PACIFIC WEBWORKS INC, S-4, 2000-12-01

PACIFIC WEBWORKS INC
S-4, 2000-12-01
PREPACKAGED SOFTWARE

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As filed with the Securities and Exchange Commission on December 1, 2000
Registration No. _______________

=============================================================================

U. S. Securities and Exchange Commission
Washington, D.C. 20549

FORM S-4

Registration Statement
under the Securities Act of 1933
_____________________

PACIFIC WEBWORKS, INC.
(Name of issuer in its charter)

Nevada 7372 87-0627910
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)

1760 Fremont Drive
Salt Lake City, Utah 84104
(801) 578-9020
(Address and telephone number of registrant's principal
executive offices and principal place of business)
_____________________________________

Christian Larsen, President
1760 Fremont Drive
Salt Lake City, Utah 84104
(801) 578-9020
(Name, Address and telephone number of agent for service)
_____________________________________

Copies to:

Cindy Shy, Attorney
Cindy Shy, P.C.
525 South 300 East
Salt Lake City, Utah 84111
(801) 323-2392

Approximate date of commencement of proposed sale of the securities to the
public:
As soon as practicable after the effective date of this registration
statement.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

<PAGE>

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

Calculation of Registration Fee
______________________________________________________________________________
Proposed Proposed
maximum maximum
Title of each Amount offering aggregate Amount of
class of securities to be price per offering registration
to be registered registered unit price fee
_____________________________________________________________________________
Common stock 2,800,000(1) $ 0.16(2) $ 2,948,132.80 $ 778.31
______________________________________________________________________________
(1) Based upon the maximum number of shares that may be issued in the
transactions described herein.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(1) under the Securities Act, based on the
average of the bid and asked prices of the Logio, Inc.'s common stock on
November 28, 2000.

Pacific WebWorks, Inc., hereby amends the registration statement on such date
or dates as may be necessary to delay its effective date until we shall file a
further amendment which specifically states that this registration statement
shall become effective in accordance with Section 8(a) of the Securities Acts
of 1933 or until the registration statement shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.

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<PAGE> 2

To our stockholders: [date]

You are cordially invited to attend a special meeting of stockholders of
Logio, Inc. on January 16, 2001 at the offices of Pacific WebWorks, located at
1760 Fremont Drive, Salt Lake City, Utah, at 10:00 a.m. local time.

The matters expected to be acted upon at the meeting are described in
detail in the attached Notice of Special Meeting of Stockholders and the
prospectus/proxy statement.

It is important that you use this opportunity to take part in the affairs
of Logio, Inc. by voting on the business to come before this meeting. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. Returning
the proxy does not deprive you of your right to attend the meeting and vote your
shares in person.

We look forward to seeing you at the meeting.

Having dispensed with the formalities, I would like to share some of my
thoughts concerning Logio, our past and our future, and on the matters to be
voted on at the upcoming stockholders meeting.

Since our last stockholder meeting held on June 2, 2000 we have continued
to address many challenging issues. Our industry and our financial markets
have undergone major adjustments, overhauls and upheaval over the past ten
months. In an effort to move forward in spite of these obstacles we have made
significant changes in our operations and have thoroughly reviewed our options
for moving ahead.

We began by reorganizing our executive management team, including my
appointment as president and chief executive officer of the Company.
Immediately thereafter we undertook an evaluation of all aspects of the
Company's operations, including product development, sales and marketing,
product positioning, employees and management, contracts and agreements, and
the significant costs being incurred throughout these areas.

As a result of this evaluation, coupled with the distinct changes
occurring in the Internet portal arena, we repositioned our strategic
direction and abandoned

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<PAGE> 3

the Internet portal concept to focus on the syndication of our business
content and directory technology to corporate Intranet and other closed
networks. We reduced our number of employees significantly, we negotiated and
settled expensive contracts that did not contribute to our syndication model,
and we aggressively pursued additional capital sources.

In addition to the careful attention we paid to our expenses, we
established sales goals and closely monitored the results of our sales
efforts. All of these steps were taken in an effort to reduce losses and
initiate the generation of revenues at Logio. Sales of the Company's
directory, however, did not meet expectations and despite our significant
decrease in costs, the Company continued to suffer losses.

As a result of these ongoing losses, the continued decline in the market
price for the Company's common stock and the severe adjustments being
experienced in the financial markets in general, the Company's agreed upon
funding was withdrawn and previously available funding sources became
unavailable.

Due to Logio's capital constraints, which severely limited our ability to
build a satisfactory sales team and to continue the development of our
directory product, our board of directors approved the pursuit of a merger or
acquisition candidate. Given management's determination that our directory
would be a powerful supplement to a software tools provider or an application
service provider (ASP), we turned our attention to finding the right party.

During the course of our investigation we consulted with Pacific
WebWorks, Inc., a Salt Lake City business software technology company, for
ideas concerning the possible application of our product in ASP environment.
During the course of these discussions it became apparent that Logio and
Pacific, at least partially, shared target markets, business models,
development goals and financial markets. These discussions ultimately
resulted in the September 28, 2000 execution of a letter of intent providing
for Pacific's acquisition of Logio, Inc. With the execution of the letter of
intent we embarked upon a thirty (30) day due diligence period, during which
time we have closely scrutinized Pacific's operation.

Having concluded our due diligence, the management and board of directors
of Logio believe that this acquisition represents the best available option
for the Company to move forward and increase stockholder value. The
management, development, engineering and sales resources available at Pacific
will greatly enhance our ability to expose our products and technologies to
the marketplace. This transaction would also allow the Company to capitalize
on the impressive equipment infrastructure that it created in connection with
our earlier directory portal model.

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We have experienced many challenges at Logio, Inc. since our move into
the public market in July of 1998. We have made significant progress in many
areas and have experienced disappointment in others. Our stockholders have
felt the impact of each of these extremes. As a Company, we are grateful for
our stockholders and for their support, and we pledge our continued efforts in
maximizing stockholder value. We believe that Pacific's acquisition of Logio
represents the first step in fulfilling this pledge.

Thank you,

Kenneth Bell,
President, Chief Executive Officer

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<PAGE> 5
_________________________________________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held January 16, 2001
_________________________________________________

Dear Stockholders:

It is my pleasure to invite you to a special meeting of the
stockholders of Logio, Inc., which will be held on January 16, 2001, at 10:00
a.m. local time, at the offices of Pacific WebWorks, located at 1760 Fremont
Drive, Salt Lake City, Utah. The purposes of the meeting will be to:

* Approve and adopt the Agreement and Plan of Reorganization,
dated October 31, 2000, between Logio and Pacific WebWorks, Inc.

* Transact such other business as may properly come before the
meeting, or any adjournment or postponement of the meeting.

Only stockholders of record at the close of business on October 31, 2000
are entitled to vote at the meeting, or any adjournment or postponement of the
meeting. We are mailing proxy solicitation material to our stockholders
commencing on or about December 15, 2000. We must receive your proxy on or
before January 8, 2001 in order for your proxy to be voted at the meeting.

You are invited to attend the meeting. Regardless of whether you expect
to attend the meeting in person, we urge you to read the attached proxy
statement and sign and date the accompanying proxy card and return it in the
enclosed postage-prepaid envelope. It is important that your shares be
represented at the meeting.

By Order of the Board of Directors,

By: Thomas Eldredge
Secretary
Salt Lake City, Utah
December __, 2000

<PAGE> 6

PROSPECTUS - PROXY STATEMENT
____________________________________________________________________________

SUBJECT TO COMPLETION

The information in this prospectus is not complete and may be changed. We may
not exchange these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
______________________________________________________________________________

Pacific WebWorks, Inc.
a Nevada corporation

Offer to exchange each outstanding share of Logio, Inc. common stock
for shares of Pacific WebWorks, Inc. common stock
______________

To Pacific WebWorks stockholders: We are
not asking you for a proxy and you are
requested not to send a proxy.

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities, or
determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.

Prospectus/proxy statement dated December __, 2000

<PAGE> 7

TABLE OF CONTENTS

INFORMATION ABOUT THE TRANSACTION

Summary....................................................................4
Summary Term Sheet.........................................................5
Risk Factors...............................................................8
Terms of the Acquisition...................................................10
Interests of Experts and Counsel...........................................14
Disclosure of Commission's Position on Indemnification
for Securities Act Liability.............................................14
Pro Forma Financial Information............................................14

INFORMATION ABOUT PACIFIC WEBWORKS

Business...................................................................18
Properties.................................................................24
Legal Proceedings..........................................................24
Market for Common Equity and Related Stockholder Matters...................24
Selected Financial Data....................................................25
Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................26
Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................................30

INFORMATION ABOUT LOGIO

Business...................................................................31
Properties.................................................................36
Legal Proceedings..........................................................36
Selected Financial Data....................................................36
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................37
Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.....................................................43

VOTING AND MANAGEMENT INFORMATION

Information Regarding the Meeting..........................................45
Questions and Answers Regarding the Meeting................................45
Logio Voting Securities and Principal Holders..............................46
Dissenters' Rights.........................................................48
Management.................................................................48
Principal Holders of Pacific WebWorks Shares...............................51
Certain Relationships and Related Transactions.............................52

FINANCIAL STATEMENTS

Index to Financial Statements..............................................53

APPENDICIES

Appendix A: Nevada Revised Statutes Dissenters Rights...................App-2
Appendix B: Logio Stockholder's Demand Form.............................App-9

<PAGE> 8

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

Pacific WebWorks has filed a registration statement on Form S-4 to
register the shares of Pacific WebWorks common stock to be issued in these
transactions. As allowed by the SEC rules, the prospectus/proxy statement
does contain all the information provided in the registration statement. That
information is available without charge to you upon written or oral request.
In addition, Pacific WebWorks undertakes to respond to requests for
information that are incorporated by reference into this prospectus/proxy
statement within one business day of receipt of the request. Pacific WebWorks
will send the copies of the incorporated document by first class mail or other
equally prompt means. You must address your request to:

Investor Relations
Pacific WebWorks, Inc.
1760 Fremont Drive
Salt Lake City, Utah 84104
(801) 578-9020

As allowed by the SEC rules, this prospectus/proxy statement does not
include all the business and financial information about Logio. That
information is available without charge to you upon written or oral request.
You must address your request to:

Investor Relations
Logio, Inc.
405 East 12450 South, Suite B
Draper, Utah 84020
(801) 816-9904

This prospectus/proxy statement incorporates by reference the Agreement
and Plan of Reorganization, dated October 31, 2000 by and between Pacific
WebWorks and Logio and that document is deemed to be part of this
prospectus/proxy statement.

To obtain timely delivery, you must request the information no later than
January 8, 2001.

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<PAGE> 9

INFORMATION ABOUT THE TRANSACTION
--------------------------------

SUMMARY

The following is a summary of certain important terms of this transaction
and related information. Reference is made to, and this summary is qualified
in its entirety by, the more detailed information contained elsewhere in this
prospectus/proxy statement and in the accompanying appendices.

The Companies

Pacific WebWorks, Inc. Logio, Inc.
1760 Fremont Drive 405 East 12450 South, Suite B
Salt Lake City, Utah 84104 Draper, Utah 84020
(801) 578-9020 (801) 816-9904

Pacific WebWorks, Inc. ("Pacific WebWorks") develops business software
technologies for Internet merchants. Our premier product, Visual
WebTools(TM), allows small to medium sized business owners to expand their
business onto the Internet. Our product lets a business create, manage,
maintain and edit its own web site. Our wholly-owned subsidiary, IntelliPay,
Inc., provides online, secure, and real-time payment processing. Pacific
WebWorks also owns World Commerce Network, LLC, which promotes and sells
products of Pacific WebWorks, IntelliPay Inc. and other vendors as we may
choose. See, "Information About Pacific WebWorks," starting on page 18.

Logio, Inc., formerly WordCruncher Internet Technologies, Inc., is a
development stage company historically engaged in the development and
marketing of a focused Internet directory and search engine which serves the
needs of the business professional. Logio launched its web site, logio.com,
on March 19, 2000. The web site was designed to provide a broad spectrum of
the information and services that are required by business people in their
daily work activities. In June 2000, Logio shifted its business model towards
the generation of revenues from set-up and maintenance fees from the sale of
its directory in private label form to certain Internet sites and corporate
Intranet. Logio is uncertain as to when it will emerge from the development
stage. See, "Information About Logio," starting on page 31.

This Transaction

On October 31, 2000, Pacific WebWorks and Logio entered into an Agreement
and Plan of Reorganization in which Pacific WebWorks agreed to acquire Logio
as a wholly-owned subsidiary through a stock-for-stock exchange. This
acquisition is contingent upon the approval of the stockholders of Logio and
this prospectus/proxy statement will be provided to those stockholders so that
they can make an investment decision whether to surrender their Logio shares
for Pacific WebWorks shares. The material terms of the agreement are as
follows:

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<PAGE> 10
Summary Term Sheet

(1) Pacific WebWorks intends to acquire 100% of the issued and outstanding
common stock of Logio as of October 31, 2000 in a stock-for-stock
exchange. See "Summary of Terms of the Acquisition Agreement," on page
11.

(2) Pacific WebWorks will exchange 2.8 million shares of its common stock for
approximately 18.4 million shares of Logio common stock, or an exchange
ratio of 6.6 Logio shares for one Pacific WebWorks share. See " Summary
of Terms of the Acquisition Agreement." on page 11.

(3) The acquisition is contingent upon stockholder approval by a majority of
Logio's stockholders and Logio expects to obtain stockholder approval at
a special meeting of its stockholders to be held January 16, 2001. See
"Voting and Management Information," starting on page 45.

(4) The acquisition is contingent upon registration of the 2.8 million
Pacific WebWorks shares. Pacific WebWorks expects to file a registration
statement on Form S-4 to register the shares under the Securities Act.
The exchange can not occur until the SEC declares the registration
statement on Form S-4 effective. See "Summary of Terms of the
Acquisition Agreement," starting on page 11.

(5) Upon completion of the acquisition Logio will be a wholly-owned
subsidiary of Pacific WebWorks. See "Summary of Terms of the Acquisition
Agreement," on page 11.

(6) Pacific WebWorks plans to structure the acquisition as a tax-free,
stock-for-stock transaction which complies with the provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
See "Certain Federal Income Tax Consequences," on page 14.

(7) Termination of the agreement may occur if either party fails to comply in
any material respect with the covenants and agreements or if any
representations or warranties in the acquisition agreement are materially
inaccurate. The parties may terminate the agreement by mutual consent.
See "Summary of Terms of the Acquisition Agreement," starting on page 11.

(8) Upon completion of the acquisition Logio's stockholders will hold
approximately 15.8% of the issued and outstanding shares of Pacific
WebWorks. See "Material Differences in Rights of Security Holders," on
page 13.

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<PAGE> 11

Stockholder Approval. The principal purpose of the Logio special
meeting is to consider, approve and adopt the acquisition agreement which will
result in the acquisition of Logio as a subsidiary. Only holders of record
of Logio common stock on October 31, 2000 will be entitled to notice and to
vote at the Logio special meeting. On that date, Logio had 18,425,830 common
shares issued and outstanding. According to Logio's Articles of Incorporation
and bylaws, a majority of the common stock outstanding, or more than 9,212,915
common shares must be present or represented by proxy at the special meeting
to establish a quorum. A majority of the quorum must vote in favor of the
acquisition. Logio's officers and directors beneficially own 5,209,138 common
shares, or 28.3%, of the shares entitled to vote. See, "Logio Voting
Securities and Principal Holders" starting on page 46.

Logio stockholders have dissenters rights of appraisal and must exercise
those rights in accordance with Nevada law. Dissenters rights will expire
January 22, 2001. See, "Dissenter Rights," on page 48.

Regulatory Approvals. Pacific WebWorks is filing with the SEC a
registration statement on Form S-4 to register the Pacific WebWorks common
shares to be issued in the exchange. This prospectus/proxy statement is a
part of that registration statement and the registration statement must be
declared effective by the SEC before the shares may be exchanged.

Federal Income Tax Consequences. It is anticipated that Pacific
WebWorks, Logio and Logio's stockholders will not recognize gain or loss as a
result of the acquisition. Stockholders are urged to consult their own tax
advisors to determine the particular tax consequences to them as a result of
the acquisition, including the application and effect of state, local and
other tax laws. See "Certain Federal Income Tax Consequences" on page 14.

Selected Pro Forma Financial Information

The following tables show historical, audited and unaudited information,
comparative per share data and comparative market value of shares for Pacific
WebWorks and Logio.

There were no cash dividends paid by either company. The unaudited pro
forma information is presented as if the companies had completed the
acquisition as of the beginning of each period presented. The adjustments
reflect amortization of goodwill for the nine month period and year ended
December 31, 1999.

Nine Months Ended September 30, 2000
-------------------------------------------------------
Pacific
WebWorks Logio Adjustments Pro forma
------------- ------------- -------------- -------------
Revenues $ 3,273,508 $ 2,180 $ - $ 3,275,688
Total operating loss (5,073,558) (4,982,643) 299,916 (10,356,117)
Net loss (5,174,111) (4,955,743) 299,916 (10,429,770)
Net loss per share
Weighted shares
outstanding $ (0.69)
15,304,532

Year Ended December 31, 1999
--------------------------------------------------------
Pacific
WebWorks Logio Adjustments Pro forma
-------------- ------------- -------------- ------------
Revenues $ 305,628 $ 23,355 $ - $ 328,983
Total operating loss (2,524,538) (5,116,235) 399,888 (8,040,661)
Net loss (2,567,535) (4,929,880) 399,888 (7,897,303)
Net loss per share $ (1.16)
Weighted shares
outstanding 12,432,500

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<PAGE> 12

Comparative Per Share Data

Nine months ended Historical
September 30, Year ended December 31,
2000 1999 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Per Pacific
WebWorks share
-----------------

Net Loss* $ (0.41) $ (0.22) $ (0.27) $ (0.03) $ (0.01)

Book value at end
of Period $ 0.15 $ (.01) $ 0.00 $ (0.04) $ (0.01)

Nine months ended Historical
September 30, Year ended December 31,
2000 1999 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Per Logio share
---------------
Net Loss* $ (0.37) $ (0.77) $ (0.96) $ (0.08) $ (0.61)

Book value at end
of Period $ 0.9 $ 0.40 $ 0.27 $ 0.07 $ (0.35)

* Net loss from continuing operations applicable to common stockholders

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RISK FACTORS

Pacific WebWorks has a limited operating history and we cannot be certain
of future progress or profitability. We were incorporated in 1987, but did
not operate as a business until 1997. We may encounter financial, managerial,
technological or other difficulties as a result of our lack of operating
history. Starting in late 1999 we began to market our software products
through resellers. During the past six months we have restructured our
operations to reduce operating expenses by consolidation of our operations
with our related companies. Although we anticipate that our operating revenue
will increase in the future based upon the continuing increases of revenues,
we cannot guarantee that our revenues will exceed our operating expenses.

We have consistently incurred losses since our formation. As of
September 30, 2000 our accumulated losses totaled $7,960,863. We are not
able to currently finance our operations through our generated revenues. We
have financed ourselves through loans and sales of our common stock. During
the coming year, we will require additional equity or debt financing from
third parties to finance our operations, which may not be available to us or
on terms which are acceptable to us. Please refer to the "Liquidity and
Capital Resources" section on page 29 for a more detailed description.

Our quarterly results could fluctuate and we cannot be certain that
future results will be similar to past results. Our operating results in the
future may vary significantly, depending on factors such as revenue from
product sales and license fees, announcements and launches of new products and
services, market acceptance of new and enhanced versions of Visual
WebTools(TM) and related products, changes in our operating expenses, changes
in our business strategy, and general economic factors. Our revenues will
also be difficult to forecast because the markets for our products and
services are evolving and our revenues in any period could be significantly
affected by new product announcements or launches by our competitors, as well
as by our competitors' development of alternative technologies. We do not
believe that period-to-period comparisons of our results of operations will
necessarily provide investors with meaningful data for the foreseeable future
because of our lack of active operations in earlier periods.

We will need additional capital and may be unable to raise it. We
believe, based on our current expenditure rate, that we will need $2.5 million
additional financing in early 2001. Therefore, our success will depend upon
our ability to access equity capital markets and borrow on terms that are
financially advantageous to us. We rely upon revenues from resellers, license
agreements, and product sales. We may not be able to obtain additional funds
on acceptable terms. If we fail to obtain funds on acceptable terms, we might
be forced to delay or abandon some or all of our business plans, which could
have a material adverse effect on our operations. If we are unable to obtain
additional capital, we may not have sufficient working capital to develop
products, finance acquisitions, pursue business opportunities, or meet
reporting requirements. If we borrow funds, we could be forced to use a large
portion of our cash reserves to repay principal and interest on those funds.
If we issue our common stock for capital, the interests of investors and
stockholders could be diluted.

Our products are complex and may be subject to error complaints from our
customers. Visual WebTools(TM) is complex and may contain errors, defects,
and "bugs." We have detected errors, defects, and bugs in the past and have
corrected them as quickly as possible. Correcting any defects or bugs we may
discover in the future may require us to make significant expenditures of
capital and other resources. Despite our continuing tests, users may find
errors or defects in Visual WebTools(TM) which could cause additional
development costs or result in the loss of (or delays in) the market
acceptance of Visual WebTools(TM). We believe that we follow
industry-standard practices relating to the identification and resolution of
errors, defects, or bugs encountered in the development of new software and in
the enhancement of existing features in our products. As we become aware of
bugs, defects, or errors, we may immediately work to correct them. As of this
date, we have not experienced any material adverse effect by reason of an
error, defect, or bug.

We may not successfully identify new product opportunities, nor develop
and bring new and enhanced products to the market in a timely manner. Our
success is highly dependent on our ability to develop new and enhanced
products that meet changing customer requirements. There can be no assurance
that our products or technologies will develop or will be commercially
successful, that we will benefit from these developments or that products, or
technologies developed by others will not render our products noncompetitive
or obsolete. At present, our four principal products, Visual WebTools(TM),
ClipOn Commerce(TM), IntelliPay(TM), and Placeto Vacation(TM) are available.
As noted above, the market for our products is characterized by rapid and
substantial technological change. We must be responsive to new developments in
hardware and semiconductor technology, operating systems,

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<PAGE> 14

programming technology, and computer capabilities in order to remain
successful. In many instances, the new and enhanced services, products, and
technologies are in the emerging stages of development and marketing, and are
subject to the risks inherent in the development and marketing of new
software, services, and products.

Our stock price is volatile and is not in our control. In recent years
the stock market in general, and the market for shares of high technology
Internet companies in particular, have each experienced extreme price
fluctuations. In many cases these fluctuations have been unrelated to the
operating performance of the affected companies. The trading price of our
common stock may be subject to extreme fluctuations in response to both
business related issues (such as quarterly variations in operating results,
announcements of new products developed by us, or announcements from our
competitors) and stock market-related influences (including, but not limited
to, changes in analysts' estimates, the presence or absence of short selling
of our common stock, and events affecting other companies which the market
believes might affect us).

The future sale of common stock could pose investment risks, including
substantial dilution to our stockholders. The market price of our common
stock could drop as a result of sales of the common stock in the market after
the effective date of this registration statement, or the perception that such
sales could occur. These factors could also make it more difficult for us to
raise funds through future offerings of our common stock. There will be a
total of approximately 17,658,342 shares of common stock outstanding
immediately after the exchange of shares. Approximately eight million four
hundred fifteen thousand (8,415,000) shares of our common stock will be freely
transferable without restriction or further registration under the Securities
Act of 1933 (the "Securities Act"). Approximately three million seven hundred
twenty-three thousand fifty-six (3,723,056) shares of our common stock will be
held by our "affiliates," as defined in Rule 144 under the Securities Act, and
will be "restricted securities," as defined in Rule 144. The Rule 144 common
stock held by our affiliates may be sold in the future without further
registration under the Securities Act to the extent those sales are permitted
by Rule 144 or any other exemption under the federal securities laws.

Investors may have difficulty selling our shares. There has not been a
large public market for our equity securities and our common stock has traded
on the over-the-counter market since January of 1999. We do not know the
extent to which investor interest in our stock will lead to the development of
an active trading market for our stock, or how liquid that market might be.
Logio stockholders may be unable to resell their Pacific WebWorks common stock
at or above the price they paid for their Logio common stock.

Also, our stock may qualify as a "penny stock" under the Penny Stock
Suitability Reform Act of 1990. The liquidity of penny stock is affected by
specific disclosure procedures to be followed by all broker-dealers, including
but not limited to, determining the suitability of the stock for a particular
customer, and obtaining a written agreement from the customer to purchase the
stock.

We have not paid dividends. We have never paid a dividend on our common
stock. We intend to retain future earnings to finance our growth and
development and do not plan to pay cash or stock dividends in the foreseeable
future.

We have a new product in a developing market which may not work
properly. Visual WebTools(TM) is based on software technology which has been
used for approximately two years. We have refined Visual WebTools(TM) by
adding additional functions, including but not limited to e-commerce
capabilities. Our success will depend largely on our ability to further
refine and continue to develop Visual WebTools(TM) and other products. If
Visual WebTools(TM) does not achieve significant market acceptance and usage,
we could suffer material adverse effects in our business.

The primary markets for Visual WebTools(TM) have only recently begun to
develop and are rapidly evolving. As is typical of new and rapidly evolving
industries, demand for (and market acceptance of) products and services that
have been released recently or that are planned for future release are subject
to a high level of uncertainty. If Visual WebTools(TM) does not achieve
market acceptance, we could suffer material adverse effects.

Our markets are highly dependent on the use of the Internet. A number
of critical issues concerning the commercial use of the Internet, including
security, reliability, capacity, taxation, costs, ease of use, access, quality
of service, and acceptance of advertising, remain unresolved and may retard
the growth of the Internet for commercial applications.

We will need to manage our growth, even if we grow quickly. We hope to
achieve rapid growth, both with respect to our sales and operations and with
respect to the number and complexity of our products. Our growth, coupled
with the rapid evolution of our markets, has placed, and is likely to continue
to place, significant strains on our administrative, operational, technical,
and financial resources and increased demands on our internal management
systems, procedures, and controls. If we are unable to manage our growth
effectively, our business and our financial condition could suffer material
adverse effects.

9
<PAGE> 15

We will be dependent upon license renewal which cannot be assured to
occur. We expect to derive revenues from user licenses and license renewals
and to increase the brand recognition of Visual WebTools(TM) among users
through these types of relationships. In the event that a substantial number
of our customers were to decline to renew their contracts for any reason, we
could experience a substantial drop in revenues. Our success in establishing
Visual WebTools(TM) and our other products as a recognized brand name and
achieving their acceptance in the market will depend in part on our ability to
continually engineer and deliver new product technologies and superior
customer service, so that customers renew their licenses year after year.

As of September 30, 2000, one hundred sixty-six (166) of our
customers' licenses have been up for renewal. Ninety-six (96) of our
customers have already renewed their licenses. All of our current contracts
expire following the original one year term. However, all customers may
continue to use the software upon the payment of their hosting fees, which is
due on a monthly basis. Failure to pay the monthly fee will result in a
discontinuance of the license.

Acquisitions of complementary service product lines, technologies or
business may adversely affect our operations. From time to time, we evaluate
potential acquisitions of businesses, services, products, or technologies.
These acquisitions may result in a potentially dilutive issuance of equity
securities, the incurrence of debt and contingent liabilities, and
amortization of expenses related to goodwill and other intangible assets. In
addition, acquisitions involve numerous risks, including difficulties in the
assimilation of the operations, technologies, services, and products of the
acquired companies, the diversion of management's attention from other
business concerns, risks of entering markets in which we have no or limited
direct prior experience and the potential loss of key employees of the
acquired company.

We may be subject to increased regulations and may be exposed to
liability for information retrieved from the Internet. Other than the laws
and regulations applicable to businesses generally, we are aware of few laws
and regulations which expressly apply to access and commerce on the Internet.
Due to the increased popularity and use of the Internet, however, it is
possible that new laws and regulations may be adopted with respect to the
Internet relating to issues such as user privacy, pricing and characteristics,
and content and quality of products and services. For example, we may be
subject to the provisions of the Communications Decency Act, which if found to
be constitutional, could expose us to substantial liability. The adoption of
any new laws or regulations could retard the growth or the use of the
Internet, which could adversely affect the demand for our products and
services. New laws or regulations could also result in significant additional
costs and technological challenges for us in complying with any mandatory
requirements. Further, several states have attempted to tax online retailers
and service providers, even when those parties have no physical presence in
the state. The federal government has imposed a three-year moratorium on
taxation of Internet commerce. We cannot predict what effect the lapse of
this three-year period will have on our business operations. In addition,
plaintiffs have brought claims, and sometimes obtained judgments, against
online service providers for defamation, negligence, copyright or trademark
infringement, or under other theories with respect to materials disseminated
through the Internet. We may be subject to similar claims.

Given the expansion of the electronic commerce market, it is possible
that the Federal Reserve might revise Regulation E or adopt new rules for
electronic funds transfer affecting our commercial transactions. Federal or
state agencies may attempt to regulate providers of electronic commerce
services, such as Pacific WebWorks and our subsidiary, IntelliPay, Inc., which
could impede our ability to do business in the regulator's jurisdiction.
Management believes that we are not required to be licensed by the Office of
the Comptroller of the Currency, the Federal Reserve Board, or other federal
or state agencies that regulate or monitor banks or other types of providers
of electronic commerce services. We are subject to various laws and
regulations relating to commercial transactions generally, such as the Uniform
Commercial Code, and may also be subject to the electronic funds transfer
rules embodied in Regulation E, promulgated by the Federal Reserve Board.
Because of growth in the electronic commerce market, Congress has held
hearings on whether to regulate providers of services and transactions in the
electronic commerce market, and it is possible that Congress or individual
states could enact laws regulating the electronic commerce market.

TERMS OF THE ACQUISITION

Background and Reasons for the Acquisition

Logio. The management of Logio believes Pacific WebWorks' acquisition
of Logio will produce the following benefits:

10
<PAGE> 16

Pacific WebWorks is a revenue generating company and its acquisition
of Logio will immediately launch Logio into that category on a consolidated
basis.

* The combination of our companies brings both closer to being NASDAQ
eligible.

* Pacific WebWorks has an experienced, enthusiastic development group
who has worked together for several years. Their attitudes and
capabilities will be invaluable to Logio as it continues to develop
its directory and search technologies.

* Pacific WebWorks has experienced sales personnel and has developed
sales and marketing distribution channels that would take Logio some
time and resources to duplicate.

* Pacific WebWorks management is intelligent, innovative and results
oriented. They will add an exciting level of innovation and results
orientation to Logio.

* The similarities in our target markets and complimentary nature of
our products make this acquisition a natural fit. Consolidation is
taking place throughout the Internet and helps to strengthen our
collective competitive situation.

* The addition of more "true technology" to the Logio product offering
will enhance our desirability in the financial markets.

* Pacific WebWorks' new facilities are "state of the art" and will
provide ample room for growth.

Pacific WebWorks. The management of Pacific WebWorks believes the
acquisition of Logio will produce the following benefits:

* Logio's content management technology provides us with a new
information management tool and potential future enhancements of our
products, as well as new products.

* Logio has developed a data center infrastructure which we believe we
can integrate with our own new data center. We believe this will
facilitate continuous and uninterrupted service to business clients
and customers, including improved overall bandwith speed, reliability
and security.

* We will strengthen and expand our management team with the inclusion
of certain members of Logio's management.

* It is more cost effective for us to acquire Logio's assets than to
build them ourselves.

* The acquisition of Logio's assets advances our overall business plan.

* Integrating Logio's technology with our products will separate us
from our competition in the small-to-medium sized business market.

None of the above benefits were controlling in the decision to acquire
Logio. We have relied upon representations made by Logio's management and key
personnel. We reviewed historical financial information of Logio, the market
price per share of the Logio common stock and the projected operating results
of Logio. Our management did not rely upon exhaustive investigation and
analysis of Logio's business or on the opinion of an independent financial
advisor. However, we investigated the merits and risks of the acquisition of
Logio's assets and have had the opportunity to ask questions of and received
satisfactory answers from the officers and directors of Logio. Prior to
signing the acquisition agreement, our management reviewed the following Logio
documents: Articles of Incorporation, Bylaws, financial statements,
resolution of the board approving the acquisition, a list of key employees,
schedule of material contracts, and officer's certificates.

Summary of Terms of the Acquisition Agreement

On October 31, 2000, Pacific WebWorks and Logio entered into an
Agreement and Plan of Reorganization by which we will acquire Logio as a
wholly-owned subsidiary through a stock-for-stock exchange intended to qualify
as a tax-free exchange. The agreement was unanimously approved by both the
Pacific WebWorks and Logio's board of directors. However, the consummation of

11
<PAGE> 17

the acquisition is contingent upon the approval of a majority of Logio's
stockholders and registration of our common shares to be issued in the
exchange.

We intend to acquire control of Logio by exchanging one of Pacific
WebWorks'common share for every 6.6 shares of Logio common stock. We will
round up fractional shares, if any, in the exchange. We anticipate that we
will issue approximately 2.8 million shares of our common stock for 18,425,830
shares of Logio common stock. Each stockholder of Logio will make an
investment decision whether to approve and adopt the acquisition agreement
which will require him or her to surrender his or her shares according to the
terms of the agreement. Logio currently has 179 stockholders of record who
will also have dissenter rights, which are discussed in further detail
starting on page 48. Pacific WebWorks has agreed to pay the actual costs and
fees of the acquisition.

We agreed to file a registration statement on Form S-4, of which this
prospectus/proxy statement is a part, as soon as practicable after execution
of the acquisition agreement. The issuance of the shares to the Logio
stockholders constitutes an offer and sale of securities under the Securities
Act and we must register the shares to be issued in the exchange. The SEC
most likely will review the registration statement and may require us to
revise it. After the revisions are complete and the SEC is satisfied, the SEC
must declare the registration statement effective before the shares can be
exchanged. After the SEC declares the registration statement effective both
companies will take the necessary steps to consummate the acquisition.

Logio intends to obtain the necessary stockholder approval at a special
meeting of stockholders discussed on page 45.

The acquisition agreement contains customary representations and
warranties relating to each company's corporate status, corporate authority to
complete the acquisition, capital structure and corporate conduct prior to the
closing. Each company has agreed to use its best efforts to maintain and
preserve its business organization, and employee relationships and to keep its
goodwill intact until the acquisition is complete. Also, each company
provided corporate documentation to the other for due diligence purposes.

