- ------------ -------------- ---------------
Total costs and expenses.................... 3,071,671 426,714 38,494 3,536,879
--------------- ------------ -------------- ---------------

Loss from operations.......................... (3,021,360) (54,210) (38,494) (3,114,064)
Interest expense.............................. 61,269 7,143 -- 68,412
Other income.................................. 3,250 -- -- 3,250
--------------- ------------ -------------- ---------------
Net loss.................................... $ (3,079,379) $ (61,353) $ (38,494) $ (3,179,226)
--------------- ------------ -------------- ---------------
--------------- ------------ -------------- ---------------

Net loss per share............................ $ (0.77) $ -- $ -- $ (0.79)
--------------- ------------ -------------- ---------------
--------------- ------------ -------------- ---------------
Weighted average number of shares used in
computing net loss per share................ 4,024,482 -- 10,000 4,034,482
--------------- ------------ -------------- ---------------
--------------- ------------ -------------- ---------------
</TABLE>

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1999

(1) Includes the operations of 3Dshopping.com for the nine months ended March
31, 1999 and Design Bas, Incorporated for the nine months ended March 31,
1999.

(2) Reflects adjustments for the acquisition of the assets and liabilities of
Design Bas, Incorporated, as if it had taken place at the beginning of the
period.

F-29
<PAGE>
[ART]

From our Web site, shoppers can access a directory of our customers, with direct
links to their Web sites.
<PAGE>
1,100,000 UNITS

[LOGO]

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

PROSPECTUS

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

PAULSON INVESTMENT COMPANY, INC.

JULY 20, 1999

YOU SHOULD RELY ONLY ON INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, UNITS ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE
OF OUR SECURITIES.

NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF THE UNITS OR POSSESSION OR DISTRIBUTION OF THIS
PROSPECTUS IN ANY SUCH JURISDICTION. PERSONS WHO COME INTO POSSESSION OF THIS
PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO INFORM
THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING AND THE
DISTRIBUTION OF THIS PROSPECTUS APPLICABLE TO THAT JURISDICTION.

UNTIL AUGUST 14, 1999, ALL DEALERS THAT BUY, SELL OR TRADE IN OUR
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.