SARATOGA INTERNATIONAL HOLDINGS CORP
10SB12G/A, 2000-06-06
BUSINESS SERVICES, NEC
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                       Securities and Exchange Commission

                               Washington DC 20549

                                 Form 10-SB A-3

GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS

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



                      Saratoga International Holdings Corp.

                 (Name of Small Business Issuer in its charter)


            Nevada                                 98-0169082
            ------                                 ----------

                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                    8756 - 122nd Avenue NE Kirkland, WA 98033

                    (Address of principal executive offices)

                                  425-827-7817

                            Issuer's telephone number

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


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

                      $0.001 Par Value Voting Common Shares

                                (Title of Class)

                    Documents Incorporated by Reference: NONE

                                        1


<PAGE>


                                     PART I

Item 1  Description of Business

o        Organization and General History

The following  summarizes the organizational  history of Saratoga  International
Holdings Corp. herein referred to as "Saratoga".

In December 1997,  Saratoga began development stage activity under the corporate
name Western Oil & Tire Distributors Inc. ("Western"), a privately owned company
originally  incorporated under the name FCP Ltd. on June 1, 1993 in the State of
Washington which had no operating activity until fiscal 1998. The corporate name
was  changed  to  Western  in  December,   1997.   Western's  original  business
development  plan adopted in December,  1997 was to engage in the acquisition of
retail  and  wholesale  tire  businesses  and  petroleum  product   distribution
companies ("The WOTD Project").

In July 1998 the  shareholders  of Western  exchanged all of their common shares
for  controlling  interest  in  Knightsbridge  Corporation  ("Knightsbridge")  a
company originally  incorporated on June 17, 1996 in the State of Nevada and the
surviving corporation's name was changed to Western.

Since the former  shareholders  of Western  owned a majority of the  outstanding
stock  of  the  surviving  corporation  following  its  July  1998  merger  with
Knightsbridge,  the  combination  of the two  companies  has been  treated  as a
recapitalization  of  Western  and  the  information  and  historical  financial
statements presented herein are those of Western.

On March 24,  1999 the  corporate  name was  changed  from  Western to  Saratoga
International  Holdings Corp.  Western had not acquired any retail and wholesale
tire  businesses  or  petroleum  product  distribution  companies  and the  WOTD
Project,  in its conceptual  and early  development  stage,  was spun-off to the
shareholders of Saratoga as of March 19, 1999.  Saratoga redirected its business
development activity at the e-commerce industry.

o        Authorized Capital

Saratoga is  authorized to issue  200,000,000  shares of  non-assessable  voting
common  stock,  par value  $0.001 per share and  50,000,000  shares of preferred
stock, par value $0.001 per share with such rights and preferences as determined
from time to time by the Board of Directors.  Copies of  Saratoga's  Articles of
Incorporation and By-Laws, including amendments thereto, are attached hereto and
incorporated herein by this reference. See Part III Item I.

                                        2
<PAGE>

o        Business Activity

Saratoga's  first entry into the  e-commerce  industry  took place in June 1999.
Saratoga  formed a wholly-owned  subsidiary  Saratoga  Telecom Corp.  ("Saratoga
Telecom"),  a Nevada  corporation,  through  which it  acquired  the right  from
Internet  Interview  Inc., a Florida based  company,  to develop a technology to
market  prepaid long distance  telephone  calling  service via the Internet as a
reseller for long distance suppliers.

The  operational  right  acquired  from  Internet  Interview   consisted  of  an
operational  concept  and plan to enter into the  business  of  selling  virtual
prepaid  phone cards over the  Internet,  including  the  technological  need to
develop a web site,  accounting and management  software,  an Internet marketing
program  to  establish  a web site  agent  network  and  Internet  links  and to
establish  agreements  and  technology  necessary  to accept,  process and clear
credit card transactions over the Internet.

As  consideration  for the  purchase of the rights to the  technology,  Saratoga
issued to the two principal  shareholders  of Internet  Interview,  Inc.  Messrs
Norman Reisch and Tom Morsey, Warrants to each to purchase 500,000 shares of the
common stock of Saratoga exercisable at any time at $0.10 per share and expiring
June 16,  2004.  The  purchase  price of the  operational  right was recorded at
$102,666, the value of the Warrants, estimated based on the Black-Scholes option
pricing model.

Saratoga  entered into a three year  employment  agreement with Tom Morsey,  the
former  President and minority  shareholder  of Internet  Interview,  Inc. which
entitles the employee to a base salary of $5,000 monthly plus annual performance
bonus to be  determined  by the Board of Directors and stock options to purchase
up to 250,000 shares of Saratoga at $0.10 per share.  Saratoga also entered into
a one year consulting  agreement with AJAY Enterprises  which entitled AJAY to a
$5,000 monthly service fee and stock options to purchase up to 250,000 shares of
Saratoga  at $0.10 per  share.  AJAY is  controlled  by  Norman  Reisch a former
principal  shareholder of Internet Interview Inc. The consulting  agreement with
AJAY was terminated by mutual  agreement in August,  1999. Tom Morsey  currently
serves as a Director of Saratoga and President of Saratoga Telecom Corp.

Initially,  the  business  development  plan for  Saratoga  Telecom was based on
marketing and selling  virtual prepaid long distance  telephone  calling service
over the  Internet  targeted at potential  customers  who  originate  calls from
foreign  countries  to the United  States and to other  foreign  countries.  The
business  development  plan for  Saratoga  Telecom  has been  updated to include
targeting  sales of prepaid long  distance  telephone  calling  service over the
Internet for calls originating in the United States to foreign countries and for
long distance calls originating and terminating within the United States as well
as calls  originating  in foreign  countries  to the United  States and to other
foreign countries.  Saratoga's  marketing plan has also been expanded to include
targeting sales of prepaid long distance  service hard cards  principally in the
United States. A recent Frost

                                        3
<PAGE>

and  Sullivan  report  estimates  that  revenues  in the prepaid  long  distance
industry  will top $9.38  billion by the year  2001.  The  forecast  is based on
revenue estimates for prepaid telephone traffic sold by long distance  companies
and resellers for service  carried over the Internet as well as service  carried
over conventional  telephone  equipment.  The Internet telephone segment of this
industry  is  forecasted  to be in excess  of $1.82  billion  by 2001.  Saratoga
Telecom, a reseller,  is pursuing sales of Internet telephone service as well as
conventional telephone equipment service.

Since acquiring the Internet prepaid long distance  calling service  development
right from Internet Interview, Saratoga Telecom has completed the development of
a web site  (www.TalkIsCheapCard.com)  which may be accessed by the customer via
the  Internet to place an order for a prepaid  virtual  calling  card.  Saratoga
Telecom has also completed the development of software  technology which enables
it to electronically acquire units of prepaid long distance calling service from
its  suppliers,  to store such units until they are sold,  to accept and process
prepaid credit card sales,  and to distribute  such units to Saratoga  Telecom's
customers.  Information  is provided to the  customer  over the  Internet on the
number of long distance units acquired,  the price per unit, the total amount of
the purchase and dialing  instructions to access long distance  calling service.
To  originate a call using the  "virtual"  card,  the  customer  must follow the
instructions  provided over the Internet at the time the prepaid calling service
is purchased.  This information can be printed out and kept in the buyer's purse
or wallet.

One of Saratoga's  marketing  strategies is to establish a network of "Web Site"
agents  in  targeted  markets  to  direct  potential  customers  to a  Web  Site
(www.TalkisCheapCard.com)  developed  and owned by  Saratoga  Telecom  Corp.  to
dispense long distance usage purchased online by the customers. Saratoga Telecom
currently  has four active web site  agents and is in the process of  finalizing
agreements with several others.

Long  distance  telephone  calling  service is to be provided  by long  distance
service  suppliers  which  provide  telecommunications  services  to the markets
targeted by Saratoga  Telecom.  Saratoga Telecom,  as an independent  contractor
("reseller"), purchases units of long distance service usage from such suppliers
under non-exclusive agreements with the suppliers.

On February 16, 2000,  Saratoga acquired all of the outstanding  common stock of
Virtual Media Group Inc. of Kirkland,  Washington. In exchange,  Saratoga issued
to the shareholders of Virtual,  1,053,940 shares of its common stock, valued at
$264,961,  and as partial  payment  for loans  made to  Virtual by their  former
shareholders in the amount of $15,400.  The common stock was valued based on the
average  trading  price three days before and after the date of the  acquisition
agreement,  which was February 2, 2000. In addition,  Saratoga granted 1,000,000
warrants  exercisable  at $0.165  per  common  share and  assumed  Virtual's  9%
convertible  debenture  obligation  for  $900,000,  net  of a debt  discount  of
$100,000.

The warrants were granted to the former  shareholders/employees of Virtual Media
Group


                                        4
<PAGE>

Inc. for future  employment  services and vest with the holder over a period six
years.  If  employment  is  terminated  at any time prior to the  vesting of the
warrants the remaining  unvested  portion of the warrants can be forfeited.  The
warrants  expire within 6 years from the date they were  granted.  Saratoga will
account  for the  warrants  in  accordance  with the  provisions  of  Accounting
Principles Board Opinion No. 25,  "Accounting for Stock Issued to Employees" and
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." These accounting standards require that the warrants be valued at
their fair value and be presented as pro forma disclosures.

On  February  11,  2000,  Virtual  issued 9% series A  subordinated  convertible
redeemable  debenture  for  $900,000,  net of a debt  discount of $100,000,  due
February 11, 2002.  The series A debenture is  convertible  into common stock of
Saratoga,  as a result of the  assumption of the debt.  The debt is  convertible
into common stock at 70.0% of the average  closing bid price of the common stock
for the five days immediately  preceding the date of notice of conversion by the
holder.  As of March 10, 2000, the debt has been converted into 4,041,501 shares
of Saratoga's common stock.

The  beneficial  conversion  feature will be accounted  for in  accordance  with
Emerging Issues Task Force No. 98-5, "Accounting for Convertible Securities with
Beneficial  Conversion Features or Contingently  Adjustable  Conversion Ratios."
Therefore,  the beneficial conversion feature, which was valued at approximately
$430,000,  will be accounted  for as  additional  interest  expense at the issue
date, which is the date the debentures first become convertible.

The acquisition  will be recorded using the purchase method of accounting on the
date of acquisition and has been summarized in the following table:

Purchase price                                         $    264,96
Liabilities assumed (including the convertible debt)       953,452
Less: fair market value of assets acquired                (928,366)
                                                       ------------
Goodwill                                               $   290,047
                                                       ============

Goodwill  will be  amortized on the  straight-line  method over a useful life of
five years.

Virtual,  which was founded in 1998,  has offices in  Kirkland,  Washington  and
Lethbridge,  Alberta,  Canada. Virtual's principal business development activity
to date has been in the Western Canada marketplace.

Virtual's business  development plan is based on providing  e-commerce solutions
for the  Internet.  Virtual  provides  technological  services to its  customers
including website development and hosting, database development, digital virtual
tour  technology and multi media services  including CD ROM's.  Virtual has also
commenced development of proprietary Internet software technology which includes
a  new  searching  technology,  a  multi  function  communications  module  with
specialized security features and an e-commerce module.

                                        5
<PAGE>

Virtual  reported  modest  annual  revenues from  technological  service fees of
approximately $50,000 for its latest fiscal year ended October 31, 1999. Virtual
plans to continue with the  development  of its  proprietary  Internet  software
technology with a goal of implementing a product roll-out plan in late 2000.

Saratoga's  current  overall  business goal to become  operational is based on a
plan  of  acquiring  and  consolidating   existing   businesses  and  marketable
technologies,  products and services targeted at the rapidly growing  e-commerce
industry.

Item 2 Management's Discussions and Analysis or Plan of Operations

o        Plan of Operations

Saratoga's  current plan is to become operational by approximately July 31, 2000
by continuing with the  implementation of the business  development plans of its
two  subsidiaries,  Saratoga Telecom Corp. and Virtual Media Group Inc. Saratoga
also  plans  to  explore  the   possibility  of  acquiring   other   businesses,
technologies, products and services available in the e-commerce industry.

Saratoga  Telecom is in the  process  of  establishing  itself as a reseller  of
prepaid long distance  telephone  calling service provided by major domestic and
international  long  distance  service  suppliers.  Saratoga's  Telecom's  major
marketing  strategy is based on selling prepaid long distance usage to customers
over   the   Internet.    Saratoga    Telecom   has   developed   a   Web   Site
(www.TalkisCheapCard.com) to facilitate the sale of prepaid long distance usage.
By dialing up the Web Site on the Internet, customers may order and receive long
distance usage by prepaying for such usage online with a credit card.

Upon purchasing  long distance  service  online,  a "virtual  calling card" will
appear on the customer's computer monitor,  complete with usage instructions and
a Personal Identification Number superimposed over the online virtual card to be
used by the customer to access his or her account.  Such information can then be
printed out by the customer for record keeping and personal use by the customer.
The print out also includes  instructions  for the customer as to how to place a
long distance call using the Virtual card.

The units of long  distance  service and PINs are supplied to Saratoga  Telecom,
under non-exclusive reseller agreements with long distance service suppliers who
provide  telephone  service to the target  markets  selected by the company.  At
present,  Saratoga Telecom,  as an independent  contractor,  has agreements with
Teleglobe  Communications  Corp. and Cable and Wireless Global Card Service Inc.
to supply it with units of long distance service on an "as ordered", "as needed"
basis.

Teleglobe has the ability to create  customized  global  connectivity,  PINs and
full turn-key calling solutions to its customers. Teleglobe's sizeable portfolio
of global  telecommunications  services also includes domestic and international
voice  services,  Internet  access,  domestic and  international  private lines,
Asynchoronous Transfer Mode (ATM) services, international toll-free services and
postpaid calling services. Therefore,

                                        6
<PAGE>

Saratoga  Telecom  has  selected  Teleglobe  as its  principal  supplier of long
distance services. Teleglobe Inc. (NYSE, TSE, ME: TGO) is a recognized leader in
global telecommunications.

Through its subsidiary Teleglobe Communications Corporation,  Teleglobe develops
and  supplies  global  connectivity  services  to  carriers,   Internet  service
providers,  business customers and content providers  worldwide.  Teleglobe also
caters to an  expanding  international  consumer  customer  base.  According  to
TeleGeography,  an industry  publication,  Teleglobe is the  fourth-ranked  long
distance  provider  in  the  United  States  and,  according  to  a  recent  KMI
Corporation  study,  the third  largest  owner of  undersea  fiber  optic  cable
systems.  Teleglobe has a 50% interest in ORBCOMM,  the world's first commercial
low-earth-orbit,   satellite-based,   data  communications  system.   Additional
information is available at www.teleglobe.com.