Termination of the agreement may occur if we or Logio fail to comply in
any material respect with the covenants or agreements included in the
acquisition agreement. For example, termination may occur if Logio's
stockholders do not approve the acquisition or if the SEC fails to declare the
Form S-4 registration statement effective in a timely manner. The acquisition
agreement may be terminated by mutual consent, which must be expressed by
action of Logio's board of directors or stockholders. In the event that the
parties terminate the agreement, both have agreed to pay their own costs
incurred.

Consideration for the Acquisition. The consideration exchanged in the
acquisition was negotiated at "arms length" and our management used criteria
from similar proposals, including the market value of Logio's common shares,
the relative value of the assets of Logio, Logio's present and past business
operations, the future potential of Logio, certain members of the management
of Logio and the potential benefit to the stockholders of Pacific WebWorks.
The source of the consideration we intend to use to acquire our interest in
Logio is approximately 2.8 million authorized but unissued common shares of
Pacific WebWorks. The 6.6 to 1 exchange rate was based upon the
considerations listed above in addition to the trading history of both
companies' shares on the OTC Bulletin Board over the 30 days prior to the
letter of intent. Our board of directors determined that the consideration
for the exchange was reasonable based upon these factors. Our board did not
seek a third party fairness opinion or any valuation or appraisal of the
exchange. Thus, stockholders will not have the benefit of a third party
opinion that the exchange of shares is fair from a financial point of view.

Description of Pacific WebWorks Stock

Our articles of incorporation, as amended, authorize 50,000,000 shares
of common stock, par value $0.001. As of October 31, 2000, we had 14,858,342
shares of common stock issued and outstanding held by approximately 61 record
holders. In addition, we have options outstanding to purchase 1,122,735 common
shares and outstanding warrants to purchase 1,250,000 common shares. We have
not authorized preferred shares.

Each holder of common stock is entitled to one vote for each share
owned of record on all matters voted upon by stockholders. A majority vote of
the outstanding shares present at a stockholders' meeting is required for
actions to be taken by stockholders. Our bylaws permit action to be taken by
written consent by a majority of our stockholders without a meeting or prior
notice. Directors are elected by a majority vote. The holders of the common
stock do not have cumulative voting rights. Accordingly, the holders of a
majority of the voting power of the shares voting for the election of
directors can elect all of the directors if they

12
<PAGE> 18

choose to do so. The common stock bears no preemptive rights, and is not
subject to redemption, sinking fund or conversion provisions. Holders of
common stock are entitled to receive dividends out of funds legally available
if, and when, declared by our board of directors. Any dividends declared with
respect to shares of common stock will be paid pro rata in accordance with the
number of shares of common stock held by each stockholder.

Material Differences in Rights of Security Holders

The rights of the holders of Pacific WebWorks common stock and Logio's
common stock are currently governed by Nevada law. Nevada law allows
corporations to authorize one or more classes of stock, with or without par
value, and to establish designations, preferences limitations and other rights
as allowed by the articles of incorporation. Pacific WebWorks has authorized
50,000,000 common shares at $.001 par value and has not authorized preferred
shares. Logio has authorized 60,000,000 common shares at $.001 par value and
granted its board of directors the authority to issue up to 50,000 at $.01 par
value shares of preferred stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the stockholders. Logio does not
have preferred shares outstanding at this time.

The voting rights for our shares are identical to the Logio voting
rights. Each share is entitled to one vote and a majority vote of the
outstanding shares present at a stockholders' meeting, or by written consent,
is required for actions to be taken by stockholders. Neither company provides
for cumulative voting rights, preemptive rights, nor redemption, sinking fund
or conversion provisions.

The rights of stockholders of Pacific WebWorks and Logio are similar in
all but one material respect. Logio's articles of incorporation require a
two-thirds (2/3) majority vote by its stockholders for the sale of
substantially all of the assets of the corporation. Pacific WebWorks does not
have a similar provision in its articles or bylaws.

After consummation of the exchange we will have approximately
17,658,342 common shares outstanding and the former Logio stockholders will
hold of record approximately 15.8% of those shares.

Generally, Nevada law allows the board of directors to declare
dividends from time to time as long as payment of dividends would not make the
corporation insolvent or cause the corporation's net assets to be insufficient
to satisfy preferential rights of stockholders other than those receiving the
dividend. Neither Pacific WebWorks not Logio have declared dividends to date.
However, in the event of liquidation, dissolution, or winding up of Pacific
WebWorks the holders of common stock are entitled to share, on a
share-for-share basis, any of the assets or funds distributable to the
stockholders upon such liquidation, dissolution or winding up.

Material Contacts With Logio

In August 2000 our management met with members of Logio to discuss
sales and marketing ideas for the Logio technology. As a result of this
meeting our management realized that Logio's technology would lend itself to
the additional products we had outlined in our business plan. Later that month
our management returned to Logio to evaluate its technology in more detail.
During the next several weeks the companies held meetings which culminated in
the letter of intent in September for the acquisition of Logio by Pacific
WebWorks.

Except as described in this prospectus/proxy statement, neither we, nor
to the best of our knowledge, any of our directors, executive officers or
other affiliates had any contract, arrangement, understanding or relationship
with any other person with respect to any Logio shares. Except as described
in this prospectus/proxy statement, there have been no contacts, negotiations
or transactions within the last two years between us or any of our directors,
executive officers or their affiliates, on the one hand, and Logio or its
affiliates, on the other hand, regarding the merger, consolidation,
acquisition of shares or election of directors.

Accounting Treatment

The acquisition of Logio will be accounted for under the purchase
method of accounting using generally accepted accounting principles. This
means that Logio's results of operation will be included with ours from the
closing date and its consolidated assets and liabilities will be recorded at
their fair values at the same date. Each company has agreed to carry on their
respective businesses in the usual and ordinary course and each will bear its
own operating expenses until completion of the acquisition.

13
<PAGE> 19

Certain Federal Income Tax Consequences

The acquisition is intended to qualify as a "tax-free" reorganization
under the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended. It is anticipated that (i) Pacific WebWorks and Logio or
their respective stockholders will not recognize gain or loss as a result of
the acquisition, and (ii) the tax basis of the Pacific WebWorks common stock
received by Logio stockholders will be the same as the tax basis of the Logio
common stock surrendered. Pacific WebWorks and Logio have not sought nor do
they intend to seek an attorney's opinion or tax revenue ruling from the
Internal Revenue Service as to the Federal income tax consequences discussed
below.

THE PRECISE FEDERAL, STATE AND LOCAL EFFECT ON THE STOCKHOLDERS MAY VARY
DEPENDING ON THE STOCKHOLDER'S RESPECTIVE FACTUAL CIRCUMSTANCES. FOR THESE
REASONS, EACH STOCKHOLDER IS STRONGLY URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR.

INTEREST OF EXPERTS AND COUNSEL

We are not aware of any expert or legal counsel named in this
prospectus/proxy statement who will receive a direct or indirect substantial
interest in Pacific WebWorks as a result of the acquisition.

DISCLOSURE OF COMMISSION'S POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITY

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

PRO FORMA FINANCIAL INFORMATION

The accompanying unaudited pro forma consolidated financial statements
have been prepared by management of Pacific WebWorks and Logio based on the
financial statements included elsewhere herein and give effect to the
acquisition of Logio.

The following unaudited pro forma consolidated statements of operations
for the year ended December 31, 1999 and for the nine months ended September
30, 2000 are presented as if the acquisition had occurred on January 1, 1999.

The following unaudited pro forma consolidated balance sheet combines
the September 30, 2000 historical consolidated balance sheet of Pacific
WebWorks with the September 30, 2000 historical consolidated balance sheet of
Logio (formerly WordCruncher Internet Technologies, Inc.) The unaudited pro
forma consolidated balance sheet assumes that the acquisition was completed
September 30, 2000, with Pacific WebWorks treated as the acquiring entity for
financial statement purposes.

The pro forma adjustments include assumptions and preliminary estimates
as discussed in the accompanying notes, and are subject to change. These pro
forma statements may not be indicative of the results that actually would have
occurred if the acquisition had been in effect on the dates indicated, and may
not be indicative of financial results that may be obtained in the future.
These pro forma financial statements should be read in conjunction with the
accompanying notes and with the historical financial information on both
Pacific WebWorks and Logio, included in this proxy statement/prospectus. See
"Financial Statements."

14
<PAGE> 20

PROFORMA - CONSOLIDATED BALANCE SHEETS

Pacific
Logio, Inc Webworks, Inc. Before Adjustments
September 30, September 30, Adjustments -------------------------- Proforma
2000 2000 NewCo DR CR NewCo
------------- ------------- ------------- ------------ ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 171,226 $ 72,044 $ 243,270 - - $ 243,270
Accounts receivable 28,815 232,483 261,298 - - 261,298
Employee receivables - 3,924 3,924 - - 3,924
Prepaid assets 68,748 362,350 431,098 - - 431,098
------------- ------------- ------------- ------------ ------------- -------------

Total current assets 268,789 670,801 939,590 - - 939,590
------------- ------------- ------------- ------------ ------------- -------------

PROPERTY & EQUIPMENT, net 1,480,493 443,826 1,924,319 - - 1,924,319

OTHER ASSETS 5,811 4,631,723 4,637,534 1,999,442(A) - 6,337,060
------------- ------------- ------------- ------------ ------------- -------------

$ 1,755,093 $ 5,746,350 $ 7,501,443 $ 1,999,442 - $ 9,200,969
============= ============= ============= ============ ============= ============
CURRENT LIABILITIES
Current portion of long-term
capital lease obligations $ 312,880 $ - $ 312,880 - - 312,880
Accounts payable 99,866 473,599 573,465 - - 573,465
Accrued expenses 57,091 271,485 328,576 - - 328,576
Deferred Revenues - 2,967,088 2,967,088 - - 2,967,088
Notes Payable-Related Parties - 216,580 216,580 - - 216,580
Notes Payable - Vendors 96,116 - 96,116 - - 96,116
------------- ------------- ------------- ------------ ------------- ------------

Total current liabilities 565,953 3,928,752 4,494,705 - - 4,494,705

CAPITAL LEASE OBLIGATIONS,
less current maturities 38,582 - 38,582 - - 38,582

STOCKHOLDERS' EQUITY
Preferred stock - - - - - -
Common stock 17,271 14,858 32,129 17,271(B) 2,800(C) 17,658
Additional paid-in capital 18,371,258 9,763,603 28,134,860 18,371,258(B) 3,147,200(C) 12,910,803
Accumulated deficit (17,237,971) (7,960,863) (25,198,834) - 17,237,971(B) (8,260,779)
------------- ------------- ------------- ------------ ------------- ------------

Total stockholders' equity 1,150,558 1,817,598 2,968,156 18,288,529 20,387,971 4,667,682
------------- ------------- ------------- ------------ ------------- ------------

$ 1,755,092 $ 5,746,350 $ 7,501,442 $20,387,971 $ 20,387,971 $ 9,200,969
============= ============= ============= ============ ============= ============

(A) Goodwill from acquisition of Logio by Pacific.
(B) Elimination of Logio subsidiary
(C) Issuance of 2.8 million shares of Pacific stock to Logio shareholders

</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>

PROFORMA - CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Pacific
Logio, Inc. Webworks, Inc.
Nine Months Nine Months
Ended Ended Before Adjustments
September 30, September 30, Adjustments -------------------------- Proforma
2000 2000 NewCo DR CR NewCo
------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Advertising $ 2,180 $ - 2,180 - - $ 2,180
Product - 3,273,508 3,273,508 - - 3,273,508
------------- ------------- ------------- ------------ ------------- -------------
2,180 3,273,508 3,275,688 - - 3,275,688

Cost of sales 440,907 212,597 653,504 - - 653,504
------------- ------------- ------------- ------------ ------------- -------------

Gross profit (loss) (438,727) 3,060,911 2,622,184 - - 2,622,184
------------- ------------- ------------- ------------ ------------- -------------

Research and development 1,672,316 645,372 2,317,688 - - 2,317,688

Selling expenses 658,034 4,503,581 5,161,615 - - 5,161,615

General and administrative 976,183 2,255,464 3,231,647 - - 3,231,647

Depreciation and amortization 606,141 730,052 1,336,193 299,916(D) - 1,636,109

Compensation expense for
stock options 631,242 - 631,242 - - 631,242
------------- ------------- ------------- ------------ ------------- -------------

Total operating expenses 4,543,916 8,134,469 12,678,385 299,916 - 12,978,301
------------- ------------- ------------- ------------ ------------- -------------

Loss from operations (4,982,643) (5,073,558) (10,056,201) (299,916) - (10,356,117)

Other income (expense)

Interest income 55,002 - 55,002 - - 55,002
Financing charges (133,703) - (133,703) - - (133,703)
Loss on disposal of equipment (2,215) - (2,215) - - (2,215)
Interest expense (96,422) (100,553) (196,975) - - (196,975)
------------- ------------- ------------- ------------ ------------- -------------
(177,338) (100,553) (277,891) - - (277,891)
------------- ------------- ------------- ------------ ------------- -------------
Net loss before
extraordinary item (5,159,981) (5,174,111) (10,334,092) (299,916) - (10,634,008)

Extraordinary gain 204,238 - 204,238 - - 204,238
------------- ------------- ------------- ------------ ------------- -------------

NET LOSS (4,955,743) (5,174,111) (10,129,854) (299,916) - (10,429,770)

Deduction for dividends
and accretion (64,360) - (64,360) - - (64,360)
------------- ------------- ------------- ------------ ------------- -------------
Net loss attributable to
common stockholders $ (5,020,103) $ (5,174,111) $(10,194,214) $ (299,916) $ - $(10,494,130)
============= ============= ============= ============ ============= =============
Net loss per common share -
basic and diluted

Before extraordinary item
and deduction for dividends
and accretion (0.38) (0.41)

Extraordinary gain 0.020 -

Deduction for dividends
and accretion (0.01) -
------------- ------------- -------------
$ (0.37) $ (0.41) $ (0.69)
============= ============= =============
Weighted-average number of
shares outstanding - basic
and diluted 13,509,126 12,504,532 15,304,532
============= ============= =============

(D) Amortization of goodwill for nine months
16

</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>

PROFORMA - CONSOLIDATED STATEMENTS OF OPERATIONS

Pacific
Logio, Inc. Webworks, Inc.
Year Year
Ended Ended Before Adjustments
December 31, December 31, Adjustments -------------------------- Proforma
1999 1999 NewCo DR CR NewCo
------------- ------------- ------------- ------------ ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Advertising $ - $ - $ - - - $ -
Product 23,355 305,628 328,983 - - 328,983
------------- ------------- ------------- ------------ ------------- -------------
23,355 305,628 328,983 - - 328,983

Cost of sales 15,071 42,874 57,945 - - 57,945
------------- ------------- ------------- ------------ ------------- -------------

Gross profit (loss) 8,284 262,754 271,038 - - 271,038
------------- ------------- ------------- ------------ ------------- -------------

Research and development 1,198,546 320,479 1,519,025 - - 1,519,025

Selling expenses 953,708 406,917 1,360,625 - - 1,360,625

General and administrative 1,340,486 773,283 2,113,769 - - 2,113,769

Depreciation and amortization 179,169 44,029 223,198 399,888(E) - 623,086

Compensation expense for stock
options and warrants 1,452,610 1,242,584 2,695,194 - - 2,695,194
------------- ------------- ------------- ------------ ------------- -------------

Total operating expenses 5,124,519 2,787,292 7,911,811 399,888 - 8,311,699
------------- ------------- ------------- ------------ ------------- -------------

Loss from operations (5,116,235) (2,524,538) (7,640,773) (399,888) - (8,040,661)

Other income (expense)

Interest income 196,310 1,246 197,556 - - 197,556
Loss on Investment (25,000) (25,000) - - (25,000)
Interest expense (9,955) (19,243) (29,198) - - (29,198)
------------- ------------- ------------- ------------ ------------- -------------
186,355 (42,997) 143,358 - - 143,358
------------- ------------- ------------- ------------ ------------- -------------

NET LOSS (4,929,880) (2,567,535) (7,497,415) (399,888) - (7,897,303)

Deduction for dividends and
accretion (6,469,861) - (6,469,861) - - (6,469,861)
------------- ------------- ------------- ------------ ------------- -------------
Net loss attributable to
common stockholders $(11,399,741) $ (2,567,535) $(13,967,276) $ (399,888) $ - $(14,367,164)
============= ============= ============= ============ ============= =============

Net loss per common share -
basic and diluted (Note 4) $ (0.96) $ (0.27) $ (1.16)
============= ============= =============
Weighted-average number of
shares outstanding - basic
and diluted 11,879,919 9,632,500 12,432,500
============= ============= =============

(E) Amortization of goodwill for one year.

</TABLE>
<PAGE> 23

INFORMATION ABOUT PACIFIC WEBWORKS
----------------------------------

BUSINESS

Pacific WebWorks began operations in 1997 as an Internet software
engineering company which provided engineering services for hire. In early
1998 we made a transition from engineering services to research and
development of Internet software applications and we remained in the
development stage during 1999. Now we are an application service provider
that develops business software technologies for Internet merchants. We
specialize in turn-key applications allowing small to medium-sized business
owners to expand their business onto the Internet. Our product family
provides tools for web site creation, management and maintenance, statistics,
reporting, surveys, marketing, hosting and e-commerce concerns within the
small to medium-size business niche.

Up to this point we have focused entirely on virtual retailing software
solutions, meaning merchants that do not have a physical store location and
would exist only on the Internet. Due to requests in the marketplace we are
expanding our technologies to include features for small to medium-sized
physical merchants in addition to our virtual merchants. Now we are expanding
our software family to include features that integrate the physical store
information systems with the Internet store information systems. This
expansion will include features such as Cashier/ POS (point of sale)
management, receiving, ordering, tender, store operations, human resources,
POS peripherals management, inventory and accounting. At the same time we
expect our virtual software will be expanded to include featured items and
benefits, catalog management, order development, advanced 1-to-1 marketing
methods, sophisticated item comparison and selection, and pre-sales
qualification. This gives the merchant a complete solution for all physical
store and Internet concerns and at the same time reduces costs of operations
and introduces new profit centers for the merchant.

We are currently structuring our operations to focus on four principal
revenue streams: Internet billing services, Internet publishing of statements,
customer care services through Internet and traditional telephony
technologies, and professional services associated with the implementation and
maintenance of these Internet technologies.

Our Subsidiaries

IntelliPay. In April 2000 we acquired IntelliPay, Inc., a Delaware
corporation, ("IntelliPay") as our wholly owned subsidiary through a
stock-for-stock exchange. (See, "Management's Discussion and Analysis of
Financial Conditions and Results of Operations - Acquisitions," below, for
further details.) We had been working closely with IntelliPay for about two
years and during 1999 we entered into a joint venture with IntelliPay to
establish MainStreetSquare.com, an on-line shopping portal. IntelliPay helps
companies in their use of e-commerce web sites and specializes in providing
online, secure and real-time payment processing services for businesses of all
sizes. We refer to its products and services as the IntelliPay transaction
gateway. IntelliPay's transaction gateway allows a business to accept real
time payments from their web site, Internet appliances, kiosks, phone, fax or
storefront. IntelliPay's systems use industry standard security components
and methods, the same standards used by all major commerce sites, and has been
tested under strict banking network procedures.

The IntelliPay transaction gateway provides ePayment system components
which help a business process and manage its Internet income. IntelliPay's
Electronic Checks allows the business to offer their customer's an additional
payment choice in addition to credit card transactions. Point-of-sale
professionals provide technical support and ePayment professionals can even
help the business locate an Internet-approved merchant account if needed.
IntelliPay is not the in-house processing arm of a merchant account provider
set up to capture additional processing fees. The IntelliPay LinkSmart
connects the business' web site to IntelliPay's secure servers. Once
customers enter the necessary data on a secure form, IntelliPay quickly
processes the transaction in real-time (3 - 9 seconds) and returns the
customer back to the business site.

As of September 2000, more than 8,500 merchants use IntelliPay's
products. It has completed proprietary certifications with FDC, NDC, NOVA,
Vital and FTB. . For more information on IntelliPay, visit
www.intellipay.com.

World Commerce Network, LLC. World Commerce Network, LLC was created in
December 1999 as a marketing company whose mission was to sell the products of
Pacific WebWorks, U.S. Merchant Systems and IntelliPay. (See, "Management's
Discussion and Analysis of Financial Conditions and Results of Operations -
Acquisitions," below, for further details.) The members included Pacific
WebWorks and U.S. Merchant Systems, Inc. In March 2000 we purchased an
additional 1% interest in World Commerce, which gave us a 51% total interest
in World Commerce. In August of 2000, we acquired the remaining 49% of World
Commerce.

<PAGE> 24

From December 1999 through July 2000 World Commerce conducted seminars
focused on small business owners and home business Internet users. At the
time World Commerce was selling products they included Visual WebTools(TM),
merchant accounts, the IntelliPay transaction gateway, as well as education
and training. World Commerce had established contract relationships with
Productive Seminars, Inc. in St. George, Utah. Productive Seminars conducted
the seminars throughout the country for World Commerce. However, World
Commerce has ended its relationship with Productive Seminars and ceased
seminar marketing as of July, 2000. During the time World Commerce was
providing seminars we acquired approximately 3,000 new customers. We do plan
to continue seminar marketing in the future, however we are considering
company direct selling instead of building complex relationships with multiple
vendors.

Our Market

We market our products to small and medium-sized businesses, which want
total, one-stop solutions to Internet advertising, marketing, and sales
concerns. Our typical "target" customers are businesses which would prefer to
invest in technologies which allow them to develop functional, interactive
Internet websites rather than hire internal employees or subcontract these
types of technologies to third parties.

The Internet software market is relatively large and continuing to
expand. In our opinion, the vast majority of businesses with successful web
strategies are those which have the financial resources to frequently update
and re-design their websites as information about their business changes.
These businesses either hire and retain information systems employees to
develop, support, and maintain their websites, or alternatively purchase
Internet services from multiple parties, have these services integrated, and
gather or purchase information on their customers and markets to facilitate
website updates. We believe these options to be cost prohibitive for the
small business owner. Our market, by contrast, consists of small to
medium-sized businesses which desire the capability to quickly re-design their
websites without incurring substantial costs or relying upon additional
employees or multiple vendors. We believe that our products provide small and
medium-sized businesses with flexibility, allowing them to update their
website and other business information by themselves and at a reduced cost.

Our Products

We have developed software technology which we market under the name
Visual WebTools(TM). Visual WebTools(TM) allows businesses to create
websites, generate statistics, reports, surveys, marketing information, as
well as complete e-commerce transaction. We believe that Visual WebTools(TM)
is powerful, yet easy and intuitive to use; it allows a small business to
quickly and easily create a website on the Internet, list itself with the
major search engines, set up e-mail, and facilitate domain name registration.
We also believe that Visual WebTools(TM) provides all the tools needed to edit
and maintain a website from most Internet-capable computers. It allows a user
to create an online store front, generate sales leads, process credit cards,
communicate with site visitors, and collect statistical information about who
visits the website and what they do while they are there. It allows a
business to create, manage, and maintain virtually all aspects of its website
at all times. In our opinion this functionality, combined with our easy to
use visual interface, provides a point-and-click total Internet business
solution at an affordable price for most small businesses.

Visual WebTools(TM). Visual WebTools(TM) includes WebWizard,
WebShopper, WebChannels, WebProfiler and WebStats, which are discussed in
further detail below. WebWizard and WebShopper are our basic products and
come in two progressive versions, Express and Pro. The Pro version provides
additional product features and support options to the business. WebChannels,
WebProfiler, and WebStats are available to our customers for an additional
license fee. We released Visual WebTools(TM) 3.0 on August 1, 1999. We
intend to expand the features of the Visual WebTools(TM) family during 2001to
include technologies that will allow a physical retail store to integrate its
business operations with an Internet store.

WebWizard. WebWizard allows businesses to quickly and easily create,
update, modify, or enhance their websites. Changes can be made 24 hours a
day, 7 days a week from anyplace in the world with an Internet terminal.
WebWizard includes an easy to use but powerful preview interface which is
referred to in the industry as WYSIWYG (What You See Is What You Get) which
uses familiar "drag and drop" functions and which allows businesses to make
website changes instantaneously. Changes are updated automatically and placed
online within minutes. WebWizard gives businesses the ability to manipulate
their website's layout, colors, and content, and to move, resize, and cut and
paste text, graphics, and tables. WebWizard also gives businesses a library
of hundreds of graphics to use throughout the website, and the ability to
upload graphics or files from a local hard drive directly onto the website.

We released WebWizard Pro in late November 1998 and WebWizard Express
and WebWizard Retail the first quarter of

19
<PAGE> 25

1999. Sales of these products were conducted primarily by two of our
resellers. WebWizard 2.0 was released in February 1999. WebWizard 2.0
simplified the tasks of creating and maintaining websites. It incorporated
Microsoft's ActiveX components directly into the interface, making WebWizard,
in our opinion, as easy to use as a word processor. WebWizard 2.0 supported
online "drag and drop" functions for editing images, tables, and text. It
also supported online text editing, as well as infinite-level "undo" and
"redo" functions. An extensive table editor was added which allowed simple
resizing and quick editing of tables. The new import feature allowed current
and older websites to be converted into the Visual WebTools(TM) environment
quickly and easily. WebWizard 2.0 also included an updated graphics and
animation library, enhanced navigation support, and increased security.

Our most current version, WebWizard 3.0, was released in August 1999.
It includes multiple features designed to make our product more powerful and
easier to use. These features include scriplets, an embedded code feature
which enhances the effect and appearance of a web page and frames, a function
which allows a user to display multiple pages or portions of pages at one time
on a computer screen. WebShopper 3.0 allows the business' products to be
included in the MainStreetSquare.com(TM) online shopping portal.

WebShopper. WebShopper allows businesses to add "electronic
storefronts" to their websites. We assist businesses in setting up merchant
accounts and in facilitating secure credit card transactions. WebShopper also
provides a customizable product database. A business's products and all of
its variables, such as price, color and size, can be entered into a
password-protected product database, which can be updated or edited at any
time. Customizable price and shipping modifiers, receipt options, sale
flagging, product option variables and tax calculations are also available.

We released WebShopper Pro in February 1999. It includes support for
merchant-account functionality, real-time Internet credit card and personal
check settlement, and includes fraud prevention features. WebShopper Pro
supports and accepts all major credit cards and optional electronic checks on
a real-time basis.

WebChannels. WebChannels allows businesses to send e-mail to multiple
clients simultaneously, creating marketing channels directly to customers.
Businesses can send announcements, sales information, product updates,
promotions, newsletters, jokes, or any other correspondence to clients at any
time. WebChannels also allows subscribers to add or remove themselves from
the automated e-mail database.

WebProfiler. WebProfiler allows businesses to gather demographics on
site visitors by creating custom questionnaires which provide direct feedback
from site visitors. With WebProfiler, businesses can obtain information from
target audiences, including, for example, levels of customer satisfaction or
dissatisfaction and customer preferences with regard to new products or
services. We believe that WebProfiler assists businesses in obtaining the
information necessary to improve customer relations, improve products, run
surveys and product specials, and gather additional information.

WebStats. WebStats allows businesses to monitor website visits. It
creates detailed reports about visits to their websites. We believe these
reports may assist businesses in determining the effectiveness of changes to
their websites and identifying the pages on their sites which draw the most
interest. WebStats keeps a detailed two-year history of visits to and
activity within our subscribers' websites, and can generate detailed reports
of site activity. For example, it can generate reports which show year-long
sales trends, or track the effectiveness of sales and promotions during
specific time periods or from specific locations. WebStats retains this
information in database format. We intend to develop future versions of
WebStats which will allow our customers to download and manipulate this
information.

ClipOn Commerce(TM) 3.5. In April 2000 we released ClipOn Commerce(TM)
3.5 which is a combination of our previous ClipOn Commerce(TM) software and
WebShopper. The previous ClipOn Commerce(TM) was a "bolt on" e-commerce
solution designed to work with any existing website. Users receive a full
back-end storefront, and an integrated shopping cart application. ClipOn
Commerce(TM) 3.5 adds e-commerce and product management, inventory control,
and automated product replacement on the Internet. Support for QuickBooks
accounting software has been added to allow importing of product information
directly into ClipOn Commerce(TM) 3.5. It is also compatible with
MainStreetSquare.com(TM)

Place to Vacation(TM). Place to Vacation(TM) is a marketing tool that
helps our users generate leads and attract Internet traffic to their website.
A website visitor enters his or her name and address information for a chance
to win a free vacation. Pacific WebWorks then gives away a free vacation
accommodation package every week. Our merchants then market to the lead
provided by the information received on the entry form.

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<PAGE> 26

FreeSiteNow.com(TM). FreeSiteNow(TM) is an affiliate program which
gives the non-sales oriented merchants the opportunity to generate leads for
our inside sales team by handing out free websites. If a sale is made by our
sales team, the affiliate will receive a commission on the sale.

MainStreetSquare.com(TM). MainStreetSquare.com(TM) is an on-line
shopping mall, which promotes products and services and links of our merchants
using ClipOn Commerce(TM) or WebShopper. Consumers can easily shop from
multiple stores on MainStreetSquare.com(TM) and proceed with one quick
check-out when they are ready to complete their purchase.

Sales and Marketing

We do not believe that our competitors are effectively targeting our
market niche: a totally Internet based, end-to-end business solution for
small and medium-sized businesses. We believe that our products will allow
businesses to generate leads, sell products, run sales promotions, capture
demographic information about website visitors, communicate with website
visitors, and obtain intelligent information about who is visiting their
websites and what they are doing while they are there. Our products allow our
customers to stay in complete control of their websites and provide tools,
which can facilitate a successful Internet experience for them.

We market and sell our products through reseller channels, our internal
sales force and strategic partnerships. We sell our products to partners at
wholesale, who then mark the products up and sell them at retail. We also
sell our products through resellers who are paid a commission for each
merchant who purchases our products. Each merchant must sign a purchase
agreement with the reseller, which the reseller must in turn provide to us. We
then provide software to the resellers' own merchants which allows these users
to create Internet projects. We provide the initial reseller with training in
the use of the software. The reseller is an independent contractor and is
obligated to pay the amounts due under the agreement even if payments from the
merchant are not received. For the nine month period ended September 30, 2000
our reseller channels accounted for approximately 20% of our net sales. World
Commerce, our wholly-owned subsidiary, accounted for a total of 76% of our
sales, and the balance, or 24% of our sales were originated by our internal
sales force.

We believe we may be able to develop a substantial presence in our
target market through a combination of marketing strategy, unique proprietary
technology, technical expertise, and early entry into our target market. We
have also developed a fourteen-day trial version of Visual WebTools(TM), which
can be provided to a business for evaluation purposes free of charge. Our
products will allow a business to create, operate, and maintain a website for
an initial one-year term, after which our customer may maintain its license by
paying a monthly license fee. We are also pursuing a national advertising
campaign, which may include television, radio, and print media.

It is our opinion that in the past, businesses which have attempted to
maintain interactive websites and conduct business on the Internet have either
developed technical expertise themselves, paid employees to create and
maintain their websites, or retained contract "web professionals" to do so.
We believe that Visual WebTools(TM) will allow small businesses, at a
relatively small cost, to participate in Internet commerce by creating and
managing their own Internet websites and storefronts.

Major Customers

During 1997 we had 41 professional engineering clients, two of whom
accounted for more than 5% of our revenue. During 1998 our management changed
our strategy from contract programming to focus on development of Internet
software applications and mass marketing of these Internet tools and
de-emphasized contract programming. We had a total client base of 85 and
four major customers who individually accounted for 10% or more of our total
revenues. Internet Yellow Pages accounted for 26%, or $44,890, of total 1998
revenues. Ex.Sight Co. accounted for 16%, or $28,161, of total revenue. CUSA
Technologies accounted for 12%, or $21,271 of total revenues. American Home
Business contributed 14%, or $24,422, in sales.

During 1999 we increased our client base to several hundred with two of
our sales channels providing 41% of our revenue. Lauman Enterprise, a
reseller, accounted for approximately $60,000 or 20% of total revenues in
1999. US Merchant Systems, Inc. supplied us with marketing expertise and
merchant accounts for our customers, and accounted for approximately $65,000,
or 21% of our revenue for 1999. While we entered into a new strategic
marketing agreement with US Merchant Systems on August 30, 1999, the loss of
our relationship with US Merchant Systems would create an immediate loss of
revenue for us and could have a material

21
<PAGE> 27

adverse effect on our operations.

Product Development

We acquired a large amount of source code from Innovative Research and
Animated Design, Inc. ("IRAD") in June of 1997. IRAD originally developed
this technology, which is a part of the underlying technology from which we
program. We believe that this code base provides us with a significant market
advantage with advancements in the areas of Internet business technologies,
including 3D animation and search engine technologies. We intend to
incorporate part or all of this technology into future versions of Visual
WebTools(TM) and our other products.

We are now developing Visual WebTools(TM) V4, our next product
evolution. We anticipate this expansion will include features such as
Cashier/ POS (point of sale) management, receiving, ordering, tender, store
operations, human resources, POS peripherals management, inventory and
accounting. At the same time our virtual software will be expanded to include
featured items and benefits, catalog management, order development, advanced
1-to-1 marketing methods, sophisticated item comparison and selection, and
pre-sales qualification. We expect this new product to give the merchant a
complete solution for all physical store and Internet concerns and at the same
time reduce costs of operations and introduce new profit centers for the
merchant.

Throughout 1999, we spent $320,479 on engineering costs, including
research and development expenses. During 1998 and 1997, we spent $11,949 and
$5,523, respectively, for engineering costs, including research and
development expenses. These costs are passed on to purchasers in the price of
the product.

Corporate Development

Asphalt Associates, Inc. was incorporated in the state of Nevada on May
18, 1987. Asphalt Associates never established commercial business
operations. On January 11, 1999 Asphalt Associates merged with Utah WebWorks,
Inc., a Utah corporation ("Utah WebWorks"). Utah WebWorks, the accounting
acquirer, was organized on April 10, 1997. In conjunction with the merger,
Asphalt Associates changed its name to Pacific
WebWorks, Inc.

Material Contracts

We are a party to the following material contracts:

In January 1998, we entered into an agreement with Electric Lightwave,
Inc. for telecommunications, facilities, and Internet access. We formalized
the agreement in February 1998 and currently pay $1,725 per month for this
service. The contract is scheduled to expire December 31, 2001. We believe
that we will be able to extend this contract on terms, which are acceptable to
us, but have no assurances that we can do so. However, we believe that we
will be able to enter a new contract with a different service provider if the
contract is not extended.

