SALEOUTLET COM INC, 10SB12G, 1999-07-01

SALEOUTLET COM INC
10SB12G, 1999-07-01

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS

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

SALEOUTLET.COM, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)

Nevada 88-0399260
------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)

132 West 21st Street
New York, NY 10011
--------------------- ----------
(Address of Principal (Zip Code)
Executive Offices)

Issuer's Telephone Number:
(212) 691-0288

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

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

Common Stock, par value $.001 per share
---------------------------------------
(Title of Class)

<PAGE>

PART 1

ITEM 1. DESCRIPTION OF BUSINESS

(a) Business Development

SaleOutlet.Com, Inc. ("SaleOutlet" or the "Company"), was incorporated in
Nevada on September 1, 1995. The Company was formed specifically to seek viable
businesses or enterprises to acquire but had not located such a candidate. From
inception until March 1, 1999, the Company had no operations and conducted no
business.

In March, 1999, then current management of the Company successfully
negotiated with a small group of individuals who had many years of marketing
experience and were poised to introduce an Internet based consumer driven
business. As a result, former management resigned and a new Board of Directors
and management team was installed. The Company changed its name to
SaleOutlet.Com and in May, 1999, the Company launched its new Internet based
business.

(b) Business of the Issuer

(1) Principal Products and Services and their Markets

The Company offers its clients their own "sale site" where, for a flat fee,
each client can offer 20 items for sale at a time. The client maintains the sale
site for a limited period of time, based on renewals and/or terms. The client is
able to update prices, copy or products for a flat per-item charge, and for a
yearly maintenance fee, can make unlimited changes. The site allows the
Company's clients to sell off overstocks without having to sell these overstocks
to a jobber at pennies on the dollar. It allows the client to set its own price
for an item provided it is at a discounted price within the parameters
established by the Company. The low cost of posting merchandise on the
SaleOutlet website provides a client with the potential for a significant return
on its investment in a relatively short period of time. It also allows for a
client to maintain its public image by not selling its overstocks to a
wholesaler.

The items available for sale on the website range from jewelry to crystal
to golf bags at discounts of 10% to 50% off regular retail prices and are
available 24 hours a day, seven days a week. Currently, the Company offers items
from 25 to 100 clients at a time on its SaleOutlet.com website. It is
anticipated that this number will increase significantly over the next 12
months. A search for a particular product can be conducted by item name,
category or price. The search engine searches the entire database of all
clients' products and then displays the matches for the viewer. This allows a
customer to shop all stores of all clients from one search engine. A description
and picture of the item listed for sale are also provided. A customer need only
fill one shopping basket for all items to be purchased regardless of how many
stores he purchases from in one shopping trip. As a result, only one checkout is
required. The Company's software calculates all taxes and shipping and handling
charges and posts all totals.

<PAGE>

The Company derives its revenue from six sources: 1) a 10% commission on
each item sold on the site, 2) an initial site fee of $5,000 per vendor
commencing in year 2000 and a fee each time an item is changed; 3) through the
Company's e-mail address database; 4) website creation; 5) catalog design and
marketing; and 6) website advertising such as by banner ads. It is anticipated
that the greatest source of revenue will be derived from sales commissions and
advertising.

The Company is taking advantage of the growing number of consumers who
purchase merchandise via the Internet by creating a one-stop shopping type of
experience while at the same time providing the benefits of an outlet mall
shopping experience because of the variety of goods available at discounted
prices.

(2) Distribution Methods

In addition to Internet sales on the Company's website, the Company is
enhancing the customer's shopping experience and convenience by offering an
event reminder and bargain registry. The bargain registry allows a customer to
register search parameters for particular items. When the system locates a match
in its database the customer is automatically e-mailed an alert with a hot link
to take him directly to that item. The event reminder allows a customer to enter
specific dates for which he will receive an e-mail reminder at a predetermined
date prior to those dates. The customer can then use the website and the bargain
registry to shop for gifts for these events.

The Company does not maintain an inventory nor stock any merchandise. It
relies upon its clients to provide the listings of the merchandise for sale and
its consumer goods' contacts and its internal marketing expertise to locate the
requested merchandise. The vendor is responsible for delivering the merchandise
ordered directly to the customer.

(3) Status of Publicly Announced New Products or Services

The Company has no new publicly announced products or services.

(4) Competitive Business Conditions

The sale of consumer goods over the Internet has exploded in the last two
years. It is anticipated that by the year 2003 consumers will purchase over $108
billion in products online according to a Forrester Research Report. In
addition, 6.3 million online shoppers will be added to the current number for
each of the next five years representing more than 60 million U.S. households
expected to be purchasing products online. As a result, competition for the
attention of these online consumers and their dollars is expected to increase
dramatically. There may be companies that are initially better financed and may
have greater name recognition. Management believes, however, that its years of
experience in the catalog marketing business prior to joining the Company will
provide the Company with the creative and marketing edge necessary to compete
effectively and successfully in the market place. Management further believes
that its unique selling approach of using direct e-mail to the Company's
database of customers, the ability of its clients to potentially

<PAGE>

achieve a significant return on its investment in a relatively short time period
and the ease of use for customers will create a positive environment for clients
and customers.

(5) Dependence on Major Customers

The Company is not dependent on one or more major customers. The catalog
industry is quite vast and management believes that there are thousands if not
tens of thousands of clients and potential clients that will avail themselves of
the Company's services.

(6) Intellectual Property

The Company regards its trade secrets and similar intellectual property as
valuable to its business, and will rely on trademark and copyright law, trade
secret protection and confidentiality and/or license agreements with its
employees, partners and others to protect its proprietary rights. There can be
no assurance that the steps taken by the Company will be adequate to prevent
misappropriation or infringement of its intellectual property. The Company
expects that it may license in the future certain of its proprietary rights such
as trademarks or copyrighted material, to third parties. While the Company
attempts to ensure that the quality of its brand is maintained by such
licensees, there can bo no assurance that such licensees will not take actions
that might materially adversely affect the value of the Company's proprietary
rights or reputation, which could have a material adverse effect on the Company.

(7) Governmental Approval

At this point in time, there is no need for government approval of the
Company's principal products or services.

(8) Governmental Approval, Regulation and Environmental Compliance

The Company will be subject, both directly and indirectly, to various laws
and regulations relating to its business, although there are few laws or
regulations directly applicable to access to the Internet. However, due to the
increasing popularity and use of the Internet, it is possible that a number of
laws and regulations may be adopted with respect to the Internet. Such laws and
regulations may cover issues such as user privacy, pricing, content, copyrights,
distribution, sales and other use taxes and characteristics and quality of
products and services. Furthermore, the growth and development of the market for
online commerce may prompt calls for more stringent consumer protection laws
that may impose additional burdens on those companies conducting business
online.

The enactment of any additional laws or regulations may impede the growth
of the Internet which could, in turn, decrease the demand for the business, or
otherwise have an adverse effect on the Company. The applicability to the
Internet of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes, contests and sweepstakes, libel,
personal

<PAGE>

privacy, rights or publicity, language requirements and content restrictions, is
uncertain and could expose the Company to substantial liability.

In addition, several telecommunications carriers are seeking to have
telecommunications over the Internet regulated by the Federal Communications
Commission (the "FCC") in the same manner as other telecommunications services.
For example, America's Carriers Telecommunications Association has filed a
petition with the FCC for this purpose. In addition, because the growing
popularity and use of the Internet has burdened the existing telecommunications
infrastructure and many areas with high Internet use have begun to experience
interruptions in phone service, local telephone carriers, such as Pacific Bell,
have petitioned the FCC to regulate Internet service providers and online
service providers in a manner similar to long distance telephone carriers and to
impose access fees on such providers. If either of these petitions are granted,
or the relief sought therein is otherwise granted, the costs of communicating on
the Internet could increase substantially, potentially slowing the growth in use
of the Internet.

Any such new legislation or regulation or application or interpretation of
existing laws could have an adverse effect on the Company's business, results of
operations and financial condition. U.S. and foreign laws regulate certain uses
of customer information and development and sale of mailing lists. The company
believes that it is in material compliance with such laws, but new restrictions
may arise in this area that could have an adverse affect on the Company.

The Company anticipates that it will have no material costs associated with
compliance with either federal, state or local environmental law.

(9) Research and Development

The Company intends to establish a small Research and Development team,
composed of both core and rotating engineering and marketing personnel, who will
develop and adopt new products, services, equipment, software and tools. The
Company believes that the results of this work will allow the Company to enhance
its services as well as its ability to provide those services effectively.
During the last two years, SaleOutlet has not incurred any significant costs in
connection with research and development with such costs approximating $65,000.