Teleglobe's prepaid card service is unique in that it allows  telecommunications
carriers and large  corporations to deliver a global calling service  completely
branded  in their own name.  The  prepaid  cards not only carry the brand of the
carrier,  but  when  callers  use the card  they  hear  custom-branded  messages
identifying the network with the retailer's name, a capability other carriers do
not offer.

Cable & Wireless Global Card Services Inc. is the American subsidiary of Cable &
Wireless of London,  England, one of the world's leading providers of integrated
communications and a major global carrier of communications  traffic:  Internet,
data, voice and video. Its businesses around the world offer a range of services
spanning interactive

entertainment  and  information,  broadband data,  Internet access and broadcast
television,  as well as fixed and mobile  voice.  Cable & Wireless is one of the
world's  largest   carriers  of   international   traffic  and  provides  mobile
communications in more than 30 countries.

Cable & Wireless  is listed on the Stock  Exchanges  of London,  New York (NYSE:
CWP) and Frankfurt.

Saratoga  Telecom's plan to originate customer contact and sales orders is based
on establishing a network of Web Site agents in markets  targeted by the Company
to direct  potential  customers to Saratoga  Telecom's  virtual calling card Web
Site.  Saratoga  Telecom  has engaged  the  services  of a marketing  consulting
service  firm in Florida to assist it with its  efforts  to  establish  Web Site
agents in Central and South America.

Under its  marketing  plan,  Saratoga  is also  pursuing a strategy  of offering
private label  branding of its virtual  calling  cards to companies  involved in
international  business, such as air transportation  carriers,  travel agencies,
financial service providers and other service and commercial businesses.

Virtual  Media's  current  business  development  plan is based on expanding its
marketing  efforts to sell  technological  service in Western  Canada and in the
USA. Further development of Virtual's proprietary software technology is subject
to the availability of sufficient funds from operating revenues or proceeds from
future financings by Saratoga.

                                        7
<PAGE>

Saratoga also plans to  aggressively  pursue the  acquisition of other products,
technologies  and services through  licensing  and/or acquiring  businesses with
proven  sales  and  operating   history  which  are  compatible  with  corporate
strategies to become operational in the e-commerce industry.

To date,  Saratoga's  current  business  development  activities  have consisted
primarily  of  acquiring  the  Internet  telecom  operational  right of Internet
Interview Inc., acquiring Virtual Media Group Inc., assembling a management team
and raising capital.  Since inception of Saratoga's development stage activities
in  December  1997 to October  31,  1999,  Saratoga's  net losses  have  totaled
approximately  $2,909,000 of which  approximately  $1,147,000 is attributable to
the tire and  petroleum  business  project  which was  spun-off to  shareholders
during  March,  1999.  These net  losses  have been  funded  primarily  with the
proceeds  from the private sales of the  Company's  convertible  debt and equity
securities  as well as with the  issuance of its common  stock in  exchange  for
services.

The  spin-off  of  the  WOTD  Project  was  accomplished  by  the  formation  of
International  Internet  Petroleum & Tire  Distributors  Corp. as a wholly owned
subsidiary of Saratoga and a distribution  of  International  shares to Saratoga
shareholders.   Saratoga  issued   5,000,000  shares  of  its  common  stock  to
International in connection with the spin-off transaction which has been treated
as a stock dividend to Saratoga's shareholders as of the date of the spin-off.

During the period  December 1, 1997  (inception)  to October 31, 1998,  Saratoga
wrote off $255,000 of an investment made by  Knightsbridge  prior to the reverse
merger  in  Language  Force,  Inc.,  an  unrelated  company,   after  management
determined that it was unlikely the investment  would be realized beyond $50,000
at any time in the future.  The remaining $50,000 was written off in fiscal 1999
after determining that none of the investment would be realized.  Also in fiscal
1998,  management  concluded  that  approximately  $99,000 of costs  incurred in
connection with an attempted acquisition of a tire company would not be realized
and the $99,000 was written off.

During the periods from December 1, 1997 (inception) to October 31, 1998 and the
year ended  October 31,  1999,  Saratoga  used cash in operating  activities  of
approximately $566,000 and $718,000 respectively.  The use of cash was primarily
the result of net losses of  approximately  $951,000  in 1998 and  approximately
$1,446,000 in 1999 offset by non-cash charges of approximately  $292,000 in 1998
and approximately $879,000 in 1999. The non-cash charges were as follows:

                                        8
<PAGE>

                                                           Fiscal year ending

                                                           ------------------
                                                             1998        1999
                                                             ----        ----
         Loss on impairment of investment                  255,500      $50,000

         Notes payable forgiven                                         (50,000)
         Issuance of options, warrants and
            stock for service                                           407,368
         Amortization                                       15,000      117,933
         Interest expense from beneficial
            conversion features and stock for               21,568      354,008
            debenture interest                             ________   __________
                                                           $292,118   $  879,309
                                                           ========   ==========
Additionally,  the use of cash from  operations  was offset by changes in assets
and  liabilities  of  approximately  $93,000  as a  source  of cash in 1998  and
approximately $151,000 as a use of cash in 1999.

During the three month periods  ended  January 31, 1999 and 2000,  Saratoga used
cash  in   operating   activities   of   approximately   $194,000  and  $359,000
respectively.  This use of cash in the  quarter  ended  January 31, 1999 was the
result  of a net loss of  approximately  $257,000  offset  by  $50,071  from the
issuance of common stock for services  and $49,785  from  interest  expense from
beneficial  conversion features.  Also a change in current liabilities was a use
of cash of $37,369.  The use of cash in the quarter  ended  January 31, 2000 was
the result of a net loss of approximately $512,000 offset by common stock issued
for services of $16,880,  depreciation  and amortization of $14,069 and interest
expense  from  beneficial  conversion  features  of $60,690.  Also,  a change in
current  assets  and  liabilities  of  $61,883   provided  cash  from  operating
activities.

Saratoga financing  activities provided cash flow of approximately  $652,000 for
the period  from  December  1, 1997  (inception)  to October  31, 1998 offset by
approximately  $87,000  attributable  to payment of debt,  and a debt issue cost
Saratoga's financing  activities provided cash flow of approximately  $1,138,000
for  the  year  ended  October  31,  1999  offset  by   approximately   $168,000
attributable  to payments  of debt and debt issue  costs.  Financing  activities
provided  cash flow of  approximately  $202,000 and $313,000 for the three month
periods ended January 31, 1999 and 2000 respectively.  This cash flow was offset
by  approximately  $102,000 of repayment  of notes  payable for the three months
ended January 31, 2000. Saratoga issued  approximately  36,383,000 shares of its
common  stock  in the  year  ended  October  31,  1999  including  approximately
8,500,000  shares for  services.  For the three months  ended  January 31, 2000,
Saratoga issued  2,639,719  shares of its common stock including  145,000 shares
for services.

                                        9
<PAGE>

Saratoga has raised  approximately  $2,019,000  of operating  capital  including
$1,333,000  in private  placement  offerings  since  inception  of its  business
development  activities in December  1997 through  January 31, 2000 and plans to
continue  its efforts to raise  additional  operating  capital  through  various
financing methods including private placements of its equity securities. Funding
of future  operations is dependent on management's  ability to raise  additional
capital.

In October 1999 Saratoga  issued to an unrelated  company a Promissory  Note for
$276,000,  including  a  $76,000  discount.  The  terms of the  Note,  including
amendments  thereto,  called for a payment of $60,000 in November,  1999 and the
balance,  including interest at 6.5%, due by February 29, 2000. Messrs.  Patrick
F. Charles and Terrence K. Picken,  officers,  directors and major shareholders,
assigned shares of Saratoga they personally own or control as collateral for the
Promissory  Note.  The proceeds,  net of the discount and $26,000 in transaction
fees, will be used as operating capital, including the funding of the continuing
development  of  the  Saratoga   Telecom   technology   and  audit,   legal  and
administrative costs related to filing a registration statement with the SEC.

o        Research & Development

Other than developing,  updating and expanding  Saratoga  Telecom's Web Site and
Internet  software to  facilitate  sales of its prepaid  long  distance  virtual
calling  card,  and  Virtual's  Internet  software  to  facilitate  sales of its
technological  services.  Saratoga does not intend to undertake  any  activities
that may be characterized as research and development  until sufficient  funding
is available from future operations or financings by Saratoga.  Saratoga has not
incurred any research and development expenses since its inception.

o        Number of Employees

Saratoga  presently has twelve (12) employees;  nine (9) full time and three (3)
part time employees. During the next 12 months, management intends to hire up to
twelve  additional  employees,  including  technical,  marketing  and  sales and
administrative support personnel.  Saratoga believes there is an ample supply of
qualified candidates available to fill such positions.  However, the continuance
of employment of existing  personnel and the hiring of any additional  employees
is subject to the  availability of sufficient  funds from operating  revenues or
proceeds from future financings to pay them.

o        NASD OTC Bulletin Board Quotations

Effective January 4, 1999, the NASD adopted rules and regulations requiring that
prior to any issuer having its  securities  quoted on the OTC Bulletin  Board of
the NASD that such issuer must be a "reporting issuer" which is required to file
reports under Section 13 or 15 (d) of the  Securities  and Exchange Act of 1934,
as amended Saratoga is not currently a "reporting issuer," and this Registration
Statement will bring Saratoga into compliance  with these listing  provisions of
the OTC Bulletin Board and should prevent the NASD from  "delisting"  quotations
of Saratoga's common stock. Under the "phase-in" schedule of the

                                       10
<PAGE>

NASD,  Saratoga  has until May 17,  2000,  within  which to become a  "reporting
issuer" and Registration Statement.

Item 3  Description of Property

Neither  Saratoga  nor  its  subsidiaries  own  any  real  property.  Saratoga's
executive and administrative  offices are located in Kirkland Washington in 1300
square feet of office space provided to it under a month to month administrative
support  services  agreement with Coast Northwest Inc., a company  controlled by
Patrick F. Charles and Terrence K. Picken, Officers of Saratoga.  Administrative
support services  provided under a verbal agreement include use of office space,
office equipment,  clerical services,  data processing,  local and long distance
telephone service and other  miscellaneous  administrative  support services for
which the Company pays $8,500 per month.

Saratoga  Telecom  Corp has a one year  lease on 1500 sq.  ft. of  office  space
located  in  Hallandale,  Florida  at a rate of  approximately  $1,506 per month
through  June 2000.  There is one two year lease  renewal  option on this office
space.

Saratoga  believes  the office  space  shall be  adequate  for its needs for the
foreseeable future.

                                       11
<PAGE>

Item 4  Security Ownership of Certain Beneficial Owners and Management

This table describes the ownership of Saratoga's outstanding common stock by (i)
each of the Company's  Officers and Directors;  (ii) each person who is known by
Saratoga to own more than 5% of Saratoga's  outstanding  common stock; and (iii)
all of Saratoga's Officers and Directors as a group:

<TABLE>
<CAPTION>


  Title of Class           Name of Beneficial Owner             Amount and Nature of        Percent of Class
                                                                  Beneficial Owner
<S>                  <C>                                        <C>                         <C>

Common               Patrick F Charles                               7,710,752    (a)               14.26%
Stock                8756-122nd Avenue NE Kirkland, WA
                     98033

Common               Terrence K. Picken                             7,190,752     (b)               13.30%
Stock                8756-122nd Avenue NE  Kirkland, WA
                     98033

Common Stock         Tom Morsey                                         35,800                       . 07%
                     2500 E Hallandale
                     Beach Blvd. Ste #210
                     Hallandale, FL 33009

Common Stock         Samuel H. Eisenberg                               200,000                        .37%
Common Stock         Harold P. Capozzi                                 200,000                        .37%
Common Stock         International Internet                          5,000,000    (c)                9.25%
                     All Officers and Directors as a               15,337,304                       28.37%
                     group (5 persons)
</TABLE>

[FN]



(a)   Includes  2,250,000 shares held by PDDE, LLC a State of Washington limited
      liability  company  formed in February 1998 of which Patrick F. Charles is
      Managing Member and owns controlling interest and 2,236,000 shares held by
      Coast Northwest  Management,  LLC a State of Washington  Limited Liability
      Company  formed  in  February  1998  of  which  Patrick  F.  Charles  is a
      co-Managing Member and owns a 50% interest.

                                       12
<PAGE>

(b)   Includes  2,250,000  shares held by United West  Holdings  LLC, a State of
      Washington  limited  liability  company  formed in February  1998 of which
      Terrence  K.  Picken is  Managing  Member and owns  controlling  interest,
      1,610,000  shares held by TKY Holdings LLC, a State of Washington  limited
      liability  company  formed in February 1998 of which Terrence K. Picken is
      Managing Member and owns controlling  interest,  and 2,236,000 shares held
      by Coast Northwest Management LLC, a State of Washington limited liability
      company  formed  in  February  1998  of  which  Terrence  K.  Picken  is a
      co-Managing Member and owns a 50% interest.

(c)   International  Internet Petroleum & Tire Distributors Corp. ("IIPT") was a
      wholly-owned  subsidiary of the Company which was formed in March 1999 and
      the shares of which were  distributed to the shareholders of Saratoga in a
      spin-off  transaction  effective  March 19,  1999.  Patrick F.  Charles is
      President,  CEO and a  Director  of IIPT and  beneficially  owns  24.7% of
      IIPT's  outstanding   common  stock.   Terrence  K.  Picken  is  Executive
      Vice-President  and Director of IIPT and beneficially owns 23.2% of IIPT's
      outstanding common stock.
</FN>

Item 5  Directors, Executive Officers, Promoters, and Control Persons

This table describes Saratoga's current Directors and Executive Officers.