In February of 1999, we entered into an agreement with U.S. Merchant
Systems, Inc. located in Newark, California. U.S. Merchant Systems, Inc.
provides merchant accounts to our clients. We integrated a merchant account
and transaction processing which allows purchasers of Visual WebTools(TM) to
accept all major credit cards and personal checks at point of sale from their
websites. The term of this agreement is one year from the date of execution
and shall automatically renew each successive year thereafter, unless canceled
in writing. We are also leveraging a relationship with a provider of Internet
factoring, which will allow customers to make monthly payments on negotiated
terms.

Trademark, Licenses and Intellectual Property

On October 9, 1998, Utah WebWorks filed a trademark application for
Visual WebTools(TM) which we acquired and became responsible for upon our
merger with Utah WebWorks. In December of 1998 the United States Patent and
Trademark Office assigned Serial No. 567,136 to this mark. The trademark is
currently pending. In 1999, we filed a Trademark application for
MainStreetSquare.com(TM), Cyberhaggle(TM), and Pricehunter(TM), all features
of the online mall. Likewise, in 1999 we filed for trademarks on Pacific
WebWorks(TM), ClipOn Commerce(TM), FreeSiteNow(TM), V4(TM), Overnet
Express(TM) and IDDS(TM).

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<PAGE> 28

Our success will depend, in part, on our ability to obtain and protect
our trademark and trade secrets and operate without infringing upon the
proprietary rights of others in the United States and other countries. If we
were to become involved in a dispute regarding our intellectual property, it
could become necessary for us to participate in interference proceedings
before the United States Patent and Trademark Office to determine whether we
have a valid claim to the rights involved. We could also be forced to seek a
judicial determination concerning the rights in question. These proceedings
could be costly and time consuming, even if we were to eventually prevail.
Should we not prevail, we could be forced to pay significant damages, obtain a
license to the technology in question, or stop marketing one or more of our
products.

All of our core technology was developed internally by our engineers
and by the engineers of Utah WebWorks. The performance of our products does
not rely on any third party technology, although we continue to support as
many third party technologies as possible.

We also rely upon trade secrets, proprietary know-how, and
confidentiality provisions in agreements with employees, consultants, and
resellers to protect our intellectual property rights. There are risks that
these other parties may not comply with the terms of their agreements with us,
and that we may not be able to adequately enforce our rights against these
parties.

We have adopted a policy of requiring our employees and resellers to
execute confidentiality agreements when they commence employment with us or
resell our products. These agreements generally provide that all confidential
information developed or made known to the employees or resellers during the
course of their relationships with us is to be kept confidential and not
disclosed to third parties, except under certain specific circumstances. In
the case of employees, the agreements also provide that all inventions
conceived by the employees in the course of their employment will be our
exclusive property.

Employees

We currently employ approximately 42 full-time employees. Our
employees are not presently covered by any collective bargaining agreement.
We believe that our relations with our employees are good, and we have not
experienced any work stoppages.

Available Information

We are subject to certain informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and,
accordingly, file reports, proxy statements and other information with the
SEC. You may read and copy any of these reports at the SEC public reference
room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549 or other public reference rooms across the nation. Please call the SEC
at 1-800-SEC-0330 for further information on public reference rooms. Also,
Pacific WebWorks is an electronic filer and the SEC maintains a web site at
"http://www.sec.gov" that contains filed reports, proxy and information
statements and other information regarding Pacific WebWorks.

Additional updating information with respect to the securities covered
by this prospectus/proxy statement may be provided in the future to purchasers
by means of amendments to this prospectus/proxy statement.

This prospectus/proxy statement, filed as a part of the registration
statement on Form S-4, does not contain information in or attached as an
exhibit to the registration statement. For further information concerning
Pacific WebWorks and the securities offered, refer to the registration
statement and its exhibits which may be inspected at the office of the SEC
without charge. A copy of the registration statement and exhibits may be
accessed through the SEC's web site at http://www.sec.gov.

Reports to Security Holders

We are required to comply with the reporting requirements of the
Securities Exchange Act of 1934 ( the "Exchange Act") and file annual,
quarterly, and other reports with the SEC. We are also subject to the proxy
solicitation requirements of the Exchange Act and, accordingly, furnish an
annual report with audited financial statements to our stockholders. We
currently use an investor relations firm, Columbia Financial Group, and
interested persons may call at (888) 301-6271. Also, interested persons may
visit our website at http://www.pacificwebworks.com.

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<PAGE> 29

PROPERTIES

We moved into new corporate offices in September 2000. The terms for
the lease of this property have not been finalized at this time. The new
corporate office is 26,200 square feet of office and common space in a
commercial development located in Salt Lake City, Utah and serves as our main
office and production facility. We believe this property will be adequate for
our future needs. We anticipate the lease agreement will require a monthly
lease payment of approximately $27,000 for a term of one year with an
automatic renewal for up to five years.

We currently are obligated under the lease for our former corporate
offices located in the Westgate Business Center in Salt Lake City, Utah. We
are negotiating a release from or termination of that lease. Under the lease
we are required to pay $8,700 each month for 8,500 square feet of commercial
office space. This lease will expire on December 31, 2001.

LEGAL PROCEEDINGS

We are not aware that we are a party to any existing or threatened
legal or administrative proceedings as of the date of this filing.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is traded on the NASD OTC Bulletin Board under the
symbol "PWEB". There was no trading activity in our common stock during 1997
and 1998. The following table presents the range of the high and low bid
prices of our stock as reported by the Nasdaq Trading and Market Services.
Such quotations represent prices between dealers and may not include retail
markups, markdowns, or commissions and may not necessarily represent actual
transactions.

On September 28, 2000, the day prior to the public announcement of the
proposed acquisition, the range of high and low bid prices for Pacific
WebWorks common stock was $2.81 and $0.37, respectively.

Year Quarter Ended High Bid Low Bid
----- -------------- -------- --------

1999 March 31 $ 15.50 $ 6.875
June 30 9.41 5.00
September 30 6.38 3.81
December 31 4.94 1.25

2000 March 31 6.00 2.19
June 30 4.47 2.06
September 30 3.44 1.63

In January of 1999, the SEC granted approval to the NASD OTC Bulletin
Board Eligibility Rule 6530 which requires a company listed on the OTC
Bulletin Board to be a reporting company and to remain current in its reports
filed with the SEC. In July of 1999 we filed a registration statement on Form
10 in order to become a fully reporting company and to maintain our listing on
the OTC Bulletin Board. Because the SEC did not reach a position of no
comment with regard to our registration statement prior to August 1999, we
lost our listing on the OTC Bulletin Board and were listed in the National
Quotation Bureau's Pink Sheets. Our listing returned to the OTC Bulletin
Board in November of 1999.

Holders

As of October 24, 2000 we have approximately 61 stockholders of record.
Upon completion of the share exchange we will have approximately 240
stockholders. See the beneficial ownership chart appearing on page 51 which
indicates the effect of the transaction on the percentage ownership of our
common stock for our more than 5% beneficial owners and our management.

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<PAGE> 30

Dividend Policy

We have not paid cash or stock dividends and have no present plan to pay
any dividends, intending instead to reinvest our earnings, if any. For the
foreseeable future, we expect to retain any earnings to finance the operation
and expansion of our business. In addition, it is anticipated that the terms
of future debt and/or equity financing may restrict the payment of cash
dividends. Therefore, the payment of any cash dividends on the common stock is
unlikely. However, payment of future dividends will be determined from time to
time by our board of directors, based upon our future earnings, financial
condition, capital requirements and other factors. We are not presently
subject to any restriction on our present or future ability to pay any
dividends.

SELECTED FINANCIAL DATA

The financial information set forth below with respect to our statements
of operations for the nine months ended September 30, 2000 and 1999 is
unaudited. In the opinion of management, this financial information, includes
all adjustments consisting of normal recurring entries necessary for the fair
presentations of such data. The results of operations for the nine months
ended September 30, 2000, are not necessarily indicative of results to be
expected for any subsequent period. The financial information set forth below
with respect to our statements of operations for each of the three years ended
December 31, 1999, and with respect to our balance sheets at December 31,
1999, 1998 and 1997 is derived from financial statements that have been
audited by our former independent certified public accountants, and is
qualified by reference to their reports and notes related thereto. The
predecessor, Utah WebWorks, Inc., had an inception date of April 10, 1997. The
following selected financial data should be read in conjunction with our
financial statements (See, Index to Financial Statements on page 53) and notes
and "Management's Discussion and Analysis of Financial Condition and Result of
Operations" beginning on page 26.

Nine Months Ended
September 30 Year Ended December 31,
------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data: 2000 1999 1999 1998 1997
---------------------------- ------------ ------------ ------------ ------------ -----------
(Unaudited) (Unaudited)
Revenues: $ 3,273,508 $ 111,281 $ 305,628 $ 172,395 $ 94,014
cost of sales 212,597 19,684 42,874 188,974 107,332
------------ ------------ ------------ ------------ -----------
Gross profit (loss) 3,060,911 91,597 262,754 (16,579) (13,318)
------------ ------------ ------------ ------------ -----------

Operating expenses:
Sales 4,503,581 206,551 406,917 30,180 13,987
Research and development 645,372 205,946 320,479 11,949 5,523
General and administrative 2,255,464 554,405 817,312 80,996 36,179
------------ ------------ ------------ ------------ -----------
Total costs and expenses 7,404,417 966,902 1,544,708 123,125 55,689
------------ ------------ ------------ ------------ -----------
Loss from operations (4,343,506) (875,305) (1,281,954) (139,704) (69,007)

Other Income and (expenses)
Amortization (641,484) (1,230,300) - - -
Depreciation (88,568) (12,248) - - -
Interest expense (100,553) (4,861) (19,243) (10,761) (3,500)
Interest income - - 1,246 - -
------------ ------------ ------------ ------------ -----------
Total other income
and (expenses) (830,605) (1,247,409) (17,997) (10,761) 3,775
------------ ------------ ------------ ------------ -----------
Warrants issued for
consulting services - - (1,242,584) - 275
Loss on investment in
World Commerce - - (25,000) - -
------------ ------------ ------------ ------------ -----------

Net loss $(5,174,111) $(2,122,714) $(2,567,535) $ (150,465) $ (68,752)
============ ============ ============ ============ ===========

25
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C> <C>
Net loss per-share basic
and diluted $ (0.41) $ (0.22) $ (0.27) $ (0.03) $ (0.01)
============ ============ ============ ============ ===========
Shares used in computing per
share amounts 12,504,532 9,447,556 9,652,500 5,000,000 5,000,000
============ ============ ============ ============ ===========

September 30, December 31,
Balance sheet data: 2000 1999 1999 1998 1997
------------------ ------------ ------------ ------------ ------------ -----------
Cash and cash equivalents $ 72,044 $ 24,754 $ 153,989 $ 9,306 $ 5,440
Total assets 4,631,723 211,984 630,559 55,970 61,092
Total current liabilities 3,928,752 308,587 644,727 265,187 -
Accumulated deficit (7,960,863) (2,335,404) (2,786,752) (219,217) (68,752)
Stockholders' equity (deficit) 1,817,598 (96,604) (14,168) (209,217) (58,752)

</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We have incurred net losses from our inception and our independent
auditors reported that this history of losses raised doubts about our ability
to continue as a going concern without financing. During the second quarter
of 2000 management took several steps to restructure our operations with the
intent to generate profits. These steps include consolidation of operations
of Pacific WebWorks and its related companies, reductions in the number of
employees, and continued growth of our sales and marketing channels.
Management believes our current and developing sales channels will be
sufficient to support our existing operations for the short term. Sales
projections may be down throughout the remainder of fiscal 2000 due to the
alteration of our short-term goals.

Reverse merger treatment. We were incorporated in the state of Nevada
on May 18, 1987, as Asphalt Associates, Inc. On January 11, 1999, Asphalt
Associates completed a merger with Utah WebWorks, Inc., a Utah corporation.
We were the surviving entity in that transaction and, as part of the
transaction, changed our name to "Pacific WebWorks, Inc." At the time of the
merger, Utah WebWorks owned all of the intellectual property we currently use.
On January 1, 1999 we issued an aggregate of 5,000,000 common shares to the
stockholders of Utah WebWorks, Inc. As a result of the merger, the former
stockholders of Utah WebWorks obtained 50% of the voting power of the combined
companies. Accordingly, in conformance with generally accepted accounting
principles, the merger has been accounted for as a "reverse merger" and the
accounting survivor is Utah WebWorks. Thus, financial statements for the
fiscal year ended December 31, 1998 are those of Utah WebWorks.

Stock Split and Change in Par Value. In December 1998, we authorized a
4-for-1 forward stock split. Unless otherwise noted in this prospectus/proxy
statement all share amounts reflect the forward stock split.

Acquisitions. On April 4, 2000 we agreed to acquire IntelliPay, Inc., a
Delaware corporation, as our wholly-owned subsidiary. In the stock-for-stock
exchange we issued 2,400,000 common shares, valued at $8,400,000, in exchange
for 1,000 shares of IntelliPay. The acquisition was accounted for under the
purchase method of accounting. Accordingly, IntelliPay's results of operation
have been included with ours from the closing date.

We and U.S. Merchant Systems, Inc. formed World Commerce Network, LLC in
December of 1999 Originally, we held a 50% interest in World Commerce. In
March 2000 we acquired an additional 1% interest in World Commerce, which gave
us a 51% total interest. We determined during the third quarter, the increased
benefit of having a partner process all of the lease documentation and
merchant account paperwork was minimized by the difficulties involved with
remote operations. We agreed with our partner, U.S. Merchant Systems, to
complete our scheduled seminars and then we would assume the outstanding
ownership of World Commerce held by US Merchant Systems and continue forward
with World Commerce operations. As a result we acquired the remaining 49%
interest in August 2000.

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<PAGE> 32

Results of Operations

The following discussions are based on consolidated financial
statements of Pacific WebWorks and its wholly owned subsidiary IntelliPay and
includes the consolidation of the former 51% interest in World Commerce.

We receive revenues from the sale or access to our software technology
sold by us or by all our resale channels and from services provided for web
site design, training, education and consulting. Cost of sales include costs
of merchant accounts and third party products. Revenues are recognized when
persuasive evidence of an agreement exists, delivery has occurred and services
have been rendered, the price is fixed or determined by and collectability is
reasonably assured. Up-front fees are non-refundable and are deferred and
recognized systematically over the period the product is delivered and
services are performed, which is generally one year. Monthly fees for our
services are recognized as services performed.

Operating expenses include general and administrative expenses which
consist of all officer salaries, general office expenses, production and
shipping expenses. Sales expenses include both sales and marketing expenses
including advertising, investments in seminar teams and commissions paid to
resellers. Research and development consists primarily of costs for product
design, programming, and quality control.

Comparison of the Nine Month Periods. Following is a comparison of our
operating results for the nine months ended September 30, 2000 with the nine
months ended September 30, 1999:

Revenues. For the nine-month period ended September 30, 2000 we
recorded revenues of $3,273,508. This was a significant increase compared to
the $111,281 in revenues for the nine-month period ended September 30, 1999.
Revenues were low for the 1999 nine month period because we did not have
significant sales of our products until the third quarter of 1999. The
increase in revenues for the 2000 nine month period were primarily the result
of revenues from our interest in World Commerce.

Cost of Sales. Cost of sales were 6.5% of revenues for the nine month
period of 2000 compared to 17.7% of revenues for the 1999 nine month period.
The decrease was primarily due to renegotiated lower prices for merchant
accounts and other third party products.

Gross Profit. Our gross profit was 93.5% of revenues for the 2000 nine
month period, compared to 82.3% of revenues for the 1999 nine month period.
As discussed above, this decrease was primarily due to lower prices for
merchant accounts and other third party products.

General and Administrative Expenses. Consolidated general and
administrative costs increased $1,701,059 for the 2000 nine month period
compared to the 1999 nine month period. The increase in general and
administrative costs is primarily attributed to the expenses related to the
operations of World Commerce and IntelliPay, which were acquired in December
1999 and April 2000, respectively.

Sales Expenses. These expenses grew $4,297,030 in the nine month period
of 2000 from the comparable nine months in 1999. The 2000 nine month period
increase resulted from radio and direct mail advertising, expenditures for
World Commerce seminar teams and increased commissions paid to existing
Pacific WebWorks sales channels. We temporarily discontinued World Commerce
seminars as of the end of July 2000. We anticipate beginning seminar
operation again in the future.

Research and Development. Research and development expenses were
$439,426 higher for the 2000 nine month period compared to the 1999 nine month
period. The costs were related to research and development of IDDS(TM),
V4(TM), and BizWiz(TM) as well as the ongoing development and improvements to
the IntelliPay transaction gateway.

Total Operating Expenses. Total operating expenses for the 2000 nine
month period exceeded revenues by $4,130,909 compared to $855,621 for the 1999
nine month period. As noted above, the expenses were primarily the result of
our costs related to World Commerce's operations.

Net Loss. Our net loss was $5,174,111 for the 2000 nine month period
compared to $2,122,714 for the 1999 nine month period. The primary cause of
our losses relates to our expenditures related to World Commerce and
IntelliPay which we acquired in December 1999 and April 2000, respectively.
For the 2000 nine month period we recorded a loss per share of $0.41 compared
to a

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<PAGE> 33

loss of $0.22 for the 1999 nine month period.

Comparison of 1999 and 1998 Year End Periods. Following is a comparison
of our operating results for the year ended December 31, 1999 with the year
ended December 31, 1998:

Revenues. We generated $305,628 in revenues from product sales and
licensing fees for our software technology during fiscal 1999 compared to
$172,395 for 1998. The increase was primarily attributable to the development
of sales of our software technology by us or through our resellers.

General and Administrative Expenses. These costs increased $736,316
from 1998 compared to 1999. The increase is primarily due to the growth in
the number of administrative employees and general office expenses.

Sales Expenses. Sales expenses increased $376,737 from 1998 compared to
1999. Sales expenses for 1999 increased over the previous years due to the
development of an inside sales force, which included experienced Internet
sales people and equipment such as a predictive dialer.

Research and Development Expenses. Research and development expenses
recorded an increase of $308,530 from 1998 to 1999. The increase was
primarily due to continued development of our software technologies and
addition of development employees.

Total Operating Expenses. The $1,421,583 increase in total operating
expenses from 1998 to 1999 was due to the change in the nature of our
operations from selling services to selling software products. Our expenses
increased primarily due to the expense related to execution of our new
development plan.

Warrants for Consulting Services. We issued warrants to purchase
400,000 common shares to our investors relations firm for services during
1999. The warrants were exercisable over a period of time and we amortized
the $1,255,800 value of the warrants, determined on the Black-Scholes model,
for the 1999 period.

Net Loss. Our net loss for 1999 was $2,567,535 compared to a net loss
of $150,465 for 1998. The net loss increase in 1999 was primarily due to
increased operating expenses related to research and development efforts,
improvement of sales channels, and the amortized expense for the warrants
issued for services.

Comparison of 1998 and 1997 Year End Periods. Following is a comparison
of our operating results for the year ended December 31, 1998 with the year
ended December 31, 1997:

Revenues. We generated $172,395 in revenues from product sales and
licensing fees for our software technology during fiscal 1998 compared to
$94,014 from engineering services for 1997. The increase in revenues was a
result of shifting our business operations from engineering services to
Internet software applications.

General and administrative expenses. These costs increased $44,817 from
1997 compared to 1998. The increase was primarily due to increases in general
office expenses.

Sales expenses. Sales expenses increased $16,193 from 1997 compared to
1998. The increase was primarily due to promotions, including printing of
material related to professional services.

Research and Development. These expenses increased $6,426 from 1997
compared to 1998. The increase was primarily due to the addition of new
development personnel.

Total operating expenses. Total operating expenses were 59.2% of
revenues in 1997 compared to 71.4% of revenues in 1998. These expenses
increased as a result of the major changes in the nature of our business
operations.

Net Loss. We recorded a net loss of $68,752 for 1997 and a net loss of
$150,465 for 1998. The increase in the net loss was a result of the operating
expenses associated with our growth and shift in business operations.

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<PAGE> 34

Liquidity and Capital Resources.

At September 30, 2000, we had $72,044 cash on hand with total current
assets of $670,801 compared to $153,898 cash on hand and total current assets
of $449,084 at December 31, 1999. Total current liabilities were $3,928,752
at September 30, 2000 compared to $644,727 at December 31, 1999. Deferred
revenue of $2,967,088 represents the majority of the total current liabilities
and has been deferred in accordance with SAB101 and recognized on a ratable
basis over the longer of our client's agreements or expected relationship with
that client.

Net cash used by operating activities for the nine months ended
September 30, 2000 was $2,051,440. Net cash used by investing activities was
$234,932, which was primarily used for the purchase of capital equipment. Net
cash provided by financing activities was $2,204,518 from both the issuance of
common stock and debt financing.

During the nine months ended September 30, 2000 we entered into
agreements with the holders of a majority of our debt to convert those debts
into equity. In September 2000 we converted a $600,000 note payable to
600,000 common shares. In June 2000 we converted a note payable for $1
million, plus $37,536 interest, into 1,040,000 common shares.

In February 2000 we agreed to sell 400,000 common shares for $1,000,000
with warrants for the purchase of an additional 600,000 common shares at
strike prices ranging from $5.00 to $7.50 per share. Upon closing of this
transaction we realized $1 million and may also receive additional proceeds
from the exercise of the warrants in the future. However, the holders of the
warrants have total discretion whether or not they exercise the warrants. We
cannot assure that all of the warrants will be exercised before their
expiration in 2004 and 2005. If all our outstanding warrants are exercised we
would realize $6,375,000 in proceeds. As of the date of this filing, none of
these warrants have been exercised.

In January 1999 we issued warrants to Columbia Financial Group to
purchase 400,000 shares of our common stock at an aggregate exercise price of
$1,475,000 in exchange for their services to us. Again in January 2000, we
issued another 400,000 warrants to Columbia Financial for investor-relation
services to be provided for us during the year 2000. The warrants were
exercisable over a period of time and we amortized their value as an expense
of $1,242,584. We entered into a registration rights agreement with Columbia
Financial in February of 2000 and have registered the shares to be issued upon
exercise of these warrants when, and if, Columbia Financial decides to
exercise the warrants. As of the date of this filing, 150,000 warrants at a
strike price of $2.50 were exercised during the fourth quarter of 2000.

Based on our revenues for the 2000 nine-month period, our management
believes that we have sufficient resources available to continue our product
development efforts and to continue our sales, marketing, and promotional
activities for Visual WebTools(TM) for the short term, however, management
believes we will need $2.5 million in early 2001 to continue our development
during the next twelve months. We operate in a very competitive industry in
which large amounts of capital are required in order to develop and promote
products. Many of our competitors have significantly greater capital
resources than we do. We believe we will need to continue to raise additional
capital, both internally and externally, in order to successfully compete.

While we may be able to fund our operations through our revenues for the
short term, we currently anticipate using private placements of our common
stock. We intend to issue such stock pursuant to exemptions from the
registration requirements provided by federal and state securities laws. The
purchasers and manner of issuance will be determined according to our
financial needs and the available exemptions. We also note that if we issue
more shares of our common stock our stockholders may experience dilution in
the value per share of their common stock.

Factors Affecting Future Performance

As of October 2000 we have added fourteen new resellers to our
nationwide reseller group, resulting in 40 total resellers, and we acquired
our 30,000th client. Management believes this growth will result in increased
revenues, however, actual revenue increases will depend on a number of
factors, including our ability to negotiate favorable licensing agreements
with resellers; the number of our resellers; the software and services for
which they subscribe; the nature and success of our products and services;
establishing brand recognition of our products; regulatory changes; and
changes in technology.

Our industry is subject to rapid technological change with which we may
not be able to keep pace. Internet industries change rapidly. Accordingly,
our operating results will depend upon our ability to successfully compete.
Our ability to successfully compete,

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<PAGE> 35

in turn, will depend upon a number of factors, including our ability to
successfully maintain and sell existing products, our ability to conceive,
develop, improve, and market new products, our ability to identify and take
advantage of emerging technological trends within our target markets, and our
ability to respond effectively to technological changes or new product
announcements by competitors. We believe that we will need to make continuing
significant expenditures for research and development in the future. Risks
exist that we may not be able to successfully develop new products or, if we
do, that those products may not be accepted by the market.

We currently estimate that we will require up to $5 million through
fiscal year 2001 to further develop our products and services in accordance
with our business plan. Our actual expenses and revenues could vary
materially from the amounts we anticipate or budget, and such variations may
affect the additional financing needed for our operations. To the extent that
we acquire the amounts necessary to fund our business plan through the
issuance of equity securities, our then-current stockholders may experience
dilution in the value per share of their equity securities. The acquisition
of funding through the issuance of debt could result in a substantial portion
of our cash flows from operations being dedicated to the payment of principal
and interest on that indebtedness, and could render us vulnerable to
competition or economic downturns.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

On August 3, 2000, Chisholm & Associates replaced Crouch, Bierwolf &
Chisholm, C.P.A.s, as our independent auditor. The decision to change
accountants was approved by our board of directors. Crouch, Bierwolf &
Chisholm had audited our financials statements for December 31, 1999 and 1998.
Crouch Bierwolf & Chisholm's report on such financials, dated January 31, 2000
did not contain an adverse opinion, disclaimer of opinion nor was it modified
as to uncertainty, audit scope or accounting principles. There were no
disagreements with Crouch, Bierwolf & Chisholm on any matter regarding
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure for the two most recent fiscal years and any
interim period.

Neither we, nor someone on our behalf, consulted with Chisholm &
Associates regarding the application of accounting principles to a specific
completed or contemplated transaction or the type of audit opinion that might
be rendered on our financial statements. Nor was a written report or oral
advice provided to us that Chisholm & Associates considered was an important
factor we relied on in reaching decisions about accounting, auditing or
financial reporting issues.

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<PAGE> 36
INFORMATION ABOUT LOGIO
-----------------------

BUSINESS

The following description of Logio's business should be read in
conjunction with the information included elsewhere in this prospectus. This
section contains certain forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from the results
discussed in the forward-looking statements as a result of certain of the risk
factors set forth below and elsewhere in this prospectus.

Overview

Logio, Inc., formerly WordCruncher Internet Technologies, Inc., is a
development stage company historically engaged in the development and
marketing of a focused Internet directory and search engine which serves the
needs of the business professional. From November 5, 1996 (inception) to
September 30, 2000, the Company's activities historically relate primarily to
attracting employees, raising capital, purchasing assets, developing
WordCruncher software, the Logio site, search engine, and directory and
implementing sales and marketing programs. As such, the reported financial
information is not necessarily indicative of the Company's future operating
results or of its future financial condition.

Content and services found at the Company's web site, logio.com, became
available on March 19, 2000, and was tailored to provide, under one roof, a
broad spectrum of the information and services that are required by business
people in their daily work activities. Information resources included a
unique, readily accessible drill down directory that organizes thousands of
business-oriented web sites and pages according to specific professional
discipline and function. The directory is augmented by an advanced search
technology that can search either the abstracts or the full text of all sites
listed in the directory, and then displays the search results in a
hits-in-context format. Logio intends to expand the delivery of this full
service concept into other forms of commerce such as online
business-to-business purchasing, and private labeling of our directory
product.

Logio's initial revenue related to the Logio directory has been derived
from sales of advertising on the site in second and third quarters 2000.
Traffic to the site ultimately drives the ability to generate such revenue.
As the Company is in its development stage, it has not yet recognized
significant advertising or sponsorship revenues. Logio's new business model
is directed towards the generation of revenues from set-up and maintenance
fees resulting from the sale of its directory in private label form to certain
Internet sites and corporate intranets. Logio is uncertain as to when it will
emerge from the development stage.

In June 2000, the board of directors, due in part to changing market
conditions and ongoing operating losses, named Kenneth W. Bell as the new
chief executive officer of the Company. Mr. Bell undertook an immediate
evaluation of all aspects of the Company's operations, including product
development, sales and marketing approaches, product positioning, employees
and management, contracts and agreements, and significant costs incurred by
the Company. As a result of Mr. Bell's recommendations, the Company
repositioned its strategic direction, reduced headcount, re-negotiated and
settled contracts, and aggressively pursued new financing sources.

Budgets were established for sales and costs related to Logio products.
Executive management continually monitored progress related to the Company's
sales and cost reduction goals in order to reduce losses and achieve sales
growth and profitability. Sales of the Company's directory did not meet
budgeted expectations and, despite the measures taken to reduce costs, the
Company continued to suffer losses, although at a reduced rate. As a result
of these ongoing losses and the continuing decline in the market price for the
Company's common stock, the Company's agreed upon funding was withdrawn and
other traditional financing sources became unavailable at acceptable terms.

Due to the continuing negative trends in the Internet industry and
markets, the trading price of the Company's stock continued to decline
throughout third quarter 2000. Because of these conditions and the resulting
lack of funding, the Company's board of directors approved the pursuit of
merger, acquirer, strategic partnership, joint partnership or other forms of
continuation that could potentially provide value to the stockholders of the
Company. This search led to the signed letter of intent with Pacific
WebWorks, Inc. on September 29, 2000 that led to the execution of the
acquisition Agreement and Plan of Reorganization with Pacific WebWorks on
October 31, 2000. In conjunction with the proposed sale of Logio, Inc. to
Pacific WebWorks, Inc., Logio has temporarily discontinued its development
activities and preliminary operations related to the Logio business directory.

The proposed sale of Logio, Inc. to Pacific WebWorks, Inc. may not be
completed, in which case Logio would not have any current operations and only
a limited amount of cash to invest in continued product development and
operations. The proposed sale of Logio, Inc. to Pacific WebWorks, Inc. is
subject to the approval of the stockholders of Logio. In the event that the
sale of Logio,

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<PAGE> 37

Inc. is not approved by its stockholders or is not completed for any other
reason, Logio would not have any operations and its assets would consist of
approximately $1,755,000 which includes cash, net accounts receivable, net
property and equipment and other assets and liabilities would consist of
approximately $605,000 based on its September 30, 2000 unaudited financial
statements. This would further adversely affect the market price of the
common stock. If the sale were not completed, Logio would most likely seek to
merge with another entity, sell the operations or net assets, or seek to
acquire another business or operations but it may not be able to do so in the
near term, if at all, with the resources available.

Company Products and Services

The following represents a discussion of Logio, Inc. products and
services:

The rapid growth of the Internet and the proliferation of Internet sites
have increasingly challenged users, site owners, and advertisers to reach one
another effectively. Users need to find quickly the most relevant information,
products and services related to a particular topic or interest. Site owners
need to become visible to their potential users, and to differentiate
themselves from competitors in an increasingly crowded medium. Advertisers
need to deliver their advertising messages more effectively to interested
audiences and target groups. In some ways, the Internet is now mirroring the
development of print media. For example, over the past thirty years, the
number of newspapers and magazines devoted to specialized subjects and
interests has mushroomed, while the number of general interest publications is
declining.

Logio has chosen to create a directory for license to others that
targets business professionals and addresses some of the more common
functional problems that confront them when they use the Internet. For
example, most search engines do not differentiate between the types of sites
they search. A business user searching on a general portal site for a lawyer,
for example, will receive information sites about lawyers, opinion sites
against lawyers, sites with lawyer jokes, lists of divorce and accident
litigation lawyers, and a myriad of other non-business-related sites all mixed
together with the business law sites he or she is looking for. Further, the
user generally receives little guidance about which sites are actually
business-focused, resulting in much trial and error before finding what is
wanted.

A similar search within the Logio directory produces a list of law sites
and firms that deal with business law. Additionally, Logio shows its hits in
context, so a user can determine which sites or firms are most likely to be
useful before clicking on a site link. The result is a faster, more targeted
search and much more productive use of a user's time and efforts. While the
display of hits in context is not the sole method by which Logio
differentiates its offerings from others in the market, it is indicative of
the attention we have paid to refining the Internet experience for the benefit
of our users.

Logio Markets.

Logio believes business professionals will use Logio products and
services in a wide range of venues. The magnitude of the business-to-business
market is estimated by several respected research firms to be between $1 and
$3 trillion by 2004. This provides Logio with unique opportunities to focus on
the professional duties of business people, regardless of industry. While most
business-to-business sites focus on very tight vertical markets (such as
steel, waste water treatment, or chemicals), Logio has focused on what people
do when they go to work every day, regardless of their line of business.
Logio believes that this unique horizontal focus on business will create
opportunities for client and partner relationships, even among the vertical
business-to-business sites. Logio also believes that our horizontal focus
will also make Logio a natural choice for supplying Internet content to
corporate intranet sites, since the directory structure closely matches the
organizational structures of most companies.

Logio's Solution

Business professionals use the Internet for many reasons - to acquire
needed information, to make business connections, to obtain business tools and
to make purchases. All these resources are currently available, but scattered
about in traditional places and on the Internet. Logio's goal is to bring
these solutions together at the Logio business information directory. The
Logio business products have the resources to help business professionals
quickly find information they seek:

A focused, targeted directory of comprehensive information, organized by
business profession or occupation.

A powerful, search function that handles both simple and complex queries
and returns results in context.

The guiding strategy that Logio uses to achieve its objectives and
differentiate itself from its competitors rests on a commitment to timely
relevance, to providing today's business professionals with what they need,
when they need it. Current components of Logio products and strategy include:

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Robust, Proprietary Business Directory. One of the most valuable
resources Logio provides, both to its own Internet site and to others, is the
Logio Directory. Its organizational structure is simple but unique: sites
are organized along broad professional discipline lines, not along vertical
business lines. A user can scan the directory for the appropriate professional
discipline, drill down through the directory's subcategories to find the right
subject, and there find appropriate news, information and resources for the
task or inquiry at hand. At mid-year 2000, the Logio Directory contained
approximately 25,000 URLs and 60,000 links into directory categories, making
it one of the largest focused business-to-business directories available. Each
URL has been individually reviewed and categorized by resource type and
company location (where appropriate), with a concise abstract of the
information or resources to be found at the site.

Hits- in-Context Search Results. Logio believes the Logio search engine
overcomes one of the most tedious and time-consuming aspects of searching the
Internet. When a user does a search with a traditional search engine, he or
she is then forced to follow each hyperlink to see if the results are relevant
to what was wanted. With the Logio Directory and search engine, the results
are returned within a context of surrounding words to help the user determine
instantly if the URL contains the desired information. This hits-in-context
approach can cut down search time and efforts dramatically.

Multi-lingual and concept-based search capabilities. Logio has started
to develop technology that is expected to enable users to search for a word or
concept in multiple languages, using single-language search entries. The
technology is expected to analyze the search query to determine the concepts
underlying it, build a query of related concepts, and then translate those
concepts into desired languages. It can then become a meta-search tool if
desired, querying multiple search engines (including Logio's and those in
corporate intranets) to return documents containing those concepts in the
specified languages. Thus, searching for a car would translate into concepts
including automobile, vehicle, SUV, and so forth, and these concepts would be
translated into the target languages for search and retrieval.