(10) Employees and Facilities

As of June 15, 1999, SaleOutlet had three (3) full-time and three (3)
part-time employees. The Company also employs independent contractors and other
temporary employees. None of the Company's employees is represented by a labor
union, and the Company considers its employee relations to be good. The Company
expects the number of employees to grow significantly over the next twelve
months. Competition for qualified personnel in certain areas of the Company's
industry is intense, particularly among software development and other technical
staff. The Company believes that its future success will depend in part on its
continued ability to attract, hire and retain qualified personnel.

<PAGE>

The Company's executive offices are located in, and substantially all of
its operating activities are conducted from, office space located in New York
City. The Company believes that additional space will be required as its
business expands and believes that it will be able to obtain suitable space as
needed. The Company does not own any real estate.

Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go to the expense of producing and delivering such reports. If the
Company is required to deliver annual reports, they will contain audited
financial statements as required.

Prior to the filing of this Form 10-SB, the Company has not filed reports
with the Securities and Exchange commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10-KSB, 10-QSB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.

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

(d) Year 2000 Disclosure

The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at any
of their facilities. All of the Company's computer systems are new and have been
year 2000 compliant from their acquisition. The Company keeps current with all
updates and revisions with all software the Company currently uses. It is
anticipated that the software updates reflect required revisions to accommodate
transactions in the year 2000 and thereafter. Though it is not anticipated that
the Company will have a problem at the turn of the century, the Company intends
to coordinate the resolution of any year 2000 problems with the vendors of the
software the Company utilizes. Nonetheless, the Company recognizes the problems
which may arise in connection with the Year 2000 issue.

<PAGE>

The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. In other words,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of operations, including, among others, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities. The Company does not believe that it has material exposure
to the Year 2000 issue with respect to its own information systems since its
existing systems correctly define the year 2000. The Company intends to conduct
an analysis in 1999 to determine the extent to which its major suppliers'
systems (insofar as they relate to the Company's business) are subject to the
Year 2000 issue. The Company is currently unable to predict the extent to which
the Year 2000 issue will affect its suppliers, or the extent to which it would
be vulnerable to the supplier's failure to remediate any Year 2000 issues on a
timely basis. The failure of a major supplier subject to the Year 2000 to
convert its systems on a timely basis or a conversion that is incompatible with
the Company's systems could have an adverse effect on the Company. In addition,
most of the purchases on the Company's web site are expected to be made with
credit cards, and the Company's operations may be adversely affected to the
extent its customers are unable to use their credit cards due to any Year 2000
issues that are not rectified by their credit card vendors.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION

Plan of Operation

During the 12 month period following the filing of this Form 10-SB, the
Company intends to use the funds it received from the private sale of its debt
and equity securities in March, 1999 and May and June, 1999, respectively, to
develop its operations and most importantly, for marketing and advertising of
its Internet based business. The Company has allocated approximately $600,000
specifically for marketing and advertising. The Company raised approximately
$1,100,000 through the sale of its securities, the balance of which has been
used for website development ($125,000), equipment ($30,000), and the balance
for working capital requirements. Management anticipates that the funds received
from the private placement and cash flow from revenues will be sufficient to
finance the Company's working capital requirements for the next 12 months. If,
however, there is a need for additional capital, such funding will likely come
from the sale of the Company's debt and/or equity securities, the successful
sale of which, if any, cannot be assured.

From time to time the Company may evaluate potential acquisitions involving
complementary businesses, content, products or technologies. The Company has no
present agreements or understanding with respect to any such acquisition. The
Company's future capital requirements will depend on many factors, including the
entrance into strategic alliances, increases in advertising, marketing and
promotions, growth of the Company's customer base, economic conditions and other
factors including the results of future operations.

<PAGE>

The Company intends to employ approximately 12 to 15 people in the next 12
months, of which it is anticipated that two (2) will be directly related to
marketing and advertising, three (3) will be directly related to the design,
development and technical support of the SaleOutlet website, three (3) will be
related to the support of vendor customer service, two(2) will be vendor sales
representatives and three (3) will be directly related to general and
administrative.

ITEM 3. DESCRIPTION OF PROPERTY

The Company's executive offices are located in, and substantially all of
its operating activities are conducted from, its office in New York City. The
Company believes that it will be able to obtain suitable space as needed and has
the physical ability to acquire additional office space at its current location.
The Company leases its office space and does not own any real estate. The
Company is not in the business of investing in real estate or real estate
mortgages.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) 5% Shareholders.

The following information sets forth certain information as of June 15,
1999 about each person who is known to the Company to be the beneficial owner of
more than 5% of the Company's Common Stock:

Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
- -------------- ------------------- ----------------------- --------
Common Christopher Stys 1,470,000 16.53%
132 West 21st Street
New York, NY 10011

Roger Tichenor 500,000 5.62%
605 Crescent Executive Ct.
Suite 300
Lake Mary, FL 32746

<PAGE>

(b) Security Ownership of Management:

Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
- -------------- ------------------- ----------------------- --------
Common Michael Aronowitz 1,560,000 17.54%
132 West 21st Street
New York, NY 10011

Jefferson Barr 1,470,000 16.53%
132 West 21st Street
New York, NY 10011

Lawrence Brown 10,000 *
27 Wolver Hollow Road
Old Brookville, NY 11545

- ----------
* Less than 1%

(1) All percentages are calculated based upon 8,893,271 shares issued and
outstanding as of the date of filing this Form 10-SB.

There is no arrangement which may result in a change of control.

ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

(a) Directors and Executive Officers

As of June 15, 1999, the directors and executive officers of the Company,
their ages, positions in the Company, the dates of their initial election or
appointment as director or executive officer, and the expiration of the terms as
directors are as follows:

<PAGE>

Period Served
Name Age Position As Director*
---- --- -------- -------------
Michael Aronowitz 36 President and Director March 1999 to
present

Jefferson Barr 36 Vice President, Secretary March 1999 to
and Director present

Lawrence Brown 53 Director April 1999 to
present
- ----------

(b) Business Experience:

Michael Aronowitz, age 36, has been president and a director of the Company
since March, 1999. From 1991 to March, 1999, he was President of Z Michaels NY,
Inc., a full service direct mail agency which he founded in 1991. Z. Michaels
designs and produces catalogs for specific target markets. Z Michaels is
currently winding down its operations and expects to cease all business
operations on or before December 31, 1999. From 1984 to 1991, Mr. Aronowitz was
employed as sales manager for Concepts in Color, a catalog design and marketing
company located in New York.

Jefferson Barr, age 36, has been vice-president, secretary and a director
of the Company since March, 1999. From 1995 to March, 1999, he was
vice-president of Z Michaels NY, Inc. From 1992 until 1995, Mr. Barr was
president of Mod Graphics, Inc., a company which specialized in the creation,
production and marketing of direct mail advertising and mail order catalogs.
From 1989 to 1992, he was the creative director for Averix USA and The Cockpit
Catalog, a wholesale manufacturer and retail catalog of sportswear apparel and
authentic aviation clothing and accessories. Mr. Barr received his Bachelor of
Fine Arts degree in illustration and communication from the Parsons School of
Design.

Lawrence Brown, age 53, has been a director of the Company since April,
1999. Since 1981, Mr. Brown has been a partner in Professional Product Research,
a closely-held company, and has responsibility for new product sales to over 100
domestic and foreign catalogs. For the past 25 years, Mr. Brown has been
involved in the direct mail industry with experience in catalogs, lead
generation, merchandising and creative development. He has assisted in the
development of catalogs in Canada and South America and managed the "Dr.
Leonard" catalog from concept to its position as the largest health care catalog
in the world.

- ----------
* The Company's directors are elected at the annual meeting of stockholders
and hold office until their successors are elected and qualified. The
Company's officers are appointed by the Board of Directors and serve at the
pleasure of the Board and subject to employment agreements, if any,
approved and ratified by the Board.

<PAGE>

None of the Company's executive officers or directors is a director of any
company that files reports with the Securities and Exchange Commission.

(d) Employees:

In addition to Messrs. Aronowitz and Barr, the Company employs two key
individuals:

Christopher Stys, age 36, has been the Company's part-time creative
director since March, 1999. Since 1995, Mr. Stys has been secretary and
treasurer of Z Michaels NY, Inc. It is anticipated that Mr. Stys will become the
Company's full-time creative director by the end of the current fiscal year.
From 1992 to 1995 , he was vice-president of Mod Graphics, Inc. and from 1990 to
1992, he was the art director for Averix USA. Mr. Stys received his Bachelor of
Fine Arts degree from Edinboro University.