                  NAME                       AGE                TITLE
Patrick F. Charles                           58      President, Chief Executive
                                                        Officer and Director

                                             61       Executive Vice-President,
Tom Morsey                                   52      President, Saratoga Telecom
Samuel H. Eisenberg                          54               Director
Harold Peter Capozzi                         74               Director

Patrick F. Charles has been Saratoga's  Chief Executive  Officer and Chairman of
the Board of Directors  since the inception of Saratoga . Mr.  Charles is also a
founder,  President  and Chief  Executive  Officer of Coast  Northwest  Inc.,  a
privately  owned  Washington  Corporation,  since its  inception in 1981.  Coast
Northwest Inc. provides financial and management  consulting services to various
clients.  Mr.  Charles  has also  served as  National  Director  of  Legislative
consulting  services for  PriceWaterhouseCoopers,  an  international  accounting
firm. Mr. Charles also currently  serves as a Director for Absolute Future Tech.
Inc. ("AFTI"),  a publicly traded company listed on the OTC Bulletin Board. AFTI
is a temporary  employment  service and Internet resume service  specializing in
providing skilled  professionals to the high-tech industry.  Mr. Charles holds a
Bachelor of Science degree in marketing from Seattle  University and an MBA from
the University of Arizona.

                                       13

<PAGE>


Terrence K. Picken has served Saratoga as Executive  Vice-President and Director
since its inception. Mr. Picken is also Executive Vice President and Director of
Coast  Northwest Inc.  since 1992.  Coast  Northwest  Inc. is a privately  owned
company which provides business management and financial  consulting services to
various    clients.    Mr.   Picken   was   also   a   general    partner   with
PriceWaterhouseCoopers, an international accounting firm. Mr. Picken has over 20
years  of  international  accounting  experience  and was  licensed  as a CPA in
California  and  Washington  as well as a  Chartered  Accountant  in Canada.  He
graduated  with a Chartered  Accountant  degree from the University of Manitoba,
Canada.

Tom Morsey was  appointed a Director of Saratoga  and has served as President of
Saratoga  Telecom Corp., a  wholly-owned  subsidiary of the Company,  since June
1999. Mr. Morsey  previously  was President of Internet  Interview Inc. which he
co-founded in 1997 and from which the Company  acquired the telecom  operational
right in June 1999. In 1989,  Mr. Morsey founded  Telecommunications  Consulting
Institute Inc.  ("Telecon Inc.") which he managed and operated for over 5 years.
Telecon Inc. was a reseller of AT & T and Sprint telephone  calling services and
prior to its sale to Telenational  Communications  Inc. of Omaha  Nebraska,  had
over  968  representatives   nationwide  offering  innovative  calling  programs
developed by Telecon Inc.

Samuel H.  Eisenberg has served as a Director of Saratoga  since its  inception.
Mr.  Eisenberg  is Senior  Vice-President  of  Portfolio  Investment  Strategies
Corporation based in New York which specializes in private  investment  banking.
He has served in such capacity for over 5 years.

Harold  P.  Capozzi  has  been  a  Director  of  Saratoga,   formerly  known  as
Knightsbridge Corporation,  since February 1997 and was President,  Chairman and
CEO of  Knightsbridge  from June 1997 to July 1998, the date of  Knightsbridge's
merger with Saratoga. Mr. Capozzi is manager of his own investment portfolio and
is an independent business advisory  consultant.  For ten years, 1990 - 1999, he
served as a Director of PLC Medical  Systems  Inc.,  a publicly  traded  Company
listed on the  American  Stock  Exchange  and was an  officer  and  Director  of
Richland Mines Inc., (VSE), and Dynamic Associates,  (NASDAQ). He is currently a
Director and Officer of Ceasar's  Explorations Inc., and Blackwater Ltd., (CVE).
Mr.  Capozzi  holds a Bachelor  of Science  Degree  and a Bachelor  of  Commerce
Degree,  with First Class Honors from the University of British Columbia,  and a
Teaching Degree from the University of Italy.

The  Directors  serve in  their  positions  until  the next  annual  meeting  of
stockholders or until the Directors' successors have been elected and qualified.
The executive  officers are appointed by the Board of Directors and serve at the
discretion of the Board.

Item 6.  Executive Compensation

The following  tables set forth the  compensation  paid by Saratoga to the named
executive officers for the periods indicated:

                                       14
<PAGE>

                           SUMMARY COMPENSATION TABLE

                  Annual Compensation         Long-Term Compensation

                                          Awards               Payouts
                                          --------------------------------------
                                                  Securities (5)
                                 Other  (1)(3)(4)   Under-
Name and                        annual  Restricted  lying          All other
Principal                       Compen-   Stock    Options/  LTIP   Compen-
Position   Year  Salary  Bonus  sation    Award      SARs   Payouts sation
                   ($)    ($)     ($)      ($)        (#)     ($)      ($)
   (a)      (b)    (c)    (d)     (e)      (f)        (g)     (h)      (i)

Patrick F.10/31/98  93,331 0       0        0         0       0       0
Charles   10/31/99 125,665 0       0   20,458   500,000       0       0
Chief
 Executive
 Officer
 and
 Director

Terrence  10/31/98  93,331   0      0       0         0       0       0
K. Picken 10/31/99 125,665   0      0  20,458   500,000       0       0
Executive
 Vice-
 President
 and
 Director

Thomas S. 10/31/98       0   0      0       0         0       0       0
Morsey    10/31/99  24,250   0      0       0   250,000       0       0
President
 of wholly-
 owned
 subsidiary,
 Saratoga
 Telecom
 Corp. and
 Director

(1)  The restricted stock award amounts reported in column (f) above for Patrick
     F.  Charles and  Terrence K. Picken  represent a 20%  discount  from market
     price on restricted common shares used to partially pay for salary included
     in column (c) above.
(2)  Thomas S. Morsey  joined  Saratoga  Telecom  Corp as its  President in June
     1999. He was  previously  co-founder  and President of Internet  Interview,
     Inc. from which  Saratoga  acquired the telecom  operational  right in June
     1999.
(3)  Dividends would be paid on restricted  common stock shares if dividends are
     declared  and paid on the common stock of Saratoga in  accordance  with the
     Articles of Incorporation, as amended.

                                       15


<PAGE>



(4)  The number and market  value of  aggregate  restricted  stock  holdings  of
     Patrick F.  Charles  and  Terrence  K. Picken held at October 31, 1999 were
     7,710,752  shares and $1,079,505  for Mr. Charles and 7,190,752  shares and
     $1,006,705 for Mr. Picken.
(5)  The stock options  listed in column (g) above were all  exercisable at date
     of grant.


OPTION/SAR GRANTS IN LAST FISCAL YEAR

                               (Individual Grants)

                          Percent
                             of

                           Total
                          Options/

                Number     SARs
                  of      Granted

             Securities     to      Exercise              Market
             Underlying   Employees  Or Base             Price on

            Options/SARs  in Fiscal  Price   Expiration   Date of
   Name      Granted (#)    Year     ($/Sh)     Date       Grant
    (a)        (b)           (c)       (d)      (e)         (f)
------------------------------------------------------------------

Patrick F.    500,000       39.2%     $0.20   9/17/04
 Charles
Chief
 Executive
 Officer and
 Director

Terrence K.   500,000       39.2%     $0.20   9/17/04
 Picken
Executive
 Vice President
 and Director

Thomas S.     250,000        19.6%    $0.10   6/16/04      $0.14
 Morsey
 President of
 Wholly-owned
 Subsidiary,
 Saratoga
 Telecom Corp.
 and Director

                                       16
<PAGE>

Effective  October  1,  1999,   Saratoga  signed  Corporate  Officer  Employment
Agreements  (the  "Agreements")  with Patrick F. Charles and Terrence K. Picken.
All significant  provisions of the Agreements are identical.  The Agreements are
for a three year term and  provide  basic  salary of $150,000 in the first year,
$175,000 in the second year and $200,000 in the final year. The Agreements  also
provide for incentive  bonuses based on pre-tax  operating cash flow. A bonus of
5.0% will be paid on the first $250,000;  4.0% on the next $250,000; 3.0% on the
next $250,000; 2.0% on the next $250,000 and 1.0% on pre-tax operating cash flow
amounts over  $1,000,000.  The Agreements also provide that at the discretion of
the officer, monthly amounts over $10,000 or any amount not paid when due may be
paid in common shares of Saratoga based on the closing bid price at the time the
officer gives notice.  In the event  Saratoga  issues  restricted  common shares
under this provision, the officer is entitled to receive additional shares based
on a factor of up to a 40%  discount  of the  closing  bid price at the time the
officer gives notice.

For common stock issued in  non-monetary  transactions  involving  marketability
discounts  Saratoga's  policy  is to  account  for  marketability  discounts  in
accordance with guidelines provided by published empirical studies and financial
research on marketability discounts.

The Agreements provide that Patrick F. Charles and Terrence K. Picken may not be
terminated for any reason unless  Saratoga  offers in writing to purchase all of
their shares directly or  beneficially  owned at market price, as defined in the
Agreements;  pays in cash all amounts  owing to the officer and; pays in cash an
amount for a buy-out of the remainder of the Agreement at the rate of 50% of the
regular salary.

The  Agreements  also  require  Saratoga to provide and pay for  $1,000,000  and
$500,000  life  insurance  on the lives of Patrick F.  Charles  and  Terrence K.
Picken,  respectively,  to be paid to their estates. In addition, the Agreements
require Saratoga to provide death and disability  benefits to Patrick F. Charles
and Terrence K. Picken or their estates  equivalent to six (6) months pay at the
time of the death or disability.  Saratoga is also required to pay an automobile
allowance of $750 per month each plus automobile  operating  expenses.  Saratoga
has paid term life insurance  premiums for the benefit of Patrick F. Charles and
Terrence K. Picken in the annual amounts of $1,915 and $1,265 respectively.

In June  1999,  Saratoga  Telecom  Corp  entered  into a three  year  Employment
Agreement  with Thomas S. Morsey as part of the  Agreement for Sale and Purchase
of Telecom Business Assets between Saratoga Telecom Corp and Internet Interview,
Inc. The  Employment  Agreement  provides a base salary of $5,000 per month,  an
incentive  bonus to be determined  by the Board of  Directors,  stock options to
purchase up to 250,000  shares of the Company's  common stock at $.10 per share,
immediately  exercisable with a term of five (5) years and a $500 per month auto
allowance.  Mr.  Morsey,  in June,  1999,  received  Warrants  to purchase up to
500,000 shares of the Company's  common stock at $0.10 per share,  in connection
with Saratoga's acquisition of operational rights to develop an Internet telecom
technology  from  Internet  Interview,  Inc., of which Mr. Morsey was the former
President and minority stockholder. The Warrants are exercisable at any time and
expire June 15, 2004. None of the warrants have been exercised at this time.

                                       17


<PAGE>


Stock Options

During  October  1998,  Saratoga  approved a Qualified and  Non-Qualified  Stock
Option Plan ("the Plan").  A total of 8,000,000  shares are available for future
grants to directors,  officers,  employees and consultants who are in a position
to make significant contributions to the success of Saratoga.

The exercise  price of each option will be  determined  by  Saratoga's  board of
directors,  in its discretion,  at the time of grant. The vesting period and the
expiration  date  shall  not  exceed  ten  years.  Under the 1998  option  plan,
incentive  stock  options  that  become  exercisable  in any fiscal year may not
exceed the fair market value of $100,000 as  determined  at the time the options
are granted.  No options granted,  to officers and directors under the Plan have
been  exercised  as of the date of this  filing  except  for  options on 250,000
shares  exercised  in  January,  2000 by Harold A.  Capozzi,  one of  Saratoga's
non-employee directors..

Compensation of Directors

Beginning in fiscal year ended October 31, 1999, non-employee directors are paid
$300 per Board of Directors meeting.  The two outside directors were paid $2,100
each for the year ended  October  31,  1999 and in April,  1999 each was granted
options to purchase up to 250,000 shares of the Company's  common stock at $0.10
per share under  Saratoga's  Stock Option Plan.  Such options expire within five
years from date of grant. There currently are no standard  arrangements  whereby
Saratoga's  directors are  compensated  for committee  participation  or special
assignments.

Item 7 Certain Relationships and Related Transactions

Coast  Northwest  Inc.  provided   substantially  all  of  Saratoga's  corporate
administrative   services  since  inception  of  Saratoga's   development  stage
activities for which Saratoga paid to Coast Northwest Inc.  $96,373 for the year
ended October 31, 1999 and $73,600 for the period from  inception of development
stage,  activity  December  1997,  to October 31, 1998.  At October 31, 1999 and
October 31, 1998 Saratoga owed an additional $1,127 and $10,100  respectively to
Coast Northwest Inc. for administrative support services.  Saratoga's President,
Patrick  F.   Charles  and   Executive   Vice-President,   Terrence  K.  Picken,
collectively own controlling interest in Coast Northwest Inc.

Item 8 Description of Securities

Saratoga has two classes of securities  authorized,  consisting  of  200,000,000
shares of common stock with a par value of $.001 per share and 50,000,000 shares
of preferred stock with a par value of $.001 per share.

                                       18


<PAGE>



o        Common Stock

     Saratoga has authorized 200,000,000 shares of common stock with a par value
     of $0.001 per share.  The holders of common  stock are entitled to one vote
     per share on 17 all matters to be voted on by shareholders  and do not have
     cumulative  voting rights.  The shares of common stock have no pre-emptive,
     subscription,  conversion  or  redemption  rights and may be issued only as
     fully  paid  and  non  assessable  shares.  In the  event  of  liquidation,
     dissolution  or winding up of the company,  the holders of the common stock
     are entitled to share ratably in all assets  remaining  which are available
     for  distribution  to them after payment of liabilities and after provision
     has been made for each class or series of stock having  preference over the
     common stock. Holders of the common stock are entitled to share pro rata in
     dividends and  distributions  with respect to the common  stock,  as may be
     declared by the Board of Directors out of funds legally  available  subject
     to a restriction  that  dividends on the common stock may not be paid until
     dividends on Saratoga's issued  cumulative Series A Convertible  Redeemable
     Preferred Stock have been paid.

                                     PART II

Item 1 Market  Price  and  Dividends  on  Saratoga's  common  equity  and  other
stockholder matters

Saratoga's  common stock has traded on the OTC  Bulletin  Board since its merger
with Knightsbridge, July, 1998. Prior to the merger, Knightsbridge had commenced
trading on the OTC Bulletin Board in May, 1998 under the trading symbol KBDG. At
the time of the  merger,  the trading  symbol was changed to WOTD.  It was again
changed to SHCC in March 1999.  The high and low sales  prices for each  quarter
from May 1998 to January 31, 2000 were as follows:

Quarter Ended                        High              Low

July 31, 1998                       $0.500           $0.156
October 31, 1998                    $0.500           $0.130

January 31, 1999                    $0.220           $0.025
April 30, 1999                      $0.290           $0.020
July 31, 1999                       $0.220           $0.100
October 31, 1999                    $0.215           $0.120

January 31, 2000                    $0.328           $0.080

Quotations  for Saratoga's  common stock reflect  inter-dealer  prices,  without
retail  markups,   markdowns  or  commissions  and  may  not  represent   actual
transactions.