Our Business Objectives and Strategy. Logio's objective is to make
Logio and its products and services, existing or contemplated, an
indispensable resource for business professionals competing in today's
marketplace. Logio intends to provide popular services and valuable content
to its customers and their users making the Logio brand a leading brand for
business professionals seeking business-related information and resources.
Logio believes that by supplying business professionals with cutting edge,
comprehensive content, Logio will offer today's connected business
professional a competitive edge.

Logio believes that, as business people become increasingly familiar
with, and dependent upon, the Internet for information, the market for
pay-per-view content will continue to accelerate. Logio intends to position
itself, from both a technological and a strategic relationship standpoint, to
capitalize on this trend.

Logio intends to achieve its business objectives through the following
means:

Position Logio as the premier content provider and syndicator for the
information and resources business professionals depend upon. The Logio
Directory, with its uniquely designed structure and strict
business-to-business focus, has been designed to be the directory
clients can depend upon to provide the information and resources
business professionals need, organized in a way that mirrors their job
duties and resource requirements. Logio is also developing partnerships
and other relationships with companies and organizations that can
support and augment this position.

Provide a good user and client experience through responsive customer
support and services. The Logio Directory and related services should
be readily available in order to meet client expectations. Logio
maintains a team of skilled network professionals to monitor and
maintain the site to meet those expectations, and contractually obligate
our content partners to do the same.

Competition.

The market in which Logio participates is new, competitive, and subject
to rapid technological and content change. As the trend towards specialty
portals, business-to-business sites, and company intranets increases, Logio
expects that competition in all three areas will likewise increase and
intensify. Some companies are now participating in the development and
operation of business directories. Logio's primary competitor is
Business.com. Other similar internet destinations with like content include
Yahoo!, Lycos, GO, Snap, Excite, AltaVista, BizProLink, VerticalNet,
Dowjones.com, CNNFN, and Office.com.

Several of the participants in each of these market sectors have
established web presence and brands, and have been offering their services for
a number of years. The increased use and visibility of Logio will depend, in
large part, on Logio's ability to continue adding content and services to its
directory, maintain operational performance levels, and effectively market its
product.

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Logio also believes it will be essential to develop long-term business
alliances with parties with which Logio can enter into strategic
relationships. Logio believes it will need to make significant investments in
research and development in order to keep up with the technological and
operational demands imposed by the anticipated ongoing developments in the
Internet.

At the present time, Logio has not identified any other companies that
are using precisely the same approach as Logio, or are targeting the
horizontal market as it is. Nonetheless, there is always the potential that
other, larger interests will choose to enter the market Logio is developing,
or that a new market may emerge. Logio may not be able to compete effectively
with current and future competitors.

Product Development.

The existing Logio site, and the infrastructure from which other sites
will be served, represents an investment of approximately $5.4 million in
equipment, software, interface design, underlying application development
software, and general costs. Logio's technology selection process for the
site is governed by several fundamental principles:

Internet users want sites to be reliable, and fast. Logio chooses our
hardware and writes code accordingly.

The site must be easily and quickly expanded or modified without
adversely affecting performance.

Logio obtains equipment and software from manufacturers with proven
track records and a commitment to timely and effective support.

The solution must be cost effective.

Logio elected to use Sun Microsystems Enterprise computers for its core
hardware. These systems have been proven in Internet applications. They are
also readily available should Logio need to either grow the system quickly, or
if a system should fail. All systems are built using standard components, so
that all hard drives in all systems are the same. This means Logio has a
consolidated inventory list for field service, and it enables Logio to reuse
or re-purpose individual systems or components as the need demands.

In addition to proprietary application software, the Logio site uses
iPlanet's (formerly the Sun/Netscape Alliance) Application and Enterprise
Servers, Oracle's 8I Parallel Database Server, the Veritas Volume Management
System, and Dataware's InQuery Search and Retrieval engine.

Logio's ability to successfully develop and release new products and
enhancements to Logio products in a timely manner will be subject to a variety
of factors, including the ability to solve technical problems and test
products, the availability of financial, sales and management resources, and
other factors, some of which Logio may not be able to control. Logio may
experience difficulties that could delay or prevent its successful
development, introduction or marketing of new products and enhancements.

Material Contracts.

We are a party to the following material contracts and arrangements:

Purchase Agreement. In February and March 1999, Logio sold 6,300 shares
of its newly designated Series A Preferred Stock to eight investors under the
terms of a purchase agreement. Logio received a total of $6.3 million in the
transaction. After the Company paid the expenses of the placement agent
($377,100) and other expenses for the transaction ($15,000), Logio received
proceeds of $5,907,900 from the sale. In connection with the transaction,
Logio also issued warrants to both the purchasers and the placement agent and
granted those parties certain registration rights for the shares of common
stock they can acquire by converting the Series A Preferred Stock and
exercising the warrants. In February and March of 2000, holders of Series A
Preferred Stock converted their preferred shares, totaling 6,300 shares, into
625,000 shares of Logio common stock. The Series A Preferred stockholders also
received a total of 727,756 shares of Logio common stock in satisfaction of
the reset provisions of the Purchase Agreement and they received 61,650 shares
of Logio common stock for payment of cumulative preferred dividends.

Columbia Financial Group Services Agreement. In January 1999, Logio
entered into a services agreement with Columbia Financial Group. Columbia
provides investor relations services for a number of public companies,
particularly those companies that are involved in the Internet business. Under
the agreement, Logio agreed to grant Columbia warrants to purchase 200,000
shares of Logio common stock for $5 per share for up to five years . As of
October 31, 2000, 100,000 warrants have been exercised and

34
<PAGE> 40

100,000 warrants are exercisable. In May, 2000, Logio entered into a new
agreement with Columbia Financial Group and has granted Columbia warrants to
acquire up to an additional 200,000 shares of Logio common stock at $4 per
share, and 200,000 shares of Logio common stock at $3 per share. As of October
31, 2000, all 400,000 warrants are exercisable into common shares.

Oracle Software Agreement. In November 1999, Logio entered into a
software license agreement with Oracle Corporation. Under the terms of the
agreement, Logio has a non-exclusive license to use certain Oracle software
products which manage its database. The purchase price under the license
agreement is approximately $257,000, which is paid in four quarterly payments
after an initial payment, and includes support services for one year. The term
of the agreement is for two years, with a November 2001 expiration date.
Logio's current balance due to Oracle is approximately $100,000 with $50,000
in default.

Sun Microsystems License Agreements. In December 1999, and March and
April 2000 Logio entered into capital lease agreements with Sun Microsystems
Finance. Under the agreements, Logio leases the server equipment necessary to
host its web site. The terms of the leases are for two years each, and expire
through January 2002. The monthly payments under these agreements approximate
$28,000 per month, for the two-year period.

Stock Purchase Agreement. On July 6, 2000, Logio closed the private
placement of 2,000,000 shares of its common stock to four investors under the
terms of a stock purchase agreement. We are in continuing discussions with
these investors regarding the terms of the stock purchase agreement.

Corporate Development.

Logio's predecessor was incorporated in the State of California on May
2, 1997, as Dunamis, Inc. Dunamis, Inc. was formed for the purpose of
publishing and marketing books and audio and video tapes. On June 25, 1998,
Dunamis, Inc. completed a merger with a Nevada corporation that had been
created for the sole purpose of changing Dunamis, Inc.'s domicile from
California to Nevada. On July 14, 1998, the surviving entity in that
transaction completed a merger with WordCruncher Publishing Technologies,
Inc., formerly known as Redstone Publishing, Inc., a Utah corporation. The
Nevada corporation was the surviving entity in that transaction and, as part
of the transaction, changed its name to WordCruncher Internet Technologies,
Inc. In June 2000, the Company's stockholders approved the change of the
Company's name to Logio, Inc.

Patents, Licenses and Intellectual Property. Logio's success will
depend, in part, on its ability to obtain and protect patents, maintain trade
secrets and operate without infringing on the proprietary rights of others in
the Untied States and other countries. Logio has secured rights to the Logio
trademark within the United States, and it is in the process of securing
international rights to this trademark. Logio intends to file patent
applications relating to its technology, products and processes as the need
arises. However, any of these patents or patent applications could be
challenged, invalidated or circumvented by its competitors.

If Logio were to become involved in a dispute regarding intellectual
property, it may have to participate in interference proceedings before the
United States Patent and Trademark Office to determine who has the first claim
to the rights involved. Logio could also be forced to seek a judicial
determination concerning the rights in question. These types of proceedings
can be costly and time consuming, even if Logio eventually prevails. If Logio
does not prevail, it could be forced to pay significant damages, obtain a
license to the technology in question, or stop commercializing a certain
product.

Logio also relies on trade secrets, proprietary know-how and
confidentiality provisions in agreements with employees and consultants to
protect its intellectual property rights. These other parties may not comply
with the terms of their agreements with Logio, and Logio may not be able to
adequately enforce its rights against those parties.

Logio has adopted a policy of requiring its employees and collaborators
to execute confidentiality agreements when they commence employment or
consulting relationships. These agreements generally provide that all
confidential information developed or made known to the individual during the
course of his or her relationship with Logio is to be kept confidential and
not disclosed to third parties, except under certain specific circumstances.
In the case of employees, the agreements also provide that all inventions
conceived by the individual in the course of his or her employment will be
Logio's exclusive property.

Employees. As of November 27, 2000, Logio had seven administrative and
editorial employees. Logio's employees are not presently covered by any
collective bargaining agreement. Logio believes its relations with its
employees are good, and Logio has not experienced any work stoppages.

35
<PAGE> 41
PROPERTIES

Logio leases 5,400 square feet of administrative, office and
developmental space at the Town Square Professional Plaza in Draper, Utah
84020. Logio entered into the original lease on December 31, 1999 for 3,600
square feet and amended the lease on March 21, 2000 to include an additional
1,800 square feet of administration and development space. The term of the
lease is from March 15, 1999 until March 31, 2002. Beginning on April 1, 2000,
the rental for the space increased to $7,727 per month, which Logio believes
is typical for similar premises in the area. Logio believes that our current
office space is adequate for its needs.

LEGAL PROCEEDINGS

To Logio's knowledge it is not a party to any proceeding or threatened
proceeding as of the date of this prospectus/proxy statement.

SELECTED FINANCIAL DATA

The financial information set forth below with respect to Logio's
statements of operations for the nine months ended September 30, 2000 and 1999
is unaudited. This financial information, in the opinion of Logio's
management, includes all adjustments consisting of normal recurring entries
necessary for the fair presentations of such data. The results of operations
for the nine months ended September 30, 2000, are not necessarily indicative
of results to be expected for any subsequent period. The financial
information set forth below with respect to Logio's statements of operations
for each of the three years ended December 31, 1999, and with respect to
Logio's balance sheets at December 31, 1999, 1998 and 1997 is derived from
financial statements that have been audited by Logio's independent certified
public accountants, and is qualified by reference to their reports and notes
related thereto. The following selected financial data should be read in
conjunction with our financial statements and notes, See, "Index to Financial
Statements," and "Management's Discussion and Analysis of Financial Condition
and Result of Operations."

Nine Months Ended
September 30 Year Ended December 31,
------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data: 2000 1999 1999 1998 1997
---------------------------- ------------ ------------ ------------ ------------ -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales $ - $ 15,285 $ 15,289 $ 32,884 $ 16,034
Advertising sales 2,180 - - - -
Contract research revenues,
royalties and license fees - - 8,066 49,794 8,450
------------ ------------ ------------ ------------ -----------
Total revenues 2,180 15,285 23,355 82,678 24,484
Cost of sales & royalties 440,907 4,330 15,071 15,864 806
------------ ------------ ------------ ------------ -----------

Gross profit (loss) (438,727) 10,955 8,284 66,814 23,678
------------ ------------ ------------ ------------ -----------

------------ ------------ ------------ ------------ -----------
Operating expenses:
Research & development 1,672,316 596,395 1,198,546 266,563 126,281
Sales & marketing 658,034 534,000 953,708 34,554 5,274
General & administrative 976,183 780,654 1,340,486 217,318 206,874
Depreciation & amortization 606,141 80,949 179,169 10,406 6,419
Compensation expense for
common stock, options and
warrants 631,242 1,135,988 1,452,610 - -
------------ ------------ ------------ ------------ -----------
Total operating expenses 4,543,916 3,127,983 5,124,519 528,841 344,848
------------ ------------ ------------ ------------ -----------
Operating loss (4,982,643) (3,117,028) (5,116,235) (462,027) (321,170)
------------ ------------ ------------ ------------ -----------
Other income and (expense)
Interest income and other, net 55,002 158,428 196,310 7,276 3,077
Interest expense (96,422) (3,561) (9,955) (28,158) (17,125)
Financing charges (133,703) - - - -
Loss on sale of equipment (2,215) - - - -
------------ ------------ ------------ ------------ -----------
Total other income and
(expense), net (177,338 154,867 186,355 (20,882) (14,048)
Extraordinary gain 204,238 - - - -
------------ ------------ ------------ ------------ -----------
Net loss (4,955,743) (2,962,161) (4,929,880) (482,909) (335,218)

</TABLE>
<PAGE> 42
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C> <C>
Deduction for dividends and
accretion (64,360) (6,239,007) (6,469,861) - -
============= ============ ============ ============ ===========
Net loss attributable to
common stockholders $ (5,020,103) $(9,201,168) $(11,399,741)$ (482,909) $ (335,218)
============= ============ ============ ============ ===========
Basic and diluted loss per
common share $ (0.37) $ (0.77) $ (0.96) $ (0.08) $ (0.61)
============= ============ ============ ============ ===========

Weighted average outstanding
shares (basic and diluted) 13,509,126 11,879,881 11,879,919 6,100,679 545,535
============= ============ ============ ============ ===========

September 30 December 31

Balance Sheet Data: 2000 1999 1999 1998 1997
------------ ------------ ------------ ------------ -----------
Cash and cash equivalents $ 171,226 $ 995,154 $ 1,055,371 $ 425,702 $ 10,369
Total assets 1,755,093 4,830,919 4,769,737 623,617 139,928
Long term liabilities,
including current portion 351,462 15,208 553,333 147,620 342,272
Deficit accumulated during
the development stage (17,237,971) (10,019,295) (12,217,868) (818,127) (335,218)
Total stockholders' equity $ 1,150,558 $ 4,716,763 $ 3,164,054 $ 441,084 $ (208,943)

</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Logio's initial revenue related to the Logio directory has been derived
from sales of advertising on the Logio site in second and third quarters 2000.
Traffic to the site ultimately drives the ability to generate such revenue.
As Logio is in its development stage, it has not yet recognized significant
advertising or sponsorship revenues. Logio's current business model pending
its acquisition by Pacific WebWorks, Inc. is directed towards the generation
of revenues from set-up and maintenance fees resulting from the sale of its
directory in private label form to certain Internet sites and corporate
intranets. Logio is uncertain as to when it will emerge from the development
stage.

Cost of sales consist primarily of fees paid to third party service
providers for use of their content and services, certain costs related to site
operations, and costs related to the insertion of banner and other
advertisements.

Research and development expenses consist primarily of compensation to
employees for site development, consulting services and other third party
service providers.

Selling and marketing expenses relate primarily to compensation to
employees for strategic marketing, content, public relations and for other
consultants and third party services.

Logio has incurred and expects to continue to incur substantial losses
and negative cash flows both on an annual basis and for interim periods. In
particular, depending on the availability of funding, Logio intends to
increase its focus and spending on brand development, sales and marketing,
further product development, web site content and strategic relationships.
Logio has an extremely limited operating history, and its prospects are
subject to the risks, costs and difficulties frequently experienced by
companies in the new and rapidly changing markets for Internet products and
services. To address these risks, Logio must, among other things, continue to
respond to competitive forces, recruit, retain and motivate valuable and
qualified employees, develop, implement and successfully execute its sales
strategies, develop and market additional products and services, upgrade and
maintain its technologies, and further market products and services using such
technologies. There can be no assurance that Logio will successfully address
these risks. As of September 30, 2000, Logio had an accumulated deficit of
$17,237,971 that included the effects of dividends and accretion of the
beneficial conversion feature of Series A Preferred stock approximating
$6,534,221. Logio's extremely limited operating history makes the prediction
of future results of operations difficult and, therefore, the recently
reported operations should not be considered indicative of future operating
results. Depending on availability of funding or completion of an acquisition
of Logio, it expects to significantly increase its operating expenses to
expand its sales and

37
<PAGE> 43

marketing strategies of its private label product, to fund further site
development as well as planned improvements and enhancements to the directory.

Logio's operating results may fluctuate significantly in the future as a
result of several factors, many of which are not within the Logio's control.
These factors include, but are not limited to, product demand, product
acceptance, Internet usage, intranet usage, seasonal trends in advertising
placements and Internet usage, Internet advertisement demand, advertisement
budgeting cycles of Internet advertisers, need for capital expenditures and
costs relating to Logio's expansion, introduction of new services or products
to the directory, competitive forces, price changes in the industry, technical
difficulties to the site, general and industry-wide economic conditions, and
the availability of service providers. As a result of changes to the
competitive Internet environment, Logio may make certain service changes or
acquisitions, including a possible acquisition of the it by another entity,
that could materially affect the its business, operations, and financial
condition. Logio also expects certain seasonal effects, as it relates to
advertising revenues, due to lower usage during the vacation periods and
holidays. Due to all of the aforementioned factors, in some future interim
periods, its operating results may be adversely affected and fall below the
expectations of analysts and investors. Logio also may never emerge from the
development stage. In such case, the trading price of its common stock would
likely be materially and adversely affected.

Logio has sustained losses from operations since inception and its
ability to continue as a going concern is dependent upon its ability to obtain
financing. Logio's management anticipates the acquisition by Pacific WebWorks
will provide an infrastructure which will enhance its ability to market its
products and technologies and thereby provide cash flow. Early in October
2000, Logio temporarily discontinued substantial development and operations of
its directory and search engine products, including a reduction in its
personnel, due to funding constraints and its possible acquisition by Pacific
WebWorks, Inc. Logio expects, that if acquisition of Logio, Inc. by Pacific
WebWorks, Inc. is successful, its development and operational efforts will
recommence.

Results of Operations

Comparison of Nine Month Periods. Following is a comparison of Logio's
operating results for the nine months ended September 30, 2000 with the nine
months ended September 30, 1999:

Revenues. Logio's revenue of $2,180 for the nine months ended
September 30, 2000 represents advertising revenues derived from its logio.com
site and decreased $13,105 from revenues of $15,285 for the nine months ended
September 30, 1999. This decrease is due to the change in focus from the
sales of its PC-based product ("WordCruncher") to focus on the development
and operations of its logio.com site and the related Logio directory, which
has only recently become available on the marketplace.

Cost of Sales. Logio's cost of revenues of $440,907 for the nine
months ended September 30, 2000 include the cost of Logio services, hosting,
support and monitoring related to the logio.com site. Cost of revenues for
the nine months ended September 30, 1999 totaled $4,330 and related to license
fees to a university for technology re-sold in the its WordCruncher product.

Research and Development. Research and development expenses increased
180.4% to $1,672,316 for the nine months ended September 30, 2000, an increase
of $1,075,921 from the $596,395 for the nine months ended September 30, 1999.
The increase in research and development expenses is due primarily to the
significant increase in the number of employees and consultants engaged in
continued site and directory development and enhancement, and for the
retention of other third party service providers related to other site content
in first and second quarters 2000. This increase relates to the recent
release of the Logio site and the related Logio directory to the marketplace.
Logio began reducing personnel and overhead early in the second quarter 2000.
By late third quarter 2000, it again reduced development personnel
significantly due to the recent lack of $1.4 funding that was previously
committed by certain investors and subsequently withdrawn.

Selling and Marketing. Selling and marketing expenses increased 23.33%
to $658,034 for the nine months ended September 30, 2000, an increase of
$124,034 from the $534,000 for the nine months ended September 30, 1999. The
increase in selling and marketing expenses is due primarily to compensation to
employees and consultants related to significant planning of the sales
strategies, public relations, and advertising and branding campaigns, mostly,
in the first quarter of 2000 related to the release of the Logio site to the
marketplace. In August and September 2000, Logio reduced selling and
marketing headcount significantly in the Los Angeles, California area due to
ineffective sales efforts and the recent lack of $1.4 funding previously
committed by certain investors and subsequently withdrawn.

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<PAGE> 44

General and Administrative. General and administrative expenses
increased 25% to $976,183 for the nine months ended September 30, 2000, an
increase of $195,532 from the $780,651 for the nine months ended September 30,
1999. The increase in general and administrative expenses is primarily due to
accounting and legal professional fees related to contracts, employee equity
incentive plan and its public filings, the addition of one employee to its
finance department subsequent to third quarter 1999, increasing its leased
building space, and obtaining additional insurance.

Depreciation and Amortization. Depreciation and amortization increased
$525,192 to $606,141 for the nine months ended September 30, 2000 from
$80,949 for the nine months ended September 30, 1999. The increase in
depreciation and amortization is due to the purchase of computer equipment and
software technology required to release and maintain the Logio site and
related Logio directory, subsequent to third quarter 1999, and the related
depreciation charges for the nine months ended September 30, 2000.

Compensation Expense for Stock Options. Compensation expense for stock
options decreased 44.4% to $631,242 for the nine months ended September 30,
2000, a decrease of $504,746 from $1,135,988 for the nine months ended
September 30, 1999. These charges reflect the intrinsic value of stock options
granted to employees and directors recorded as earned by the employee or
director over each period. The decrease represents the forfeiture of
approximately 886,834 options, management's efforts to discontinue granting of
options at an exercise price less than fair market value in second quarter of
2000, and the completion of vesting periods for certain employee options.

Total Operating Expenses. Logio's operating expenses increased 45.3%
during the nine months ended September 30, 2000 over the nine months ended
September 30, 1999. This is due primarily to the continued efforts to develop
the infrastructure of the logio.com site and the Logio directory, bring
existing products and services to the marketplace and to develop new and
innovative ideas for implementation on the site and directory.

Interest Income. Interest income decreased 65.3% to $55,002 for the
nine months ended September 30, 2000, a decrease of $103,426 from $158,428 for
the nine months ended September 30, 1999. The decrease reflects the continued
use of cash balances and liquidation of short-term investments over the nine
months ended September 30, 2000 to fund operations.

Interest Expense and Financing Charges. Interest expense totaled
$96,422 for the nine months ended September 30, 2000 an increase of $92,861
from $3,561 for the nine months ended September 30, 1999. The increase is due
primarily to capital leases entered into subsequent to the three months ended
September 30, 1999 and other notes payable to vendors and stockholders.
Financing charges of $133,703 incurred during September 2000 represent the
intrinsic value of debt and accrued interest converted to Logio's common
stock. In these transactions $1,187,642 of notes payable to stockholders and
related accrued interest were converted to approximately 3,165,000 of its
common stock at prices ranging from $0.20 to $0.3122 per share. These shares
were issued at prices less than the fair market value of the common stock on
the dates of conversion and, consequently, financing charges of $133,703 were
incurred for the intrinsic values.

Extraordinary Gain. During September 2000, Logio settled $244,670 of
vendor payables for $51,225 in cash and $70,000 in stock. Also during
September 2000, Logio settled $290,793 in notes payable to vendors for
$210,000 in cash. The forgiven debt from these transactions resulted in
$204,238 in extraordinary gain.

Net Loss. Net loss increased 67.3% to $4,955,743 for the nine months
ended September 30, 2000 an increase of $1,993,582 compared to a net loss of
$2,962,161 for the nine months ended September 30, 1999. The increase in net
loss is a result of Logio's increased costs and expenses associated with
the continued research, development, marketing and implementation of the
Logio website and related directory and their operations.

Net Loss Attributable to Common Stockholders. The accretion of the
beneficial conversion feature of Series A Preferred Stock was fully
recognized by fiscal year end 1999. The remaining cumulative 6% dividend to
each of the Series A Preferred stockholders was recognized in the first
quarter 2000, totaling $64,360. As such, net loss attributable to common
stockholders totaled $5,020,103 for the nine months ended September 30, 2000.
Net loss attributable to common stockholders for the nine months ended
September 30, 1999 totaled $9,201,168 after giving affect to the dividends and
accretion of the beneficial conversion feature of Series A Preferred Stock
recognized during the first nine months of 1999, totaling $6,239,007. This
transaction resulted in an increase to additional paid-in capital and a
corresponding increase in accumulated deficit during the quarters.

39
<PAGE> 45

Comparison of 1999 and 1998 Year End Periods. Following is a comparison
of Logio's operating results for the year ended December 31, 1999 with the
year ended December 31, 1998:

Revenue. Revenues decreased $59,323, from $82,678 for the year ended
December 31, 1998, to $23,355 for the year ended December 31, 1999. This 72%
decrease was due to the discontinuation of the PC-based product and Logio's
focus on the development of Logio.com site, which only recently became
available for use in the marketplace.

Costs of Revenues. Cost of revenues remained relatively flat with 1998
cost of sales amounting to $15,864 and 1999 amounting to $15,071. This
decrease in cost of sales in the face of significant declines in revenue is
attributed to the added cost of discontinuing the PC based lines.

Research & Development. Research and development expense increased
nearly 450% from $266,563 in 1998 to $1,198,546 in 1999. This was due
primarily to the significant level of expenditure involved in the development
of Logio.com site during 1999.

Sales and Marketing. Sales and marketing expenses also increased
significantly, from $34,554 in 1998 to $953,708 in 1999, an increase of nearly
2700%, as Logio prepared to and initiated its sales efforts in connection with
the launch of the Logio.com site. Nearly 50% of these monies were spent in
connection with advertising and branding campaign, and a majority of the
balance was devoted to salaries and the cost of hiring marketing personnel.

General and Administrative Expense. General and administrative expense
increased significantly in 1999, as Logio increased staff in preparation for
commercial operations. During 1999, as compared to 1998, general and
administrative expenses increased 517% to $1,340,486 from $217,318.

Depreciation and Amortization. Depreciation and amortization expense
increased from $10,406 in 1998 to $179,169 in 1999 primarily due to the
additional property, equipment and software that Logio acquired in 1999 to
support its website development operations.

Total Operating Expenses. Total operating expenses increased $4,595,678,
from $528,841 in 1998 to $5,124,519 in 1999. This 969% increase in operating
expenses resulted in an operating loss for 1999 of $5,116,235, an increased
loss of $4,654,208 over the 1998 loss of $462,027.

Other Income. Other income increased from $7,276 in 1998 to $196,310 in
1999, a 2700% increase, as interest and dividends on invested cash increased
significantly due to the cash proceeds received from the Series A Preferred
Share offering into secure liquid investments prior to their use in Logio's
development process.

Interest Expense. As a result of decreased borrowing, Logio's interest
expense decreased from $28,158 in 1998 to $9,955 in 1999.

Net Loss. Logio's net loss for 1999 grew $4,446,971 to $4,929,880,
compared to a loss of $482,909 for 1998, as a result of the increased costs
and expenses related to the research, development and implementation of the
Logio.com website operations.

Net Loss Attributable to Common Stockholders. Giving effect to the
beneficial conversion feature of our Series A Preferred Share offering,
Logio's total loss attributable to common stockholders was $11,399,741 in
1999. This resulted in an increase to additional paid in capital and a
corresponding accumulated increase in deficit. This was the first year that
the beneficial conversion feature was in existence.

Comparison of 1998 and 1997 Year End Periods. Following is a comparison
of Logio's operating results for the year ended December 31, 1998 with the
year ended December 31, 1997:

Revenue. Revenues increased $58,194 from $24,484 for the year ended
December 31,1997, to $82,678 for the year ended December 31, 1998. This
increase was due largely to a specific project Logio performed for an
unaffiliated company using Logio's search engine technology.

Costs of Revenues. Cost of revenues increased even more significantly,
from $806 in 1997 to $15,864 in 1998, due to more accurate allocation of costs
related to sales.

40
<PAGE> 46

Research & Development. Research and development expense increased
during 1998 to $266,563, up from $126,281 in 1997. This was due to Logio's
increased level of operations.

Sales and Marketing. Sales and marketing expenses also increased from
$5,274 in 1997 to $34,554 in 1998 due to the increased level of Logio's
operations.

General and Administrative Expense. General and administrative expense
increased in 1998, as Logio geared up its commercial operations. During 1998,
as compared to 1997, Logio's general and administrative expenses increased
from $206,874 to $217,318.

Depreciation and Amortization. Depreciation and amortization expense
increased from $6,419 in 1997 to $10,406 in 1998 due to the additional
property and equipment and software technology that Logio acquired in 1998.

Total Operating Expenses. Total operating expenses increased $183,993
from $344,848 in 1997 to $528,841 in 1998. This resulted in an operating loss
for 1998 of $462,027, an increased loss of $140,857 over the 1997 loss of
$321,170.

Interest Expense. As a result of heavier borrowing, Logio's interest
expense grew $11,033 from $17,125 in 1997 to $28,158 in 1998.
Correspondingly, interest income more than doubled from $3,077 in 1997 to
$7,276 in 1998 due to larger invested balances during the last 60 days of
1998.

Net Loss. Logio's net loss for 1998 grew $147,691 to $482,909, compared
to a loss of $335,218 for 1997 as a result of its increased costs and
expenses, primarily from its commercial operations.

Logio had no operations for the period ended December 31, 1996, so an
item by item comparison of the results of operations for the periods ended
December 31, 1996 and December 31, 1997 would reflect an increase in the
amount of each of those line items to the extent of those line items in 1997.
The changes in the line items are directly attributable to the fact that Logio
initiated our operations during 1997.

Quarterly Trends. Logio does not anticipate significant "seasonal"
changes in its operations. Logio expects its revenues to grow consistently
over the next five years, but believes they should grow reasonably even from
quarter to quarter. Logio believes revenues will initially come from private
label sales of its directory. Logio believes it will generate additional
revenues through partnership arrangements with other sites that use Logio in
other commerce-related areas over the Internet, and through the sale of
information through the Logio site.

Liquidity and Capital Resources

As a development stage company, Logio has been unable to fund its cash
requirements through operations. Since Logio's inception, it has funded its
cash requirements through debt and equity financings. Logio has used the
proceeds of those transactions to fund its investment in the development of
the Logio business information site and business directory, to provide working
capital and for other general corporate purposes. Logio's management expects
the acquisition by Pacific WebWorks to provide an infrastructure which will
enhance its ability to market its products and technologies, resulting in cash
flow. If the acquisition is not consummated there is substantial doubt about
Logio's ability to continue as a going concern.

As of September 30, 2000, Logio had $171,226 in cash and short-term
investments, $1,755,093 in total assets and total liabilities of $604,535. As
of September 30, 2000, Logio has negative working capital of $297,164, an
accumulated deficit of $17,237,971 (a significant portion of which is due to
dividends and accretion of the beneficial conversion feature of the Series A
Preferred Stock) and total stockholders' equity of $1,l50,558.

Logio used $3,572,247 in cash for operations during the nine
months ended September 30, 2000 that relates mostly to consulting fees,
salaries and other operating transactions.

Cash totaling $92,829 was used in investing related activities for
purchases of property and equipment during the nine months ended September 30,
2000. Short-term investments were sold for cash totaling $1,454,207 during
the nine months ended September 30, 2000 in order to fund cash requirements.

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<PAGE> 47

Cash provided by financing activities during the nine months ended
September 30, 2000 includes $907,600 from the exercise of options and
warrants. Logio purchased $65,685 of equipment during the nine months ended
September 30, 2000 by entering into capital lease agreements. Cash used to pay
financing activities for capital leases, notes payable and other long-term
obligations totals $1,006,031 during the nine months ended September 30, 2000.
Logio paid a cumulative stock dividend of 6% to the Series A Preferred
stockholders during the first quarter of 2000 totaling 61,650 shares of our
common stock.

As of September 30, 2000, Logio had no material commitments for capital
expenditures for the remainder of fiscal year 2000. Logio's capital lease
obligations totaling $351,462 are due through February 2002 and notes payable
of $96,116 are currently due to a software company.

In June 2000, Logio received $500,000 in cash from three of its major
stockholders and officers in exchange for 8% notes payable, which were
originally due in July 2001. In September 2000, these notes and accrued
interest of $11,666 were converted into 626,422 shares of Logio's common
stock.

On July 6, 2000, Logio signed a purchase agreement with five investors
for the sale of two million shares of its common stock for a total purchase
price of $1.4 million. The terms of the agreement require the deposit of $1.4
million into an escrow account before July 31, 2000. The monies were agreed
to be released to Logio upon the effective registration of the shares with the
Securities and Exchange Commission on or before October 31, 2000. In
September 2000, the Securities and Exchange Commission declared the
registration effective. As of September 30, 2000, the investors have not
released the funds and are in default of the agreement.

Logio expects to continue to generate negative cash flows for at least
the next several quarters. Logio anticipates that its principal liquidity
needs over the next twelve months will be met with proceeds generated from
private offerings of its securities. There can be no assurance that the
offerings will take place or that the proceeds of such offerings will be
adequate to meet Logio's needs. Logio's need to raise external capital in the
future will depend on many factors, including, but not limited to, the rate of
sales growth and market acceptance of our products and services, the amount
and timing of our necessary and continuing research and development
expenditures, the amount and timing of our expenditures to sufficiently market
and promote our Logio site and the Logio brand name and the timing of any new
product introductions.

Logio currently estimates that it will require between $15 and $20
million to continue to develop its products and operate in accordance with its
business plan through fiscal 2002. The actual costs will depend on a number
of factors, including:

- Logio's ability to negotiate favorable prices for purchases of
necessary directory components
- the number of customers (traffic) and advertisers
- the services for which they subscribe
- the nature and success of the services which Logio offers
- regulatory changes, and
- changes in technology.

In addition, Logio's actual costs and revenues could vary from the
amounts Logio expects or budgets, possibly materially, and those variations
are likely to affect how much additional financing it will need for its
operations. Accordingly, there can be no assurance that its actual financial
needs will not exceed the amounts available to it.

Expected future uses of cash include continued expansion, development
and enhancements of the Logio site, strategic sales and marketing related to
private label sales of the Logio directory to corporate intranets and Internet
companies, and maintaining Logio's current level of administration and
operations. This is expected to be achieved by obtaining additional staffing
in the sales and marketing and development departments, and by engaging
certain professional services firms.