Amy Gottenberg, age 31, has been vice-president of marketing and business
development for the Company since June, 1999 From 1997 to June, 1999, she was a
consultant to Meisel, Inc., a software distribution company, and Veritel
Corporation, a voice recognition company, on matters relating to sales and
business development. From 1996 to 1997, she was manager of electronic financial
services for Donnelley Financial, a R.R. Donnelley & Sons company. From 1995 to
1996, Ms. Gottenberg was director of media products and services for Jupiter
Communications. From 1994 to 1995, she was a new media and emerging technologies
analyst for Simon & Schuster. From 1991 to 1994, Ms. Gottenberg was a consultant
to AT&T, The Voyager Company and Futurevision Entertainment. She is a member of
New York New Media and Venice Interactive Community, two online trade
associations. Ms. Gottenberg received her Bachelor of Science degree in mass
communications from Boston University and her Master of Professional Studies,
Interactive Telecommunications Program, from New York University.

(e) Family Relationships:

There are no family relationships between the directors, executive officers
or any other person who may be selected as a director or executive officer of
the Company.

<PAGE>

(f) Involvement in Certain Legal Proceedings:

None of the officers, directors, promoters or control persons of the
Company have been involved in the past five (5) years in any of the following:

(1) An bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;

(2) Any conviction in a criminal proceedings or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);

(3) Being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, or any Court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or

(4) Being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities laws or commodities law, and
the judgment has not been reversed, suspended, or vacated.

ITEM 6. EXECUTIVE COMPENSATION

The Company did not compensate prior management in the years ended December
31, 1998, 1997 and 1996 since it did not engage in business during those years.
The Company has commenced compensating Messrs. Aronowitz and Barr since they
were appointed to their respective positions in March 1999. None of the
Company's executive officers earned more than $100,000 during the years ended
December 31, 1998, 1997 and 1996.

<PAGE>

Summary Compensation Table

Long Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
--------------------------------- -------------------- -----------------
Annual Restricted Under- Other
Name and Compen- Stock lying LTIP Compen-
Principal Position Year Salary Bonus sation Awards Options Payouts sation
------------------ ---- ------ ----- ------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael Aronowitz, 1998 None None None None None None None
President and Director 1997 None None None None None None None
1996 None None None None None None None

Jefferson Barr, 1998 None None None None None None None
Vice President, 1997 None None None None None None None
Secretary and Director 1996 None None None None None None None

</TABLE>

During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's Common Stock, except as
disclosed in the following paragraphs:

The Company intends to enter into five (5) years employment agreements with
individuals the Company deems vital to its operations. These individuals are
Michael Aronowitz, President of the Company and a director, and Jefferson Barr,
vice president and secretary of the Company and a director. Pursuant to these
employments agreements, Mr. Aronowitz and Mr. Barr will each be compensated for
their services at the rate of $75,000 per year and receive 200,000 shares each
of the Company's restricted Common Stock. This is in addition to the 1,560,000
shares and 1,470,000 shares, respectively, each received after being appointed
as officers and directors of the Company in March, 1999. The Company's Board of
Directors may increase the salary as it deems appropriate. The employment
agreements will provide that if Messrs. Aronowitz and Barr are terminated by the
Company without cause (as defined in the employment agreements), each will be
entitled to receive the lesser of (i) his base salary for one year from the date
of termination plus the cash value of any benefits, or (ii) the aggregate amount
of his base salary plus the cash value of any benefits during the balance of the
term of the agreements.

<PAGE>

The employment agreements will also provide that Messrs. Aronowitz and Barr
will not, during the term of the agreements or thereafter, disclose any
confidential information of the company without the prior written approval of
the Company. Further, they will not during the term of the agreements and for a
period of one (1) year thereafter, participate in any business or other
enterprise that competes with the Company or solicit any of the Company's
employees or customers or otherwise interfere with the Company's relationships
and business.

In June,1999, Lawrence Brown received 10,000 shares of Common Stock upon
appointment to the Board of Directors and will receive 10,000 additional shares
for each year he serves as a member of the Board of Directors. Every
non-employee director shall also receive 10,000 shares for each year of service
on the Board and $400 for each meeting of the Board of Directors attended.

On March 10, 1999, the Company entered into a Consulting Agreement with
Roger Tichenor to provide services to the Company. Such services include
consultation with respect to business structure and corporate development, new
projects and growth strategies, identifying possible mergers, acquisitions and
joint ventures and strategic planning. As compensation for these services, Mr.
Tichenor received 500,000 shares of Common Stock . The shares issued to Mr.
Tichenor were issued in reliance on an exemption from registration contained in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
and the certificate representing such shares bears a restrictive legend
reflecting the limitations on future transfer of the shares.

ITEM 8. DESCRIPTION OF SECURITIES

The Company's Articles of Incorporation authorizes the issuance of
50,000,000 shares of Common Stock, $.001 par value per share. There is no
preferred stock authorized. Holders of shares of Common Stock are entitled to
one vote for each share on all matters to be voted on by the stockholders.
Holders of shares of Common Stock are entitled to share ratably in dividends, if
any, as may be declared from time to time by the Board of Directors in its
discretion from funds legally available therefor. In the event of a liquidation,
dissolution or winding up of the Company, the holders of shares of Common Stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of Common Stock have no preemptive or other subscription
rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to such shares. All of the shares of Common Stock issued
and outstanding are fully paid and nonassessable.

<PAGE>

PART II.

ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS

Market Information:

The Company's Common Stock currently trades on the Over-The-Counter
Bulletin Board (OTC:BB) under the trading symbol "SLET". From September, 1998,
when the Company's Common Stock was listed for trading on the OTC:BB, until on
or about May, 1999, there was no trading market for the Company's Common Stock.
Since such time there has been a limited trading market for the Company's Common
Stock

There can be no assurance that an active public market for the Common Stock
will develop or be sustained. In addition, the shares of Common Stock are
subject to various governmental or regulatory body rules which affect the
liquidity of the shares.

Holders:

There were approximately 52 holders of record of the Company's Common Stock
as of June 15, 1999.

Dividends:

The Company has never paid cash dividends on its Common Stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.

ITEM 2. LEGAL PROCEEDINGS

The Company is not a party to, and none of the Company's property is
subject to any pending or threatened legal, governmental, administrative or
judicial proceedings.

ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

There have been no disagreements with the Company's previous independent
auditors. The Company has, however, changed auditors but not as a result of any
disagreements.

<PAGE>

ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES

On March 31, 1999, the Company issued an aggregate of $155,000 principal
amount Series A 12% Convertible Cumulative Promissory Notes which, in accordance
with their terms, will be converted as of June 30, 1999 into an aggregate of
232,500 shares of Common Stock to the following:

Stephen Guarino 112,500 Shares
James Arch 75,000 Shares
Douglas Nagel 45,000 Shares

These shares were issued in accordance with an exemption from registration
provided by Section 4(2) of the Securities Act.

In April, 1999, the Company issued a total of 4,480,000 shares of its
Common Stock to Michael Aronowitz (1,540,000 shares), Jefferson Barr (1,470,000
shares) and Christopher Stys (1,470,000 shares) in consideration for them
agreeing to become officers, directors and employees of the Company. These
shares were issued in accordance with an exemption from registration provided by
Section 4(2) of the Securities Act.

In April, 1999, the Company issued 500,000 shares of Common Stock to Roger
Tichenor pursuant to the terms of a Consulting Agreement between the Company and
Mr. Tichenor dated March 10, 1999. These shares were issued in accordance with
an exemption from registration provided by Section 4(2) of the Securities Act.