Saratoga has approximately 282 holders of its common stock.

                                       19
<PAGE>

No dividends  have been  declared on  Saratoga's  common  stock.  Holders of the
common stock are entitled to share pro rata in dividends and distributions  with
respect to the common stock, as may be declared by the Board of Directors out of
funds legally  available  subject to a restriction  that dividends on the common
stock may not be paid until  dividends on the  cumulative  Series A  Convertible
Redeemable Preferred Stock have been paid.

Item 2 Legal Proceedings

Saratoga is not a party to any pending legal proceedings.

Item 3 Changes in and Disagreements with Accountants

There have not been any changes in or disagreements with Accountants.

Item 4 Recent Sales of Unregistered Securities

Prior to the merger with Knightsbridge,  Saratoga, then named Western Oil & Tire
Distributors  Inc.  issued  6,000,000  shares of its common stock at $0.0001 par
value per share  principally  to its  founding  stockholders  and to others  for
services pursuant to Section 4 (2) of the Securities Act of 1933.

In accordance with an Agreement and Plan of Merger ("Merger") effective July 28,
1998,  the  6,000,000  common shares of Western were  exchanged  for  12,000,000
shares of  Knightsbridge  common  stock  recorded at $0.001 per share par value,
11,577,000 of which were restricted and newly issued from Knightsbridge treasury
and 423,000 of which were delivered by certain  stockholders  of  Knightsbridge.
950,000  shares of  restricted  common  stock  recorded at $0.001 par value were
newly  issued as finder's  fees under the Merger  Agreement.  The shares  issued
under the Merger  Agreement  were  issued  without  registration  pursuant to an
exemption from registration under Section 4 (2) of the Securities Act of 1933.

In July  1998,  Saratoga  issued  $150,000  principal  amount  of a 9%  Series A
Subordinated Convertible Redeemable Debenture due July 24, 1999 to an accredited
investor in a private placement. The Series A Debenture and the shares of common
stock into which it was converted were exempt from  registration  in reliance on
Rule 504 of Regulation D of the  Securities  Act of 1933. The Series A Debenture
was  convertible  into common stock at a conversion  price equal to 72.5% of the
average  closing  bid price of the common  stock for the five (5)  trading  days
immediately preceding the date of receipt of the conversion notice. The Series A
Debenture plus interest  thereon of $8,414 was converted to 6,345,908  shares of
common  stock  between  October  1998  and  April  1999 at an  average  price of
approximately  $.025  per  share.  At the  time  of the  sale  of the  Series  A
Debenture,  Saratoga recorded $56,897 of additional paid-in capital representing
the beneficial conversion feature value of the discount. This amount was charged
to interest expense over the expected conversion period.

                                       20
<PAGE>

In November 1998 through  January 1999 Saratoga  issued 850,000 shares of common
stock  valued at a total of $50,071  for an average  price of $.059 per share to
J.B. Marc and Associates for financial  advisory and corporate  public relations
services.  Such shares were issued without  registration in reliance on Rule 504
of Regulation D of the Securities Act of 1933.

In December 1998,  Saratoga  issued $15,000  principal  amount of a Subordinated
Convertible   Redeemable  Debenture  due  December,   1999  to  Coast  Northwest
Management  LLC ("Coast LLC  Debenture")  a limited  liability  company owned by
Patrick F. Charles and Terrence K. Picken,  officers,  directors and controlling
shareholders  of the  Company  in a private  placement  as  payment of a loan to
Saratoga.  The Coast LLC  Debenture and the shares of common stock into which it
was  converted  were  exempt  from  registration  in  reliance  on  Rule  504 of
Regulation  D of the  Securities  Act of  1933.  The  Coast  LLC  Debenture  was
convertible  into  common  stock  at a  conversion  price  equal to 72.5% of the
average  closing  bid price of the common  stock for the five (5)  trading  days
immediately  preceding the date of receipt of the conversion  notice.  The Coast
LLC Debenture  was  converted to 300,000  shares of common stock on December 18,
1998 at a price of approximately  $.05 per share. At the time of the sale of the
Coast LLC Debenture,  Saratoga  recorded  $5,690 of additional  paid-in  capital
representing  the  beneficial  conversion  feature value of the  discount.  This
amount was charged to interest expense over the expected conversion period.

On January 7, 1999 Saratoga issued  3,600,000 shares of common stock for $90,000
cash to two non-U.S.  resident  investors,  unrelated third parties,  in an arms
length  transaction.  The shares were sold at an average of $.025 per share. The
purchase price per share of the  transaction was  significantly  discounted from
the  reported  trade  price of the shares  due to a lack of  trading  volume and
sufficient  history to determine per share market value. Such shares were issued
without  registration  in reliance on Rule 504 of Regulation D of the Securities
Act of 1933.

In January 1999  Saratoga  issued  $30,000  principal  amount of a  Subordinated
Convertible  Redeemable Debenture due January 2000 to Coast Northwest Management
LLC ("Coast LLC  Debenture 2") a limited  liability  company owned by Patrick F.
Charles and Terrence K. Picken,  officers,  directors and major  shareholders of
Saratoga in a private placement as payment of a loan to Saratoga.  The Coast LLC
Debenture  2 and the shares of common  stock into  which it was  converted  were
exempt  from  registration  in  reliance  on  Rule  504 of  Regulation  D of the
Securities  Act of 1933. The Coast LLC Debenture 2 was  convertible  into common
stock at a conversion  price equal to 72.5% of the average  closing bid price of
the common stock for the five (5) trading days immediately preceding the date of
receipt  of the  conversion  notice.  $29,000 of the Coast LLC  Debenture  2 was
converted to 1,250,000  shares of common stock on January 21, 1999 at a price of
approximately $.023 per share. The remaining $1,000 of the Coast LLC Debenture 2
was  forgiven.  At the time of the sale of the Coast LLC  Debenture 2,  Saratoga
recorded  $11,380 of additional  paid-in  capital  representing  the  beneficial
conversion  feature value of the  discount.  This amount was charged to interest
expense over the expected conversion period.

                                       21
<PAGE>

In January 1999  Saratoga  issued  $15,000 of principal  amount of  Subordinated
Convertible Redeemable Debentures due January 2000 to each of Patrick F. Charles
and Terrence K. Picken,  officers,  directors and major shareholders of Saratoga
in a private placement for a total of $30,000 in payment of services provided to
Saratoga.  The  Debentures  and the shares of common  stock into which they were
converted were exempt from  registration in reliance on rule 504 of Regulation D
of the Securities Act of 1933. The Debentures were convertible into common stock
at a  conversion  price equal to 72.5% of the  average  closing bid price of the
common stock for the five (5) trading  days  immediately  preceding  the date of
receipt of the conversion notice. $14,500 of each Debenture totaling $29,000 was
converted  into a total of 1,250,000  shares of common stock on January 21, 1999
at a price of  approximately  $.023  per  share.  The  remaining  $1,000  of the
Debentures  was forgiven.  At the time of the sale of the  Debentures,  Saratoga
recorded  $11,380 of additional  paid-in  capital  representing  the  beneficial
conversion  feature value of the  discount.  This amount was charged to interest
expense over the expected conversion period.

On February 11, 1999 Saratoga issued  2,250,000 shares of common stock valued at
$.016 per share to Patrick F.  Charles,  an officer,  director and a controlling
shareholder of Saratoga as partial payment for management  services  provided to
Saratoga . These  shares were issued at a 20% discount  from the closing  market
price at the date of  issuance.  Such shares were  issued  without  registration
pursuant to an exemption from registration under Section 4 (2) of the Securities
Act of 1933.

On February 11, 1999 Saratoga issued  2,250,000 shares of common stock valued at
$.016 per share to Terrence K. Picken an officer, director and major shareholder
of Saratoga as partial  payment for  management  services  provided to Saratoga.
These shares were issued at a 20% discount from the closing  market price on the
date of issuance.  Such shares were issued without  registration  pursuant to an
exemption from registration under Section 4 (2) of the Securities Act of 1933.

On February 11, 1999  Saratoga  issued  25,000  shares of common stock valued at
$.016 per share to a limited  liability  corporation  controlled  by  Patrick F.
Charles an Officer,  Director and major  shareholder  of Saratoga as payment for
management services. These shares were issued at a 20% discount from the closing
market  price  on  the  date  of  issuance.  Such  shares  were  issued  without
registration  pursuant to an exemption from registration  under Section 4 (2) of
the Securities Act of 1933.

On February 11, 1999 Saratoga  issued 50,000  restricted  shares of common stock
valued at $.016 per share to a non-U.S.  resident  for  merger  and  acquisition
consulting services. These shares were issued at a 20% discount from the closing
market  price  on  the  date  of  issuance.  Such  shares  were  issued  without
registration  pursuant to an exemption from registration  under Section 4 (2) of
the Securities Act of 1933.

On February 11, 1999 Saratoga  issued  500,000  shares of common stock valued at
$.02 per  share to Prime  Ventures  Corporation  as  payment  of a fee to extend
payments  under  a  consulting  agreement.   Such  shares  were  issued  without
registration  in reliance on rule 504 of Regulation D of the  Securities  Act of
1933.

                                       22
<PAGE>

On February 11, 1999 Saratoga  issued  100,000  shares of common stock valued at
$.02  per  share  to  Portfolio  Investment   Strategies  Corp  for  merger  and
acquisition consulting services. Such shares were issued without registration in
reliance on Rule 504 of Regulation D of the Securities Act of 1933.

On February 18, 1999 Saratoga  issued  500,000  shares of common stock valued at
$.023 per share as payment to PMR and Associates for corporate  public relations
services.  Such shares were issued without  registration in reliance on Rule 504
of Regulation D of the Securities Act of 1933.

Pursuant to a February 18, 1999 corporate  public  relations  service  agreement
entered  into  between PMR and  Associates  and  Saratoga  including  amendments
thereto.  PMR, in October, 1999 exercised its right to purchase 1,700,000 shares
of Saratoga common stock under warrants  granted to PMR under the agreement at a
price of  approximately  $.029  per  share.  Such  shares  were  issued  without
registration  pursuant to an exemption from  registration  under Section 4(2) of
the Securities Act of 1933.

On February 18, 1999 Saratoga  issued 95,000 shares of common stock valued at an
average  price of $.023 per  share to (4) four  individuals  under  arrangements
whereby they  provided  administrative  services to  Saratoga.  Such shares were
issued without registration in reliance on rule 504 of Regulation D or Section 4
(2) of the Securities Act of 1933.

On March 17, 1999  Saratoga  issued  50,000  restricted  shares of common  stock
valued at $.03 per share to an independent  consultant  who provided  merger and
acquisition  services to Saratoga.  These shares were issued at a 9.1%  discount
from the closing  market price on the date of issuance.  Such shares were issued
without registration  pursuant to an exemption from registration under Section 4
(2) of the Securities Act of 1933.

On March 17, 1999 Saratoga  issued 250,000 shares of common stock valued at $.03
per  share to  Commonwealth  Partners  for  merger  and  acquisition  consulting
services.  These shares were issued at a 9.1% discount  from the closing  market
price on the date of  issuance.  Such shares were  issued  without  registration
pursuant to an exemption from registration under Section 4 (2) of the Securities
Act of 1933.

On March 19, 1999  Saratoga  issued  5,000,000  shares of common stock valued at
$.05 per share to  International  Internet  Petroleum & Tire  Distributors  Corp
("IIPT") in connection with the spin-off  transaction whereby the shares of IIPT
were  distributed to the  stockholders  of Saratoga as of March 19, 1999.  These
shares were issued at approximately a 20% discount from the closing market price
on the date of  issuance.  Saratoga  shares  issued to IIPT were issued  without
registration  pursuant to an exemption from registration  under Section 4 (2) of
the  Securities Act of 1933. The issuance of these shares was accounted for as a
stock dividend.

                                       23


<PAGE>


In March  1999,  Saratoga  issued  $450,000  principal  amount  of a 9% Series B
Subordinated  Convertible  Redeemable  Debentures  due March  30,  2000 to three
accredited  investors in a private  placement.  The Series B Debentures  and the
shares of  common  stock  into  which  they  were  converted  were  exempt  from
registration  in reliance on Rule 504 of Regulation D of the  Securities  Act of
1933. The Series B Debentures were convertible into common stock at a conversion
price  equal to 72.5% of the average  closing bid price of the common  stock for
the five (5)  trading  days  immediately  preceding  the date of  receipt of the
conversion  notice. The Series B Debentures plus interest thereon of $2,857 were
converted to 5,795,564 shares of common stock in May 1999 at an average price of
approximately  $.078  per  share.  At the  time  of the  sale  of the  Series  B
Debentures,   Saratoga   recorded   $170,691  of  additional   paid-in   capital
representing  the  beneficial  conversion  feature value of the  discount.  This
amount was charged to interest expense over the expected conversion period.

On April 6, 1999 Saratoga issued 10,000 restricted shares of common stock valued
at $.04 per share to an individual for services. Such shares were issued without
registration  pursuant to an exemption from registration  under Section 4 (2) of
the Securities Act of 1933.

On May 17,  1999  Saratoga  issued  550,000  shares  of common  stock  valued at
approximately  $.131  per  share  to PMR and  Associates  for  corporate  public
relations  services.  These  shares  were  issued at a 3.03%  discount  from the
closing  market price on the date of issuance.  Such shares were issued  without
registration  pursuant to an exemption from registration  under Section 4 (2) of
the Securities Act of 1933.

In May  1999  Saratoga  issued  377,742  shares  of  its  Series  A  Convertible
Redeemable  Preferred  Stock in payment of a $377,742  Note Payable due March 3,
2003.  These Series A Convertible  Redeemable  Preferred  shares are convertible
into common stock of Saratoga  one-third after April 30, 2000, another one-third
after April 30,2001,  and a final one-third after April 30,2002.  The conversion
rate is $1.00 divided by the average  closing price for Saratoga's  common stock
for the five trading days  immediately  prior to the notice of conversion.  Such
preferred shares were issued without registration  pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933.