To the extent that Logio acquires the amounts necessary to fund its
business plan through the issuance of equity securities, Logio's then-current
stockholders may experience dilution in the value per share of their equity
securities. The acquisition of funding through the issuance of debt could
result in a substantial portion of Logio's cash flows from operations being
dedicated to the payment of principal and interest on that indebtedness, and
could render the Company more vulnerable to competitive and economic
downturns.
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<PAGE> 48

Recent Accounting Pronouncements

During first quarter 2000, the Financial Accounting Standards Board
issued FIN 44, an Interpretation of APB Opinion 25 on accounting for employee
stock compensation. The statement provides clarification on, among other
things, the definition of an employee, on a fixed stock option or award and
variable accounting for stock options and awards. FIN 44 was effective on July
1, 2000. Logio believes that the impact of the adoption of this
Interpretation will not have a significant effect on our financial statements.

The SEC staff issued SAB 101, "Revenue Recognition in Financial
Statements," in December 1999. The SAB provides registrants with the staff's
positions on revenue recognition requirements and related disclosures under
generally accepted accounting principles. SAB 101 was to be effective no later
than the second fiscal quarter of the fiscal year beginning after December 15,
1999. SAB 101 has since been amended and is effective no later than the
fourth fiscal quarter of the fiscal year beginning after December 31, 1999.
Logio believes that, as it achieves significant levels of revenue, it will
adopt SAB 101 in the recognition of such revenue and that this statement will
then be reflected in its financial statements.

Special Note Regarding Forward-Looking Statements

Certain statements contained in "Management's Discussion and Analysis"
constitute forward-looking statements concerning Logio's operations, economic
performance and financial condition. Because those statements involve risks
and uncertainties, actual results may differ materially from those expressed
or implied by those forward-looking statements.

In addition, any statements that express or involve discussions as to
expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking and,
accordingly, those statements involve estimates, assumptions and uncertainties
which could cause actual results to differ materially from those expressed in
the forward-looking statements. Accordingly, those types of statements are
qualified in their entirety by reference to, and are accompanied by, the
factors discussed throughout this prospectus/proxy statement. Among the key
factors that have a direct bearing on Logio's results of operations are the
potential risk of delay in implementing its business plan; the economic and
legal aspects of the markets in which it operates; competition; and its need
for additional substantial financing. Logio has no control over these
factors.

The factors described in this prospectus/proxy statement could cause
Logio's actual operating results to differ materially from those expressed in
any forward-looking statements made by or on behalf of Logio. Persons
reviewing this prospectus/proxy statement, therefore, should not place undue
reliance on those forward-looking statements. Further, to the extent this
prospectus/proxy statement contains forward-looking statements, they speak
only as of the date of this prospectus/proxy statement, and Logio undertakes
no obligation to update any forward-looking statement or statements to reflect
the occurrence of unanticipated events. New factors may emerge from time to
time, and it is not possible for management to predict all of such factors.
Further, management cannot assess the impact of each such factor on its
business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statements.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES

In February, 2000, our Board of Directors authorized the engagement of
Grant Thornton LLP as our independent certified public accountants for the
fiscal year ended December 31, 1999, and concurrently, we dismissed Crouch
Bierwolf & Chisholm, P.C., which had served as our independent accountants
since 1998. Our decision to change accountants was prompted by the ability of
Grant Thornton to provide audit services for us on an extended scale as our
operations are expected to expand. Our Board of Directors participated in and
approved the decision to change independent accountants.

The reports of Crouch Bierwolf on our financial statements for the two
fiscal years prior to their termination contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. In connection with its audit for 1998
and through February 23, 2000, there were no disagreements with Crouch
Bierwolf on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements if
not resolved to the satisfaction of Crouch Bierwolf would have caused Crouch
Bierwolf to make reference thereto in their report on the financial statements
for such year.

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<PAGE> 49

During the most recent fiscal year and through any interim period prior
to our engagement of Grant Thornton, we had not consulted with Grant Thornton
regarding either: (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on our financial statements, and neither a written report
was provided to us nor oral advice was provided that Grant Thornton concluded
was an important factor considered by us in reaching a decision as to the
accounting, auditing or financial reporting issue; or (ii) any matter that was
either the subject of a disagreement or a reportable event.

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<PAGE> 50

VOTING AND MANAGEMENT INFORMATION
--------------------------------

INFORMATION REGARDING THE MEETING

Pacific WebWorks' stockholders are not required to vote on the
acquisition of Logio by Pacific WebWorks and Pacific WebWorks will not hold a
special meeting of stockholders, nor solicit proxies.

Logio will hold a special meeting of stockholders to consider, approve
and adopt the acquisition agreement which provides for the stock-for-stock
exchange. Only holders of record of Logio common stock at the close of
business on October 31, 2000 will be entitled to notice of and to vote at the
Logio special meeting. The special meeting will be held on January 16, 2001
at 10:00 a.m. local time, at 1760 Fremont Drive, Salt Lake City, Utah, 84104.
At the meeting, Logio's stockholders will be asked to vote for approval and
adoption of the acquisition agreement. Stockholders not agreeable to the
proposal have dissenters rights of appraisal. See, "Dissenters Rights" on
page 48.

Proxies are solicited on behalf of the Logio board and Pacific WebWorks
will bear the costs of the proxy solicitation. This prospectus/proxy
statement and the accompanying proxy card were first mailed to stockholders on
or about December 15, 2000. The proxies submitted in connection with this
meeting may be revoked by the submitting stockholder(s) at any time prior to
the time of the meeting. Unless otherwise indicated, or unless previously
revoked, all properly executed proxies received will be voted by the board of
directors as they see fit. Logio's board unanimously recommends that Logio
stockholders vote FOR the approval and adoption of the acquisition agreement.
If any other matters are properly brought before the Logio special meeting and
submitted to a vote, all proxies will be voted in accordance with the judgment
of the board of directors.

More than 50% of the shares represented in person or proxy at the
special meeting must vote FOR the acquisition in order to approve the
acquisition.

Questions and Answers Regarding the Meeting

What may I vote on? You will be entitled to vote, either in person or
by proxy, on adoption and approval of Agreement and Plan of Reorganization,
dated October 31, 2000 (the acquisition agreement).

How does the Board recommend I vote on the proposals? The Board
recommends a vote FOR the acquisition agreement.

Who is entitled to vote? Logio stockholders of record as of the close
of business on October 31, 2000 are entitled to vote at the meeting.

How do I vote? Sign and date the proxy card you receive with this
prospectus/proxy statement and return it in the prepaid envelope. If you
return your signed proxy card but do not mark the boxes showing how you wish
to vote, your shares will be voted FOR the proposal. You have the right to
revoke your proxy at any time before the meeting by:

* notifying our corporate Secretary, Tom Eldredge; OR

* Voting in person; OR

* returning a later-date proxy card

Who will count the votes? We have appointed Daniel W. Jackson,
Attorney, as the inspector of the election. He or his representative will
count and tabulate the votes.

Is my vote confidential? Your vote will not be disclosed except:

1. as needed to permit the inspector of election to tabulate and
certify the vote;

2. as required by law; or

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<PAGE> 51

3. in limited circumstances, such as a proxy contest in opposition
to the board.

Additionally, all comments written on the proxy card or elsewhere will
be forwarded to our management, but your identity will be kept confidential
unless you ask that your name be disclosed.

What shares are included on the proxy card? The shares on your proxy
card represented ALL of your shares, including those shares held in your
accounts at various brokerages. If you do not return your proxy card, your
shares will not be voted.

What does it mean if I get more than one proxy card? If your shares are
registered differently and are in more than one account, you will receive more
than one proxy card. Sign and return all the proxy cards you receive to
ensure that all your shares are voted.

How many shares can vote? As of the record date, 18,425,830 shares of
Logio common stock were outstanding and entitled to vote. Each share of
common stock is entitled to one vote on each matter being considered.

What is a "quorum"? A "quorum" is a majority of the outstanding shares.
They may be present at the meeting or represented by proxy. There must be a
quorum for the meeting to be held, and to be adopted a proposal must be
approved by more than 50% of the shares voting at a meeting at which there is
a quorum. If you submit a properly executed proxy card, even if you abstain
from voting, then you will be considered part of the quorum. However,
abstentions are not counted in the tally of votes FOR or AGAINST a proposal.
We intend to treat shares referred to as "broker non-votes" (i.e., shares held
by brokers or nominees as to which the broker or nominee indicates on a proxy
that it does not have discretionary authority to vote) as shares that are
presented and entitled to vote for purposes of determining the presence of a
quorum. We will not consider broker non-votes as votes cast either for or
against a particular matter.

Who can attend the special meeting? All of our stockholders as of
October 31, 2000 can attend. Due to limited space in the meeting room, we are
limiting the persons who can attend the meeting to Logio stockholders, their
representatives, Logio employees and directors and Logio representatives.

How will voting on any other business be conducted? Although we do not
know of any business to be considered at the meeting other than the proposal
described in this prospectus/proxy statement, if any other business is
presented at the meeting, your signed proxy card gives authority to our board
of directors to vote on those matters at their discretion.

Who are the largest principal stockholders? As of October 2000,
Technology Equity Fund Corp. owns 8.1% of our capital stock. In addition, our
directors and officers as a group own 28.3% of the outstanding shares entitled
to vote on the acquisition.

How much did this proxy solicitation cost? Logio did hire a third party
to assist in the distribution of the prospectus/proxy statement. We estimate
that our costs for those actions (which will be conducted by our employees,
officers and directors) will be approximately $30,000. We will also reimburse
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding the prospectus/proxy
statement to Logio stockholders.

How do I revoke my proxy after I give it? A stockholder giving a proxy
pursuant to this prospectus/proxy statement may revoke it at any time prior to
its exercise at the meeting by delivering to our corporate secretary a written
notice of revocation, or a duly executed proxy bearing a later date, or by
attending the meeting and voting in person. Attendance at the meeting will
not, however, constitute revocation of your proxy without your further action.
Any written notice revoking your proxy should be sent to our principal
executive offices addressed as follows: Attn: Tom Eldredge, Secretary, Logio,
Inc., 405 East 12450 South, Suite B, Draper, Utah 84020.

LOGIO VOTING SECURITIES AND PRINCIPAL HOLDERS

On October 31, 2000 there were 18,425,830 shares of Logio common stock
issued and outstanding and entitled to vote on the approval of the acquisition
agreement. Each share of Logio common stock is entitled to one vote per
share. The method for counting votes at the special meeting is as follows:
(i) proxies received by mail for, against or in abstention of

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<PAGE> 52

the acquisition agreement will be tallied, (ii) then the proxies revoked by
persons present at the meeting will be tallied and the proxy totals will be
adjusted accordingly, and (iii) then votes by persons present at the meeting
for or against will be added to the proxy totals to ascertain the total vote.

The following table sets forth the beneficial ownership of Logio's
outstanding common stock entitled to vote held by each of Logio's executive
officers, directors and all executive officers and directors as a group and
other persons known to us that own five percent or more of our common stock.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. For
purposes of calculating the percentages shown in the chart, each person listed
is also deemed to beneficially own any shares issuable on either the exercise
of vested options or warrants held by that person and that are exercisable
within 60 days after October 31, 2000. Except as indicated by footnote, the
persons named in the table have sole voting and investment power with respect
to all shares of common stock shown as beneficially owned by them. The
inclusion of any shares as beneficially owned does not constitute an admission
of beneficial ownership of those shares. The percentage calculation of
beneficial ownership is based on 18,425,830 shares of Logio common stock
outstanding as of October 31, 2000.

CERTAIN BENEFICIAL OWNERS

Common Stock Beneficially Owned
--------------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
-------------------------- ----------------------- --------------------
Technology Equity Fund Corp.
1209 Orange Street
Wilmington, Delaware 19801 1,500,000 8.1%

MANAGEMENT

Common Stock Beneficially Owned
--------------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
-------------------------- ----------------------- --------------------
Kenneth W. Bell
405 E. 12450 S., Suite B
Draper, Utah 84020 1,710,641 (1) 9.2%

James W. Johnston
405 E. 12450 S., Suite B
Draper, Utah 84020 2,234,417 (2) 11.9%

M. Daniel Lunt
405 E. 12450 S., Suite B
Draper, Utah 84020 2,011,577 (3) 10.8%

Thomas R. Eldredge
405 E. 12450 S., Suite B
Draper, Utah 84020 55,000 (4) *

Michael D. Fowler
405 E. 12450 S., Suite B
Draper, Utah 84020 10,500 (5) *

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<PAGE> 53

David Grow
405 E. 12450 S., Suite B
Draper, Utah 84020 10,000 (5) *

All Executive officers and
directors as a group 6,034,135 (6) 31.3%

* Less than 1% of the outstanding common stock.
1 Mr. Bell has sole voting power and investment power of 530,033 shares and
shares voting power and investment power of 930,608 shares with his
spouse. Includes options to acquire 250,000 common shares.
2 Mr. Johnston has sole voting power and investment power of 213,194
shares, shares voting power and investment power of 1,703,339 shares held
jointly with his spouse; and 66,408 are held in the name of his spouse.
He also influences the investment power and voting power of 1,476 shares
held by his child. Mr. Johnston does not disclaim beneficial ownership
of his spouse's and child's shares. Includes options to acquire 250,000
common shares.
3 Mr. Lunt has sole voting power and investment power of 213,194 shares,
shares voting power and investment power with his spouse of 1,548,383.
Includes options to acquire 250,000 common shares.
4 Mr. Eldredge holds options to acquire 180,000 common shares, of which
the options for 55,000 common shares are vested.
5 Includes as to each listed party, options to acquire 10,000 common
shares.
6 Includes options to acquire 825,000 common shares.

DISSENTERS' RIGHTS

The Logio Board believes that the acquisition will be in the best
interest of Logio's stockholders. However, Logio stockholders are entitled to
assert their dissenter's rights as provided for in Sections 92A.300 through
92A.500 of the Nevada Revised Statutes. In compliance with Section 92A.410 of
the Nevada Revised Statutes a copy of Sections 92A.300 through 92A.500 of the
NRS are attached to this prospectus/proxy statement as Appendix A.

Pursuant to Section 92A.380 of the Nevada Revised Statutes, each
stockholder has the right and is entitled to dissent from the consummation of
the acquisition and receive payment of the fair value of the common stock
owned by that stockholder. In the event a stockholder elects to exercise
dissenters' rights, such stockholder must comply with the applicable
procedures set forth in Sections 92A.300 through 92A.500 of the Nevada Revised
Statutes, as summarized below, in order to receive payment of the fair value
of any common shares.

If a Logio stockholder elects to exercise his dissenters' rights in
accordance with Section 92A.440, the Logio stockholder will be paid the fair
value of the shares as determined by the board of directors. Pursuant to
92A.420, to assert dissenters' rights a stockholder must deliver to Logio,
before the vote is taken, written notice of his intent to demand payment for
his shares if the proposed action is effectuated; and the stockholder must not
vote his shares in favor of the proposed action. A vote against the corporate
action does NOT satisfy the requirements for assertion of dissenters rights.

A demand form is attached to this prospectus/proxy statement as Appendix
B and must be received by Logio no later than 5:00 p.m.,local time, Monday,
January 22, 2001. The stockholder's certificate must be deposited no later
than January 31, 2001, at 5:00 p.m, local time. Logio retains the authority
to restrict the transfer of common stock not represented by a certificate from
the date the demand form is received by Logio.

The board of directors has determined the fair value of each share of
common stock to be $0.286. The determination of the per share fair value was
computed based on the average close for 30 days prior to the announcement of
the signing of the acquisition agreement.

Interests of Certain Persons

Neither Pacific WebWorks or Logio knows of any direct or indirect
substantial interest of any director, executive officer or other affiliate of
either company in the acquisition.

MANAGEMENT

The directors and executive officers and key employees of Pacific
WebWorks corporation are listed below. Their respective ages and positions
are listed, as well as, biographical information for each of these persons is
presented below. Our articles of incorporation provide for a board of
directors consisting of at least 3, but no more than 9 persons. Our directors
serve for terms of one year. Our executive officers are chosen by our board
of directors and serve at its discretion.

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<PAGE> 54

Currently, the offices of Secretary and Treasurer are vacant. Our board will
appoint and individual or individuals to those positions by early 2001. There
are no family relationships between or among any of our directors, executive
officers, and key employees.

Directors and Executive Officers

Name Age Position Held

Christian R. Larsen 26 President, Chief Executive Officer, and
Director
Lamar P. Taylor 38 Director
Allan E. Oepping 25 Director, Vice President of Engineering
Eric K. Schmitter 26 Director
Benjamin A. Black 28 Director
Tom Hill 48 Director, President and Chief Executive
Officer of IntelliPay, Inc.

Christian R. Larsen: Mr. Larsen serves as President and Chief Executive
Officer and a director of Pacific WebWorks, Inc. and has done so since April
1999. For the two years prior to this, he served as Chief Operating Officer
for Pacific WebWorks, Inc. and as a consultant for Utah WebWorks. In July
1993, he started Innovative Research and Animated Design, Inc. ("IRAD") which
developed custom and commercial software for animation and special effects.
He served as President of IRAD from October 1993 until February 1997. IRAD
grew to a Company employing 28 individuals. He has seven years experience
providing computer consulting and business management services. Mr. Larsen
filed a Chapter 7 voluntary bankruptcy petition in May of 1997 in the District
of Utah Central Division of the United States Bankruptcy Court, which was
discharged in September of 1997.

Lamar P. Taylor: Mr. Taylor was the founder of Utah WebWorks, Inc. He
currently serves as a Director. He served as President for Utah WebWorks from
April 1997 until it merged with Pacific WebWorks in April, 1999. Mr. Taylor
then served as President and Chief Executive Officer of Pacific WebWorks until
May, 1999. From 1994 through 1997, Mr. Taylor worked as a senior animator for
IRAD, producing two dimensional and three dimensional computer animation for
television commercials, promotional videos and medical simulations. From 1991
through 1994, Mr. Taylor was employed as the Freelance Technical Director for
Shockwave Entertainment, Inc. There he created interactive video graphics for
feature films including True Lies and Lawnmower Man. He received his B.A.
with Honors from California State University, Los Angeles in 1991.

Allan E. Oepping: Mr. Oepping serves as a Director and as Pacific
WebWorks' Vice President of Engineering. He is a Microsoft Certified
Professional (MCP) and has fourteen years' experience working with computer
hardware and software. He started with Utah WebWorks in November of 1997 as
an independent consultant, then became its Technical Director in August of
1998. He was the head programmer for IRAD for five years. While at IRAD, Mr.
Oepping developed several new technologies, including a spatial
division/isolation technique which speeds up renderings from 200% to 700%. He
attended Salt Lake Community College in Salt Lake City, Utah during 1994. Mr.
Oepping filed a Chapter 7 voluntary bankruptcy petition on March 2, 1998, in
the District of Utah, Central Division of the United States Bankruptcy Court.
The petition was discharged on June 12, 1998.

Eric K. Schmitter: Mr. Schmitter serves as a Director. He started with
Utah WebWorks as the Creative Director in April of 1997. He has two years
experience in animation and two years experience in software sales. He
attended the University of North Texas during 1993 and the University of Utah
in 1994. In 1988, Mr. Schmitter filed a Chapter 13 voluntary bankruptcy
petition, which later converted to a Chapter 7, in the District of Utah,
Central Division, of the United States Bankruptcy Court. The petition was
subsequently discharged later that year.

Benjamin A. Black: Mr. Black serves as a Director. He has five years'
experience in software development programming. He has worked as Senior
Programmer for Utah WebWorks since April of 1997. He was lead programmer at
IRAD from 1994 through 1997. In 1995 he received his Associate of Science
degree in electronics technology from Salt Lake Community College in Salt Lake
City, Utah. He is a Microsoft Certified Professional (MCP) and is experienced
in advanced programming languages including C, C++, and Perl.

Tom Hill: Mr. Hill was appointed as a Director for Pacific WebWorks in
May 2000. He is the President and CEO of IntelliPay, Inc., a wholly-owned
subsidiary of Pacific WebWorks. He has held this position with IntelliPay
since

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February 1998. Prior to his service with IntelliPay, he was the sales and
marketing manager for BobCAD-CAM Inc. in San Jose California. Tom attended
North Texas State University. While at North Texas State, Mr. Hill studied
Public Relations and Journalism.

Executive Compensation

None of the named executive officers have received compensation in excess of
$100,000 during the past fiscal year. The table below lists our Chief
Executive Officer compensation for the past three fiscal years.

SUMMARY COMPENSATION TABLE

Long Term Compensation
------------------------------- ------------------------
Annual Compensation Awards Payouts
------------------------------- ---------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Re- All
Name Annual stricted Other
and Compensa- Stock Underlying LTIP Compensa-
Principal sation Awards Options/ Payouts tion
Position Year Salary($) Bonus($) ($) ($) SAR's(#) ($) ($)
-------------------- ----- --------- ---------- ----------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Christian R. Larsen 1999 $ 60,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
President, C.E.O. 1998 36,000 0 0 0 0 0 0
1997 24,000 0 0 0 0 0 0

Each executive officer is compensated at a different level, however the
compensation structure for the officers is the same. Executive compensation
is based upon a base salary with bonuses being established upon a percentage
of gross sales. Total salaries and bonuses are also capped. There is also a
program under which executives are compensated in the form of stock options
which are awarded based on sales or performance milestones and can be executed
at $2.00 a share. We determine an executive's availability to participate in
the program by accomplishment of revenue milestones.

Upon reaching a specified milestone as determined by our Board, each
executive can receive a bonus which will not exceed $150,000 total
compensation when added to his or her base salary. Executive officers and
employees are treated equally with respect to sick time, paid holidays, and
medical insurance. We value these benefits at approximately $6,100 per year,
based upon an average annual salary of $35,000.

Compensation of Directors.

We do not have any standard compensation arrangements for our directors.

Employment Contracts.

In April 1999 we adopted a policy to enter into employment agreements
with our senior management. Each agreement is effective for one year and will
be automatically renewed annually unless terminated. Mr. Larsen, our Chief
Executive Officer, will receive an annual base salary of $60,000 and bonuses
not to exceed an additional $65,000. Each of our senior managers receives
medical insurance. Each may be terminated for cause if he or she acts
improperly or negligently in his or her position, engages in dishonest or
illegal conduct, and/or breaches our policies and procedures. Each may be
terminated for disability if he fails to perform duties for 90 consecutive
days for mental or physical health reasons. Each promises to not compete with
us for a period of one year after his or her employment expires or terminates,
unless he assures us in writing that confidential and proprietary information
will not be jeopardized. All inventions and improvements in our products or
methods of conducting business shall remain our property. Each agrees not to
solicit employees, customers or others for a period of two years after the
termination of his or her employment. After termination or resignation, each
agrees not to disclose or use confidential or proprietary information. The
agreements provide compensation if we have a change in control or if the
person resigns, or if the employment is terminated.

50
<PAGE> 56

PRINCIPAL HOLDERS OF PACIFIC WEBWORKS SHARES

The following table sets forth the beneficial ownership of Pacific
WebWorks outstanding common stock of each person or group known by us to own
beneficially more than 5% of our outstanding common stock; each of our
executive officers; each of our directors; and all executive officers and
directors as a group.

Beneficial ownership is determined according to the rules of the SEC and
generally includes voting or investment power with respect to securities.
Except as indicated by footnote, the persons named in the table below have
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them. The inclusion of any shares as
beneficially owned does not constitute an admission of beneficial ownership of
those shares. The percentage of beneficial ownership is based on 14,858,342
shares of common stock.

CERTAIN BENEFICIAL OWNERS

Common Stock Beneficially Owned
--------------------------------------
Percentage of Percentage of
Name and Address of Number of Shares class prior to class after
Beneficial Owners Of Common Stock share exchange share exchange
-------------------------- ---------------- -------------- --------------
LVT Associates, LLC
2247 Emerson
Salt Lake City, Utah 84108 1,575,000 (2) 10.6% 8.9%

Net Strategic Investments, LLC
1986 E. Falcon Hill Circle
Sandy, Utah 84092 1,117,500 (1) 7.5% 6.3%

(1) Christian Larsen's father owns all of the outstanding stock of Net
Strategic Funding, Inc., the corporation which owns all of the interest
of Net Strategic Investments, LLC. Mr. Christian Larsen has disclaimed
beneficial ownership of these shares.

DIRECTORS AND OFFICERS

Common Stock Beneficially Owned
--------------------------------------
Percentage of Percentage of
Name and Address of Number of Shares class prior to class after
Beneficial Owners Of Common Stock share exchange share exchange
-------------------------- ---------------- -------------- --------------
Benjamin A. Black 500,000 3.4% 2.8%
1760 Fremont Drive
Salt Lake City, Utah 84104

Tom Hill 553,056 3.7% 3.1%
2481 Valleywood Drive
San Bruno, California 94066

Allan E. Oepping 725,000 4.9% 4.1%
1760 Fremont Drive
Salt Lake City, Utah 84104

Eric K. Schmitter 370,000 2.5% 2.1%
1760 Fremont Drive
Salt Lake City, Utah 84104

Lamar P. Taylor 1,575,000 (2) 10.6% 8.9%
1760 Fremont Drive
Salt Lake City, Utah 84104

All executive officers and
directors as a group 3,723,056 25.1% 21.1%

51
<PAGE> 57

(2) Mr. Taylor is one of two members of LVT Associates, LLC and shares
voting and investment power with such LLC.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following information summarizes certain transactions we have
either engaged in since the beginning of our past fiscal year or propose to
engage in involving our executive officers, directors, 5% stockholders, or
immediate family members of such persons:

Pursuant to the Asphalt Associates and Utah WebWorks merger agreement,
dated January 6, 1999, $1,000,000 was placed in an escrow account by Asphalt
Associates to be disbursed to the merged entity. Utah WebWorks was loaned
$250,000 of these funds by Asphalt Associates, Inc. as a 30 day interest free
loan in order to allow it to satisfy a debt pending the merger. The note
payable was credited to Utah WebWorks' value in determining the number of
shares its stockholders received. Accordingly, six of the Utah WebWorks
stockholders received a total of 5,000,000 shares in the merged entity. The
balance of the funds ($750,000) was distributed to us between January and June
of 1999.

During 1999, we recognized $166,046 as a note receivable from World
Commerce Network, LLC, our subsidiary. There is no provision for interest and
the balance is due within the next twelve months. As of December 31 1999,
there is an accounts receivable of $6,800 due from World Commerce Network,
LLC.

On April 4, 2000 we signed a reorganization agreement to acquire all of
the outstanding shares of IntelliPay, Inc., a Delaware corporation. As a
result of this transaction Tom Hill, the President of IntelliPay, was
appointed to our board of directors.

52
<PAGE> 58
INDEX TO FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF PACIFIC WEBWORKS FOR PERIOD ENDED SEPTEMBER 30, 2000
Consolidated Balance Sheets as of September 30, 2000
(Unaudited) and December 31, 1999....................................F-2
Consolidated Statements of Operations for the Nine Months
Ended September 30, 2000 and 1999 (Unaudited).......................F-3
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2000 and 1999 (Unaudited)..............................F-4
Notes to Consolidated Financial Statements for the Nine
Months Ended September 30, 2000 (Unaudited)..........................F-5

FINANCIAL STATEMENTS OF PACIFIC WEBWORKS FOR THE YEARS ENDED DECEMBER 31, 1999
AND 1998
Reports of Independent Auditors........................................F-9
Consolidated Balance Sheets as of December 31, 1999 and
December 31, 1998................................................... F-10
Consolidated Statements of Operations for Years Ended
December 31, 1999, 1998 and 1997.....................................F-11
Consolidated Statements of Stockholder's Equity for Years
Ended December 31, 1999, 1998 and 1997...............................F-12
Consolidated Statements of Cash Flows for Years Ended
December 31, 1999, 1998 and 1997.....................................F-13
Notes to Consolidated Financial Statements.............................F-15

FINANCIAL STATEMENTS OF LOGIO (formerly WordCruncher Internet Technologies,
Inc.) FOR THE PERIOD ENDED SEPTEMBER 30, 2000
Consolidated Balance Sheets as of September 30, 2000 (Unaudited)
and December 31, 1999................................................F-20
Consolidated Statements of Operations for the Nine Months
Ended September 30, 2000 and 1999 (Unaudited).......................F-21
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 and 1999 (Unaudited).......................F-22
Consolidated Statements of Stockholders' Equity for the Nine
Months Ended September 30, 2000 and December 1999...................F-24
Notes to Consolidated Financial Statements for the Nine
Months Ended September 30, 2000 and December 1999 (Unaudited)........F-28

FINANCIAL STATEMENTS OF LOGIO FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND
1997
Report of Grant Thornton LLP, independent certified public
accountants on the December 31, 1999 financial statements............F-33
Report of Crouch, Bierwolf and Chisholm, independent certified
public accountants on the December 31, 1998 and 1997 financial
statements...........................................................F-35
Consolidated Balance Sheets as of December 31, 1999 and
December 31, 1998....................................................F-36
Consolidated Statements of Operations for Years Ended December
31, 1999, 1998 and 1997..............................................F-37
Consolidated Statements of Stockholder's Equity for Years Ended
December 31, 1999, 1998 and 1997.....................................F-38
Consolidated Statements of Cash Flows for Years Ended December
31, 1999, 1998 and 1997..............................................F-41
Notes to Consolidated Financial Statements.............................F-43

53
<PAGE> 59

Pacific Webworks, Inc.
And Subsidiaries

Consolidated Financial Statements
September 30, 2000

F-1
<PAGE> 60

Pacific Webworks, Inc.
Consolidated Balance Sheets

September 30 December 31
2000 1999
------------ ------------
(Unaudited)

Assets

Current Assets (unaudited)
Cash and Cash Equivalents $ 72,044 $ 153,898
Accounts Receivable (net of allowance of
$12,798 and $3,798 respectively) 232,483 101,429
Employee Receivable 3,924 4,578
Prepaid Expenses 362,350 16,333
Accounts Receivable - Related Party - 6,800
Notes Receivable - Related Party - 166,046
Note Receivable - -
------------ ------------

Total Current Assets 670,801 449,084
------------ ------------

Property and Equipment 443,826 171,393
------------ ------------
Other Assets
Goodwill, net 4,283,939 -
Deposits 5,250 5,250
Computer Software Costs 342,534 4,832
------------ ------------
Total Other Assets 4,631,723 10,082
------------ ------------

Total Assets $ 5,746,350 $ 630,559
============ ============
Liabilities and Stockholders' Equity

Current Liabilities
Accounts Payable $ 473,599 $ 74,550
Accrued Expenses 271,485 70,177
Notes Payable - 500,000
Notes Payable - Related Party 216,580 -
Deferred Revenue 2,967,088 -
------------ ------------

Total Current Liabilities 3,928,752 644,727

Minority Interest - -
------------ ------------
Stockholders' Equity
Common Stock, authorized 50,000,000 shares of no
par value, issued and outstanding 10,400,342 and
10,395,679 shares 14,858 10,396
Deferred Compensation - (13,216)
Paid in Capital 9,763,603 2,775,404
Retained Deficit (7,960,863) (2,786,752)
------------ ------------

Total Stockholders' Equity 1,817,598 (14,168)
------------ ------------

Total Liabilities and Stockholders' Equity $ 5,746,350 $ 630,559
============ ============
F-2

<PAGE> 61

Pacific WebWorks, Inc.
Consolidated Statements of Operations
(Unaudited)

</TABLE>
<TABLE>
<CAPTION>

For the three For the nine
months ended months ended,
September30, September 30, September30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
SALES $ 1,682,669 $ 72,151 $ 3,273,508 $ 111,281

COST OF GOODS SOLD 116,235 8,316 212,597 19,684
------------ ------------ ------------ -------------

GROSS PROFIT 1,566,434 63,835 3,060,911 91,597
------------ ------------ ------------ -------------
OPERATING EXPENSES
General And Administrative
Expenses 650,710 240,083 2,255,464 554,405
Sales 737,804 102,689 4,503,581 206,551
Research and Development 246,972 100,673 645,372 205,946
------------ ------------ ------------ -------------

TOTAL OPERATING EXPENSES 1,635,486 443,445 7,404,417 966,902
------------ ------------ ------------ -------------

OPERATING INCOME (LOSS) (69,052) (379,610) (4,343,506) (875,305)
------------ ------------ ------------ -------------
OTHER INCOME AND (EXPENSES)
Amortization (307,875) 95,841 (641,484) (1,230,300)
Depreciation (41,149) (4,045) (88,568) (12,248)
Interest Expense (40,226) (4,861) (100,553) (4,861)
Minority Interest - - - -
------------ ------------ ------------ -------------

Total Other income and (Expenses) (389,250) 86,935 (830,605) (1,247,409)
------------ ------------ ------------ -------------

NET INCOME (LOSS) $ (458,302) $ (292,675) $(5,174,111) $ (2,122,714)
============ ============ ============ =============

NET INCOME (LOSS) PER SHARE (0.03) (0.03) (0.41) (0.22)
============ ============ ============ =============

WEIGHTED AVERAGE NUMBER OF 14,267,212 9,447,556 12,504,532 9,447,556
COMMON SHARES ============= ============ ============ =============

F-3

</TABLE>
<PAGE> 62
Pacific WebWorks, Inc.
Consolidated Statements of Cash Flows
Unaudited)

For the nine months ended
September 30 September 30
2000 1999
------------- -------------
Cash Flows From Operating Activities

Net income (loss) $ (5,174,111) $ (2,122,714)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Used in Operating Activities:
Depreciation & Amortization 730,051 1,249,773
Bad Debt 18,000 -
Minority Interest - -
Loss on Investments 25,000 -
Change in Assets and Liabilities (Net of
effects of acquisition of WCN)
(Increase) Decrease in:
Accounts Receivable (96,616) (49,251)
Other Receivables 1,595 -
Prepaid Expenses (346,018) -
Increase/(decrease) in:
Accounts Payable and Accrued Expenses 71,071 48,261
Deferred Expenses - -
Deferred Revenue 2,719,588 -
------------- -------------

Net Cash Provided (Used) by Operating Activities (2,051,440) (873,931)
------------- -------------
Cash Flows from investing Activities
Cash paid for Notes Receivable - -
Purchase of Property and Equipment (244,150) (110,621)
Cash paid for deposits (500) -
Cash acquired in acquisition 9,718 750,000
------------- -------------

Net Cash Provided (Used) by Investing Activities (234,932) 639,379
------------- -------------
Cash Flows from Financing Activities
Proceeds from debt financing 597,446 500,000
Principal payments on debt financing (18,873) (250,000)
Proceeds from Issuance of Stock 1,625,945 -
Warrants issued for services - -
------------- -------------

Net Cash Provided (Used) by Financing Activities 2,204,518 250,000
------------- -------------
Net increase (Decrease) in Cash and
Cash Equivalents (81,854) 15,448
------------- -------------

Cash and Cash Equivalents Beginning of Period 153,898 9,306
------------- -------------
Cash and Cash Equivalents
End of Period $ 72,044 $ 24,754
============= =============
F-4

<PAGE> 63
Pacific Webworks, Inc.
September 30, 2000

NOTES TO FINANCIAL STATEMENTS

Pacific Webworks, Inc. (the "Company") has elected to omit
substantially all footnotes to the financial statements for the nine months
ended September 30, 2000, since there have been no material changes (other
than indicated in other footnotes) to the information previously reported by
the Company in their Annual Report filed on Form 10-K for the fiscal year
ended December 31, 1999.