On or about June 7, 1999, the Company issued an aggregate of 583,271 shares
of its Common Stock to the following in accordance with an exemption provided by
Rule 506 of Regulation D promulgated under the Securities Act:

Todd Havemeister 20,000
Michael A. Garcia 16,667
Roberto Veitia 15,166
Virginia Beasely 5,700
Steven and Kimberly Bronson JTWROS 15,000
Tentrino-Val S.A. 6,668
Select Media Ltd. 66,650
James Skalko 66,667
Physicians Radiology Profit Sharing 6,667
Frederick A. Lenz 6,667
Peter Berney 70,000
Ronnie L. Williams, Sr. 6,667
Kimberly Dowda 16,666

<PAGE>

Edwards Capital Corporation 16,666
Expectation Company of Central Florida 33,334
Stephen Guarino 83,334
Matthew Carley 23,334
Douglas L. Carley 23,334
Steven G. Weismann 16,667
Robert D. Hall 20,000
Seajay Capital Corporation 14,000
Lee Meier 16,750
Charles DeVine 6,667

On or about June 7, 1999, the Company issued 150,000 shares of its Common
Stock to Noble House of Boston, Inc. pursuant to the terms of an agreement
between the Company and Noble House of Boston dated May 7, 1999 for Noble House
to provide the Company with public relations, advertising and promotional
services.

On or about June 7, 1999, the Company issued 10,000 shares of its Common
Stock to Lawrence Brown for serving on the Company's Board of Directors.

All certificates representing all of the foregoing shares issued by the
Company bear a restrictive legend restricting transferability under the
Securities Act.

ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 78.751 of the Nevada General Corporation Law allows the Company to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or in the
right of the Company, by reason of the fact that such person is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses including attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
the action, suit or proceeding if such person acted in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendre or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interest
of the Company and that, with respect to any criminal action or proceeding, such
person had reasonable cause to believe that his conduct was unlawful.

<PAGE>

Section 78.751 of the Nevada General Corporation Law also allows the
Company to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Company to procure a judgment in the Company's favor by reason of
the fact that such person is or was a director, officer, employee or agent of
the Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses including amounts paid in settlement
and attorneys fees actually and reasonably incurred by such person in connection
with the defense or settlement of the action or suit if such person acted in
good faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Company. Indemnification may not be made
for any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction determining, after exhaustion of all appeals
therefrom, to be liable to the Company or for amount paid in settlement to the
Company, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.

Section 78.751 of the Nevada General Corporation Law also provides that to
the extent that a director, officer, employee or agent of the Company has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in paragraphs above, or in defense of any claim, issue or
matter therein, the Company shall indemnify him against expenses, including
attorneys fees, actually and reasonably incurred by such person in connection
with the defense.

The Company's Articles of Incorporation provide that no director or officer
of the Company shall be personally liable to the Company or any of its
stockholders for damages for breach of fiduciary duty as a director or officer
involving any act or omission of any such director or officer; provided,
however, that the liability of a director or officer shall not be eliminated or
limited for acts or omissions which involve intentional misconduct, fraud or
knowing violation of law, or the payment of dividends in violation of Section
78.300 of the Nevada Revised Statutes. The Articles of Incorporation further
provide that any repeal or modification of the applicable Article shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director or officer of the Company for any acts or omissions
prior to such repeal or modification.

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

PART F/S

Financial Statements

18
<PAGE>

BARRY L. FRIEDMAN, P.C.
Certified Public Accountant

1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278

INDEPENDENT AUDITORS' REPORT

Board of Directors June 28, 1998
Austin Underground, Inc.
Las Vegas, Nevada

I have audited the accompanying Balance Sheets of Austin Underground, Inc.,
(A Development Stage Company), as of May 31, 1998, December 31, 1997, and
December 31, 1996, and the related statements of operations, stockholders'
equity and cash flows for period January 1, 1998, to May 31, 1998, and the two
years ended December 31, 1997, and December 31, 1996. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Austin Underground, Inc., (A
Development Stage Company), as of May 31, 1998, December 31, 1997, and December
31, 1996, and the results of its operations and cash flows for the period
January 1, 1998, to May 31, 1998, and the two years ended December 31, 1997, and
December 31, 1996, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Barry L. Friedman
- ---------------------------
Barry L. Friedman
Certified Public Accountant

-1-
<PAGE>

AUSTIN UNDERGROUND, INC.
(A Development Stage Company)

BALANCE SHEET

ASSETS

May 31, December 31, December 31,
1998 1997 1996
------- ------------ ------------

CURENT ASSETS ..................... $ 0 $ 0 $ 0
---- ---- ----
TOTAL CURRENT ASSETS ......... $ 0 $ 0 $ 0
---- ---- ----

OTHER ASSETS:
Organization Costs ............. $162 $192 $264
---- ---- ----
TOTAL OTHER ASSETS ........... $162 $192 $264
---- ---- ----
TOTAL ASSETS ................. $162 $192 $264
==== ==== ====

See accompanying notes to financial statements & audit report

-2-

<PAGE>

AUSTIN UNDERGROUND, INC.
(A Development Stage Company)

BALANCE SHEET

LIABILITIES AND STOCKHOLDERS' EQUITY

May 31, December 31, December 31,
1998 1997 1996
------- ------------ ------------

CURRENT LIABILITIES:
Officers Advances (Note #6) ........... $ 185 $ 85 $ 85
------ ------ ------
TOTAL CURRENT LIABILITIES .............. $ 185 $ 85 $ 85
------ ------ ------
STOCKHOLDERS' EQUITY: (Note 1)

Common stock, par value, $.001
authorized 50,000,000 shares
issued and outstanding at
December 31, 1996 - 6,000,000 shares .. $6,000
December 31, 1997 - 6,000,000 shares .. $6,000
May 31, 1998 - 6,000,000 shares ....... $6,000

Additional paid in Capital ............ 0 0 0

Accumulated loss ...................... -6,023 -5,893 -5,821
------- ------ ------

TOTAL STOCKHOLDERS' EQUITY ............. $ -23 $ 107 $ 179
------- ------ ------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................... $ 162 $ 192 $ 264
======= ====== ======

See accompanying notes to financial statements & audit report

-3-

<PAGE>

AUSTIN UNDERGROUND, INC.
(A Development Stage Company)

STATEMENT OF OPERATIONS

EXPENSES:
General, Selling and
Administrative ................ $ 100 $ 0 $ 85 $ 5,825
Amortization .................... 30 72 72 198
--------- --------- --------- ---------

Total Expenses .............. $ 130 $ 72 $ 157 $ 6,023
--------- --------- --------- ---------

Net Profit/Loss (-) ............... $ -130 $$ -72 $ -157 $ -6,023
========= ========= ========= =========

Net Profit/Loss (-)
per weighted share (Note 1) ..... $ NIL $ NIL $ NIL $ -.0010
========= ========= ========= =========

Weighted average number of
common shares outstanding ....... 6,000,000 6,000,000 6,000,000 6,000,000
========= ========= ========= =========
</TABLE>

See accompanying notes to financial statements & audit report

-4-

<PAGE>

AUSTIN UNDERGROUND, INC.
(A Development Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Common Stock Additional
-------------------- Paid-In Accumulated
Shares Amount Capital Deficit
--------- ------ ---------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 ................. 6,000,000 $6,000 $ 0 $-5,664

Net loss year ended December 31, 1996 ...... -157
--------- ------ --- -------

Balance, December 31, 1996 ................. 6,000,000 $6,000 $ 0 $-5,821

Net loss year ended December 31, 1997 ...... -72
--------- ------ --- -------

Balance, December 31, 1997 ................. 6,000,000 $6,000 $ 0 $-5,893

Net loss, January 1, 1998 to May 31, 1998... -130
--------- ------ --- -------

Balance, May 31, 1998 ...................... 6,000,000 $6,000 $ 0 $-6,023
========= ====== === =======
</TABLE>

See accompanying notes to financial statements & audit report

-5-

<PAGE>

AUSTIN UNDERGROUND, INC.
(A Development Stage Company)

STATEMENT OF CASH FLOWS

Sept. 1, 1995
Jan. 1 1998 Year Year (inception)
to Ended Ended to
May 31, Dec. 31, Dec. 31, May 31,
1998 1997 1996 1998
----------- --------- --------- -------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Loss .............................. $-130 $-72 $-157 $-6,023
Adjustment to reconcile net loss to
net cash provided by operating
activities
Amortization .......................... -30 +72 +72 +198

Changes in assets and liabilities:
Organization Costs .................... -360
Increase in current liabilities ....... +100 0 +85 +185
----- ---- ----- -------
Net cash used in operating activities ... $ 0 $ 0 $ 0 $-6,000

Cash Flows from investing activities .... 0 0 0 0

Cash Flows from Financing Activities:
Issuance of common stock for cash ..... 0 0 0 +6,000
----- ---- ----- -------
Net increase (decrease) in cash ......... $ 0 $ 0 $ 0 $ 0

Cash, beginning of period ............... 0 0 0 0
----- ---- ----- -------

Cash, end of period ..................... $ 0 $ 0 $ 0 $ 0
===== ==== ===== =======
</TABLE>

See accompanying notes to financial statements & audit report

-6-

<PAGE>

AUSTIN UNDERGROUND, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS
May 31, 1998, December 31, 1997, and December 31, 1996

NOTE 1 -- HISTORY AND ORGANIZATION OF THE COMPANY

The Company was organized August 30, 1995, under the laws of the State of
Nevada, as Austin Underground, Inc. The company currently has no operations and,
in accordance with SFAS #7, is considered a development stage company.