In June  1999,  Saratoga  issued  $150,000  principal  amount  of a 9%  Series C
Subordinated Convertible Redeemable Debenture due June 11, 2001 to a corporation
in a private  placement.  The Series C Debenture  and the shares of common stock
into which it was converted  were exempt from  registration  in reliance on Rule
504 of Regulation D of the  Securities  Act of 1933.  The Series C Debenture was
convertible  into  common  stock  at a  conversion  price  equal to 72.5% of the
average  closing  bid price of the common  stock for the five (5)  trading  days
immediately preceding the date of receipt of the conversion notice. The Series C
Debenture  plus  interest  thereon of $97 was  converted to 1,548,158  shares of
common stock in June 1999 at an average price of approximately  $.097 per share.
At the time of the sale of the Series C Debenture, Saratoga recorded $ 56,897 of
additional paid-in capital representing the beneficial  conversion feature value
of the discount.  This amount was charged to interest  expense over the expected
conversion period.

                                       24


<PAGE>


On June 16, 1999 Saratoga  issued 150,000 shares of common stock valued at $.112
per share to a  corporation  for  services.  These  shares  were issued at a 20%
discount from the closing market price on the date of issuance. Such shares were
issued without  registration  pursuant to an exemption from  registration  under
Section 4 (2) of the Securities Act of 1933.

On July 1, 1999,  Saratoga  issued 25,000 shares of common stock valued at $.136
per share to an  individual  for  services.  These  shares  were issued at a 20%
discount from the closing market price on the date of issuance. Such shares were
issued without  registration  pursuant to an exemption from  registration  under
Section 4 (2) of the Securities Act of 1933.

On July 22, 1999 Saratoga issued 220,000 shares of common stock to an individual
for corporate public relations services.  The agreed value of the shares was 85%
of the  average  closing  price of the common  stock for the five (5)  preceding
trading days or $.149 per share.  Such shares were issued  without  registration
pursuant to an exemption from registration under Section 4 (2) of the Securities
Act of 1933.

In July  1999,  Saratoga  issued  $150,000  principal  amount  of a 2%  Series D
Subordinated  Convertible Redeemable Debenture due July 30, 2001 to a company in
a private placement.  The Series D Debenture and the shares of common stock into
which it was converted were exempt from  registration in reliance on Rule 504 of
Regulation  D of  the  Securities  Act of  1933.  The  Series  D  Debenture  was
convertible  into common stock at a conversion price equal to 75% of the average
closing bid price of the common stock for the five (5) trading days  immediately
preceding the date of receipt of the conversion  notice.  The Series D Debenture
plus  interest  thereon of $1,275 was  converted to  1,182,261  shares of common
stock in August 1999 at an average price of  approximately  $.127 per share.  At
the time of the sale of the Series C  Debenture,  Saratoga  recorded  $50,000 of
additional paid-in capital representing the beneficial  conversion feature value
of the discount.  This amount was charged to interest  expense over the expected
conversion period.

On August 25, 1999 Saratoga issued 170,000 shares of common stock valued at $.15
per share to a corporation for corporate public relations services.  Such shares
were issued  without  registration  pursuant to an exemption  from  registration
under Section 4 (2) of the Securities Act of 1933.

On October 4, 1999 Saratoga  issued  400,000  restricted  shares of common stock
valued at $.14 per share to  Patrick  F.  Charles  an  officer,  director  and a
controlling  shareholder of Saratoga as  reimbursement  for consulting  services
paid by Mr.  Charles on behalf of  Saratoga.  Such shares  were  issued  without
registration  pursuant to an exemption from registration  under Section 4 (2) of
the Securities Act of 1933.

On October 4, 1999 Saratoga issued 29,762  restricted  shares of common stock to
each of Patrick F.  Charles and  Terrence K.  Picken,  officers,  directors  and
controlling shareholders

                                       25


<PAGE>


of  Saratoga.  These  shares  were  valued at $.112  per share and were  partial
payment of their salary in accordance  with employment  agreements  between them
and Saratoga. These shares were issued at a 20% discount from the closing market
price on the date of  issuance.  Such shares were  issued  without  registration
pursuant to an exemption from registration under Section 4 (2) of the Securities
Act of 1933.

In November,  1999,  Saratoga issued  1,000,000 shares of common stock valued at
$.06 per share as payment on a note  payable to an unrelated  third party.  Such
shares were issued without  registration in reliance on Rule 504 of Regulation D
of the Securities Act of 1933.

In December, 1999, Saratoga issued 115,000 shares of common stock valued at $.09
per share to employees. Such shares were issued without registration pursuant to
an exemption form registration under Section 4(2) of the Securities Act of 1933.

In January,  2000,  Saratoga issued $160,000  principal  amount of a 2% Series E
Subordinated  Convertible  Redeemable  Debenture  due  January  20,  2001  to  a
non-related  company  in a private  placement.  The Series E  Debenture  and the
shares of common stock into which it was converted were exempt form registration
in reliance  on Rule 504 of  Regulation  D of the  Securities  Act of 1933.  The
Series E Debenture was convertible into common stock at a conversion price equal
to 72.5% of the average  closing bid price of the common  stock for the five (5)
trading days immediately preceding the date of receipt of the conversion notice.
The E Debenture  was  converted to 1,244,719  shares of common stock in January,
2000 at an average price of  approximately  $.129 per share.  At the time of the
sale of the Series E Debenture,  Saratoga recorded $60,690 of additional paid-in
capital  representing the beneficial  conversion  feature value of the discount.
This amount was charged to interest expense over the expected conversion period.

In January,  2000, Saratoga issued 250,000 shares of common stock valued at $.10
per share to a Director upon exercise of a stock option granted to the Director.
Such shares were  issued  without  registration  pursuant to an  exemption  from
registration under Section 4(2) of the Securities Act of 1933.

In January,  2000,  Saratoga issued 30,000 shares of common stock valued at $.20
per share to employees. Such shares were issued without registration pursuant to
an exemption from registration under Section 4(2) of the Securities Act of 1933.

Saratoga  believed that each of the foregoing persons or entities to whom shares
of common stock were issued were either "accredited investors" or "sophisticated
investors"  as defined  in the  Securities  Act of 1933.  Each had access to all
material  information  regarding Saratoga,  its business and financial condition
prior to the offer and sale of the securities in question.

Saratoga took into  consideration  a number of factors in determining  the price
per share of its common stock in the described transactions.  These consisted of
(1) the "restricted"

                                       26


<PAGE>


nature of the securities  (except for those transactions under Regulation D Rule
504);  (2) the limited  market for  Saratoga's  common stock on the OTC Bulletin
Board; (3) the low book value per share;  and (4) Saratoga's  history of limited
revenues.

For common stock issued in  non-monetary  transactions  involving  marketability
discounts  Saratoga's  policy  is to  account  for  marketability  discounts  in
accordance with guidelines provided by published empirical studies and financial
research on marketability discounts.

Item 5 Indemnification of Officer and Directors

Section 78.751 (1) of the Nevada Revised  Statutes  ("NRS")  authorizes a Nevada
corporation to indemnify any director, officer, employee or corporate agent "who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, except an action by or in the right of the corporation" due to
his or her corporate role.  Section 78.751 (1) extends this protection  "against
expenses,  including  attorneys'  fees,  judgments,  fines and  amounts  paid in
settlement actually and reasonably incurred by him or her in connection with the
action,  suit or  proceeding  if he or she  acted in good  faith and in a manner
which  he or she  reasonably  believed  to be in or  not  opposed  to  the  best
interests  of the  corporation,  and,  with  respect to any  criminal  action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful."

Section 78.751 (2) of the NRS also authorizes  indemnification of the reasonable
defense or settlement  expenses of a corporate  director,  officer,  employee or
agent  who is sued,  or is  threatened  with a suit,  by or in the  right of the
corporation.  The  party  must  have  been  acting  in good  faith  and with the
reasonable  belief that his or her actions were not opposed to the corporation's
best interests.  Unless the court rules that the party is reasonably entitled to
indemnification,  the party  seeking  indemnification  must not have been  found
liable to the corporation.

To the  extent  that a  corporate  director,  officer,  employee,  or  agent  is
successful  on the merits or  otherwise in  defending  any action or  proceeding
referred to in Section 789.751 (1) or 78.751 (2),  Section 78.751 (3) of the NRS
requires that he be indemnified  "against expenses,  including  attorneys' fees,
actually and reasonably incurred by him or her in connection with the defense."

Section 78.751 (4) of the NRS limits  indemnification  under Sections 78.751 (1)
and 78.751  (2) to  situations  in which  either  (1) the  stockholders  (2) the
majority  of a  disinterested  quorum of  directors,  or (3)  independent  legal
counsel determine that indemnification is proper under the circumstances.

Pursuant  to  Section  78.751 (5) of the NRS,  the  corporation  may  advance an
officer's or director's  expenses incurred in defending any action or proceeding
upon receipt of an undertaking.  Section 78.751 (6) (a) provides that the rights
to indemnification and

                                       27
<PAGE>

advancement of expenses shall not be deemed  exclusive of any other rights under
any  bylaw,  agreement,  stockholder  vote or vote of  disinterested  directors.
Section 78.751 (6) (b) extends the rights to indemnification  and advancement of
expenses to former directors,  officers,  employees and agents, as well as their
heirs, executors, and administrators.

Regardless  of whether a director,  officer,  employee or agent has the right to
indemnity,  Section  78.752  allows the  corporation  to purchase  and  maintain
insurance on his behalf  against  liability  resulting from his or her corporate
role.

Article II of the Company's  Articles of Incorporation  provides that any person
serving as a Director or Officer is to be  indemnified  and held harmless to the
fullest extent legally  permissible under the General Corporate Law of the State
of Nevada.

                                       28


<PAGE>


                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, hereunto duly authorized.

Dated:  May 26, 2000.

                                    SARATOGA INTERNATIONAL HOLDINGS CORP.

                                    By: /s/ Patrick F. Charles

                                    ------------------------------------------
                                    Patrick. F. Charles
                                    CEO, President and Director

                                       29


<PAGE>


                                    PART F/S
              SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARY
                          (A Development Stage Company)
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                 Page



Independent Auditor's Report                                      F-3
Consolidated Balance Sheets as of October 31, 1999                F-4
and January 31, 2000 (unaudited)

Consolidated Statements of Operations for the three
months ended January31, 1999 and 2000 (unaudited) and for
the year ended October 31, 1999 and from December 1, 1997
(inception) through October 31, 1998 and the
cumulative period during the development stage from
December 1, 1997 (inception) through January 31, 2000             F-5
(unaudited)

Consolidated Statement of Changes in Shareholders'
Equity (Deficiency) from December 1, 1997 (inception) through
October 31, 1998, for the year ended October 31,
1999 and the three months ended January
31, 2000 (unaudited)                                              F-6

Consolidated Statements of Cash Flows for the
three months ended January 31, 1999 and 2000, (unaudited)
for the year ended October 31, 1999 and from December
1, 1997 (inception) through October 31, 1998 and the
cumulative period during the development stage from
December 1, 1997 (inception) through January 31, 2000
(unaudited)                                                       F-7

Notes to Consolidated Financial Statements                     F-8 - F-26






                                       F-1


<PAGE>


                            VIRTUAL MEDIA GROUP INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                 Page



Auditor's Report                                                 F-27

Balance Sheet as of October 31, 1999 and January 31, 2000
(Unaudited)                                                      F-28

Statements of Loss and Deficit for the year ended October
31, 1999 and for the three months ended January 31, 1999
and 2000 (Unaudited)                                             F-29

Statements of Cash Flow for the year ended October
31, 1999 and for the three months ended January 31,
1999 and 2000 (Unaudited)                                        F-30

Notes to Financial Statements                                F-31 - F-33

                               UNAUDITED PRO FORMA
                    CONDENSED COMBINED FINANCIAL STATEMENTS

Introduction                                                     F-34

Unaudited  Pro Forma  Condensed  Combined  Balance
Sheet as of January 31, 2000                                     F-35

Unaudited Pro Forma  Condensed  Combined  Statement of
Operations  for the year ended  October 31, 1999                 F-36

Unaudited  Pro Forma  Condensed  Combined  Statement of
Operations  for the three  months  ended  January  31,  2000     F-37

Notes to Unaudited Pro Forma Condensed Combined Financial
Statements                                                    F-38 - F-40




                                       F-2


<PAGE>


                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders of
Saratoga International Holdings Corp. and Subsidiary
Kirkland, Washington

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Saratoga
International Holdings Corp. and Subsidiary, (A Development Stage Company) as of
October  31,  1999,  and the  related  consolidated  statements  of  operations,
shareholders'  equity (deficiency) and cash flows for the year ended October 31,
1999 and for the period December 1, 1997  (inception)  through October 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 audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial   position  of  Saratoga
International  Holdings Corp. and Subsidiary (A Development Stage Company) as of
October 31, 1999,  and the results of their  operations and their cash flows for
the year ended October 31, 1999 and for the period December 1, 1997  (inception)
through  October 31, 1998,  in conformity  with  generally  accepted  accounting
principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2(a), to
the consolidated  financial  statements the Company is in the development stage,
has incurred net losses since  inception and expects to incur net losses for the
foreseeable future. These conditions raise substantial doubt about the Company's
ability to continue as a going  concern.  Management's  plans in regard to these
matters are described in note 2(a). The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

                  /s/ Feldman Sherb Horowitz & Co., P.C.