UNAUDITED INFORMATION

The information furnished herein was taken from the books and
records of the Company without audit. However, such information reflects all
adjustments which are, in the opinion of management, necessary to properly
reflect the results of the period presented. The information presented is not
necessarily indicative of the results from operations expected for the full
fiscal year.

ACQUISITION OF WORLD COMMERCE NETWORK, LLC

Effective January 1, 2000, the Company issued 4,663 shares of its
common stock to U.S. Merchant Systems, Inc. for 1% of the outstanding stock of
World Commerce Network, LLC. (WCN) The shares were valued at $9,180. The
issuance increases the Company's ownership in WCN to 51% and WCN therefore
becomes a subsidiary of the Company. The operations of WCN have been
consolidated with the Company's operations effective January 1, 2000. Prior
to the additional 1% purchase, the Company owned 50% of WCN and recorded its
investment using the equity method. The balance at December 31, 1999 was $0.

ACQUISITION OF INTELLIPAY, INC.

On April 4, 2000, the Company completed an Agreement and Plan of
Reorganization between Pacific Webworks, Inc. a public Nevada corporation (the
Company) and Intellipay, Inc. a private Delaware corporation (Intellipay).
The Company issued 2,400,000 shares of common stock valued at $4,320,000 for
all of the outstanding shares of Intellipay. Thereby Intellipay became a
wholly owned subsidiary of the Company. The transaction was recorded using the
purchase method of accounting.

COMMON STOCK

On June 30, 2000, the Company's $1,000,000 notes payable and $37,536
accrued interest were converted to 1,040,000 shares of common stock at $1.00
per share.

F-5
<PAGE> 64
Pacific Webworks, Inc.
September 30, 2000

On September 20, 2000, the Company's $600,000 notes payable were
converted to 600,000 shares of common stock at $1.00 per share.

REVENUE RECOGNITION

The company receives revenue from the sales of access to its web-based
applications, the performance of consulting and training and from the
continual hosting of its client's web sites. The initial term of all
agreements into which the company enters with its clientele for its web-based
applications is one year. The revenues related to these contracts are,
therefore, recognized ratably over the initial term of the contract. The
monthly charges related to hosting and gateway access are recognized when
billed in accordance with SOP 97-2. Any additional consulting fees or
training fees, outside of the initial contract, related to any Visual WebTools
products are recognized as the service is delivered.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB 101 clarifies application of generally accepted accounting
principles to revenue transactions. The Company changed its accounting method
during the third quarter 2000 to conform to the views of the SEC staff as
documented in SAB 101. The change involves that of accounting for up-front
fees and, in accordance with SAB 101, the company is amortizing such fees over
one year, which generally represents the longer of the contractual period or
the expected life of the customer relationship. There is no cumulative effect
adjustment for the change in the first quarter 2000 as there were not
significant up-front fees relating to the change prior to January 1, 2000.
Pursuant to this new accounting policy the company has deferred revenue of
$2,967,088 at September 30, 2000, some of which was reported as revenues in
prior quarters. The Company has also deferred commissions paid in connection
with the deferred revenues and has recorded prepaid expenses of $362,350 at
September 30, 2000.

F-6
<PAGE> 65

Pacific WebWorks, Inc.

Financial Statements

December 31, 1999 and 1998

F-7
<PAGE> 66

C O N T E N T S

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 3

Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 5

Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . 6

Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . 7

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . 8

F-8
<PAGE> 67

CROUCH, BIERWOLF & CHISHOLM
Certified Public Accountants
50 West Broadway, Suite 1130
Salt Lake City, Utah 84101
Office (801) 363-1175
Fax (801) 363-0615

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders of
Pacific WebWorks, Inc.

We have audited the accompanying balance sheets of Pacific WebWorks, Inc. as
of December 31, 1999 and 1998 and the related statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1999,
1998 and 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pacific WebWorks, Inc. as of
December 31, 1999 and 1998 and the results of its operations and cash flows
for the years ended December 31, 1999, 1998 and 1997 in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has had recurring operating losses and is
dependent upon financing to continue operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in the Note
2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

/s/ Crouch, Bierwolf & Chisholm

Salt Lake City, Utah
January 31, 2000

F-9
<PAGE> 68

Pacific WebWorks, Inc.
Balance Sheets

Assets
December 31,
1999 1998
------------- -------------
Current assets
Cash and Cash Equivalents $ 153,898 $ 9,306
Accounts Receivable (net of allowance of
$3,798 and $6,600, respectively) 101,429 10,392
Employee Receivable 4,578 836
Prepaid Expenses 16,333 -
Accounts Receivable - Related Party (Note 8) 6,800 -
Notes Receivable - Related Party (Note 8) 166,046 -
------------- -------------
Total Current Assets 449,084 20,534
------------- -------------

Property and Equipment (Note 3) 171,393 23,353
------------- -------------
Other Assets
Deposits 5,250 5,250
Computer Software Costs (Note 5) 4,832 6,833
------------- -------------
Total Other Assets 10,082 12,083
------------- -------------
Total Assets $ 630,559 $ 55,970
============= =============

Liabilities and Stockholders' Equity

Current Liabilities
Accounts Payable $ 74,550 $ 11,261
Accrued Expenses 70,177 3,926
Notes Payable (Note 4) 500,000 250,000
------------- -------------
Total Current Liabilities 644,727 265,187
------------- -------------
Stockholders' Equity
Common Stock, authorized 50,000,000 shares of
no par value, issued and outstanding 10,395,679
and 5,000,000 shares, respectively 10,396 5,000
Deferred Compensation (Note 9) (13,216) -
Paid in Capital 2,775,404 5,000
Retained Deficit (2,786,752) (219,217)
------------- -------------
Total Stockholders' Equity (14,168) (209,217)
------------- -------------

Total Liabilities and Stockholders' Equity $ 630,559 $ 55,970
============= =============

The accompanying notes are an integral part of these financial statements.
F-10
<PAGE> 69

Pacific WebWorks, Inc.
Statements of Operations

For the
Years Ended
December 31,
1999 1998 1997
------------- ------------ -------------
Revenues: $ 305,628 $ 172,395 $ 94,014

Cost of Sales 42,874 188,974 107,332
------------- ------------ -------------
Gross Profit 262,754 (16,579) (13,318)
------------- ------------ -------------
Expenses:

Sales 406,917 30,180 13,987
Research & Development 320,479 11,949 5,523
General & Administrative 817,312 80,996 36,179
------------- ------------ -------------

Total Expenses 1,544,708 123,125 55,689
------------- ------------ -------------

Income (Loss) from Operations (1,281,954) (139,704) (69,007)

Other Income (Expenses)

Interest Expense (19,243) (10,761) (3,500)
Interest Income 1,246 - -
Other Income - - 3,755
Warrants issued for consulting
services (1,242,584) - -
Loss on Investment (Note 7) (25,000) - -
------------- ------------ -------------

Net Income (Loss) $ (2,567,535) $ (150,465) $ (68,752)
============= ============ =============

Net Loss Per Share $ (0.27) $ (0.03) $ (0.01)
============= ============ =============

Weighted average shares outstanding 9,632,500 5,000,000 5,000,000
============= ============ =============

The accompanying notes are an integral part of these financial statements.

F-11

<PAGE> 70
Pacific WebWorks, Inc.
Statement of Stockholders' Equity

Common Stock Paid in Retained
Shares Amount Capital Deficit
------------ ---------- ------------- -------------
Balance at Inception on
April 10, 1997 - $ - $ - $ -

April 1997, shares issued
for cash at $10 per share 5,000,000 5,000 5,000 -

Net loss December 31, 1997 - - - (68,752)
------------ ---------- ------------- -------------

Balance, December 31, 1997 5,000,000 5,000 5,000 (68,752)

Net loss December 31, 1998 - - - (150,465)
------------ ---------- ------------- -------------

Balance, December 31, 1998 5,000,000 5,000 5,000 (219,217)

Reverse merger &
reorganization adjustment 5,000,000 5,000 995,000 -

September 1999, shares
issued for insurance
policy at $1.43 per share,
valued at $20,000 14,000 14 19,986 -

December 1999, shares
issued for payment on
notes payable of $500,000
at $2.62 per share 381,679 382 499,618 -

Warrants issued for
consulting fees during 1999 - - 1,255,800 -

Net loss December 31, 1999 - - - (2,567,535)
------------ ---------- ------------- -------------

Balance, December 31, 1999 10,395,679 $ 10,396 $ 2,775,404 $ (2,786,752)
============ ========== ============= =============

The accompanying notes are an integral part of these financial statements.

F-12

<PAGE> 71
Pacific WebWorks, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
For the
Years Ended
December 31,
1999 1998 1997
------------- ------------ -------------
<S> <C> <C> <C>
Cash Flows form Operating Activities:
Net Income (loss) $ (2,567,535) $ (150,465) $ (68,752)
Adjustments to reconcile
net (loss) to net cash
provided by operations
Depreciation & Amortization 30,572 13,151 5,473
Warrants issued for services 1,255,800 - -
Bad Debt - 4,055 2,545
Loss on Investment 25,000 - -
Change in assets and liabilities:
Accounts receivable (94,779) 13,828 (31,656)
Accounts Payable and accrued expenses 121,064 (755) 15,942
Prepaid expenses (29,549) - -
Common stock issued for insurance 20,000 - -
Accounts receivable - related party (6,800) - -
------------- ------------ -------------

Net Cash Flows used in Operating Activities (1,246,227) (120,186) (76,448)
------------- ------------ -------------
Cash Flows from Investing Activities:
Cash paid for property and equipment (148,135) (12,675) (22,014)
Cash paid for deposits - (5,250) -
Cash paid for technology - - (10,000)
Cash paid for investment (25,000) - -
Cash from escrow 750,000 - -
Cash paid to related party (166,046) - -
------------- ------------ -------------

Net Cash Paid for Investing Activities 410,819 (17,925) (32,014)
------------- ------------ -------------
Cash Flows from Financing Activities:
Cash from debt financing 980,000 381,300 108,802
Issuance of stock - - 10,000
Principle payments on Debt financing - (239,323) (4,900)
------------- ------------ -------------

Net Cash Flows from Financing Activities 980,000 141,977 113,902
------------- ------------ -------------

Net increase (decrease) in cash 144,592 3,866 5,440

Cash and Cash Equivalents,
beginning of period 9,306 5,440 -
------------- ------------ -------------

Cash and Cash Equivalents, end of period $ 153,898 $ 9,306 $ 5,440
============= ============ =============

Supplemental Cash Flow Information
Cash Paid for:
Interest $ 1,400 $ 14,262 $ -
Taxes $ - $ - $ -

F-13
(continued)

</TABLE>
<PAGE> 72

Pacific WebWorks, Inc.
Statement of Cash Flows
(continued)

Supplemental Non-Cash Disclosures:

During 1999, 14,000 shares of common stock were issued at $1.43 per share
for a $20,000 insurance policy.

During 1999, 381,679 shares of common stock were issued at $2.62 per
share in payment of a $500,000 notes payable.

During 1999, 400,000 warrants were issued for non-employee services
performed during the year. These warrants are valued at $1,255,800.

For 1999, the Company's share of the recognized loss in the joint venture
is $25,000.

The accompanying notes are an integral part of these financial statements.

F-14
<PAGE> 73

Pacific WebWorks, Inc.
Notes to The Financial Statements
December 31, 1999 and 1998

NOTE 1 - Summary of Significant Accounting Policies

a. Organization

Pacific WebWorks, Inc., ("the Company") was organized under the laws
of the state of Nevada on May 18, 1987 as Asphalt Associates, Inc. On
December 31, 1998 the board of directors changed the name of the Company to
Pacific Webworks, Inc. On January 11, 1999, the Company merged with Utah
Webworks, Inc., a Utah corporation organized April 10, 1997. The share
exchange with Utah Webworks was accounted for as a reverse merger, therefore
all financial information prior to January 11, 1999 is that of the accounting
survivor being Utah Webworks. Utah Webworks is currently engaged in
developing, selling and servicing computer and internet related software and
hardware products.

b. Accounting Method

The Company recognizes income and expenses on the accrual basis of
accounting.

c. Earnings (Loss) Per Share

The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements. Fully diluted earnings per share has not been presented because
it is anti-dilutive. 400,000 potentially issuable common shares were excluded
from the calculation because their effects were anti-dilutive.

d. Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities
of three months or less to be cash equivalents.

e. Provision for Income Taxes

At December 31, 1999, the Company has net operating loss
carryforwards totaling approximately $2,786,752 that may be offset against
future taxable income through 2013. No tax benefit has been reported in the
1999 financial statements since the loss carryforwards are offset by valuation
allowance of the same amount.

Deferred tax assets and the valuation account is as follows at
December 31, 1999 and 1998:

1999 1998
--------------- ---------------

Deferred tax asset
NOL carryforward $ 947,400 $ 74,500
Valuation allowance (947,400) (74,500)
--------------- ---------------
$ - $ -
=============== ===============

F-15
<PAGE> 74

Pacific WebWorks, Inc.
Notes to The Financial Statements
December 31, 1999 and 1998

NOTE 1 - Summary of Significant Accounting Policies (continued)

f. Use of Estimates in the Preparation of Financial Statements

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

g. Revenue Recognition

The Company recognizes income and expense on the accrual basis of
accounting. The Company receives revenues from services provided for internet
software design and engineering. Pursuant to SOP 97-2, revenue is recorded
when the services are completed. The Company also generates revenues from the
sale or access to their internet design software technology. This product is
sold separately without future performance such as upgrades or maintenance,
and is not sold with PCS services, therefore according to SOP 97-2 revenue is
recorded upon the sale and delivery of or access to the product once an
agreement exists, the price is fixed and collectability is probable.

Revenues generated from resellers are recorded in the same manner as
to the end user, except delivery is directly to the end user rather than to
the reseller. Revenue is recorded when all terms of SOP 97-2 as mentioned
above are achieved.

Trade receivables are due upon receipt of the invoice. An allowance
has been made from potentially uncollectable accounts in the amounts of
$3,798, $6,600 and $2,545 for the periods ended December 31, 1999, 1998 and
1997, respectively.

h. Depreciation

The provision for depreciation is calculated using the straight-line
method over the estimated useful lives of the assets. Depreciation expense
for the period ended December 31, 1999, 1998 and 1997 is $28,572, $11,151 and
$4,306, respectively.

i. Major Customers

During 1999 and 1998 the Company had major customers that
individually accounted for 10% or more of the annual sales. During 1998, four
customers generated sales in the amount of $118,744 or 68% of total sales as
follows:

Customer Sales %
---------- ---------- --------
A 28,161 16
B 21,271 12
C 24,422 14
D 44,890 26

During 1999, two customers generated sales in the amount of $124,344
or 41% of total sales as follows:

Customer Sales %
---------- ----------- --------
A 64,535 21
B 59,809 20

F-16
<PAGE> 75

Pacific WebWorks, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998

NOTE 1 - Summary of Significant Accounting Policies (continued)

j. Impairment of Long Lived Assets

Fixed assets are evaluated annually by management and if impaired are
written down to the fair market value.

NOTE 2 - Going Concern

The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has had
recurring operating losses since inception and is dependent on financing to
continue operations. However, the Company believes that its current and
developing sales channels, including the World Commerce Network sales
operations will be sufficient to support its existing operations without any
requirements for external financing. The financial statements do not include
any adjustment that might result from the outcome of this uncertainty.

NOTE 3 - Property and Equipment

Property and Equipment consists of the following at December 31, 1999
and 1998:

December 31,
1999 1998
--------------- ------------
Computer Equipment $ 82,165 $ 32,990
Furniture and Fixtures 59,138 5,820
Equipment 39,558 -
Software 27,894 -
Leasehold improvements 6,667 -
--------------- ------------
Total 215,422 38,810
--------------- ------------
Less Accumulated Depreciation (44,029) (15,457)
--------------- ------------
171,393 23,353
=============== ============

NOTE 4 - Notes Payable-Current

During 1999, the Company received $980,000 cash and $20,000 of
equipment from a company. In December 1999, $500,000 of the note was
converted to 381,679 restricted shares of the company's common stock. The
remaining balance of $500,000 matures on December 31, 2000.

NOTE 5 - Computer Software Costs

On May 7, 1997, the Company entered into an agreement for assignment
of a security interest and judgement from a bank for various software service
codes and other technology they held. Pursuant to FASB 86, the Company
capitalized these costs because the purchased software had alternative future
use, being an integral part of the internet software design product sold to
the public. Costs of maintaining the product is charged to expense when
incurred. The Company paid $10,000 for the transfer of these software tools
and is amortizing them over a five year life. Amortization expense is $2,001,
$2,000 and $1,167 for the years ended December 31, 1999, 1998 and 1997,
respectively.

F-17
<PAGE> 76

Pacific WebWorks, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998

NOTE 6 - Reverse Merger / Stock Split

Effective January 11, 1999, Pacific Webworks, Inc. (a public Company)
entered into an agreement and Plan of Reorganization with Utah Webworks, Inc.,
(a private company). The agreement provides for the merger of the Company
into Utah Webworks to be treated as a reverse merger, thus making Utah
Webworks the accounting survivor. Pursuant to the agreement the Company
issued 5,000,000 shares of common stock to the shareholders of Utah Webworks
for all shares of their Company. Because the historical financial information
in these financial statements prior to the reverse merger (January 11, 1999)
is that of the accounting acquirer (Utah Webworks), a 5,000 for 1 forward
stock split adjustment has been retroactively applied to the shares of Utah
Webworks, to show the effects of the reverse merger. The 5,000,000 share
reorganization adjustment represents the shares held by the shareholders of
the public company. The management of the Company resigned and the management
and board of Utah Webworks filled the vacancy. Utah Webworks is in the
business of software development for computer and internet systems. The
public company had cash in escrow of $750,000 and a note receivable from Utah
Webworks of $250,000 as its only assets. The cash and note receivable were
contributed to Utah Webworks as an investment in subsidiary advanced for
operations. This business combination was accounted for using the purchase
method.

NOTE 7 - Investment in Joint Venture

During 1999, the Company became a 50% member in World Commerce
Network, LLC. For 1999, World Commerce Network, LLC has a net loss of
$281,341, of which, $140,671 should be recognized by the Company. However,
since the Company contributed only $25,000 in capital, the loss on investment
is limited to this amount. The Company's book value in this investment at
December 31, 1999 is $0. In January 2000, the Company acquired an additional
1% interest and began accounting for this investment using the consolidation
method and changed from the equity method.

NOTE 8 - Related Party

During 1999, $166,046 has been recognized as a notes receivable from
World Commerce Network, LLC. There is no provision for interest and the
balance is due within the next twelve months.

As of December 31, 1999, there is an accounts receivable of $6,800
due from World Commerce Network, LLC.

Lamar Taylor, a previous officer and shareholder of the Company,
advanced funds to the Company for operating capital in the amount of $131,300
and $108,800 during the periods ended December 31, 1998 and 1997,
respectively. All advances were repaid during 1998.

NOTE 9 - Stock Warrants

At January 1999, the Company had outstanding warrants to purchase
400,000 shares of the Company's common stock at prices ranging from $2.50 to
$6.00 per share. The warrants became exercisable in January 1999 and expire
in January 2004. The warrants are exercisable as follows:

150,000 warrants at $2.50
100,000 warrants at $3.50
100,000 warrants at $4.50
50,000 warrants at $6.00

F-18
<PAGE> 77

Pacific WebWorks, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998

NOTE 9 - Stock Warrants (continued)

The warrants were issued to a public relations firm for promotional
services to be provided for one year from issue date. To date, the warrant
holder has not exercised any of the warrants. We accounted for these warrants
per FASB 123 using the Black-Scholes model on the date the warrants became
measurable per EITF 96-18. The measurement dates are as follows: 133,000
warrants on January 28, 1999, 67,000 warrants of July 27, 1999 and the
remaining 200,000 on November 27, 1999. The resulting valuation for the
warrants is $1,255,800 of which $1,242,584 was amortized in 1999. The balance
of $13,216 will be amortized during the year 2000 and is recorded a deferred
compensation on the balance sheet. As of the audit report date, no options
have been exercised.

NOTE 10 - Commitments and Contingencies

The Company is committed to an operating lease for office space. The
lease requires the Company to pay monthly rent of $8,700 and expires in
December 2001.

Future minimum lease payments are as follows:

2000 $ 104,400
2001 104,400
----------------
Total $ 208,800
================

NOTE 11 - Fair Value of Financial Instruments

Unless otherwise indicated, the fair values of all reported assets
and liabilities which represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such instruments.

NOTE 12 - Incentive Stock Option Plan

On December 1, 1999, the Company established an Incentive Stock Option
Plan (the Plan). The Plan covers both current and prospective employees

The exercise price for each option shall be established by the Company
Board of Directors. The exercise price per share for an Incentive Stock
Option can not be less than the fair market value of a share of stock on the
effective grant date. Once granted 33% of the options vest after 1 year of
service and the remaining 67% vests after the second year.

As of December 31, 1999, there are 750,000 options granted and no
options have yet vested. Per SFAS 123, the Company does not record
compensation for the stock options until the employee performs the required
service and the options are issued (vest). No options are exercisable after
the expiration of 10 years after the effective grant date. The maximum number
of shares to be issued under the plan is 1,000,000.

F-19
<PAGE> 78

Logio, Inc.
(a development stage company)

CONSOLIDATED BALANCE SHEETS

ASSETS
September 30, December 31,
2000 1999
------------- -------------
CURRENT ASSETS (Unaudited)
Cash and cash equivalents $ 171,226 $ 1,055,371
Short term investments - 1,462,147
Accounts receivable, net of allowance for
doubtful accounts of $6,000
as of September 30, 2000
(none as of December 31, 1999) 28,815 736
Interest receivable - 1,983
Note receivable - 1,955
Prepaid assets 68,748 311,199
------------- -------------

Total current assets 268,789 2,833,391
------------- -------------

PROPERTY & EQUIPMENT, net 1,480,493 1,930,335

OTHER ASSETS 5,811 6,011
------------- -------------

$ 1,755,093 $ 4,769,737
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current portion of long-term capital
lease obligations $ 312,880 $ 299,983
Accounts payable (Note 2) 99,866 306,349
Accrued expenses 57,091 86,319
Note payable (Note 2) 96,116 659,682
------------- -------------

Total current liabilities 565,953 1,352,333

CAPITAL LEASE OBLIGATIONS, less current maturities 38,582 253,350

COMMITMENTS AND CONTINGENCY (Notes 2, 6 and 7) - -

STOCKHOLDERS' EQUITY (Notes 3, 4, 5 and 6)
6% preferred stock, par value $0.01; liquidation
preference $1,000; authorized 50,000 shares;
issued and outstanding none as of September 30,
2000 and 6,300 as of December 30, 1999 - 63
Common stock, par value $0.001; authorized
60,000,000 shares; issued and outstanding
17,270,830 as of September 30, 2000 and
11,891,002 as of December 31, 1999 17,271 11,891
Additional paid-in capital 18,371,258 15,362,028
Accumulated other comprehensive income - 7,940
Deficit accumulated during the development stage (17,237,971) (12,217,868)
------------- -------------

Total stockholders' equity 1,150,558 3,164,054
------------- -------------

$ 1,755,092 $ 4,769,737
============= =============

The accompanying notes are an integral part of these financial statements

F-20
<PAGE> 79

Logio, Inc.
(a development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>

Cumulative
amounts Three months ended Nine months ended
since September 30, September 30,
inception 2000 1999 2000 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues
Advertising $ 2,180 $ 646 $ - $ 2,180 $ -
Product 130,517 - 1,213 - 15,285
------------- ------------- ------------- ------------- -------------
132,697 646 1,213 2,180 15,285

Cost of sales 472,648 140,161 231 440,907 4,330
------------- ------------- ------------- ------------- -------------

Gross profit (loss) (339,951) (139,515) 982 (438,727) 10,955
------------- ------------- ------------- ------------- -------------

Research and development 3,263,488 113,264 266,379 1,672,316 596,395

Selling and marketing
expenses 1,651,787 28,417 357,046 658,034 534,000

General and
administrative 2,740,861 326,393 252,989 976,183 780,651

Depreciation and
amortization 802,134 205,137 42,288 606,141 80,949

Compensation expense
for stock options 2,083,853 50,400 430,801 631,242 1,135,988
------------- ------------- ------------- ------------- -------------

Total operating
expenses 10,542,123 723,611 1,349,503 4,543,916 3,127,983
------------- ------------- ------------- ------------- -------------

Loss from operations (10,882,074) (863,126) (1,348,521) (4,982,643) (3,117,028)

Other income (expense)

Interest income 261,665 20,167 61,181 55,002 158,428
Financing charges
(Note 3) (133,703) (133,703) - (133,703) -
Interest expense (151,661) (33,431) (652) (96,422) (3,561)
Loss on disposal of
equipment (2,215) (2,215) - (2,215) -
------------- ------------- ------------- ------------- -------------
(25,914) (149,182) 60,529 (177,338) 154,867
------------- ------------- ------------- ------------- -------------
Loss before
extraordinary item (10,907,988) (1,012,308) (1,287,992) (5,159,981) (2,962,161)

Extraordinary gain
(Notes 2 and 3) 204,238 204,238 - 204,238 -
------------- ------------- ------------- ------------- -------------

NET LOSS (10,703,750) (808,070) (1,287,992) (4,955,743) (2,962,161)

Deduction for dividends
and accretion (6,534,221) - (1,519,113) (64,360) (6,239,007)

Net loss attributable to
common stockholders $(17,237,971) $ (808,070) $ (2,807,105) $ (5,020,103) $ (9,201,168)
============= ============= ============= ============= =============
Net loss per common
share - basic and
diluted (Note 4):

Before extraordinary
item and deduction
for dividends and
accretion $ (1.39) $ (0.06) $ (0.11) $ (0.38) $ (0.25)

Extraordinary gain 0.03 0.01 - 0.02 -

Deduction for dividends
and accretion (0.83) - (0.13) (0.01) (0.52)
------------- ------------- ------------- ------------- -------------
Net loss per common
share attributable
to common
stockholders $ (2.19) $ (0.05) $ (0.24) $ (0.37) $ (0.77)
============= ============= ============= ============= =============
Weighted-average number
of shares outstanding-
basic and diluted 7,839,426 16,644,408 11,881,611 13,509,126 11,879,881
============= ============= ============= ============= =============

The accompanying notes are an integral part of these financial statements

F-21
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>

Logio, Inc.
(a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Cumulative
amounts Nine months
since ended September 30,
inception 2000 1999
------------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net loss $(10,703,750) $ (4,955,743) $ (2,962,161)
Adjustments to reconcile net loss
to net cash used in operating activities
Depreciation & amortization 802,134 606,141 80,949
Loss on disposal of equipment 2,215 2,215 -
Bad debt expense 6,000 6,000 -
Financing charge for stock conversion 133,703 133,703 -
Issuance of common stock and options
for compensation and other expenses 2,083,853 631,242 1,135,988
Issuance of warrants for consulting services 348,000 90,000 171,552
Extraordinary gain (204,238) (204,238) -
Changes in assets and liabilities
Accounts receivable (34,815) (34,079) (1,485)
Interest receivable - 1,983 (3,840)
Prepaid expenses and other assets (68,748) 242,451 15,294
Accounts payable 99,866 (77,336) 56,428
Accrued expenses 57,091 (14,586) 7,607
------------- ------------- -------------

Total adjustments 3,225,061 1,383,496 1,462,493
------------- ------------- -------------

Net cash used in operating activities (7,478,689) (3,572,247) (1,499,668)
------------- ------------- -------------
Cash flows from investing activities
Purchases of property and equipment (1,387,428) (92,829) (751,981)
(Increase) decrease in short-term investments - 1,454,207 (3,065,648)
Repayment of notes receivable from related
parties 117,700 1,955 -
Notes receivable issued to related parties (117,700) - 97,531
(Increase) decrease in other assets (5,811) 200 (5,076)
------------- ------------- -------------
Net cash provided by (used in)
investing activities (1,393,239) 1,363,533 (3,725,174)
------------- ------------- -------------
Cash flows from financing activities
Proceeds from issuance of common stock 2,292,762 907,600 22,400
Proceeds form issuance of preferred stock 6,300,000 - 6,300,000
Cash paid for fees associated with preferred
stock issuance (392,100) - (392,100)
Proceeds from issuance of notes payable
to related parties 1,423,000 1,423,000 -
Principal payments of notes payable to
related parties (250,000) (250,000) -
Principal payments under capital lease
obligations (532,401) (267,556) (16,006)
Proceeds from issuance of long term
obligations and notes payable 998,682 - -
Principal payments of long-term obligations
and notes payable (796,789) (488,475) (120,000)
------------- ------------- -------------

Net cash provided by financing activities 9,043,154 1,324,569 5,794,294
------------- ------------- -------------

Net increase (decrease) in cash and
cash equivalents 171,226 (884,145) 569,452

Cash and cash equivalents at beginning of period - 1,055,371 425,702
------------- ------------- -------------

Cash and cash equivalents at end of period $ 171,226 $ 171,226 $ 995,154
============= ============= =============

Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 147,679 $ 98,551 $ 3,673
Cash paid during the period for income taxes - - -

F-22

</TABLE>
<PAGE> 81

Logio, Inc.
(a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)

Non-cash financing activities:

During the nine months ended September 30, 2000 and 1999, the Company
purchased $65,685 and $3,594, respectively, in property and equipment
through capital lease obligations.

Also during the nine months ended September 30, 2000, a total of 6,300
shares of the Company's convertible preferred stock were converted into
625,000 shares of the Company's common stock. Convertible preferred
shareholders were also issued 727,756 and 61,650 shares of the Company's
common stock during the nine months ended September 30, 2000 for reset
provisions and cumulative dividends, respectively (Note 3).

During the nine months ended September 30, 2000, the Company settled
$244,670 in vendor payables for $51,225 in cash and $70,000 in stock.
These settlements resulted in $123,445 of forgiven debt and
extraordinary gain.

During the nine months ended September 30, 2000, the Company settled
$290,793 in notes payable and accrued interest for $210,000 in cash.
This settlement resulted in $80,793 of forgiven debt and extraordinary
gain.

During the nine months ended September 30, 2000, the Company converted a
total of $676,246 in debt and interest to 3,165,000 shares of the
Company's common stock at prices ranging from $0.2012 to $0.2510 per
share. The conversions resulted in a financing charge of $133,703
representing those conversions with price differences between fair
market values of the common stock on the dates of conversion and the
conversion prices.

During the nine months ended September 30, 2000, the Company converted a
total of $500,000 in notes payable to shareholders and interest of
$11,666 into 626,422 shares of the Company's common stock at prices
ranging from $0.81 to $0.82 per share. The conversions resulted in
an extraordinary gain of $315,909 representing those conversions with
price differences between fair market values of the common stock on the
dates of conversion and the conversion prices.