On September 1, 1995, the company issued 6,000,000 shares of $.001 par
value common stock for $6,000, in cash.

NOTE 2 -- ACCOUNTING POLICIES AND PROCEDURES

Accounting policies and procedures have not been determined except as
follows:

1. The Company uses the accrual method of accounting.

2. Earnings per share is computed using the weighted average number of
common shares outstanding.

3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.

4. Organization costs of $360.00 are being amortized over a 60 month period
commencing September 1, 1995, to August 31, 2000.

NOTE 3 -- GOING CONCERN

The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.

NOTE 4 -- WARRANTS AND OPTIONS

There are no warrants or options outstanding to acquire any additional
shares of common stock.

-7-
<PAGE>

AUSTIN UNDERGROUND, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS CONTINUED
May 31, 1998, December 31, 1997, and December 31, 1996

NOTE 5 -- RELATED PARTY TRANSACTION

The Company neither owns or leases any real or personal property. Office
services are provided without charge by a director. Such costs are immaterial to
the financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.

NOTE 6 -- OFFICERS ADVANCES

While the Company is seeking additional capital through a merger with an
existing operating company, an officer of the Company has advanced funds on
behalf of the Company to pay for any costs incurred by it. These funds are
interest free.

-8-

<PAGE>

[GRAPHIC]

INDEPENDENT AUDITOR'S REPORT

Board of Directors
SaleOutlet.com (formerly Austin Underground, Inc.)
Las Vegas, Nevada

I have audited the accompanying balance sheets of SaleOutlet.com (a
development stage company), as of December 31, 1998 and March 31, 1999 and the
related statements of operations, changes in stockholders' equity and cash flows
for each of the periods then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SaleOutlet.com (a
development stage company) at December 31, 1998 and March 31, 1999 and the
results of its operations and its cash flows for each of the periods then ended
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has had no operations and has no established
source of revenue. This raises substantial doubt about its ability to continue
as a going concern. Management's plan in regard to these matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ Kurt D. Saliger C.P.A.
- --------------------------
Kurt D. Saliger C.P.A.
April 20, 1999

[GRAPHIC]
-1-
<PAGE>

SALEOUTLET.COM
(FORMERLY AUSTIN UNDERGROUND, INC.)
BALANCE SHEETS

March 31, December 31,
1999 1998
--------- ------------

ASSETS
CURRENT ASSETS
Cash ............................................. $ 0 $ 0
------- -------
TOTAL CURRENT ASSETS .......................... $ 0 $ 0

OTHER ASSETS
Organization Costs, net .......................... $ 102 $ 120
------- -------
TOTAL OTHER ASSETS ............................ $ 102 $ 120
------- -------
TOTAL ASSETS ............................... $ 102 $ 120
======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Officers Advances ............................... $ 185 $ 185
------- -------
TOTAL CURRENT LIABILITIES ..................... $ 185 $ 185

LONG-TERM DEBT ..................................... $ 0 $ 0

STOCKHOLDERS' EQUITY
Common Stock, $.001 par value authorized
50,000,000 shares issued and outstanding
at December 31, 1998 and outstanding at
March 31, 1999 - 6,000,000 shares ............. $ 6,000 $ 6,000

Additional Paid In Capital ...................... $ 0 $ 0

Deficit Accumulaed During Development ........... $(6,083) $(6,065)
------- -------
TOTAL STOCKHOLDERS' EQUITY .................... $ (83) $ (65)
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.. $ 102 $ 120
======= =======

See accompanying notes to financial statements.

-2-

<PAGE>

SALEOUTLET.COM
(FORMERLY AUSTIN UNDERGROUND, INC.)
(A Development State Company)
STATEMENT OF OPERATIONS

Jan. 1, Jan. 1, Sept. 1, 1995
1999 to 1998 to (inception)
March December to March
31, 1999 31, 1998 31, 1999
-------- -------- -------------
<S> <C> <C> <C>
INCOME
Revenue .................... $ 0 $ 0 $ 0
---------- ---------- ----------
TOTAL INCOME ............... $ 0 $ 0 $ 0

EXPENSE
General and
Administrative ............ $ 0 $ 100 $ 5,825
Amortization $ 18 $ 72 $ 258
---------- ---------- ----------
TOTAL EXPENSES .............. $ 18 $ 172 $ 6,083
---------- ---------- ----------
NET PROFIT (LOSS) ........... ($18) ($172) ($6,083)
========== ========== ==========

NET PROFIT (LOSS)
PER SHARE ................... $ 0.0000 $ 0.0000 $ ($0.0001)
========== ========== ==========

AVERAGE NUMBER OF
SHARES OF COMMON
STOCK OUTSTANDING ........... 6,000,000 6,000,000 6,000,000
========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

-3-

<PAGE>

SALEOUTLET.COM
(FORMERLY AUSTIN UNDERGROUND, INC.)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
March 31, 1999

Common Stock (Deficit)
--------------------- Accumulated
Number Additional During
of Paid In Development
Shares Amount Capital Stage
------ ------ ---------- -----------
<S> <C> <C> <C> <C>
Balance December
31, 1995 .................. 6,000,000 $6,000 $0 ($5,664)

Net (loss) year ended
December 31, 1996 ........... ($157)
--------- ------ -- -------
Balance December
31, 1996 .................. 6,000,000 $6,000 $0 ($5,821)

Net (loss) year ended
December 31, 1997 ........... ($72)
--------- ------ -- -------
Balance December
31, 1997 .................. 6,000,000 $6,000 $0 ($5,893)

Net (loss) year ended
December 31, 1998 ........... ($172)
--------- ------ -- -------
Balance December
31, 1998 .................. 6,000,000 $6,000 $0 ($6,065)

Net (loss) three months
ended March 31, 1999 ........ ($18)
--------- ------ -- -------
Balance March
31, 1999 .................. 6,000,000 $6,000 $0 ($6,083)
========= ====== == =======
</TABLE>

See accompanying notes to financial statements.

-4-

<PAGE>

SALEOUTLET.COM
(FORMERLY AUSTIN UNDERGROUND, INC.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS

Jan. 1, Jan. 1, Sept. 1, 1995
1999 to 1998 to (inception)
March December to December
31, 1999 31, 1998 31, 1998
-------- -------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) ............................. ($18) ($172) ($6,083)
Adjustment to reconcile net
(loss) to net cash provided
by operating activities:
Amortization ........................... 18 72 258
Increase in officers advances .......... $ 0 $100 185
Organization costs ..................... ($360)
---- ----- -------
Net cash provided by operations ........ $ 0 $ 0 ($6,000)
---- ----- -------
CASH FLOWS FROM INVESTING ACTIVITIES....... $ 0 $ 0 $ 0
CASH FLOWS FROM FINANCING ACTIVITIES
Issue common stock ..................... $ 0 $ 0 $6,000
---- ----- -------
Net increase in cash ................... $ 0 $ 0 $ 0

Cash, Beginning of Period .............. $ 0 $ 0 $ 0
---- ----- -------
Cash, Ending of Period $ 0 $ 0 $ 0
---- ----- -------
</TABLE>

See accompanying notes to financial statements.

-5-

<PAGE>

SALEOUTLET.COM
(FORMERLY AUSTIN UNDERGROUND, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and March 31, 1999

NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY

The Company was organized in August 30, 1995 under the laws of the State of
Nevada. The Company currently has no operations and, in accordance with SFAS #7,
is considered a development stage company.

On September 1, 1995 the Company issued 6,000,000 shares of $0.001 par
value common stock for $6,000 in cash.

On February 26, 1999 the name of the Company was changed to SaleOutlet.com.

NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES

The Company has not determined its accounting policies and procedures,
except as follows:

A.) The Company uses the accrual method of accounting.

B.) Earnings or loss per share is calculated using the number of
shares of common stock outstanding as of the balance sheet date.

C.) The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.

D.) Organization costs of $360 are being amortized over a sixty (60)
month period commencing September 1, 1995, to August 31, 2000.