                  Feldman Sherb Horowitz & Co., P.C.
                  Certified Public Accountants

New York, New York
January 7, 2000

                                       F-3


<PAGE>

<TABLE>

                         SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARY

                                      (A Development Stage Company)

                                       CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                             January 31,

ASSETS                                                                          2000        October 31,
                                                                             (Unaudited)       1999
<S>                                                                         <C>            <C>
                                                                            -------------  -------------
CURRENT ASSETS:

   Cash                                                                     $     72,811   $    241,589
   Accounts receivable                                                            10,671              -
   Deferred PIN costs                                                             23,890              -
   Deferred financing cost                                                        11,300         35,475
   Prepaid expense and other current assets                                       54,653         72,249
                                                                            -------------  -------------
      TOTAL CURRENT ASSETS                                                       173,325        349,313

PROPERTY AND EQUIPMENT - at cost, net                                             30,842         10,752

INTANGIBLE ASSET, net                                                             68,950         81,733
                                                                            -------------  -------------

                                                                            $    273,117   $    441,798
                                                                            =============  =============


LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:

   Note payable                                                             $     98,163   $    200,000
   Loans payable - shareholders and officers                                      75,000         31,789
   Accrued expenses and other current liabilities                                113,105         58,432
                                                                            -------------  -------------
      TOTAL CURRENT LIABILITIES                                                  286,268        290,221

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT):

   8% cumulative convertible redeemable preferred stock, $.001 par value,
      50,000,000 authorized, 377,742 shares, issued and outstanding,

         liquidating preference of $1                                            377,742        377,742
   Common stock, par value $0.001, 200,000,000 authorized
      54,697,850 shares and 52,058,125, issued and outstanding                    54,698         52,058
   Additional paid in capital                                                  2,713,460      2,393,530
   Less:  Common stock subscriptions                                                   -        (25,000)
   Deficit accumulated during the development stage                           (3,159,051)    (2,646,753)
                                                                            -------------  -------------
      TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                       (13,151)       151,577
                                                                            -------------  -------------

                                                                            $    273,117   $    441,798
                                                                            =============  =============

</TABLE>

               See notes to the consolidated financial statements

                                       F-4


<PAGE>

<TABLE>

                                     SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARY

                                                 (A Development Stage Company)

                                             CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>

                                                                                                                  Cumulative
                                                                                                                  During the

                                                                                                                 Development

                                                   Three           Three                            From            Stage
                                                   Months          Months                       December 1,      (December 1,
                                                   Ended           Ended           Year             1997           1997) to
                                                Janurary 31,    Janurary 31,       Ended       (inception) to    January 31,
                                                    1999            2000        October 31,     October 31,          2000
                                                (Unaudited)     (Unaudited)        1999             1998         (Unaudited)
<S>                                            <C>             <C>             <C>            <C>               <C>
                                               --------------  --------------  -------------  ----------------  --------------
NET SALES                                      $           -   $       6,671   $      2,660   $             -   $       9,331
COST OF SALES                                              -           4,798         23,810                 -          28,608
                                               --------------  --------------  -------------  ----------------  --------------
GROSS PROFIT (LOSS)                                        -           1,873        (21,150)                -         (19,277)

OPERATING EXPENSES

   General & admninistrative expenses                196,183         392,131      1,038,729           475,489       1,906,349
   Loss on impairment of investment                        -               -         50,000           255,500         305,500
                                               --------------  --------------  -------------  ----------------  --------------
      TOTAL OPERATING EXPENSES                       196,183         392,131      1,088,729           730,989       2,211,849
                                               --------------  --------------  -------------  ----------------  --------------
LOSS FROM OPERATIONS                                (196,183)       (390,258)    (1,109,879)         (730,989)     (2,231,126)
                                               --------------  --------------  -------------  ----------------  --------------

OTHER INCOME (EXPENSE):

   Write-off of terminated acquisition costs               -               -              -           (99,043)        (99,043)
   Expenses of reverse merger                              -               -              -           (78,816)        (78,816)
   Interest expense                                  (60,905)       (122,040)      (393,369)          (48,357)       (563,766)
   Forgiveness of note payable                             -               -         50,000                 -          50,000
   Other income                                            1               -          7,415             6,286          13,701
                                               --------------  --------------  -------------  ----------------  --------------
      NET OTHER EXPENSES                             (60,904)       (122,040)      (335,954)         (219,930)       (677,924)
                                               --------------  --------------  -------------  ----------------  --------------

NET LOSS                                            (257,087)       (512,298)    (1,445,833)         (950,919)     (2,909,050)
LESS:

   CUMULATIVE PREFERRED STOCK DIVIDEND                     -           7,555         15,110                 -          22,665
                                               --------------  --------------  -------------  ----------------  --------------

NET LOSS TO COMMON SHARES                      $    (257,087)  $    (519,853)  $ (1,460,943)  $      (950,919)  $  (2,931,715)
                                               ==============  ==============  =============  ================  ==============


LOSS PER COMMON SHARE, BASIC AND DILUTED       $       (0.01)  $       (0.01)  $      (0.04)  $         (0.05)  $       (0.09)
                                               ==============  ==============  =============  ================  ==============


WEIGHTED AVERAGE NUMBER OF COMMON

   SHARES OUTSTANDING, BASIC AND DILUTED          23,592,193      53,643,031     38,925,978        18,041,680      31,788,435
                                               ==============  ==============  =============  ================  ==============



</TABLE>
               See notes to the consolidated financial statements

                                       F-5


<PAGE>

<TABLE>

                            SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARY

                                                  (A Development Stage Company)

                             CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
<CAPTION>

                                                                Common Stock                 Preferred Stock        Additional
                                                      -------------------------------   -------------------------     Paid-in

                                                           Shares           Amount        Shares        Amount        Capital
                                                      ----------------  --------------  -----------  -------------  ------------
<S>                                                   <C>               <C>             <C>          <C>            <C>
 BALANCE, DECEMBER 1, 1997 (INCEPTION)                     12,217,400   $      12,217             -  $           -  $   185,261
 Reverse stock split 1-for-4                               (9,163,050)         (9,163)            -              -        9,163
 Issuance of common stock pursuant to reverse
    acquisition                                            11,577,000          11,577             -              -      (11,577)
 Issuance of common stock for services related

    to reverse acquisition                                    950,000             950             -              -         (950)
 Adjustment for beneficial conversion feature
    from issuance of a debenture                                    -               -             -              -       56,897
 Issuance of common stock from conversion
   of debenture                                                94,085              94             -              -       10,138
 Net loss                                                           -               -             -              -            -
                                                      ----------------  --------------  -----------  -------------  ------------
 BALANCE, OCTOBER 31, 1998                                 15,675,435          15,675             -              -      248,932
 Issuance of common stock for services                      8,504,524           8,505             -              -      362,943
 Issuance of common stock from conversion
   of debentures                                           17,578,166          17,578             -              -      957,833
 Adjustment for beneficial conversion feature
    from issuance of debentures                                     -               -             -              -      306,036
 Issuance of common stock for cash
    and stock subscriptions receivable                      5,300,000           5,300             -              -      134,700
 Issuance of common stock in connection
    with a spin-off of WOTD Project                         5,000,000           5,000             -              -      245,000
 Issuance of warrants for operational right                         -               -             -              -      102,166
 Issuance of options and warrants for services                      -               -             -              -       35,920
 Issuance of 8% cumulative convertible redeemable
    preferred stock                                                 -               -       377,742        377,742            -
 Net loss                                                           -               -             -              -            -
                                                      ----------------  --------------  -----------  -------------  ------------
 BALANCE, OCTOBER 31, 1999                                 52,058,125   $      52,058       377,742  $     377,742  $ 2,393,530

 The following is unaudited:

 Issuance of common stock for services                        145,000             145             -              -       16,735
 Issuance of common stock from conversion
    of debentures                                           1,244,719           1,245             -              -      158,755
 Adjustment for beneficial conversion feature
    from issuance of debentures                                     -               -             -              -       60,690
 Issuance of common stock for cash                          1,250,000           1,250             -              -       83,750
 Stock subscription received                                        -               -             -              -            -
 Net loss                                                           -               -             -              -            -
                                                      ----------------  --------------  -----------  -------------  ------------
 BALANCE, JANUARY 31, 2000                                 54,697,844   $      54,698       377,742  $     377,742  $ 2,713,460
                                                      ================  ==============  ===========  =============  ============
</TABLE>
<TABLE>
<CAPTION>


                                                                          Deficit
                                                          Common        Accumulated        Total

                                                           Stock        During the     Shareholders'
                                                       Subscriptions    Development       Equity

                                                        Receivable         Stage       (Deficiency)
                                                      ---------------  -------------  ---------------
<S>                                                   <C>              <C>            <C>
 BALANCE, DECEMBER 1, 1997 (INCEPTION)                $            -   $          -   $      197,478
 Reverse stock split 1-for-4                                       -              -                -
 Issuance of common stock pursuant to reverse
    acquisition                                                    -              -                -
 Issuance of common stock for services related

    to reverse acquisition                                         -              -                -
 Adjustment for beneficial conversion feature
    from issuance of a debenture                                   -              -           56,897
 Issuance of common stock from conversion
   of debenture                                                    -              -           10,232
 Net loss                                                                  (950,920)        (950,920)
                                                      ---------------  -------------  ---------------
 BALANCE, OCTOBER 31, 1998                                         -       (950,920)        (686,313)
 Issuance of common stock for services                             -              -          371,448
 Issuance of common stock from conversion
   of debentures                                                   -              -          975,411
 Adjustment for beneficial conversion feature
    from issuance of debentures                                    -              -          306,036
 Issuance of common stock for cash
    and stock subscriptions receivable                       (25,000)             -          115,000
 Issuance of common stock in connection
    with a spin-off of WOTD Project                                -       (250,000)               -
 Issuance of warrants for operational right                        -              -          102,166
 Issuance of options and warrants for services                     -              -           35,920
 Issuance of 8% cumulative convertible redeemable
    preferred stock                                                -              -          377,742
 Net loss                                                          -     (1,445,833)      (1,445,833)
                                                      ---------------  -------------  ---------------
 BALANCE, OCTOBER 31, 1999                            $      (25,000)  $ (2,646,753)  $      151,577

 The following is unaudited:

 Issuance of common stock for services                             -              -           16,880
 Issuance of common stock from conversion
    of debentures                                                  -              -          160,000
 Adjustment for beneficial conversion feature
    from issuance of debentures                                    -              -           60,690
 Issuance of common stock for cash                                 -              -           85,000
 Stock subscription received                                  25,000              -           25,000
 Net loss                                                          -       (512,298)        (512,298)
                                                      ---------------  -------------  ---------------
 BALANCE, JANUARY 31, 2000                            $            -   $ (3,159,051)  $      (13,151)
                                                      ===============  =============  ===============


</TABLE>
               See notes to the consolidated financial statements

                                       F-6


<PAGE>

<TABLE>
<CAPTION>

                                     SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARY

                                                 (A Development Stage Company)

                                             CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                                  Cumulative
                                                                                                                  During the
                                                                                                                  Development

                                                           Three         Three                        From           Stage
                                                           Months        Months                      Dec. 1,       (Dec. 1,
                                                           Ended         Ended          Year          1997         1997) to
                                                          Jan. 31,      Jan. 31,       Ended       (inception)     Jan. 31,
                                                            1999          2000        Oct. 31,     to Oct. 31,       2000
                                                        (Unaudited)   (Unaudited)       1999          1998        (Unaudited)
<S>                                                     <C>           <C>           <C>           <C>            <C>
                                                        ------------  ------------  ------------  -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net loss                                             $  (257,087)  $  (512,298)  $(1,445,833)  $   (950,919)  $ (2,909,050)
   Adjustment to reconcile net loss to
      net cash used in operations:

         Loss on impairment of investments                        -             -        50,000        255,500        305,500
         Forgiveness of note payable                              -             -       (50,000)             -        (50,000)
         Issuance of options and warrants for services            -             -        35,920              -         35,920
         Issuance of common stock for service                50,071        16,880       371,448              -        388,328
         Depreciation                                             -         1,286             -              -          1,286
         Amortization                                             -        12,783       117,933         15,000        145,716
         Interest expense from
            beneficial conversion features                   49,785        60,690       341,597         21,336        423,623
         Interest expense from convertible debentures
            exchanged for common stock                          446             -        12,411            232         12,643
   Changes in assets and liabilities:
      Deferred financing cost                                     -        24,175       (35,475)             -        (11,300)
      Accounts Receivable                                         -       (10,671)            -              -        (10,671)
      Deferred PIN Cost                                           -       (23,890)            -              -        (23,890)
      Prepaid expense and other current assets                    -        17,596       (72,250)             -        (54,654)
      Accrued expenses and other current liabilities        (37,369)       54,673       (43,556)        92,978        104,095
                                                        ------------  ------------  ------------  -------------  -------------
NET CASH USED IN OPERATING ACTIVITIES                      (194,154)     (358,776)     (717,805)      (565,873)    (1,642,454)
                                                        ------------  ------------  ------------  -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES:

   Capital expenditures                                           -       (21,376)      (10,752)             -        (32,128)
                                                        ------------  ------------  ------------  -------------  -------------
NET CASH USED IN INVESTING ACTIVITIES                             -       (21,376)      (10,752)             -        (32,128)
                                                        ------------  ------------  ------------  -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:

   Loans payable - shareholders and officers                 26,450        43,211       (59,778)        41,567         25,000
   Proceeds from notes payable                                    -             -       200,000              -        200,000
   Repayment of notes payable                                     -      (101,837)            -              -       (101,837)
   Proceeds from long term debt                              10,942             -             -        461,122        461,122
   Repayment of long term debt                                    -             -       (10,942)       (72,438)       (83,380)
   Proceeds from convertible debentures                      75,000       160,000       823,000        150,000      1,133,000
   Debt issue costs                                               -             -       (97,500)       (15,000)      (112,500)
   Proceeds from collection of
      stock subscription receivable                               -        25,000             -              -         25,000
   Proceeds from issuance of common stock                    90,000        85,000       115,000              -        200,000
                                                        ------------  ------------  ------------  -------------  -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                   202,392       211,374       969,780        565,251      1,746,405
                                                        ------------  ------------  ------------  -------------  -------------
NET INCREASE IN CASH                                          8,238      (168,778)      241,223           (622)        71,823
CASH AT BEGINNING OF PERIOD                                     366       241,589           366            988            988
                                                        ------------  ------------  ------------  -------------  -------------
CASH AT END OF PERIOD                                   $     8,604   $    72,811   $   241,589   $        366   $     72,811
                                                        ============  ============  ============  =============  =============


Supplemental Disclosure of Cash Flow Information

Cash paid during the period:

   Interest                                             $         -   $         -   $    73,324   $     26,789   $    100,113
                                                        ============  ============  ============  =============  =============
   Income Taxes                                         $         -   $         -   $         -   $          -   $          -
                                                        ============  ============  ============  =============  =============

Supplemental Disclosure of Non-Cash Flow

Investing and Financing Activities

Issuance of common stock from reverse acquisition       $         -   $         -   $         -   $     12,527   $     12,527
                                                        ============  ============  ============  =============  =============
Issuance of common stock for

   stock subscription receivable                        $         -   $         -   $    25,000   $          -   $     25,000
                                                        ============  ============  ============  =============  =============
Issuance of common stock from

   conversion of debentures                             $    83,000   $   160,000   $   963,000   $     10,000   $  1,133,000
                                                        ============  ============  ============  =============  =============
Issuance of common stock in connection with

   a spin-off of Western                                $         -   $         -   $   250,000   $          -   $    250,000
                                                        ============  ============  ============  =============  =============
Issuance of 8% cumulative convertible redeemable

   preferred stock for notes payable                    $         -   $         -   $   377,742   $          -   $    377,742
                                                        ============  ============  ============  =============  =============


</TABLE>

               See notes to the consolidated financial statements

                                       F-7


<PAGE>


              SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARY

                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           (Information at January 31, 2000 and the three months ended
                    January 31, 1999 and 2000 are unaudited)

1.   ORGANIZATION AND HISTORY

The following  summarizes the organizational  history of Saratoga  International
Holdings Corp. and subsidiary (herein referred to as "Saratoga").