The accompanying notes are an integral part of these financial statements

F-23

<PAGE> 82
<TABLE>
<CAPTION>
Logio, Inc.
(a development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

Nine months ended September 30, 2000 (unaudited)
and years ended December 31, 1999, 1998, 1997,
and period from November 5, 1996 (inception) to December 31, 1996

Deficit
Accumulated accumulated
Additional other during the
Price per Preferred Stock Common Stock paid-in comprehensive development
Date share Shares Amount Shares Amount capital income stage
------ --------- -------- -------- ----------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at November 5,
1996 - $ - - $ - - $ - $ - $ - $ -

Net loss - - - - - - - - -
-------- -------- ----------- ------- ------------ ------------ ------------
Balances at December 31,
1996 - - - - - - - - -

Issuance of stock for
cash to organizers Jan-97 0.001 - - 622,500 623 52 - -

Issuance of stock for
cash Feb-97 0.001 - - 67,500 67 8 - -

Issuance of stock for
licence agreement Feb-97 - - - 110,742 111 (111) - -

Issuance of stock to
employees for
services Sep-97 0.333 - - 252,450 252 83,898 - -

Issuance of stock for
services Aug-97 1.092 - - 37,875 38 41,337 - -

Net loss for the year - - - - - - - - (335,218)
-------- -------- ----------- ------- ------------ ------------ ------------
Balances at December 31,
1997 - - - - 1,091,067 1,091 125,184 - (335,218)

(Continued)
F-24
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>

Logio, Inc.
(a development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - CONTINUED

Nine months ended September 30, 2000 (unaudited)
and years ended December 31, 1999, 1998, 1997,
and period from November 5, 1996 (inception) to December 31, 1996

Deficit
Accumulated accumulated
Additional other during the
Price per Preferred Stock Common Stock paid-in comprehensive development
Date share Shares Amount Shares Amount capital income stage
------ --------- -------- -------- ----------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of stock
for cash Jul-98 4.17 - - 120,000 120 499,880 - -

Reverse acquisition and
reorganization
adjustment Jul-98 - - - 9,885,435 9,886 (8,550) - -

Issuance of stock
for cash Jul-98 0.725 - - 690,000 690 499,310 - -

Issuance of stock for
debt conversion Jul-98 0.96 - - 13,500 13 12,987 - -

Issuance of stock for
services Oct-98 1.90 - - 39,000 39 70,161 - -

Issuance of stock for
software technology Oct-98 1.80 - - 13,000 13 23,387 - -

Issuance of stock for
insurance coverage Nov-98 1.00 - - 25,000 25 24,975 - -

Net loss for the year - - - - - - - - (482,909)
------ --------- -------- -------- ----------- ------- ------------ ------------ ------------
Balances at December 31,
1998 - - - - 11,877,002 11,877 1,247,334 - (818,127)

(continued)
F-25
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>

Logio, Inc.
(a development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - CONTINUED

Nine months ended September 30, 2000 (unaudited)
and years ended December 31, 1999, 1998, 1997,
and period from November 5, 1996 (inception) to December 31, 1996

Deficit
Accumulated accumulated
Additional other during the
Price per Preferred Stock Common Stock paid-in comprehensive development
Date share Shares Amount Shares Amount capital income stage
------ --------- -------- -------- ----------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of warrants for
consulting services Jan-99 - - - - - 258,000 - -

Issuance of preferred
stock for cash, net of
offering costs Feb-99 1,000 6,100 61 - - 5,719,839 - -

Issuance of preferred
stock for cash, net of
offering costs Mar-99 1,000 200 2 - - 187,998 - -

Issuance of common stock
for exercise of options Jun-99 0.11 - - 2,000 2 21,998 - -

Issuance of common stock
for exercise of options Aug-99 0.10 - - 4,000 4 396 - -

Issuance of common stock
for conversion of debt Dec-99 3.25 - - 8,000 8 25,992 - -

Issuance of stock
options to employees Jan-
for compensation Dec 99 - - - - - 1,430,610 - -

Accretion of intrinsic
value of preferred Feb-
stock Dec 99 - - - - - 6,131,944 - (6,131,944)

Dividends on preferred Feb-
stock Dec 99 - - - - - 337,917 - (337,917)

Unrealized gain on
short-term investments - - - - - - - 7,940 -

Net Loss for the year - - - - - - - - (4,929,880)
-------- -------- ----------- ------- ------------ ------------ ------------
Balances at December 31,
1999 - - 6,300 63 11,891,002 11,891 15,362,028 7,940 (12,217,868)

(Continued)
F-26

</TABLE>
<PAGE> 85
<TABLE>
<CAPTION>

Logio, Inc.
(a development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - CONTINUED

Nine months ended September 30, 2000 (unaudited)
and years ended December 31, 1999, 1998, 1997,
and period from November 5, 1996 (inception) to December 31, 1996

Deficit
Accumulated accumulated
Additional other during the
Price per Preferred Stock Common Stock paid-in comprehensive development
Date share Shares Amount Shares Amount capital income stage
------ --------- -------- -------- ----------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock
for exercise of options Jan 00 0.10 - - 2,000 2 198 - -

Issuance of common stock
for exercise of warrants Jan 00 5.00 - - 100,000 100 499,900 - -

Conversion of preferred
stock to common stock Feb 00 - (2,500) (25) 248,016 248 (223) - -

Issuance of common stock
for exercise of options Mar 00 0.10 - - 12,000 12 1,188 - -

Issuance of common stock
for exercise of warrants Mar 00 7.00 - - 58,000 58 405,942 - -

Conversion of preferred
stock to common stock Mar 00 - (3,800) (38) 376,984 377 (339) - -

Issuance of common stock
for reset shares Mar 00 - - - 727,756 728 (728) - -

Dividends on preferred Jan-
stock Mar 00 - - - - - 64,360 - (64,360)

Issuance of common stock
for preferred dividends
paid Mar-00 - - - 61,650 62 (62) - -

Issuance of common stock
for exercise of options Apr-00 0.10 - - 2,000 2 198 - -

Issuance of stock for
conversion of notes 0.20-
payable (Note 3) Sep-00 0.2510 - - 3,165,000 3,165 806,514 - -

Issuance of stock for
conversion of notes
payable to shareholders 0.81-
(Notes 2 and 3) Sep-00 0.82 - - 626,422 626 511,040 - -

Issuance of warrants
for consulting May -
services Sep 00 - - - - - 90,000 - -

Issuance of stock options
to employees for Jan -
compensation Sep 00 - - - - - 631,242 - -

Unrealized gain on Jan-
marketable securities Sep 00 - - - - - - 6,071 -

Net realized gain on Jan-
marketable securities Jun 00 - - - - - - (14,011) -

Net loss for the interim
period ended September
30, 2000 - - - - - - - - (4,955,743)
-------- -------- ----------- ------- ------------ ------------ ------------
Balances at September 30,
2000 - - - $ - 17,270,830 $17,271 $18,371,258 $ - $(17,237,971)
======== ======== =========== ======= ============ ============ ============

The accompanying notes are an integral part of this financial statement

F-27
</TABLE>
<PAGE> 86

Logio, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2000 and 1999
(Unaudited)

NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION

Logio, Inc., formerly WordCruncher Internet Technologies, Inc., (the Company)
is a development stage company engaged in the development and marketing of a
focused Internet directory and search engine which serves the needs of the
business professional.

The Company commenced planned principal operations on March 19, 2000 of its
Internet portal and directory, but has not produced any significant revenues.

On September 29, 2000, the Company changed its focus from its business
Internet portal to its continuing developmental efforts on the Logio business
directory.

The Company was incorporated on November 5, 1996 in the State of Utah under
the name of Redstone Publishing, Inc. During July 1998, the Company merged
with Dunamis, Inc. a public Company organized in the State of California. The
merger was recorded as a reverse acquisition, therefore WordCruncher is the
accounting survivor.

On April 18, 2000, the Board of Directors approved the change of the Company's
name to Logio, Inc. The change was approved by the Company's stockholders in
June 2000. The Company also amended its articles of incorporation and filed
the appropriate documents with the state of Nevada in June 2000 when the
Company officially changed its name to Logio, Inc.

The Company conducts its business within one industry segment.

The accompanying unaudited consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments, which, in the opinion
of management, are necessary for a fair presentation of the results for the
periods shown. Certain prior period balances have been reclassified to conform
with current period presentation.

NOTE 2 - SETTLEMENT OF LIABILITIES

During the nine months ended September 30, 2000, the Company settled $244,670
of vendor payables for $51,225 in cash and $70,000 in stock. These
settlements resulted in $123,445 of forgiven debt and extraordinary gain.

Also during the nine months ended September 30, 2000, the Company settled
$290,793 in notes payable and accrued interest for $210,000 in cash. This
settlement resulted in $80,793 of forgiven debt and extraordinary gain.

F-28
<PAGE> 87

Logio, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2000 and 1999
(Unaudited)

NOTE 2 - SETTLEMENT OF LIABILITIES (Continued)

In June 2000, the Company was loaned $500,000 from three principal
shareholders and officers of the Company in exchange for notes payable bearing
interest of 8% annually. Principal and interest were due in full on July 1,
2001. The notes were not collateralized. On September 26, 2000 the Company
converted the notes and $11,666 of accrued interest into 626,422 of the
Company's common stock at $0.81 to $0.82 per share, which represents prices in
excess of the fair market value ($0.3125) of the common shares on the date of
conversion.

The Company was also released from approximately $406,000 of other long-term
commitments with certain of its vendors that would have expired through April
2002 by obtaining releases and giving consideration through settlements as
discussed above.

NOTE 3 - SHAREHOLDERS' EQUITY

Preferred stock conversion
--------------------------
In February and March 2000, holders of the Company's convertible preferred
stock converted 6,300 preferred shares into 625,000 common shares. The
preferred stockholders also received 727,756 shares of the Company's common
stock in conjunction with the "reset" provisions of the preferred stock
agreement. Common stock totaling 61,650 shares were also issued to preferred
shareholders representing a six percent cumulative dividend.

Stock purchase agreement
------------------------
On July 6, 2000, the Company signed a purchase agreement with five investors
for the sale of two million shares of its common stock for a total purchase
price of $1.4 million. The terms of the agreement required the deposit of
$1.4 million into an escrow account before July 31, 2000. The monies were
agreed to be released to the Company upon the effective registration of the
shares with the Securities and Exchange Commission on or before October 31,
2000. In September 2000, the Securities and Exchange Commission declared the
registration effective. As of September 30, 2000, the investors have not
released the funds and are in default of the agreement.

Conversion of notes payable to equity
-------------------------------------
In September 2000, the Company was advanced a total of $603,000 from various
parties to fund the settlement of liabilities in the form of notes payable.
Also in September 2000 the Company then converted the notes payable and $2,976
of accrued interest into 2,815,000 of the Company's common stock at prices
ranging from $0.2012 to $0.251 per share. The conversion prices did not
represent the fair market value of the common shares on the date of
conversion. As such, the Company incurred $88,576 in financing charges.

F-29
<PAGE> 88

Logio, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2000 and 1999
(Unaudited)

NOTE 3 - SHAREHOLDERS' EQUITY (Continued)

Conversion of notes payable to equity - continued
-------------------------------------------------
In September 2000, a corporation assumed $130,045 in liability from one of the
Company's vendors. Also in September 2000, the Company converted $70,000 of
this liability into 350,000 shares of the Company's common stock and was
forgiven of $60,045 in liability by the assuming creditor (as discussed
above). The liability was converted at $0.20 per share, which did not
represent the fair market value of the Company's common shares on the date of
conversion. As such, the Company incurred $45,127 in financing charges.

As discussed in Note 2, in September 2000, the Company converted $511,666 of
notes payable and interest to shareholders to 626,422 shares of its common
stock. The fair market value of the shares on the date of conversion was
$0.3125 and the conversion prices ranged from $0.81 to $0.82 per share.

NOTE 4 - NET LOSS PER COMMON SHARE

<TABLE>
<CAPTION>
Cumulative
amounts Three months ended Nine months ended
since September 30, September 30,
inception 2000 1999 2000 1999
------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Common shares
outstanding during
the entire period - 13,479,408 11,879,002 11,891,002 11,879,002

Weighted-average
common shares issued
during the period 7,839,426 3,165,000 2,609 1,618,124 879
------------ ------------ ------------- ------------- ------------
Weighted-average
common shares used
in basic EPS 7,839,426 16,644,408 11,881,611 13,509,126 11,879,881

Dilutive effects of
potential common
shares - - - - -
------------ ------------ ------------- ------------- ------------
Weighted-average
number of common
shares and dilutive
potential common
stock used in
diluted EPS 7,839,426 16,644,408 11,881,611 13,509,126 11,879,881
============ ============ ============= ============= ============

</TABLE>

The computation of net loss per common share is based on the weighted-average
number of shares outstanding during each period presented. Diluted loss per
common share would include the dilutive potential effects of options,
warrants, and convertible and reset features of series A preferred stock, but
were not included in the calculation of diluted net loss per common share
because their effects were anti-dilutive.

F-30
<PAGE> 89

Logio, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2000 and 1999
(Unaudited)

NOTE 5 - EQUITY INCENTIVE PLAN

On April 18, 2000, the Board of Directors adopted the Logio, Inc. 2000 Equity
Incentive Plan (the Plan). The Plan allows for the granting of awards in the
form of stock options, stock appreciation rights or restricted shares to
employees, independent directors and certain consultants. The Company may
grant awards representing up to 2,500,000 shares of the Company's common stock
under the Plan. This includes 1,450,116 options, each to purchase one share
of the Company's common stock, outstanding as of September 30, 2000. The Plan
was approved by the Company's stockholders in June of 2000.

During the nine months ended September 30, 2000, the Company granted 1,283,000
options, each to purchase one share of the Company's common stock to
employees, directors and certain consultants at exercise prices ranging from
$0.625 to $7.7813 per share. Approximately 886,834 of these options were
forfeited during the nine months ended September 30, 2000.

Common stock issued in relation to the exercise of warrants and options during
the nine months ended September 30, 2000 totaled 174,000 shares.

On May 15, 2000, the Company entered into an agreement with a consultant to
provide investor relations, public relations, and fulfillment services related
to financing in exchange for warrants. A total of 200,000 warrants were
issued at an exercise price of $3.00 per share and an additional 200,000
warrants were issued at an exercise price of $4.00 per share under the terms
of this agreement. Vesting of the warrants commenced as follows: 25% on
agreement date (May 15, 2000), 25% on June 30, 2000, and 50% on September 30,
2000. Consulting charges related to this agreement total $90,000 representing
the fair market value of the services performed through
September 30, 2000. The agreement terminates on January 15, 2001 when the
services are completed. The vested warrants expire on May 15, 2005.

NOTE 6 - LETTER OF INTENT

On September 29, 2000, the Company entered into a letter of intent with
Pacific WebWorks, Inc. (Pweb). The letter outlines, among other things,
Pweb's intent to acquire Logio, Inc. for an estimated ratio of one Pweb common
share for every 6.6 shares of Logio, Inc., which is estimated to total
2,700,000 Pweb shares. Logio, Inc. and Pweb underwent a 30-day due diligence
period to evaluate and conclude the acquisition.

NOTE 7 - CONTINGENCY

The Company is currently in dispute with one of its vendors for services that
were not performed adequately, not received or not requested. The vendor is
currently reviewing approximately $130,000 of billings that the Company claims
are erroneous. The Company intends to rigorously defend itself against any
portion of the over-billings that may be re-submitted by the vendor.

F-31
<PAGE> 90
Logio, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2000 and 1999
(Unaudited)

NOTE 8 - SUBSEQUENT EVENTS

Conversion of note payable to equity
------------------------------------
In October 2000, the Company was advanced $169,300 from a related party to
fund the Company through the possible acquisition discussed in Note 6. The
Company converted this note into 1,150,000 shares of its common stock. The
conversion price did not represent the fair market value of the common shares
on the date of conversion. As such, the Company incurred $83,700 in financing
charges.

Issuance of stock for exercise of options
-----------------------------------------
In October 2000, the Company issued 5,000 shares of its common stock to an
employee who exercised stock options.

Agreement and plan of reorganization
------------------------------------

On October 31, 2000, the Company entered into an Agreement and Plan of
Reorganization (Plan) with Pweb. The Plan includes the transfer of 18,425,830
shares of the Company's common stock in exchange for 2,800,000 shares of
Pweb's common stock subject to the provisions of the Plan. Pweb has also
committed to file a registration statement with the Securities Exchange
Commission to cover the 2,800,000 shares issued pursuant to the Plan. Upon
approval of the Plan by the Company's stockholders, the Company will be a
wholly owned subsidiary of Pweb.

F-32
<PAGE> 91

REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
WordCruncher Internet Technologies, Inc.

We have audited the accompanying consolidated balance sheet of WordCruncher
Internet Technologies, Inc. (a development stage company), as of December 31,
1999, and the related consolidated statements of operations, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The
financial statements, audited by other auditors, for the period from November
5, 1996 (inception) to December 31, 1998 reflect total revenues and net loss
of $107,162 and $818,127, respectively, of the related totals. Our opinion
insofar as it relates to the cumulative amounts since inception included for
such prior period, is based solely on the report of other auditors.

We conducted our 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. We believe that our audit and the report of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of other auditors, the 1999
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of WordCruncher Internet
Technologies, Inc. (a development stage company), as of December 31, 1999, and
the consolidated results of their operations and their consolidated cash flows
for the year then ended and cumulative amounts since inception in conformity
with generally accepted accounting principles.

F-33
<PAGE> 92

The Company is in the development stage as of December 31, 1999. Recovery of
the Company's assets is dependent on future events, the outcome of which is
indeterminable. In addition, successful completion of the Company's
development plan and its transition, ultimately, to attaining profitable
operations, is dependent upon obtaining adequate financing to fulfil its
development activities and achieving a level of sales adequate to support the
Company's cost structure.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As shown in the financial statements, the
Company has incurred consolidated cumulative net losses attributable to common
stockholders of $12,217,868 since inception of operations. This factor, among
others, as discussed in Note B to the financial statements, raises substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note B.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/Grant Thornton LLP

Salt Lake City, Utah
March 6, 2000

F-34
<PAGE> 94

CROUCH, BIERWOLF & CHISHOLM
Certified Public Accountants
50 West Broadway, Suite 1130
Salt Lake City, Utah 84101
Office: (801) 363-1175

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
of WordCruncher Internet Technologies, Inc.

We have audited the accompanying consolidated balance sheets of WordCruncher
Internet Technologies, Inc. (a development stage company) as of December 31,
1998 and 1997 and the related statements of operations, stockholders' equity
and cash flows for the years ended December 31, 1998, 1997 and 1996 and from
inception of the development stage on November 5, 1996 through December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
WordCruncher Internet Technologies, Inc. (a development stage company) as of
December 31, 1998 and 1997 and the results of its consolidated operations and
cash flows for the years ended December 31, 1998, 1997 and 1996 and from
inception of the development stage on November 5, 1996 through December 31,
1998 in conformity with generally accepted accounting principles.

/s/ Crouch, Bierwolf & Chisholm

Salt Lake City, Utah
January 21, 1999

F-35
<PAGE> 95
WordCruncher Internet Technologies, Inc.
(a development stage company)

CONSOLIDATED BALANCE SHEETS

December 31,

ASSETS

1999 1998
------------- -------------
CURRENT ASSETS
Cash and cash equivalents $ 1,055,371 $ 425,702
Short-term investments (Note C) 1,462,147 -
Prepaid expenses 311,199 -
Interest receivable 1,983 -
Current maturities of notes receivable (Note F) 1,955 -
Accounts receivable 736 -
------------- -------------
Total current assets 2,833,391 425,702
------------- -------------
PROPERTY AND EQUIPMENT, at cost (Note E) 1,930,335 81,419

NOTES RECEIVABLE, less current maturities (Note F) - 100,200

OTHER ASSETS (Note D) 6,011 16,296
------------- -------------

$ 4,769,737 $ 623,617
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current maturities of long-term obligations
(Note G) $ - $ 120,000
Current maturities of capital lease obligations
(Note H) 299,983 16,006
Notes payable 659,682 -
Accounts payable 306,349 10,421
Accrued expenses 86,319 24,492
------------- -------------
Total current liabilities 1,352,333 170,919

CAPITAL LEASE OBLIGATIONS, less current maturities
(Note H) 253,350 11,614

COMMITMENTS (Notes H and I) - -

STOCKHOLDERS' EQUITY (Notes B, C, I, J, K, M and N)
6% preferred stock, par value $0.01; liquidation
preference $1,000; authorized 50,000 shares;
issued and outstanding 6,300 shares in 1999
and none in 1998 63 -
Common stock, par value $0.001; authorized
60,000,000 shares; issued and outstanding
11,891,002 shares in 1999 and 11,877,002 shares
in 1998 11,891 11,877
Additional paid-in capital 15,362,028 1,247,334
Accumulated other comprehensive income 7,940 -
Deficit accumulated during the development stage (12,217,868) (818,127)
------------- -------------

Total stockholders' equity 3,164,054 441,084
------------- -------------

$ 4,769,737 $ 623,617
============= =============

The accompanying notes are an integral part of these statements.

F-36

<PAGE> 96

WordCruncher Internet Technologies, Inc.
(a development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

Cumulative
amounts
since Year ended December 31,
inception 1999 1998 1997
------------- ------------- ------------- ------------
Revenues $ 130,517 $ 23,355 $ 82,678 $ 24,484
Cost of sales 31,741 15,071 15,864 806
------------- ------------- ------------- ------------
Gross profit 98,776 8,284 66,814 23,678

Selling expenses 993,536 953,708 34,554 5,274
Research and
development 1,591,390 1,198,546 266,563 126,281
General and
administrative 1,764,678 1,340,486 217,318 206,874
Depreciation and
amortization 195,994 179,169 10,406 6,419
Compensation expense
for common stock and
options (Note K) 1,452,610 1,452,610 - -
------------- ------------- ------------- ------------
Total operating
expenses 5,998,208 5,124,519 528,841 344,848
------------- ------------- ------------- ------------

Loss from operations (5,899,432) (5,116,235) (462,027) (321,170)

Other income (expense)
Interest income and
other 206,663 196,310 7,276 3,077
Interest expense (55,238) (9,955) (28,158) (17,125)
------------- ------------- ------------- ------------

151,425 186,355 (20,882) (14,048)
------------- ------------- ------------- ------------

NET LOSS $ (5,748,007) $ (4,929,880) $ (482,909) $ (335,218)
============= ============= ============= ============

Deduction for dividends
and accretion (Note J) $ (6,469,861) $ (6,469,861) $ - $ -
============= ============= ============= ============
Net loss attributable
to common stockholders $(12,217,868) $(11,399,741) $ (482,909) $ (335,218)
============= ============= ============= ============
Net loss per common
share - basic and
diluted (Note M) $ (2.09) $ (0.96) $ (0.08) $ (0.61)
============= ============= ============= ============
Weighted-average number
of shares outstanding
basic and diluted 5,850,408 11,879,919 6,100,679 545,535
============= ============= ============= ============

The accompanying notes are an integral part of these statements.

F-37
<PAGE> 97

WordCruncher Internet Technologies, Inc.
(a development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1999, 1998, 1997,
and period from November 5, 1996 (inception) to December 31, 1996

<TABLE>
<CAPTION>
Deficit
Preferred Stock Common Stock Accumulated accumulated
Price --------------- ------------------ Additional other during the
per Number of Number of paid-in comprehensive development
Date share Shares Amount Shares Amount capital income stage
------ ------- --------- ------- ----------- ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances
at November 5, 1996 - $ - - $ - - $ - $ - $ - $ -

Net loss - - - - - - - - -
--------- ------- ----------- ------- ----------- ------------- ------------
Balances
at December 31, 1996 - - - - - - - - -

Issuance of stock for
cash to organizers Jan 97 0.001 - - 622,500 623 52 - -

Issuance of stock
for cash Feb 97 0.001 - - 67,500 67 8 - -

Issuance of stock for
license agreement
(Note I) Feb 97 - - - 110,742 111 (111) - -

Issuance of stock to
employees for services Sep 97 0.333 - - 252,450 252 83,898 - -

Issuance of stock for
services performed Aug 97 1.092 - - 37,875 38 41,337 - -

Net loss for the year - - - - - - - - (335,218)
--------- ------- ----------- ------- ----------- ------------- ------------
Balances
at December 31, 1997 - - - - 1,091,067 1,091 125,184 - (335,218)

Issuance of stock
for cash Jul 98 4.17 - - 120,000 120 499,880 - -

Reverse acquisition
and reorganization
adjustment Jul 98 - - - 9,885,435 9,886 (8,550) - -

(Continued)
F-38
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
WordCruncher Internet Technologies, Inc.
(a development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1999, 1998, 1997,
and period from November 5, 1996 (inception) to December 31, 1996

Deficit
Preferred Stock Common Stock Accumulated accumulated
Price --------------- ------------------ Additional other during the
per Number of Number of paid-in comprehensive development
Date share Shares Amount Shares Amount capital income stage
------ ------- --------- ------- ----------- ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of stock
for cash Jul 98 0.725 - - 690,000 690 499,310 - -

Issuance of stock for
debt conversion Jul 98 0.96 - - 13,500 13 12,987 - -

Issuance of stock for
services Oct 98 1.90 - - 39,000 39 70,161 - -

Issuance of stock for
software technology Oct 98 1.80 - - 13,000 13 23,387 - -

Issuance of stock for
insurance coverage Nov 98 1.00 - - 25,000 25 24,975 - -

Net loss for the year - - - - - - - - (482,909)
--------- ------- ----------- ------- ----------- ------------- ------------
Balances
at December 31, 1998 - - - - 11,877,002 11,877 1,247,334 - (818,127)

Issuance of warrants
for consulting
services (Note K) Jan 99 - - - - - 258,000 - -

Issuance of preferred
stock for cash, net
of offering costs
(Note J) Feb 9 1,000 6,100 61 - - 5,719,839 - -

Issuance of preferred
stock for cash, net
of offering costs
(Note J) Mar 99 1,000 200 2 - - 187,998 - -

(Continued)

F-39
</TABLE>
<PAGE> 99
<TABLE>
<CAPTION>

WordCruncher Internet Technologies, Inc.
(a development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1999, 1998, 1997,
and period from November 5, 1996 (inception) to December 31, 1996

Deficit
Preferred Stock Common Stock Accumulated accumulated
Price --------------- ------------------ Additional other during the
per Number of Number of paid-in comprehensive development
Date share Shares Amount Shares Amount capital income stage
------ ------- --------- ------- ----------- ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common
stock to employees
for compensation Jun 99 0.11 - - 2,000 2 21,998 - -

Issuance of common
stock for exercise
of options Aug 99 0.10 - - 4,000 4 396 - -

Issuance of common
stock for conversion
of debt Dec 99 3.25 - - 8,000 8 25,992 - -

Issuance of stock
options to employees Jan -
for compensation Dec 99 - - - - - 1,430,610 - -

Accretion of intrinsic
value of preferred Feb -
stock (Note J) Dec 99 - - - - - 6,131,944 - (6,131,944)

Dividends on preferred Feb -
stock (Note J) Dec 99 - - - - - 337,917 - (337,917)

Unrealized gain on
marketable securities
(Note C) - - - - - - - 7,940 -

Net loss for the year - - - - - - - - (4,929,880)
--------- ------- ----------- ------- ----------- ------------- ------------
Balances
at December 31, 1999 - - 6,300 $ 63 11,891,002 $11,891 $15,362,028 $ 7,940 $(12,217,868)
========= ======= =========== ======= =========== ============= =============

The accompanying notes are an integral part of this statement.
F-40
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>

WordCruncher Internet Technologies, Inc.
(a development stage company)

STATEMENTS OF CASH FLOWS

Cumulative
amounts
since Year ended December 31,
inception 1999 1998 1997
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net loss $ (5,748,007) $ (4,929,880) $ (482,909) $ (335,218)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 195,994 179,169 10,406 6,419
Issuance of common stock and options
for compensation and other expenses 1,673,335 1,452,610 95,200 125,525
Issuance of warrants for consulting
services 258,000 258,000 - -
Changes in assets and liabilities
Prepaid expenses (311,199) (311,199) - -
Interest receivable (1,983) 8,035 (7,141) (2,877)
Accounts receivable (736) (736) - -
Accounts payable 301,349 295,928 4,251 1,170
Accrued expenses 86,319 61,827 19,063 5,429
------------- ------------- ------------- ------------

Total adjustments 2,201,079 1,943,634 121,779 135,666
------------- ------------- ------------- ------------

Net cash used in operating activities (3,546,928) (2,986,246) (361,130) (199,552)
------------- ------------- ------------- ------------
Cash flows from investing activities
Purchases of property and equipment (1,279,458) (1,260,831) (18,627) -
Increase in short-term investments (1,454,207) (1,454,207) - -
Repayment of notes receivable
from related parties 115,745 110,745 5,000 -
Notes receivable issued to related parties (117,700) (12,500) (23,200) (82,000)
Increase in deposits (5,076) - (5,076) -
------------- ------------- ------------- ------------

Net cash used in investing activities (2,740,696) (2,616,793) (41,903) (82,000)
------------- ------------- ------------- ------------

(Continued)

F-41
</TABLE>
<PAGE> 101
<TABLE>
<CAPTION>
WordCruncher Internet Technologies, Inc.
(a development stage company)

STATEMENTS OF CASH FLOWS

Cumulative
amounts
since Year ended December 31,
inception 1999 1998 1997
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Cash flows from financing activities
Proceeds from issuance of common stock 1,001,150 400 1,000,000 750
Proceeds from issuance of preferred stock 6,300,000 6,300,000 - -
Payment of fees associated with issuance
of preferred stock (392,100) (392,100) - -
Proceeds from issuance of notes payable 685,682 685,682 - -
Proceeds from issuance of long-term
obligations 313,000 - 13,000 300,000
Principal payments under capital lease
obligations (256,423) (241,274) (6,320) (8,829)
Principal payments of long-term obligations (308,314) (120,000) (188,314) -
------------- ------------- ------------- ------------

Net cash provided by investing activities 7,342,995 6,232,708 818,366 291,921
------------- ------------- ------------- ------------

Net increase in cash and cash equivalents 1,055,371 629,669 415,333 10,369

Cash and cash equivalents at beginning of period - 425,702 10,369 -
------------- ------------- ------------- ------------

Cash and cash equivalents at end of period $ 1,055,371 $ 1,055,371 $ 425,702 $ 10,369
============= ============= ============= ============

Supplemental disclosures of cash flow information
-------------------------------------------------
Cash paid during the period for:
Interest $ 49,128 $ 4,584 $ 29,888 $ 14,656
Income taxes - - - -

Noncash financing activities
----------------------------
Purchase of equipment through lease
obligations $ 818,177 $ 766,987 $ - $ 51,190
Unrealized gain on available-for-sale
securities 7,940 7,940 - -
Issuance of common stock for debt conversion 39,000 26,000 13,000 -

The accompanying notes are an integral part of these statements.

F-42
</TABLE>
<PAGE> 102
WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements follows:

1. Organization and principles of consolidation

WordCruncher Internet Technologies, Inc. (the Company) was incorporated
on November 5, 1996 in the State of Utah under the name of Redstone
Publishing, Inc. On March 10, 1997, the Company changed its name to
WordCruncher Publishing Technologies, Inc. During July 1998, the Company
merged with Dunamis, Inc. a public company organized in the State of
California. Dunamis had approximately $1 million of cash and essentially no
other assets and liabilities. Management of Dunamis resigned and management
of the Company now manages the consolidated entity. The merger was recorded
as a reverse acquisition, therefore WordCruncher is the accounting survivor.

In connection with the merger, Dunamis, the legal survivor, changed its
name to WordCruncher Internet Technologies, Inc. and changed its domicile to
the State of Nevada. The Company's headquarters are in Draper, Utah, where
the Company is engaged in the development and marketing of a business
information Internet site. The Internet site is specialized for business
professionals and the business-to-business marketplace. The Company has
acquired a license agreement from a University wherein the Company has an
exclusive, worldwide right to sell, develop and manufacture the "WordCruncher"
technology.

2. Stock split and change in par value

In July 1998, the Company authorized a 3 for 1 forward stock split.
These financial statements have been retroactively restated to reflect the
stock split. Pursuant to the reverse merger with Dunamis, the Company's par
value of its common stock changed to $.001 per share. This change has also
been retroactively applied.

3. Development stage company

The Company is a development stage company and is concentrating
substantially all of its efforts in raising capital and developing its
business information Internet site for future commercial release.

4. Software development costs

Software development costs incurred in the development of software
related products are charged to expense as incurred. Material software
development costs incurred subsequent to the establishment of technological
feasibility are capitalized. Technological feasibility is established by the
Company upon completion of a working model. Software development costs
incurred by the Company subsequent to technological feasibility have been
insignificant.

F-43

<PAGE> 103

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

5. Recognition of revenue

The Company recognizes income and expense on the accrual basis of
accounting. During the development stage, the Company has received revenues
for certain services provided for indexing printed materials to online format.
Revenue is recorded when the services are completed. The Company also
generates revenues during the development stage from the sale of its
publishers' proprietary version of the search engine technology. This
technology is sold separately without future performance such as upgrades or
maintenance, and is not sold with support services, therefore revenue is
recorded upon the sale and delivery of the product. Licensing fees are also
received from the sublicensing of this technology which is included in the
software of certain sublicenses. Licensing fees are recorded as revenue as
software is reported as sold by the sublicensee.

6. Cash and cash equivalents

The Company considers all highly liquid investments with original
maturities of three months or less when purchased to be cash equivalents.

7. Short-term investments

Short-term investments are comprised of various government securities,
commercial paper and other securities, which mature in one year or less and
are classified as available-for-sale. Available-for-sale securities are
measured at fair value with net unrealized gains and losses reported in
equity.

8. Fair value of financial instruments

The fair value of the Company's cash equivalents, receivables, accounts
payable and accrued liabilities approximate carrying value due to the
short-term maturity of the instruments. The fair value of long-term
obligations approximate carrying value based on their effective interest rates
compared to current market rates.

9. Use of estimates

In preparing the Company's financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ significantly from those estimates.

10. Depreciation and amortization

Depreciation of property and equipment is provided on the straight-line
method over the estimated useful lives of the assets. Accelerated methods of
depreciation of property and equipment are used for income tax purposes.

F-44
<PAGE> 104

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

10. Depreciation and amortization - continued

Property and equipment under capital leases are amortized over the lessor
of the life of the asset or the term of the lease.

Maintenance, repairs, and renewals which neither materially add to the
value of the property nor appreciably prolong its life are charged to expense
as incurred. Gains or losses on dispositions of property and equipment are
included in earnings.

11. Income taxes

In 1997, WordCruncher Publishing Technologies, Inc. elected to file
federal and state income taxes under the provisions of Subchapter S of the
Internal Revenue Code. Under those provisions, the Company did not pay
corporate income taxes on its taxable income during that period of time.
Instead, the stockholders were liable for individual income taxes on their
respective shares of the Company's net operating income in their individual
income tax returns. Effective July 1, 1998, the Company filed consolidated
tax returns with its parent and terminated its S-Corporation status.

Since July 1, 1998, the Company utilizes the liability method of
accounting for income taxes. Under the liability method, deferred income tax
liabilities are provided based on the difference between the financial
statement and tax bases of assets and liabilities as measured by the currently
enacted tax rates in effect for the years in which these differences are
expected to reverse. Deferred tax expense or benefit is the result of changes
in deferred tax assets and liabilities.

12. Comprehensive income

In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130 establishes
standards for disclosure and financial statement display for reporting total
comprehensive income and its individual components. Comprehensive income, as
defined, includes all changes in equity during a period from nonowner sources.
The Company's comprehensive income includes net loss and unrealized gains on
investments and is displayed in the statement of stockholders' equity.

13. Net loss per common share

The computation of net loss per common share is based on the
weighted-average number of shares outstanding during each period presented.
Diluted loss per common share would include the dilutive potential effects of
options, warrants, and convertible and reset features of Series A preferred
stock, but were not included in the calculation of diluted EPS because their
effects were antidilutive.

F-45
<PAGE> 105

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

14. Certain reclassifications

Certain nonmaterial reclassifications have been made to the 1998 and 1997
financial statements to conform to the 1999 presentation.

NOTE B - GOING CONCERN

The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate continuation
of the Company as a going concern. However, the Company is a development
stage company, has generated only limited revenue through
December 31, 1999, and has sustained losses from operations each period since
inception. In addition, it has a deficit accumulated during the development
stage of $12,217,868. Also, the Company has used cash in, rather than
provided cash from, its operations.

In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheets is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements on a continuing basis, to maintain present financing
and to succeed in its future operations. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue in existence.

The Company has taken the following steps to revise its operating and
financial requirements which it believes are sufficient to provide the Company
with the ability to continue in existence:

* During February and March 1999, Company received a total of
$6,300,000 for a preferred stock offering (Note J).
* During December 1999, the Company's pending S-1 Registration
Statement became effective.
* Through January 2000, the Company entered into agreements with
prominent ad serving and reporting technology companies to utilize
various technologies for its site management.
* Also in January 2000, the Company has selected a full-service
advertising agency to promote its planned business information
Internet site.
* In March of 2000, negotiations were underway to obtain up to
$15,000,000 of additional financing.
* In March 2000, the Company completed a working model of its planned
business information Internet site.