NOTE 3 - GOING CONCERN

The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern. However, the
Company has no current source of revenue. Without realization of additional
capital, it would be unlikely for the Company to continue as a going concern. It
is management's plan to seek additional capital to keep the Company operating.

NOTE 4 - WARRANTS AND OPTIONS

There are no warrants or options outstanding to acquire any additional
shares of common stock.

-6-

<PAGE>

SALEOUTLET.COM
(FORMERLY AUSTIN UNDERGROUND, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and March 31, 1999

NOTE 5 - RELATED PARTY TRANSACTIONS

The Company neither owns or leases any real or personal property. Office
services are provided without charge by a director. Such costs are immaterial to
the financial statements and are not reflected. The officers and directors of
the Company are involved in other business opportunities and may, in the future,
become involved in another business opportunity. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company has not
formulated a policy for the resolution of such conflicts.

NOTE 6 - OFFICERS ADVANCES

While the Company is seeking additional capital through a merger with an
existing operating company, an officer of the Company has advanced funds on
behalf of the Company to pay for costs incurred by it. These funds are interest
free.

-7-

<PAGE>

PART III.

ITEM 1. Index to Exhibits

The following exhibits are filed with this Form 10-SB:

Assigned Number Description
- --------------- -----------
(2) Articles of Incorporation, as amended

(3)(ii) By-laws

(16) Letter on change of certifying accountant

(27) Financial Data Schedule

<PAGE>

SIGNATURES

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

Dated: June 30, 1999.

SALEOUTLET.COM, INC.

By: /s/ Michael Aronowitz
---------------------
Michael Aronowitz
President

FILED
In the office of the
Secretary of the State of
STATE OF NEVADA
Sept 01 1995

ARTICLES OF INCORPORATION

Austin Underground, Inc.

Know all men by these present,

That the undersigned, have this day voluntarily associated ourselves together
for the purpose of forming a corporation under and pursuant to the provisions of
Nevada Revised Statutes 78.010 to Nevada Revised Statutes 78.090 inclusive, as
amended, and certify that,

1. The name of this corporation is

Austin Underground, Inc.

2. Offices for the transaction of any business of the Corporation and
where meetings of the Board of Directors and of Stockholders may be
held, may be established and maintained in any part of the State of
Nevada, or in any other state, territory, or possession of the United
States.

3. The nature of the business is to engage in any lawful activity.

4. The Capital Stock shall consist of 50,000,000 shares of common stock,
$0.001 par value.

5. The members of the governing board of the Corporation shall be styled
directors, of which there shall be no less than 1. The Directors of
this Corporation need not be stockholders. The first Board of Directors
is Raymond M. Girard, whose address is 1700 E. Desert Inn Rd., Suite
100, Las Vegas, NV 89109.

6. This Corporation shall have perpetual existence.

7. The name and address of each of the incorporators signing these
Articles of Incorporation are as follows; Raymond M. Girard, whose
address is 1700 E. Desert Inn Road, Suite 100, Las Vegas, NV 89109.

<PAGE>
8. This Corporation shall have a president, a secretary, a treasurer, and
a resident agent, to be chosen by the Board of Directors, any person
may hold two or more offices.

9. The resident agent of this Corporation shall be Raymond M. Girard, 1700
E. Desert Inn Road, Suite 100, Las Vegas, NV 89109.

10. The Capital Stock of the Corporation, after the fixed consideration
thereof has been paid or performed, shall not be subject to assessment,
and the individual liable for the debts and liabilities of the
Corporation, and the Articles of Incorporation shall never be amended
as the aforesaid provisions

11. No director or officer of the Corporation shall be personally liable to
the Corporation of any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission
of any such director or officer provided, however, that the foregoing
provision shall not eliminate or limit the liability of a director or
officer for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes. Any repeal
or modification of this Article of the Stockholders of the Corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of officer of the
Corporation for acts or omissions prior to such repeal or modification

2
<PAGE>

I, the undersigned, being the incorporator herein above named for the purpose of
forming a corporation pursuant to the general corporation law of the State of
Nevada, do make and file these Articles of Incorporation, hereby declaring and
certifying that the facts within stated are true, and accordingly, have hereunto
see my hand this 3 day of August, 1995.

/s/ Raymond M. Girard
---------------------
Raymond M. Girard
1700 E. Desert Inn Rd, Suite 100
Las Vegas, NV 89109

State of NEVADA )
)ss.
County of CLARK )

On August 3, 1995, personally appeared before me, a notary public, personally
known to me to be the person whose name is subscribed to the above instrument
who acknowledged that he/she executed the instrument.

/s/ Kristin D. Payne
--------------------
Signature

<PAGE>

FILED
In the office of the
Secretary of State of the
STATE OF NEVADA
Feb 26 1999

CERTIFICATE OF AMENDMENT OF ARTICLES ON INCORPORATION

Austin Underground, Inc.
(the Corporation)

We, the undersigned, Andrew W. Berney (President) and Douglas Ansell (Secretary)
of the Corporation do hereby certify:

That the board of Directors of the Corporation at a special meeting of
the board of directors duly convened and held on the 25th day of
February 1999, adopted a resolution to amend the original articles as
follows:

Article I is hereby amended to read as follows:

"The name of the Corporation is (hereinafter known as
the corporation) is SaleOutlet.com"

The number of shares of the Corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation are 6,000,000 that the said change(s)
and amendment has been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.

/s/ Andrew W. Berney /s/ Douglas Ansell
- -------------------- ------------------
Andrew W. Berney, President Douglas Ansell, Secretary

State of Nevada )
)ss.
County of Clark )

The undersigned Notary Public certified, deposes and states that Andrew
W. Berney and Douglas Ansell, personally appeared before me and executed the
foregoing on behalf of the Corporation as it's President and Secretary
respectively, this 25th day of February 1999.

/s/ Bridget E. Richards
-----------------------
Notary Public in and for said
County and State

Bylaws
of
Austin Underground, Inc.
(the "Corporation")

Article I

Office

The Board of Directors shall designate and the Corporation shall maintain a
principal office. The location of the principal office may be changed by the
Board of Directors. The Corporation also may have offices in such other places
as the Board may from time to time designate. The location of the initial office
of the Corporation shall be designated by resolution.

Article II

Shareholders Meetings

1. Annual Meetings

The annual meeting of the shareholders of the Corporation shall be held
at such place within or without the State of Nevada as shall be set
forth in compliance with these Bylaws. The meeting shall be held on the
First Friday of September of each year. If such day is a legal holiday,
the meeting shall be on the next business day. This meeting shall be
for the election of Directors and for the transaction of such other
business as may properly come before it.

2. Special Meetings

Special meetings of shareholders, other than those regulated by
statute, may be called by the President upon written request of the
holders of 50% or more of the outstanding shares entitled to vote at
such special meeting. Written notice of such meeting stating the place,
the date and hour of the meeting, the purpose or purposes for which it
is called, and the name of the person by whom or at whose direction the
meeting is called shall be given.

3. Notice of Shareholders Meeting

The Secretary shall give written notice stating the place, day, and
hour of the meeting, and in the case of a special meeting, the purpose
or purposes for which the meeting is called, which shall be delivered
not less than ten or more than fifty days before the date of the
meeting, either personally or by mail to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at their address as it appears on the
books of the Corporation, with postage thereon prepaid. Attendance at
the meeting shall constitute a waiver of notice thereof.

<PAGE>

4. Place of Meeting

The Board of Directors may designate any place, either within or
without the State of Nevada, as the place of meeting for any annual
meeting or for any special meeting called by the Board of Directors. A
waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the State of
Nevada, as the place for the holding of such meeting. If no designation
is made, or if a special meeting is otherwise called, the place of
meeting shall be the principal office of the Corporation.

5. Record Date

The Board of Directors may fix a date not less than ten nor more than
fifty days prior to any meeting as the record date for the purpose of
determining shareholders entitled to notice of and to vote at such
meetings of the shareholders. The transfer books may be closed by the
Board of Directors for a stated period not to exceed fifty days for the
purpose of determining shareholders entitled to receive payment of and
dividend, or in order to make a determination of shareholders for any
other purpose.

6. Quorum

A majority of the outstanding shares of the Corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further
notice. At a meeting resumed after any such adjournment at which a
quorum shall be present or represented, any business may be transacted,
which might have been transacted at the meeting as originally noticed.