In December 1997,  Saratoga began development stage activity under the corporate
name Western Oil & Tire Distributors Inc. ("Western"), a privately owned company
originally  incorporated  on June 1, 1993 in the State of  Washington  under the
corporate name FCP Ltd.  which had no operating  activity until fiscal 1998. The
corporate  name was  changed to Western in  December  1997.  Western's  original
business  development  plan,  adopted in  December,  1997,  was to engage in the
acquisition  of retail and  wholesale  tire  businesses  and  petroleum  product
distribution companies ("The WOTD Project")

In July 1998, the  shareholders of Western  exchanged all of their common shares
for  controlling  interest in  Knightsbridge  Corporation  a company  originally
incorporated  on June 17,  1996 in the State of Nevada.  Western was merged into
Knightsbridge  on July 28, 1998 and  Knightsbridge  changed its name to Western,
the surviving corporation.

Since the former  shareholders  of Western  owned a majority of the  outstanding
stock  following  its July,  1998,  merger with  Knightsbridge  this exchange of
shares  has  been  accounted  for  as a  reverse  merger.  Knightsbridge  was  a
non-operating  public  shell with an  investment  in a private  company that was
recorded  at  approximately  $306,000  and  liabilities  totaling  approximately
$113,000  on the date of the  reverse  merger  (See Note 10).  Accordingly,  the
combination  of  the  two  companies  is  recorded  as  a  recapitalization   of
shareholders'  equity of  Western  pursuant  to which  Western is treated as the
continuing  entity  for  accounting   purposes  and  the  historical   financial
statements  presented are those of Western.  Pro-forma  information has not been
presented since the transaction  was deemed a capital stock  transaction  rather
than a business combination.

On March 24,  1999,  the  corporate  name was changed  from  Western to Saratoga
International  Holdings Corp. and the operations of the company's  petroleum and
tire business was spun-off to the  shareholders of Saratoga as of March 19, 1999
(See Note 3).  Saratoga  redirected  its  business  development  activity at the
e-commerce industry.

In June 1999,  Saratoga formed a wholly-owned  subsidiary Saratoga Telecom Corp.
through which it acquired an operational  right from Internet  Interview Inc. to
develop a technology to market prepaid long distance  telephone  calling service
via the Internet as a reseller for long  distance  suppliers  servicing  foreign
based markets such as Central and South America.

Saratoga has been in the  development  stage since its  inception in  accordance
with statement of Financial Accounting Standards No. 7.

                                       F-8
<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a.   Basis of Presentation

         The accompanying  financial statements have been prepared assuming that
         Saratoga  will  continue  as  a  going  concern.  Saratoga,  since  its
         inception,  December 1, 1997 through  January 31, 2000 has incurred net
         losses of approximately  $2,909,000 and has had negative cash flow from
         operations  of   approximately   $1,664,000.   These  conditions  raise
         substantial  doubt about its  ability to  continue as a going  concern.
         Management  expects  to incur  additional  losses  for the  foreseeable
         future  and  recognizes  the need to raise  capital  to  achieve  their
         business  plans.  Saratoga  has  raised  approximately   $2,019,000  of
         operating   capital  since  inception  for  its  business   development
         activities  and  plans to  continue  its  efforts  to raise  additional
         operating  capital through various  financing methods including private
         placements of its equity  securities.  Funding of future  operations is
         dependent  on  management's   ability  to  raise  additional   capital.
         Saratoga's  ability to continue as a going  concern is  dependent  upon
         profitable  operations and support from  shareholders.  Unless Saratoga
         can generate  positive cash flow from  operations and raise  additional
         capital,  the  company  may be unable to  continue  in  existence.  The
         financial  statements  do not include any  adjustments  relating to the
         recoverability  and  classification  of recorded  asset  amounts or the
         amounts  and  classification  of  liabilities  that might be  necessary
         should Saratoga be unable to continue in existence.

     b.   Principles of Consolidation

         The consolidated  financial statements include the accounts of Saratoga
         and its Subsidiary,  Saratoga  Telecom Corp. All material  intercompany
         transactions and balances have been eliminated.

     c.   Investments

         Investments  are  carried  at cost  except,  where  in the  opinion  of
         management,  there  has been a loss in  value  other  than a  temporary
         decline in which case the  carrying  value is reduced to its  estimated
         value.

     d.   Intangible Asset

          The  cost of the  operational  right  acquired  in June  1999 is being
          amortized on a straight-line basis over 2 years.

     e.   Income Taxes

          Saratoga  utilizes the asset and liability  method of  accounting  for
          income taxes as set forth in FASB Statement No. 109,  "Accounting  for
          Income  Taxes." Under the asset and liability  method,  deferred taxes
          are determined based on the difference between

                                       F-9
<PAGE>



         the financial  statement and tax bases of assets and liabilities  using
         enacted tax rates in effect in the years in which the  differences  are
         expected to reverse.

     f.   Use of Estimates

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

     g.   Fair Value of Financial Instruments

         Saratoga's  financial  instruments  consist primarily of cash,  accrued
         expenses,  and loans  payable which  approximate  fair value because of
         their  short  maturities.  Saratoga's  investments  were  estimated  by
         management  to have been  impaired  and as such have been  written down
         from their  original cost to their  estimated fair value at October 31,
         1999 (see Notes 3 and 10).  Saratoga's  note payable  approximates  the
         fair value of such instrument based upon  management's best estimate of
         interest  rates  that  would be  available  to  Saratoga  for a similar
         financial arrangement at October 31, 1999.

     h.   Stock Options

         Saratoga accounts for all transactions under which employees,  officers
         and directors  receive  options to purchase shares of stock in Saratoga
         in  accordance  with the  provisions  of  Accounting  Principles  Board
         Opinion  No.  25,  "Accounting  for  Stock  Issued  to  Employees."  In
         accordance  with  Statement of Financial  Accounting  Standards No. 123
         ("SFAS  123"),  "Accounting  for  Stock-Based  Compensation,"  Saratoga
         adopted the pro forma disclosure requirements of SFAS 123. Accordingly,
         no  compensation  has been  recognized in the results of operations for
         the employees,  officers and directors stock option plan other than for
         options  issued to  non-employees  for consulting  services,  which are
         valued based on their fair market value.

     i.   Loss Per Share

          Saratoga has adopted the provisions of Financial  Accounting Standards
          No. 128,  "Earnings per share".  This statement requires that Saratoga
          report  basic and  diluted  earnings  (loss) per share for all periods
          reported.  Basic net income  (loss) per share is  computed by dividing
          net income  (loss)  available to common  shareholders  by the weighted
          average number of common shares  outstanding  for the period.  For the
          year ended  October 31, 1999,  and the three months ended  January 31,
          2000,  Saratoga added undeclared and not recorded  cumulative Series A
          Convertible   Preferred   stock   dividends   of  $15,110  and  $7,555
          respectively  to the net  loss in  order  to  arrive  at the net  loss
          available to common shareholders in accordance with SFAS No. 128.

                                      F-10
<PAGE>

          Diluted net income (loss) per share is computed by dividing net income
          (loss) by the weighted average number of common shares outstanding for
          the  period,   adjusted  for  the  dilutive  effect  of  common  stock
          equivalents,  consisting  of stock options and warrants at October 31,
          1999.

          The weighted  average shares  outstanding  for the period  December 1,
          1997  (inception)  to the  closing  date of the  reverse  merger  with
          Knightsbridge   were  the   11,577,000   shares  issued  to  Western's
          shareholders.  In addition, the 5,000,000 shares of common stock, from
          the stock dividend declared in March 1999 (see Note 3), was considered
          outstanding  as of  December  1,  1997  (inception)  for  purposes  of
          computing  the basic and  diluted  net loss per share for all  periods
          presented.  Subsequent  to the  merger  and the  stock  dividend,  the
          weighted average shares outstanding used to calculate the net loss per
          share was the actual  number of shares  outstanding  of the  surviving
          entity.

          For all periods presented,  diluted net loss per share was the same as
          basic net loss per share  since the  inclusion  of stock  options  and
          warrants would have been anti-dilutive.

     j.   Revenue Recognition.

          At the time a PIN is issued to a customer revenue from the sale of the
          virtual  prepaid  calling  card  is  deferred,  and  such  revenue  is
          recognized  as income  based on  customer  usage  over the life of the
          card. The cost of the virtual  prepaid calling card is deferred at the
          time of purchase.  The PIN costs include the cost of purchasing  units
          of time from  telecommunication  vendors.  Upon issuance of a PIN to a
          customer,  the related cost is  recognized  as a cost of sale based on
          customer usage over the life of the card.

     k.   Property and Equipment.

          Property and equipment are recorded at cost.  Depreciation is provided
          on a straight-line  method based on the estimated  useful lives of the
          respective  assets.  Property and equipment are being depreciated over
          three years.  Maintenance,  repairs and minor  renewals are charged to
          operations  as incurred.  Upon the sale or  retirement of property and
          equipment,   the  related  costs  and  accumulated   depreciation  are
          eliminated  from the  accounts  and gains or losses are  reflected  in
          operations.

          Software  Development  Costs. In March 1998, the American Institute of
          Certified  Public  Accountants  issued  Statement  of  Position  98-1,
          "Accounting for the Costs of Computer  Software  Developed or Obtained
          for  Internal  Use."  SOP 98-1 is  effective  for all  fiscal  periods
          beginning after December 5, 1998. SOP 98-1 requires the capitalization
          of costs,  including  payroll costs,  incurred in connection  with the
          development  or purchase of software for internal use. The adoption of
          SOP 98-1 does not have a material  impact on the financial  statements
          of the  Company.  Saratoga  had no  software  development  costs  from
          December 1, 1997  (inception)  through October 31, 1998. In the fiscal
          year ended  October 31, 1999,  $5,395 of these costs were

                                      F-11
<PAGE>


          capitalized  and an additional  $17,116 were  capitalized in the three
          months  ended  January 31, 2000.  These costs are now being  amortized
          over a two year period.

     l.   Impairment of Long-Lived Assets.

          In the event that facts and  circumstances  indicate that an asset may
          be impaired, an evaluation of recoverability would be performed. If an
          evaluation is required,  the estimated future  undiscounted cash flows
          associated  with the asset would be  compared  to the assets  carrying
          amount to determine if a write down to market is required.  At October
          31,  1999  the  Company  does  not  believe  that  any  impairment  of
          long-lived assets has occurred.

     m.   Interim Financial Statements

          The accompanying consolidated financial statements (unaudited) for the
          three months ended  January 31, 1999 and 2000,  have been  prepared in
          accordance  with  generally  accepted  accounting  principles  for the
          interim  financial  information  and, in the  opinion of the  Company,
          include all adjustments,  consisting of normal recurring  adjustments,
          necessary for a fair presentation thereof.

     n.   Recent Accounting Pronouncement

          Saratoga does not currently  hold any derivative  instruments  and has
          not held any derivative  instruments since its inception and therefore
          is not impacted by SFAS No. 133 "Accounting for Derivative Instruments
          and Hedging Activities" issued by the FASB in June 1998, effective for
          all fiscal periods beginning after June 15, 1999.

3.   SPIN OFF AND PURCHASE OF INTANGIBLE ASSET

     In March 1999,  Saratoga  formed  International  Internet  Petroleum & Tire
     Distributors,   Inc.   ("International")   as  a  wholly  owned  subsidiary
     incorporated  under Nevada law.  Saratoga  transferred to International the
     trade name  "Western Oil & Tire  Distributors,  Inc." along with all of the
     rights,  title and interest to the  petroleum and tire business and related
     business  development plan ("the WOTD Project").  Saratoga then distributed
     the common  stock and Class A and B Warrants of  International  to Saratoga
     shareholders in a spin-off  transaction  effective March 19, 1999. Saratoga
     issued  5,000,000  shares  of its  common  stock,  valued at  $250,000,  to
     International  in connection with the spin-off  transaction  which has been
     treated as a stock  dividend to Saratoga's  shareholders  as of the date of
     the spin-off.

     The  operational  right  acquired  from Internet  Interview  consisted of a
     conceptual  plan which  identified  the need for software and technology to
     enter into the  business of selling  virtual  prepaid  phone cards over the
     Internet.  The conceptual plan included the technological need to develop a
     web site, accounting and management software, an Internet marketing program
     to establish a web site agent  network and Internet  links and to establish
     agreements  and  technology  necessary to accept,  process and clear credit
     card transactions over the Internet.

                                      F-12
<PAGE>

     As consideration for the purchase of the rights to the technology, Saratoga
     issued to the two principal shareholders of Internet Interview, Inc. Messrs
     Norman Reisch and Tom Morsey,  Warrants to each to purchase  500,000 shares
     of the common stock of Saratoga  exercisable at any time at $0.10 per share
     and expiring June 16, 2004. The purchase price of the operational right was
     recorded at $102,666,  the value of the  Warrants,  estimated  based on the
     Black-Scholes option pricing model.

     This amount was  recorded as an  intangible  asset and is being  charged to
     amortization  expense over two years.  Because of the conceptual  nature of
     the operational right, management concluded it would become technologically
     obsolete  over a two year period.  No  amortization  expense was charged to
     operations in fiscal 1998.  Amortization  expense  charged to operations in
     fiscal 1999 was $20,433. Amortization expense charged to operations for the
     three months ended January 31, 2000 was $12,823.