F-46
<PAGE> 106
WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE C - SHORT-TERM INVESTMENTS

At December 31, 1999, the cost, fair value and unrealized gain on
short-term investments are as follows:

Fair value $ 1,462,147
Cost 1,454,207
----------------

Unrealized gain $ 7,940
================

NOTE D - OTHER ASSETS

Other assets consist of the following:

1999 1998
------------- -------------
Deposits $ 5,076 $ 5,076
Other 935 1,202
Interest receivable - 10,018
------------- -------------

$ 6,011 $ 16,296
============= =============

NOTE E - PROPERTY AND EQUIPMENT

Property and equipment, at cost and estimated useful lives are as
follows:

Estimated
useful
1999 1998 lives
------------ ------------- -------------
Computer equipment $ 1,217,668 $ 54,352 5
Furniture and fixtures 49,392 5,358 7
Software technology 858,868 38,400 3
------------ -------------
2,125,928 98,110
Less accumulated depreciation 195,593 16,691
------------ -------------

Total property and equipment $ 1,930,335 $ 81,419
============ =============

F-47
<PAGE> 107
WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE F - NOTES RECEIVABLE - RELATED PARTIES

Notes receivable consist of the following:

1999 1998
------------- -------------
8% note receivable from a former employee,
interest and principal due in full April 2000,
not collateralized $ 1,955 $ -

8% note receivable from an officer, interest
and principal due in full January 1, 2000,
received in full in 1999 - 66,700

8% note receivable from an officer, interest
and principal due in full January 1, 2002,
received in full in 1999 - 29,500

8% note receivable from a corporation owned
by an officer, interest and principal due in
full January 1, 2000, received in full in 1999 - 4,000
------------- -------------
1,955 100,200

Less current maturities 1,955 -
------------- -------------

$ - $ 100,200
============= =============

NOTE G - LONG-TERM OBLIGATIONS

At December 31, 1998, the Company had prime plus 1.5 percent (9.25
percent) notes payable to officers in the amount of $120,000. Interest
payments were due monthly, and principal was due in December 1999. The notes
were not collateralized and were paid in full in 1999.

NOTE H - LEASES

1. Operating leases

The Company leases their office facilities under an operating lease,
which expires in March 2002. Future minimum lease payments are as follows:

Year ending December 31,
-----------------------
2000 $ 44,933
2001 44,933
2002 11,233
Thereafter -
----------------

$ 101,099
=================

F-48
<PAGE> 108

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE H - LEASES - CONTINUED

2. Capital lease obligations

Included in property and equipment is $818,177 and $51,101 of computer
equipment under capital leases at December 31, 1999 and 1998, respectively.
The related accumulated amortization is $56,411 and $16,333 at December 31,
1999 and 1998, respectively.

Future minimum lease payments at December 31, 1999, are as follows:

Year ending December 31,
-----------------------
2000 $ 335,930
2001 260,923
2002 3,388
Thereafter -
------------
Total minimum lease payments 600,241

Less amount representing interest 46,908
------------
Present value of net minimum lease payments 553,333

Less current maturities 299,983
------------

Noncurrent portion $ 253,350
============

NOTE I - COMMITMENTS

1. Licenses

On February 14, 1997, the Company signed an exclusive license agreement
with Brigham Young University (BYU), a Utah nonprofit corporation and
educational institution, wherein the Company has the worldwide rights to
market, modify, develop and manufacture the "WordCruncher" technology, which
is a software program used to search data for specific items (search engine).
The term of the license covers the underlying period of the patent as provided
for by federal law, which is 17 years. The agreement calls for license fees
and royalties of three percent of adjusted gross sales, and 50 percent of
royalty payments from sublicenses. Annual minimum royalties begin for the
calendar year 1999 and are due the quarter following the year end, as
specified below. Minimum royalty payments will be capped at $150,000 from
2002 forward. The Company acquired the license through stock issuance, and
was required to maintain BYU's equity interest of 10 percent through July
1998.

F-49
<PAGE> 109

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE I - COMMITMENTS - CONTINUED

1. Licenses - continued

The Company is committed to minimum royalty payments as follows:

Year ending December 31,
-----------------------
2000 $ 50,000
2001 100,000
2002 150,000
2003 150,000
2004 150,000
Thereafter 1,368,750
--------------

$ 1,968,750
==============

These minimum royalties are due as long as the license agreement is in
effect.

2. Employment agreements

The Company has six employment and severance agreements with certain
officers and a manager of the Company. Salaries covered by these agreements
range from $100,000 to $120,000 annually, subject to annual adjustment.
Contracts with three individuals provide for annual salaries of $120,000 (plus
annual increases of at least eight percent and cash bonuses determined by the
board of directors or the compensation committee), and are for terms of three
years expiring in August 2001. The agreements provide for severance equal to
one year's salary if the individual is terminated without cause. Furthermore,
if there is a change in control as defined by these three agreements, the
contracts provide for compensation equal to five times the average of the sum
of amounts paid to the executive for salary for the five fiscal years
immediately preceding the date of the change in control. The other three
contracts provide for annual salaries of $84,000 to $100,000 (plus monthly
commissions equal to 50 percent of monthly base salary and/or annual incentive
bonuses equal to 30-60 percent of annual base salary), and are for terms of
two years expiring April through December 2001. The agreements also provide
for severance equal to 90 days of the employee's base salary plus the maximum
amount of incentive pay the employee would have earned in the same 90 day
period. Furthermore, if there is a change in control, as defined by these
agreements, the contracts provide for compensation equal to the employee's
annual base salary. There is no provision for any severance payments under
these employment contracts.

3. Consulting and development contract

The Company has entered into a consulting and development contract in
connection with the launch of its website. The Company is required to pay a
fixed price of $500,000 in exchange for these services, to be paid in four
installments based upon meeting certain milestones. At December 31, 1999,
$275,000 remains payable under this contract.

F-50
<PAGE> 110

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE J - PREFERRED STOCK

In January of 1999, the Board of Directors approved the creation of
Series A Convertible Preferred Stock (Preferred Stock) and authorized 50,000
shares. The Preferred Stock has a stated value of $1,000 per share, and a
cumulative dividend of 6 percent. The Company issued 6,100 and 200 shares of
the Preferred Stock in February and March of 1999, respectively. The
Preferred Stock is convertible into a total of 625,000 shares of the Company's
common stock at a conversion rate of $10.08 per share. The conversion price
is based on the average closing price of the Company's common stock during the
20 day period immediately preceding the closing of the preferred issuance.
The Preferred shares hold no voting rights and have liquidation preferences of
$1,000 per share and cumulative dividends.

The Preferred shareholders have a limited right to receive additional
shares of common stock ("reset shares") if the market price of the common
stock is less than the "reset price" of $12.096 per share for a ten day period
of time following certain reset dates (adjustment price). The additional
shares are calculated as the difference between the reset price and the
adjustment price, multiplied by one third of the purchase price of Preferred
stock divided by the conversion price, divided by the adjustment price. The
reset dates commence 150, 240 and 360 calendar days following the issuance of
the Preferred Stock. As of December 31, 1999, the holders of Preferred stock
are entitled to receive 574,867 shares of common stock under this provision.

On the dates that the Preferred Stock was issued, the intrinsic values of
the beneficial conversion feature were $10,995,740 and $31,994 in February and
March, respectively. The intrinsic values were derived by the difference
between the conversion price and the market value of the common stock on the
day of the preferred stock issuance multiplied by the number of common shares
into which the Preferred Stock is convertible. The closing price of the stock
was $28.25 and $11.69 at each of the respective closing dates. The proceeds
received from the sale of these convertible instruments were $6,100,000 and
$200,000, respectively. Because the intrinsic values of the beneficial
conversion features are greater than the proceeds received, the discounts
assigned to the convertible instruments are $6,100,000 and $31,944,
respectively, creating a total discount of $6,131,944. The Preferred Stock
became fully convertible into common stock as of November of 1999 and the
discount was accreted accordingly during 1999 and is reflected on the
statement of operations as a deduction for dividends and accretion.

Offering cost related to the issuance of Preferred Stock total $392,100
and have been netted with the proceeds for reporting purposes.

Cumulative Preferred dividends total $337,917 as of December 31, 1999.

F-51
<PAGE> 111

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE K - STOCK OPTIONS AND WARRANTS

1. Stock options

The Company provides for issuance of stock options to certain employees,
directors, officers and others. There has been no formal stock option plan
adopted as of December 31, 1999. The Board of Directors has approved the
granting of options as follows:

Directors, officers and key employees have been granted options to
acquire 1,079,000 shares of common stock. The options were granted at various
dates at prices ranging from $0.10 to $5.54 per share, which amounts represent
prices below market price of the Company's shares on the dates granted as
determined by the Board of Directors. The options vest periodically through
November 2002 and expire through June 2003.

Fair market value of options granted

The Company has adopted only the disclosure provisions of Statement of
Financial Accounting Standard No. 123 (SFAS 123), "Accounting for Stock-Based
Compensation". Therefore, the Company accounts for stock based compensation
under Accounting Principles Board Opinion No. 25, under which compensation
cost has been recognized using the intrinsic value method. Under this method,
compensation cost is recognized over the vesting period based on the
difference, if any, on the date of grant between the fair value of the
Company's stock and the amount an employee must pay to acquire the stock. Had
compensation cost been determined based upon the fair value of the options at
the grant date consistent with the methodology prescribed by SFAS 123, the
Company's net loss and loss per share would have been changed to the following
pro forma amounts:

1999
--------------
Net loss attributable to As reported $ (11,399,741)
common stockholders Pro forma (11,453,549)

Net loss per common share As reported (.96)
basic and diluted Pro forma (.96)

The fair value of these options was estimated at the date of grant using
the Black-Scholes American option-pricing model with the following
weighted-average assumptions: expected volatility of 120 percent; risk-free
interest rate of 6.5 percent; and expected life of 3.50 years. The
weighted-average fair value of options granted was $4.75.

Option pricing models require the input of highly sensitive assumptions,
including the expected stock price volatility. Also, the Company's stock
options have characteristics significantly different from those of traded
options, and changes in the subjective input assumptions can materially affect
the fair value estimate. Management believes the best input assumptions
available were used to value the options and that the resulting option values
are reasonable.

F-52

<PAGE> 112

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE K - STOCK OPTIONS AND WARRANTS - CONTINUED

Information with respect to the Company's stock options is as follows:

Weighted-
average
Stock Exercise exercise
options price price
----------- ------------ ------------
Outstanding at January 1, 1997 - $ - $ -
Granted - - -
Exercised - - -
Canceled/expired - - -
----------- ------------ ------------
Outstanding at December 31, 1997 - - -
Granted - - -
Exercised - - -
Canceled/expired - - -
----------- ------------ ------------
Outstanding at December 31, 1998 - - -
Granted 1,079,000 0.10 - 5.54 1.79
Exercised (4,000) 0.10 0.10
Canceled/expired - - -
----------- ------------ ------------
Outstanding at December 31, 1999 1,075,000 $0.10 - 5.54 $ 1.80
=========== ============ ============
Exercisable at December 31, 1999 116,833 $ 0.10 $ 0.10
=========== ============ ============

Additional information regarding stock options outstanding and
exercisable at December 31, 1999 is summarized as follows:

Options Outstanding Options Exercisable
-------------------------------------------- -------------------------------
Weighted
average Weighted Weighted
remaining average average
Range of Number contractual exercise Number exercise
exercise prices outstanding life (years) price exercisable price
------------------- ----------- ------------ --------- ----------- ---------
$ 0.10 440,000 13.3 $ 0.10 116,833 $ 0.10
$ 2.72 - $ 2.77 550,000 21.0 2.73 - -
$ 3.00 - $ 3.47 35,000 1.3 3.17 - -
$ 5.54 50,000 1.9 5.54 - -
----------- -----------

1,075,000 37.5 $ 1.80 116,833 $ 0.10
=========== ===========

F-53
<PAGE> 113
WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE K - STOCK OPTIONS AND WARRANTS - CONTINUED

2. Warrants

Series A, B and C warrants

In connection with the sale of Series A Convertible Preferred Stock (Note
J), purchasers, were issued Series A and B warrants to purchase the Company's
common stock. Series C warrants were also issued to a third party for a
finder's fee.

Series A warrants allow holders to purchase up to an aggregate of 71,069
shares of common stock at a weighted-average price of $34.53 per share.

Series B warrants allow holders to purchase up to an aggregate of 47,380
shares of common stock at a weighted-average of $41.44 per share.

Series C warrants allow holders to purchase up to 189,000 shares of
common stock at a weighted-average price of $29.01 per share.

All 307,449 Series A, B and C warrants expire in February 2004.

Other warrants issued for services

In January of 1999, and in conjunction with the sale of Series A
Convertible Preferred Stock (Note J), the Company issued warrants to purchase
200,000 shares of the Company's common stock to its investor relations
consultant. The warrants were issued with an exercise price of $5.00 per
share and are fully vested at December 31, 1999. The fair value of $1.29 was
estimated as the value of the services performed. Consulting expenses
relating to these warrants totaled $258,000 during 1999.

Information with respect to the Company's warrants is as follows:

Weighted-
Number average
of shares exercise price
----------- --------------
Outstanding at January 1, 1997 - $ -
Granted - -
Exercised - -
Forfeited - -
----------- --------------
Outstanding at December 31, 1997 - -
Granted - -
Exercised - -
Forfeited - -
----------- --------------
Outstanding at December 31, 1998 - -
Granted 507,449 $ 21.48
Exercised - -
Forfeited - -
----------- --------------
Outstanding at December 31, 1999 507,449 $ 21.48
=========== ==============
Warrants exercisable at December 31, 1999 507,449 $ 21.48
=========== ==============

F-54
<PAGE> 114

WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE L - INCOME TAXES

The income tax expense (benefit) reconciled to the tax computed at the
federal statutory rate of 34 percent is as follows:

1999 1998
------------- ------------
Income tax benefit at statutory rate $ (1,676,159) $ (164,189)
Income tax attributed to the S-Corporation - 8,560
State income tax benefit, net of federal tax benefit (115,157) (15,936)
Nondeductible option compensation 493,887 -
Deductible stock option compensation (6,068) -
Change in valuation allowance 1,301,627 169,896
Other, net 1,870 1,669
------------- ------------
Income tax expense $ - $ -
============= ============

Deferred income tax assets and liabilities are as follows:

1999 1998
------------- ------------
Deferred tax assets
Deferred expenses $ 146,465 $ -
Net operating losses 1,442,150 169,896
------------- ------------
1,588,615 169,896
Less valuation allowance (1,471,524) (169,896)
------------- ------------
117,091 -
------------- ------------
Deferred tax liabilities
Deferred income (117,091) -
------------- ------------
Net deferred tax assets (liability) $ - $ -
============= ============

The Company has sustained net operating losses in each of the periods
presented. There were no deferred tax assets or income tax benefits recorded
in the financial statements for net deductible temporary differences or net
operating loss carryforwards because the likelihood of realization of the
related tax benefits cannot be established. Accordingly, a valuation
allowance has been recorded to reduce the net deferred tax asset to zero and
consequently, there is no income tax provision or benefit for any of the
period presented. The increase in the valuation allowance was $1,301,628 and
$169,896 for the years ended December 31, 1999 and 1998, respectively.

As of December 31, 1999, the Company had net operating loss
carryforwards for tax reporting purposes of approximately $3,866,354 expiring
in various years through 2019.

Through June 30, 1998, the Company elected to file federal and state
income taxes under the provisions of Subchapter S of the Internal Revenue
Code. Effective July 1, 1998, the Company revoked its S election, and will
therefore be a taxable entity under the provisions of Subchapter S of the
Internal Revenue Code.

F-55
<PAGE> 115
WordCruncher Internet Technologies, Inc.
(a development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

NOTE M - NET LOSS PER COMMON SHARE

Cumulative
amounts
since Year ended December 31,
inception 1999 1998 1997
------------- ------------- ------------- -----------
Common shares outstanding
during the entire period - 11,877,002 1,091,067 -

Weighted-average common
shares issued during the
period 5,850,408 2,917 5,009,612 545,535
------------- ------------- ------------- -----------
Weighted-average common
shares used in basic EPS 5,850,408 11,879,919 6,100,679 545,535

Dilutive effects of
potential common shares - - - -
------------- ------------- ------------- -----------
Weighted-average number
of common shares and
dilutive potential
common stock used in
diluted EPS 5,850,408 11,879,919 6,100,679 545,535
============= ============= ============= ===========

For the years ended December 31, 1999, 1998 and 1997, and for cumulative
amounts since inception, all of the convertible securities, reset provisions,
options and warrants discussed in Notes J and K were not included in the
computation of diluted EPS because to do so would have been antidilutive.

NOTE N - SUBSEQUENT EVENTS

1. Company name change

In January 2000, the Company began conducting business under the name
"Logio".

2. Preferred stock conversion

Through March 2000, 6,300 shares of the Company's preferred stock were
converted into 625,000 common shares and 728,046 "reset shares" of the
Company's common stock were issued to preferred shareholders (Note J). Also,
through March 2000, cumulative dividends were paid to preferred shareholders
in the form of 61,650 shares of the Company's common stock.

3. Options granted
Through March 2000, options for 5,000 shares of the Company's common
stock were granted to an employee.

4. Options and warrants exercised

Through March 2000, warrants were exercised for 158,000 shares of the
Company's common stock and options were exercised for 4,000 shares of the
Company's common stock.

F-56
<PAGE> 116

INDEX TO APPENDICES

Appendix A: Nevada Revised Statutes Dissenters Rights............App - 2
Appendix B: Logio stockholder's demand form......................App - 9

App -1
<PAGE> 117
RIGHTS OF DISSENTING OWNERS

NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.50, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections. (Added to NRS by 1995, 2086)

NRS 92A.305 "Beneficial stockholder" defined. "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or
by a nominee as the stockholder of record. (Added to NRS by 1995, 2087)

NRS 92A.310 "Corporate action" defined. "Corporate action" means the
action of a domestic corporation. (Added to NRS by 1995, 2087)

NRS 92A.315 "Dissenter" defined. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive. (Added to NRS by 1995, 2087; A 1999, 1631)

NRS 92A.320 "Fair value" defined. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. (Added to NRS by 1995, 2087)

NRS 92A.325 "Stockholder" defined. "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation. (Added to NRS
by 1995, 2087)

NRS 92A.330 "Stockholder of record" defined. "Stockholder of record"
means the person in whose name shares are registered in the records of a
domestic corporation or the beneficial owner of shares to the extent of the
rights granted by a nominee's certificate on file with the domestic
corporation. (Added to NRS by 1995, 2087)

NRS 92A.335 "Subject corporation" defined. "Subject corporation" means
the domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective
or the surviving or acquiring entity of that issuer after the corporate action
becomes effective. (Added to NRS by 1995, 2087)

NRS 92A.340 Computation of interest. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances. (Added to NRS by 1995,
2087)

NRS 92A.350 Rights of dissenting partner of domestic limited
partnership. A partnership agreement of a domestic limited partnership or,
unless otherwise provided in the partnership agreement, an agreement of merger
or exchange, may provide that contractual rights with respect to the
partnership interest of a dissenting general or limited partner of a domestic
limited partnership are available for any class or group of partnership
interests in connection with any merger or exchange in which the domestic
limited partnership is a constituent entity. (Added to NRS by 1995, 2088)

NRS 92A.360 Rights of dissenting member of domestic limited-liability
company. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in

App -2
<PAGE> 118

connection with any merger or exchange in which the domestic limited-liability
company is a constituent entity. (Added to NRS by 1995, 2088)

NRS 92A.370 Rights of dissenting member of domestic nonprofit
corporation. 1. Except as otherwise provided in subsection 2, and unless
otherwise provided in the articles or bylaws, any member of any constituent
domestic nonprofit corporation who voted against the merger may, without prior
notice, but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his
resignation and is thereby entitled to those rights, if any, which would have
existed if there had been no merger and the membership had been terminated or
the member had been expelled. 2. Unless otherwise provided in its articles
of incorporation or bylaws, no member of a domestic nonprofit corporation,
including, but not limited to, a cooperative corporation, which supplies
services described in chapter 704 of NRS to its members only, and no person
who is a member of a domestic nonprofit corporation as a condition of or by
reason of the ownership of an interest in real property, may resign and
dissent pursuant to subsection 1. (Added to NRS by 1995, 2088)

NRS 92A.380 Right of stockholder to dissent from certain corporate
actions and to obtain payment for shares.

1. Except as otherwise provided in NRS 92A.370 and 92A.390, a stockholder
is entitled to dissent from, and obtain payment of the fair value of his
shares in the event of any of the following corporate actions:

(a) Consummation of a plan of merger to which the domestic corporation
is a party:

(1) If approval by the stockholders is required for the merger by
NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation and he is
entitled to vote on the merger; or

(2) If the domestic corporation is a subsidiary and is merged
with its parent under NRS 92A.180.

(b) Consummation of a plan of exchange to which the domestic corporation
is a party as the corporation whose subject owner's interests will be
acquired, if he is entitled to vote on the plan.

(c) Any corporate action taken pursuant to a vote of the stockholders to
the event that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.

2. A stockholder who is entitled to dissent and obtain payment under NRS
92A.300 to 92A.500, inclusive, may not challenge the corporate action creating
his entitlement unless the action is unlawful or fraudulent with respect to
him or the domestic corporation. (Added to NRS by 1995, 2087)

NRS 92A.390 Limitations on right of dissent: Stockholders of certain
classes or series; action of stockholders not required for plan of merger.

1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:

(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or

App -3
<PAGE> 119

(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:

(1) Cash, owner's interests or owner's interests and cash in lieu
of fractional owner's interests of:

(I) The surviving or acquiring entity; or

(II) Any other entity which, at the effective date of the
plan of merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National Association
of Securities Dealers, Inc., or held of record by a least 2,000 holders of
owner's interests of record; or

(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph
(b).

2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action
of the stockholders of the surviving domestic corporation under NRS 92A.130.
(Added to NRS by 1995, 2088)

NRS 92A.400 Limitations on right of dissent: Assertion as to portions
only to shares registered to stockholder; assertion by beneficial stockholder.

1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf
he asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his
other shares were
registered in the names of different stockholders.

2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:

(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and (b) He does so with respect
to all shares of which he is the beneficial stockholder or over which he has
power to direct the vote. (Added to NRS by 1995, 2089)

NRS 92A.410 Notification of stockholders regarding right of dissent.

1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.

2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the
domestic corporation shall notify in writing all stockholders entitled to
assert dissenters' rights that the action was taken and sent them the
dissenter's notice described in NRS 92A.430. (Added to NRS by 1995, 2089; A
1997, 730)

NRS 92A.420 Prerequisites to demand for payment for shares.

1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:

App- 4
<PAGE> 120

(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and

(b) Must not vote his shares in favor of the proposed action.

2. A stockholder who does not satisfy the requirements of subsection 1
and NRS 92A.400 is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2089; 1999, 1631)

NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to
assert rights; contents.
1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements
to assert those rights.

2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:

(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;

(b) Inform the holders of shares not represented by certificates to what
extent the transfer of the shares will be restricted after the demand for
payment is received;

(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;

(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the
date the notice is delivered; and

(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2089)

NRS 92A.440 Demand for payment and deposit of certificates; retention
of rights of stockholder.

1. A stockholder to whom a dissenter's notice is sent must:

(a) Demand payment;

(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and

2. The stockholder who demands payment and deposits his certificates,
if any, before the proposed corporate action is taken retains all other rights
of a stockholder until those rights are canceled or modified by the taking of
the proposed corporate action.

3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter. (Added
to NRS by 1995, 2090; A 1997, 730)

App -5
<PAGE> 121

NRS 92A.450 Uncertificated shares: Authority to restrict transfer after
demand for payment; retention of rights of stockholder.

1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.

2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action. (Added to NRS by 1995, 2090)

NRS 92A.460 Payment for shares: General requirements.

1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by

the district court:

(a) Of the county where the corporation's registered office is located;
or

(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.

2. The payment must be accompanied by:

(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year and the latest available interim financial statements, if any;

(b) A statement of the subject corporation's estimate of the fair value
of the shares;

(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and

(e) A copy of NRS 92A.300 to 92A.500, inclusive. (Added to NRS by 1995,
2090)

NRS 92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.

1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.

2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of
the
fair value of the shares, an explanation of how the interest was calculated,
and a statement of the dissenters' right to demand payment pursuant to NRS
92A.480. (Added to NRS by 1995, 2091)

NRS 92A.480 Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.

App-6
<PAGE> 122

1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value
of his shares and interest due, if he believes that the amount paid pursuant
to NRS 92A.460 or offered pursuant to NRS 92A.470 is less than the fair value
of his shares or that the interest due is incorrectly calculated.

2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares. (Added to NRS by 1995, 2091)

NRS 92A.490 Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.

1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If the subject corporation does not commence the proceeding within
the 60-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.

2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it
shall commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.

3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy
of the petition. Nonresidents may be served by registered or certified mail or
by publication as provided by law.

4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.

5. Each dissenter who is made a party to the proceeding is entitled to
a judgment:

(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject corporation;
or

(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant
to NRS 92A.470. (Added to NRS by 1995, 2091)

NRS 92A.500 Legal proceeding to determine fair value: Assessment of
costs and fees.

1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable,
to the extent the court finds the dissenters acted arbitrarily, vexatiously or
not in good faith in demanding payment.

App-7
<PAGE> 123

2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:

(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or

(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.

3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that
the fees for those services should not be assessed against the subject
corporation, the court may award to those counsel reasonable fees to be paid
out of the amounts awarded to the dissenters who were benefited.

4. In a proceeding commenced pursuant to NRS 92A.460, the court may
assess the costs against the subject corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court
finds that such parties did not act in good faith in instituting the
proceeding.

5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115. (Added to NRS by 1995, 2092)

App-8
<PAGE> 124

DEMAND FOR PAYMENT

The date the Logio, Inc. ("Logio") Board of Directors approved and
adopted the terms of the share exchange with Pacific WebWorks, Inc. ("Pacific
WebWorks"), whereby Logio shall be a wholly owned subsidiary of Pacific
WebWorks, having occurred on October 31, 2000, the undersigned Stockholder,
having been the beneficial owner of _____________ of the common shares of
Logio, hereby demands payment for such stock pursuant to said Stockholder's
dissent rights. Said Stockholder hereby certifies that said Stockholder did,
in fact acquire beneficial ownership of said stock before such date.

Dated: ________________________

___________________________
Stockholder Signature

__________________________
Stockholder (print name)

__________________________
Address, City, State and Zip

(__)_______________________
Telephone

App -8
<PAGE> 125

No person is authorized to give any
information or to make any representation
not contained in this Prospectus/Proxy
Statement, and if given or made, such
information or representation should not Pacific WebWorks, Inc.
be relied upon as having been authorized.
This Prospectus/Proxy Statement does not
constitute an offer to exchange or sell, Offer to exchange each
or a solicitation of an offer to exchange outstanding share
or sell, or a solicitation of an offer to of Logio, Inc. common stock
exchange or purchase, the securities offered for shares of
hereby, or the solicitation of a proxy, in Pacific WebWorks, Inc.
any jurisdiction to or from any person to
whom it is unlawful to make such offer of ________________
solicitation in such jurisdiction. Neither
the delivery of this Prospectus/Proxy
Statement nor any distribution of the
securities to which this Prospectus/Proxy PROSPECTUS
Statement relates shall, under any
circumstances, create an implication that PROXY STATEMENT
there has been no change in the affairs of
Pacific WebWorks and Logio since the date _________________
hereof.
____________ December __, 2000

TABLE OF CONTENTS

Page
Information About the Transaction
---------------------------------
Summary...................................4
Summary Term Sheet....................... 5
Risk Factors .............................8
Terms of the Acquisition ................10
Interests of Experts and Counsel.........14
Disclosure of Commission's Position on
Indemnification for Securities Act
Liability..............................14
Pro Forma Financial Information .........14

Information About Pacific WebWorks
----------------------------------
Business.................................18
Properties...............................24
Legal Proceedings .......................24
Market for Common Equity and Related
Stockholder Matters ..................24
Selected Financial Data .................25
Management's Discussion and Analysis.... 26
Changes in and Disagreements With
Accountants...........................30

Information About Logio
-----------------------
Business.................................31
Properties ..............................36
Legal Proceedings .......................36
Selected Financial Data..................36
Management's Discussion and Analysis.....37
Changes in and Disagreements With
Accountants ............................43

Voting and Management Information
---------------------------------
Information Regarding the Meeting........45
Questions and Answers Regarding
the Meeting............................45
Logio Voting Securities and
Principal Holders.....................46
Dissenters Rights........................48
Management...............................48
Principal Holders of Pacific
WebWorks Shares.........................51
Certain Relationships and Related
Transactions...........................52

Financial Statements
--------------------
Index to Financial Statements............53

Appendices
-----------
Appendix A: Nevada Revised Statutes
Dissenters' Rights .................App-2
Appendix B: Logio Stockholder's
Demand Form.........................App-9

<PAGE> 126

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20: INDEMNIFICATION OF DIRECTORS AND OFFICERS

Neither our Articles of Incorporation nor our bylaws provide for the
indemnification of a present or former director or officer. However, we have
purchased director and officer liability insurance with limits of $1 million
per loss and $1 million per policy year per insured. Pursuant to Nevada
Revised Statutes Sections 78.750 and 78.751 we must indemnify a director,
officer, employee, or agent of the corporation who is successful on the merits
or otherwise in defense of any action or suit. This indemnification shall
include expenses, including attorney's fees actually or reasonably incurred.
Nevada law also provides for discretionary indemnification for each person who
serves as or at the request of the corporation as our officer or director. We
may indemnify these individuals against all costs, expenses, and liabilities
incurred in a threatened, pending, or completed action, suit or proceeding
brought because this individual is our director or officer. The individual
must have conducted himself in good faith and reasonably believed that his
conduct was in, or not opposed to, our best interests. In a criminal action
he must not have had a reasonable cause to believe his conduct was unlawful.

ITEM 21: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

No. Exhibit Location
2.1 Agreement and Plan of Merger between Asphalt Associates, (1)
Inc. and Utah WebWorks, Inc., dated January 11, 1999
2.2 Agreement and Plan of Reorganization between Pacific
WebWorks and IntelliPay, dated April 4, 2000 (2)
2.3 Agreement and Plan of Reorganization between Pacific
WebWorks and Logio, dated October 31, 2000 (6)
3.1 Articles of Incorporation of Asphalt Associates, Inc. (1)
3.2 Articles of Merger for Asphalt Associates, Inc.,
dated January 6, 1999 (1)
3.4 Amended and Restated Bylaws of Pacific WebWorks, Inc. (1)
5.1 Opinion of Cindy Shy, P.C. To be filed by
amendment
10.1 Master Service Agreement between Electric Lightware,
Inc., and Utah WebWorks, Inc., dated February 2, 1998. (1)
10.2 Internet Access Agreement, Addendum to Master Service
Agreement between Electric Lightwave, Inc., and Utah
WebWorks, Inc., dated February 2, 1998 (1)
10.3 Form of Employment Agreement with management (1)
10.4 Lease Agreement between Utah WebWorks, Inc., and
Westgate Business Center dated January 11, 1999 (1)
10.5 Strategic Reseller Agreement with U.S. Merchant Systems (1)
10.6 Amended Form of Reseller Agreement (1)
10.7 Promissory Note issued to Capital Communications, Inc. (1)
10.8 Purchase Agreement between Pacific WebWorks and U.S.
Merchant Systems, Inc., dated February 22, 1999 (3)
10.9 Registration Rights Agreement between Pacific WebWorks
and Midwest First National, Inc. and Condiv Investments,
Inc. and Columbia Financial Group, dated February 22, 2000 (5)
10.10 Consultant Agreement between Pacific WebWorks and
Columbia Financial, dated January 10, 2000. (4)
21.1 Subsidiaries of Pacific WebWorks Attached
23.1 Consent of Crouch, Bierwolf & Chisholm Attached
23.2 Consent of Crouch Bierwolf & Chisholm Attached
23.3 Consent of Grant Thornton LLP Attached
23.4 Consent of Cindy Shy, P.C. See exhibit 5.1
24.1 Power of Attorney See signature page
27.1 Financial Data Schedule Attached

II-1
<PAGE> 127

(1) Incorporated by reference to Pacific WebWork's Form 10, as amended, file
No. 0-26731, filed July 16, 1999.
(2) Incorporated by reference to Pacific WebWork's Form 8-K, filed April 19,
2000
(3) Incorporated by reference to Pacific WebWork's Form 10-K, filed March 10,
2000
(4) Incorporated by reference to Pacific WebWork's Form 10-Q, as amended,
filed May 15, 2000
(5) Incorporated by reference to Pacific WebWorks's Form S-1 Registration
Statement, effective June 12, 2000.
(6) Incorporated by reference to Pacific WebWork's Form 8-K, filed November
14, 2000.

ITEM 22: UNDERTAKINGS

The undersigned registrant hereby undertakes:

1. Pursuant to Rule 415, to file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement
which will include:

a. Any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
b. To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
c. To include any additional or changed material information on the plan of
distribution disclosed in the registration statement.

2. For the purpose of determining any liability under the Securities Act of
1933, to treat each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities at that time to
be the initial bona fide offering.

3. To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

4. That prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other Items of the applicable form.

5. That every prospectus (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

6. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

7. To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.

II-2
<PAGE> 128

8. To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein that
was not the subject of and included in the registration statement when it
became effective.

II-3
<PAGE> 129

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused the registration statement to be signed on its
behalf by the undersigned, duly authorized, in the city of Salt Lake City,
state of Utah.

PACIFIC WEBWORKS, INC.
a Nevada Corporation

/s/ Christian R. Larsen 11/28/00
By: _____________________________________Date: ______________________________
Christian R. Larsen
President, Chief Executive Officer, Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Christian R. Larsen and Allan E.
Oepping, and each of them, his attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him in any and all capacities,
to sign any and all amendments (including post effective amendments) to this
registration statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully as to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or any of them,
or their or his substitute or substitutes, may do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, the
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ Christian R. Larsen 11/28/00
By:____________________________________ Date:_______________________________
Christian R. Larsen
President, Chief Executive Officer,
Director

By: /s/ /s/ Allan E. Oepping 11/28/00
____________________________________ Date:______________________________
Allan E. Oepping, Director

/s/ Erik K Schmitter 11/28/00
By:____________________________________ Date:______________________________
Erik K. Schmitter, Director

/s/ Benjamin A. Black 11/28/00
By: ___________________________________ Date:______________________________
Benjamin A. Black, Director

/s/ Tom Hill 11/28/00
By: __________________________________ Date: _____________________________
Tom Hill, Director

/s/ Lamar P. Taylor 11/28/00
By:____________________________________ Date:_______________________________
Lamar P. Taylor, Director