7. Voting

A holder of outstanding shares, entitled to vote at a meeting, may vote
at such meeting in person or by proxy. Except as may otherwise be
provided in the currently filed Articles of Incorporation, every
shareholder shall be entitled to one vote for each share standing their
name on the record of shareholders. Except as herein or in the
currently filed Articles of Incorporation otherwise provided, all
corporate action shall be determined by a majority of the votes cast at
a meeting of shareholders by the holders of shares entitled to vote
thereon.

8. Proxies

At a meeting of shareholders, a shareholder may vote in person or by
proxy executed in writing by the shareholder or by their duly
authorized attorney-in-fact. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. No
Proxy shall be valid after six months from the date of its execution.

<PAGE>

9. Informal Action by Shareholders

Any action required to be taken at a meeting of the shareholders, may
be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by a majority of the shareholders
entitled to vote with respect to the subject matter thereof.

Article III

Board of Directors

1. General Powers

The business and affairs of the Corporation shall be managed by its
Board of Directors. The Board of Directors may adopt such rules and
regulations for the conduct of their meetings and the management of the
Corporation as they appropriate under the circumstances. The Board
shall have authority to authorize changes in the Corporation's capital
structure.

2. Number, Tenure and Qualification

The number of Directors of the Corporation shall be a number between
one and five, as the Directors may by resolution determine form time to
time. Each of the Directors shall hold office until the next annual
meeting of shareholders and until their successor shall have been
elected and qualified.

3. Regular Meetings

A regular meeting of the Board of Directors shall be held without other
notice than by this Bylaw, immediately after and, at the same place as
the annual meeting of shareholders. The Board of Directors may provide,
by resolution, the time and place for the holding of additional regular
meetings without other notice than this resolution.

4. Special Meetings

Special meetings of the Board of Directors may be called by order of
the Chairman of the Board or the President. The Secretary shall give
notice of the time, place and purpose or purposes of each special
meeting by mailing the same at least two days before the meeting or by
telephone, telegraphing or telecopying the same at least one day before
the meeting to each Director. Meeting of the Board of Directors may be
held by telephone conference call.

5. Quorum

A majority of the members of the Board of Directors shall constitute a
quorum for the transaction of business, but less than a quorum may
adjourn any meeting from time to time

<PAGE>

until a quorum shall be present, whereupon the meeting may be held, as
adjourned, without further notice. At any meeting at which every
Director shall be present, even though without any formal notice any
business may be transacted.

6. Manner of Acting

At all meetings of the Board of Directors, each Director shall have one
vote. The act of a majority of Directors present at a meeting shall be
the act of the full Board of Directors, provided that a quorum is
present.

7. Vacancies

A vacancy in the Board of Directors shall be deemed to exist in the
case of death, resignation, or removal of any Director, or if the
authorized number of Directors is increased, or if the shareholders
fail, at any meeting of the shareholders, at which any Director is to
be elected, to elect the full authorized number of Directors to be
elected at that meeting.

8. Removals

Directors may be removed, at any time, by a vote of the shareholders
holding a majority of the shares outstanding and entitled to vote. Such
vacancy shall be filled by the Directors entitled to vote. Such vacancy
shall be filled by the Directors then in office, though less than a
quorum, to hold office until the next annual meeting or until their
successor is duly elected and qualified, except that any directorship
to be filled by election by the shareholders at the meeting at which
the Director is removed. No reduction of the authorized number of
Directors shall have the effect of removing any Director prior to the
expiration of their term of office.

9. Resignation

A director may resign at any time by delivering written notification
thereof to the President or Secretary of the Corporation. A resignation
shall become effective upon its acceptance by the Board of Directors;
provided, however, that if the Board of Directors has not acted thereon
within ten days from the date of its delivery, the resignation shall be
deemed accepted.

10. Presumption of Assent

A Director of the Corporation who is present at a meeting of the Board
of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action(s) taken unless their dissent
shall be placed in the minutes of the meeting or unless he or she shall
file their written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to

<PAGE>

the secretary of the Corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Director who
voted in favor of such action.

11. Compensation

By resolution of the Board of Directors, the Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.

12. Emergency Power

When, due to a national disaster or death, a majority of the Directors
are incapacitated or otherwise unable to attend the meetings and
function as Directors, the remaining members of the Board of Directors
shall have all the powers necessary to function as a complete Board,
and for the purpose of doing business and filling vacancies shall
constitute a quorum, until such time as all Directors can attend or
vacancies can be filled pursuant to these Bylaws.

13. Chairman

The Board of Directors may elect from its own number a Chairman of the
Board, who shall preside at all meetings of the Board of Directors, and
shall perform such other duties as may be prescribed from time to time
by the Board of Directors. The Chairman may by appointment fill any
vacancies on the Board of Directors.

Article IV

Officers

1. Number

The officers of the Corporation shall be a President, one or more Vice
Presidents, a Secretary, and a Treasurer, each of whom shall be elected
by a majority of the Board of Directors. Such other Officers and
assistant Officers as may be deemed necessary may be elected or
appointed by the Board of Directors. In its discretion, the Board of
Directors may leave unfilled for any such period as it may determine
any office except those of President and Secretary. Any two or more
offices may be held by the same person. Officers may or may not be
Directors or shareholders of the Corporation.

2. Election and Term of Office

The Officers of the Corporation to be elected by the Board of Directors
shall be elected

<PAGE>
annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the shareholders. If the
election of Officers shall not be held at such meeting, such election
shall be held as soon thereafter as convenient. Each Officer shall hold
office until their successor shall have been duly elected and shall
have qualified or until their death or until they shall resign or shall
have been removed in the manner hereinafter provided.

3. Resignations

Any Officer may resign at any time by delivering a written resignation
either to the President or to the Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery.

4. Removal

Any Officer or agent may be removed by the Board of Directors whenever
in its judgment the best interests Corporation will be served thereby,
but such removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment of an Officer or
agent shall not of itself create contract rights. Any such removal
shall require a majority vote of the Board of Directors, exclusive of
the Officer in question if he or she is also a Director.

5. Vacancies

A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, or if a new office shall be created, may
be filled by the Board of Directors for the un-expired portion of the
term.

6. President

The President shall be the chief executive and administrative Officer
of the Corporation. He or she shall preside at all meetings of the
stockholders and, in the absence of the Chairman of the Board, at
meetings of the Board of Directors. He or she shall exercise such
duties as customarily pertain to the office of President and shall have
general and active supervision over the property, business, and affairs
of the Corporation and over its several Officers, agents, or employees
other than those appointed by the Board of Directors. He or she may
sign, execute and deliver in the name of the Corporation powers of
attorney, contracts, bonds and other obligations, and shall perform
such other duties as may be prescribed from time to time by the Board
of Directors or by the Bylaws.

<PAGE>

7. Vice President

The Vice President shall have such powers and perform such duties as
may be assigned to him by the Board of Directors or the President. In
the absence or disability of the President, the Vice President
designated by the Board or the President shall perform the duties and
exercise the powers of the President. A Vice President may sign and
execute contracts any other obligations pertaining to the regular
course of their duties.

8. Secretary

The Secretary shall keep the minutes of all meetings of the
stockholders and of the Board of Directors and, to the extent ordered
by the Board of Directors or the President, the minutes of meeting of
all committees. He or she shall cause notice to be given of meetings of
stockholders, of the Board of Directors, and of any committee appointed
by the Board. He or she shall have custody of the corporate seal and
general charge of the records, documents and papers of the Corporation
not pertaining to the performance of the duties vested in other
Officers, which shall at all reasonable times be open to the
examination of any Directors. He or she may sign or execute contracts
with the President or a Vice President thereunto authorized in the name
of the Corporation and affix the seal of the Corporation thereto. He or
she shall perform such other duties as may be prescribed from time to
time by the Board of Directors or by the Bylaws.

9. Treasurer

The Treasurer shall have general custody of the collection and
disbursement of funds of the Corporation. He or she shall endorse on
behalf of the Corporation for collection check, notes and other
obligations, and shall deposit the same to the credit of the
Corporation in such bank or banks or depositories as the Board of
Directors may designate. He or she may sign, with the President or such
other persons as may be designated for the purpose of the Board of
Directors, all bills of exchange or promissory notes of the
Corporation. He or she shall enter or cause to be entered regularly in
the books of the Corporation full and accurate account of all monies
received and paid by him on account of the Corporation; shall at all
reasonable times exhibit his (or her) books and accounts to any
Director of the Corporation upon application at the office of the
Corporation during business hours; and, whenever required by the Board
of Directors or the President, shall render a statement of his (or her)
accounts. The Treasurer shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the
Bylaws.

10. Other Officers

Other Officers shall perform such duties and shall have such powers as
may be assigned to them by the Board of Directors.

<PAGE>
11. Salaries

Salaries or other compensation of the Officers of the Corporation shall
be fixed from time to time by the Board of Directors, except that the
Board of Directors may delegate to any person or group of persons the
power to fix the salaries or other compensation of any subordinate
Officers or agents. No Officer shall be prevented from receiving any
such salary or compensation by reason of the fact that he or she is
also a Director of the Corporation.

12. Surety Bonds

In case the Board of Directors shall so require, any Officer or agent
of the Corporation shall execute to the Corporation a bond in such sums
and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his (or her) duties to the
Corporation, including responsibility for negligence and for the
accounting for all property, monies or securities of the Corporation,
which may come into his (or her) hands.

Article V

Contracts, Loans, Checks and Deposits

1. Contracts

The Board of Directors may authorize any Officer or Officers, agent or
agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation and such
authority may be general or confined to specific instances.

2. Loans

No loan or advance shall be contracted on behalf of the Corporation, no
negotiable paper or other evidence of its obligation under any loan or
advance shall be issued in its name, and no property of the Corporation
shall be mortgaged, pledged, hypothecated or transferred as security
for the payment of any loan, advance, indebtedness or liability of the
Corporation unless and except as authorized by the Board of Directors.
Any such authorization may be general or confined to specific
instances.

3. Deposits

All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may select,
or as may be selected by an Officer or agent of the Corporation
authorized to do so by the Board of Directors.

<PAGE>

4. Checks and Drafts

All notes, drafts, acceptances, checks, endorsements and evidence of
indebtedness of the Corporation shall be signed by such Officer or
Officers or such agent or agents of the Corporation and in such manner
as the Board of Directors from time to time may determine. Endorsements
for deposits to the credit of the Corporation in any of its duly
authorized depositories shall be made in such manner as the Board of
Directors may from time to time determine.

5. Bonds and Debentures

Every bond or debenture issued by the Corporation shall be in the form
of an appropriate legal writing, which shall be signed by the President
or Vice President and by the Treasurer or by the Secretary, and sealed
with the seal of the Corporation. The seal may be facsimile, engraved
or printed. Where such bond or debenture is authenticated with the
manual signature of an authorized Officer of the Corporation or other
trustee designated by the indenture of trust or other agreement under
which such security is issued, the signature of any of the
Corporation's Officers named thereon may be facsimile. In case any
Officer who signed, or whose facsimile signature has been used on any
such bond or debenture, shall cease to be an Officer of the Corporation
for any reason before the same has been delivered by the Corporation,
such bond or debenture may nevertheless by adopted by the Corporation
and issued and delivered as though the person who signed it or whose
facsimile signature has been used thereon had not ceased to be such
Officer.

Article VI

Capital Stock

1. Certificate of Share

The shares of the Corporation shall be represented by certificates
prepared by the Board of Directors and signed by the President. The
signatures of such Officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a
transfer agent or registered by a registrar other than the Corporation
itself or one of its employees. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of
the person to whom the shares represented thereby are issued, with the
number of shares and date of issue, shall be entered on the stock
transfer books of the Corporation. All certificates surrendered to the
Corporation for transfer shall be canceled except in case of a lost,
destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.

<PAGE>

2. Transfer of Shares

Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of record thereof or by
his (or her) legal representative, who shall furnish proper evidence of
authority to transfer, or by his (or her) attorney thereunto authorized
by power of attorney duly executed and filed with the Secretary of the
Corporation, and on surrender for cancellation of the certificate for
such shares. The person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof
for all purposes.

3. Transfer Agent and Registrar

The Board of Directors of the Corporation shall have the power to
appoint one or more transfer agents and registrars for the transfer and
registration of certificates of stock of any class, and may require
that stock certificates shall be countersigned and registered by one or
more of such transfer agents and registrars.

4. Lost or Destroyed Certificates

The Corporation may issue a new certificate to replace any certificate
therefore issued by it alleged to have been lost or destroyed. The
Board of Directors may require the owner of such a certificate or his
(or her) legal representative to give the Corporation a bond in such
sum and with such sureties as the Board of Directors may direct to
indemnify the Corporation as transfer agents and registrars, if any,
against claims that may be made on account of the issuance of such new
certificates. A new certificate may be issued without requiring any
bond.

5. Registered Shareholders

The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder thereof, in fact, and shall not
be bound to recognize any equitable or other claim to or on behalf of
this Corporation to any and all of the rights and powers incident to
the ownership of such stock at any such meeting, and shall have power
and authority to execute and deliver proxies and consents on behalf of
this Corporation in connection with the exercise by this Corporation of
the rights and powers incident to the ownership of such stock. The
Board of Directors, from time to time, may confer like powers upon any
other person or persons.

<PAGE>

Article VII

Indemnification

No Officer or Director shall be personally liable for any obligations of the
Corporation or for any duties or obligations arising out of any acts or conduct
of said Officer or Director performed for or on behalf of the Corporation. The
Corporation shall and does hereby indemnify and hold harmless each person and
their heirs and administrators who shall serve at any time hereafter as a
Director or Officer of the Corporation from and against any and all claims,
judgments and liabilities to which such persons shall become subject by reason
of their having heretofore or hereafter been a Director or Officer of the
Corporation, or by reason of any action alleged to have heretofore or hereafter
taken or omitted to have been taken by him as such Director or Officer and shall
reimburse each such person for all legal and other expenses reasonably incurred
by him in connection with any such claim or liability, including power to defend
such persons from all suits or claims as provided for under the provisions of
the Nevada Revised Statutes; provided, however, that no such persons shall be
indemnified against, or be reimbursed for, any expense incurred in connection
with any claim or liability arising out of his (or her) own negligence or
willful misconduct. The rights accruing to any person under the foregoing
provisions of this section shall not exclude any other right to which he or she
may lawfully be entitled, nor shall anything herein contained restrict the right
of the Corporation to indemnify or reimburse such person in any proper case,
even though not specifically herein provided for. The Corporation, its
Directors, Officers, employees and agents shall be fully protected in taking
action or making any payment, or in refusing so to do in reliance upon the
advice of counsel.

Article VIII

Notice

Whenever any notice is required to be given to any shareholder or Director of
the Corporation under the provisions of the Articles of Incorporation, or under
the provisions of the Nevada Statutes, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
Attendance at any meeting shall constitute a waiver of notice of such meetings,
except where attendance is for the express purpose of objecting to the holding
of that meeting.

Article IX

Amendments

These Bylaws may be altered, amended, repealed, or new Bylaws adopted by a
majority of the entire Board of Directors at any regular or special meeting. Any
Bylaw adopted by the Board may be repealed or changed by the action of the
shareholders.

<PAGE>
Article X

Fiscal Year

The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.

Article XI

Dividends

The Board of Directors may at any regular or special meeting, as they deem
advisable, declare dividends payable out of the surplus of the Corporation.

Article XII

Corporate Seal

The seal of the Corporation shall be in the form of a circle and shall bear the
name of the Corporation and the year on incorporation per sample affixed hereto.

Dated Friday, September 1, 1995 Austin Underground, Inc.

/s/ Douglas Ansell
- ------------------
Douglas Ansell
Secretary

BARRY L. FRIEDMAN, P.C.
Certified Public Accountant

1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278

June 29, 1999

Securities And Exchange Commission
Washington, D.C. 20549

Ladies and Gentlemen:

We were previously principal accountants for SaleOutlet.Com (formerly
Austin Underground, Inc.) and on June 29, 1998, we reported on the financial
statements of SaleOutlet.Com as of and for the two years ended December 31, 1996
and 1997. On April 1, 1999, we were replaced as principal accountants for
SaleOutlet.Com. There have been no disagreements with SaleOutlet.Com on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure or any reportable events.

Very truly yours,

/s/ Barry L. Friedman
------------------------
Barry L. Friedman
Certified Public Account

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from SaleOutlet.Com, Inc. (formerly Austin Underground, Inc.)
March 31, 1999 financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 102
<CURRENT-LIABILITIES> 185
<BONDS> 0
0
0
<COMMON> 6000
<OTHER-SE> (6083)
<TOTAL-LIABILITY-AND-EQUITY> 102
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18)
<EPS-BASIC> .00
<EPS-DILUTED> .00

</TABLE>