4.   CONCENTRATION OF CREDIT RISK

     Saratoga maintains cash balances at two commercial banks. Accounts at these
     financial  institutions  are  insured  by  the  Federal  Deposit  Insurance
     Corporation up to $100,000.

5.   LOANS PAYABLE-SHAREHOLDERS AND OFFICERS

     At October 31,  1999,  and January 31, 2000 the  Balances  consisted of the
     following:

                                        October 31, 1999        January 31, 2000
                                        ----------------        ----------------
                                                                   (Unaudited)

      Loan payable to Patrick F. Charles   $   15,331              $    37,500

      Loan payable to Terrence K. Picken       15,331                   37,500

                                           ----------              -----------
                                           $   30,662              $    75,000
                                           ==========              ===========

         The loans payable are non-interest bearing, uncollateralized,  and have
         no specific due date for repayment. Patrick F. Charles is a shareholder
         and Chief  Executive  Officer of Saratoga  and  Terrence K. Picken is a
         shareholder and Vice President of Saratoga.

6.   NOTE PAYABLE

     In October 1999 Saratoga  issued to an unrelated  company a Promissory Note
     for  $276,000,  including  a  $76,000  discount.  The  terms  of the  Note,
     including amendments thereto,  called for a payment of $60,000 in November,
     1999 and the balance, including interest at 6.5%, due by February 29, 2000.
     Messrs. Patrick F.Charles and Terrence K. Picken,  officers,  directors and
     major  shareholders,  assigned  shares of Saratoga they  personally  own or
     control as collateral for the Promissory Note.

                                      F-13


<PAGE>

7.   INCOME TAXES

     As of October 31, 1999, and January 31, 2000 Saratoga has available  unused
     federal,  net operating loss carryforwards of approximately  $2,397,000 and
     $2,909,000  respectively  that may be applied against future taxable income
     and that expire in 2020.  Saratoga has  established  a valuation  allowance
     with  respect  to  the  available   unused   federal  net  operating   loss
     carryforwards  because the likelihood of realization of this benefit cannot
     be presently determined.

                                         October 31, 1999    January 31, 2000
                                                                (Unaudited)
       Deferred tax asset:
         Net operating loss carryforward    $  815,000          $   989,000
         Valuation Allowance                  (815,000)            (989,000)
                                            -----------         ------------

         Net deferred tax asset             $        0          $         0
                                            ===========         ============

8.   RELATED PARTY TRANSACTIONS

     Coast Northwest Inc., a management consulting firm, provided  substantially
     all of Saratoga's  corporate  administrative  services  since  inception of
     Saratoga's development stage activities for which Saratoga incurred expense
     of $97,500  for the year ended  October 31, 1999 and $83,700 for the period
     from inception of development stage activity, December 1997, to October 31,
     1998 and $25,500 for the three  months ended  January 31, 2000.  At October
     31,  1999  and  October  31,  1998   Saratoga   owed  $1,177  and  $10,100,
     respectively to Coast Northwest Inc. for  administrative  support services.
     Saratoga's  President,  Patrick F.  Charles and  Executive  Vice-President,
     Terrence  K.  Picken,   collectively  own  controlling  interest  in  Coast
     Northwest Inc. (see Notes 9 and 11).

9.   SHAREHOLDERS' EQUITY

     Stock Split and Authorization of Shares

     Prior  to  and in  conjunction  with  Saratoga  merger  with  Knightsbridge
     Corporation in July 1998, the Board of Directors of Knightsbridge  approved
     a 1 for 4 reverse stock split including the reduction of authorized  common
     stock from 200,000,000  shares to 50,000,000  shares. All per share data in
     these statements reflect the reverse stock split.

     In March 1999, the board of directors of Saratoga  approved the increase of
     authorized common stock from 50,000,000 shares to 200,000,000  shares.  The
     stockholders also approved the authorization of the issuance of a new class
     of 50,000,000 shares of $.001

                                      F-14
<PAGE>

     par value preferred stock. The preferred stock of Saratoga can be issued in
     series.  With  respect to each series  issued,  the Board of  Directors  of
     Saratoga will  determine,  among other things,  the number of shares in the
     series,  voting  rights and term,  dividend  rates and  terms,  liquidation
     preferences and redemption and conversion privileges.

     8% Convertible Redeemable Preferred Stock

     In May 1999,  Saratoga  issued  nonvoting  restricted  cumulative  Series A
     convertible  redeemable  preferred  stock as  payment  for the  outstanding
     balance of $377,742 on a note payable. Upon the declaration of the board of
     directors,  the  Preferred  Stock pays a  dividend  at 8% per share and any
     unpaid  dividends  are  cumulative.  The  shares  of  Preferred  Stock  are
     convertible  into common  stock,  over a three year period,  at the rate of
     125,914  preferred  shares each year beginning one year from date of issue.
     At the holder's option,  each preferred  share,  valued at $1.00 each, plus
     unpaid  cumulative  dividends on such shares may be  converted  into common
     shares based on the  published  trade price of the common shares at date of
     conversion  notice.  In  addition,  upon  written  notice  to the  holders,
     Saratoga has the right to redeem shares,  at its  discretion,  at $1.00 per
     share plus any accumulated  unpaid  dividends and the preferred Stock has a
     liquidation  preference  over  common  stock of $1.00  per  share  plus any
     accumulated unpaid dividends.

     Common Stock Issuances

     The  following is a summary of common  stock  issued by Saratoga  effective
     with and  following  the  reverse  merger  transaction  with  Knightsbridge
     Corporation and the related 1 for 4 reverse stock split in July 1998:

     In July 1998,  11,577,000 restricted common shares were issued to Western's
     shareholders under a share exchange agreement to give effect to the reverse
     merger transaction with Knightsbridge.

     In addition,  950,000 restricted common shares were issued as finder's fees
     for introducing Western to Knightsbridge (see Note 1).

     The total of 12,527,000 shares issued in connection with the reverse merger
     transaction were recorded at $0.001 per share.

                                      F-15
<PAGE>

     Shares of common stock of Saratoga issued  subsequent to the reverse merger
     through January 31, 2000 are summarized as follows:

                                         Average     Number
                                           Per         Of

                          Transaction     Share      Shares

Date        Description      Value      Valuation    Issued

11/98-1/99  Issued for     $ 50,071       $0.059    850,000
            services

1/99        Private        $ 90,000       $0.025  3,600,000
            placement for
            cash

2/99        Issued for     $ 26,485       $0.021  1,245,000
            services

2/99        Issued for     $ 72,400       $0.016  4,525,000
            services

            provided by
            Officers

2/99        Private        $ 50,000       $0.029  1,700,000
            Placement for
            cash

3/99        Issued for     $  9,000       $0.030    300,000
            services

3/99        Issued to      $250,000       $0.050  5,000,000
            International

            in connection with
            the WOTD Project
            Spin-off transaction
            (See Note 3)

4/99        Issued for     $    400       $0.040     10,000
            services

5/99        Issued for     $ 72,000       $0.131    550,000
            services

6/99        Issued for     $ 16,800       $0.112    150,000
            services

7/99        Issued for     $ 36,126       $0.147    245,000
            services

                                      F-16
<PAGE>

8/99        Issued for     $ 25,500       $0.150    170,000
            services

10/99       Issued for     $ 56,000        $0.14    400,000
            services

10/99       Issued to      $  6,666       $0.112     59,524
            Officers for
            salaries

12/99-1/00  Issued for     $ 16,880       $0.116    145,000
            services
            (Unaudited)

11/99-1/00  Issued for     $ 85,000       $0.068  1,250,000
            cash
            (Unaudited)

The "Per Share  Valuation" set forth above is based on the recorded value of the
transaction  divided by the number of shares  issued as  consideration  for each
transaction.

Debentures Converted to Common Stock

In July 1998,  Saratoga issued 9% series A subordinated  convertible  redeemable
debenture  for $150,000  due July 1999,  under an  exemption  from  registration
afforded by Rule 504,  Regulation D, of the Securities act of 1933. The series A
debenture was convertible  into common stock of Saratoga at 72.5% of the average
closing bid price of the common  stock for the five days  immediately  preceding
the date of notice of conversion by the holder.

During  October 1998,  the holder  converted  $10,000 of principal  plus accrued
interest into 94,085 shares of common stock.  During the period from January 21,
1999, to April 6, 1999, the holder  converted the principal  balance of $140,000
at October 31, 1999,  plus accrued  interest of $8,182 into 6,251,823  shares of
common stock.

In March 1999, Saratoga issued 9% series B subordinated  convertible  redeemable
debentures for $450,000 due March 30, 2000, under an exemption from registration
afforded by Rule 504,  Regulation D, of the Securities act of 1933. The series B
debentures  were  convertible  into  common  stock of  Saratoga  at 72.5% of the
average  closing  bid price of the  common  stock for the five days  immediately
preceding the date of notice of conversion by the holder.

In May 1999,  the holders of these series B debentures  converted  the principal
balance of $450,000  plus accrued  interest of $2,857 into  5,795,564  shares of
common stock.

                                     F-17
<PAGE>

In June 1999,  Saratoga issued 9% series C subordinated  convertible  redeemable
debentures for $150,000 due June 11, 2001, under an exemption from  registration
afforded by Rule 504,  Regulation D, of the Securities act of 1933. The series C
debentures  were  convertible  into  common  stock of  Saratoga  at 72.5% of the
average  closing  bid price of the  common  stock for the five days  immediately
preceding  the date of notice of  conversion  by the holder.  In June 1999,  the
holders of these series C debentures converted the principal balance of $150,000
plus accrued interest of $97 into 1,548,158 shares of common stock.

In July 1999, Saratoga issued a 2% series D subordinated  convertible redeemable
debenture for $150,000 due July 30, 2001,  under an exemption from  registration
afforded by Rule 504,  Regulation D, of the Securities act of 1933. The series D
debenture  is  convertible  into common  stock of Saratoga at 75% of the average
closing bid price of the common  stock for the five days  immediately  preceding
the date of notice of conversion by the holder.

In August 1999,  the holder of this series D debenture  converted  the principal
balance of $150,000  plus accrued  interest of $1,275 into  1,182,621  shares of
common stock.

In December 1998,  Saratoga  issued $15,000  principal  amount of a Subordinated
Convertible   Redeemable  Debenture  due  December,   1999  to  Coast  Northwest
Management  LLC a limited  liability  company  owned by Patrick F.  Charles  and
Terrence K. Picken, officers, directors and controlling shareholders of Saratoga
in a private placement as payment of a loan to Saratoga. The Coast LLC Debenture
and the shares of common  stock into which it was  converted  were  exempt  from
registration  in reliance on Rule 504 of Regulation D of the  Securities  Act of
1933. The Coast LLC Debenture was convertible  into common stock at a conversion
price  equal to 72.5% of the average  closing bid price of the common  stock for
the  five  trading  days  immediately  preceding  the  date  of  receipt  of the
conversion notice. In December 1998, the holder of this Debenture  converted the
principal balance of $15,000 into 300,000 shares of common stock.

In January 1999  Saratoga  issued  $30,000  principal  amount of a  Subordinated
Convertible Redeemable Debentures due January 2000 to Coast Northwest Management
LLC ("Coast LLC  Debenture 2") a limited  liability  company owned by Patrick F.
Charles and Terrence K. Picken, officers, directors and controlling shareholders
of Saratoga in a private  placement as payment of a loan to Saratoga.  The Coast
LLC Debenture 2 and the shares of common stock into which it was converted  were
exempt  from  registration  in  reliance  on  Rule  504 of  Regulation  D of the
Securities  Act of 1933. The Coast LLC Debenture 2 was  convertible  into common
stock at a conversion  price equal to 72.5% of the average  closing bid price of
the common stock for the five (5) trading days immediately preceding the date of
receipt of the conversion  notice.  In January 1999 the holder of this Debenture
converted  $29,000 of the  principal  balance  into  1,250,000  shares of common
stock. The remaining $1,000 of the Coast LLC Debenture 2 was forgiven.

In January 1999  Saratoga  issued  $15,000 of principal  amount of  Subordinated
Convertible Redeemable Debentures (the "Debentures") due January 2000 to each of
Patrick F. Charles and Terrence K. Picken,  officers,  directors and controlling
shareholders of Saratoga in a

                                     F-18
<PAGE>

private  placement  for a total of $30,000 in payment of  services  provided  to
Saratoga.  The  Debentures  and the shares of common  stock into which they were
converted were exempt from  registration in reliance on rule 504 of Regulation D
of the Securities Act of 1933. The Debentures were convertible into common stock
at a  conversion  price equal to 72.5% of the  average  closing bid price of the
common stock for the five (5) trading  days  immediately  preceding  the date of
receipt of the conversion  notice.  $29,000 principal amount of these Debentures
were  converted  to  1,250,000  shares of common  stock in  January,  1999.  The
remaining $1,000 of the Debentures was forgiven.

In  January,  2000,  Saratoga  issued  a 2%  Series E  Subordinated  Convertible
Redeemable  Debenture for $160,000 due January 20, 2001, under an exemption from
registration  afforded by Rule 504, Regulation D, of the Securities Act of 1933.
The Series E Debenture is convertible  into common stock of Saratoga at 72.5% of
the average closing bid price of the common stock for the five days  immediately
preceding the date of notice of conversion by the holder.

In January,  2000, the holder of this Series E Debenture converted the principal
balance of $160,000 into 1,244,719 shares of common stock.

For common stock issued in  non-monetary  transactions  involving  marketability
discounts  Saratoga's  policy  is to  account  for  marketability  discounts  in
accordance with guidelines provided by published empirical studies and financial
research on marketability discounts.

In an Emerging Issues Task Force meeting  sponsored by the Financial  Accounting
Standards Board, held on March 13, 1997, the Securities and Exchange  Commission
("SEC")  announced  their  position  on  the  accounting  for  the  issuance  of
convertible  debt  securities with a  nondetachable  conversion  feature that is
"in-the-money"  at the date of issue.  Those securities are usually  convertible
into common stock at the lower of a  conversion  rate fixed at the date of issue
or a  fixed  discount  to  the  common  stock's  market  price  at the  date  of
conversion,  creating a "beneficial  conversion feature".  The SEC's position is
that the  beneficial  conversion  feature  should be recognized  and measured by
allocating  a  portion  of the  proceeds  equal to the  intrinsic  value of that
feature to additional  paid-in capital.  The amount is calculated at the date of
issuance as the difference  between the  conversion  price and the fair value of
the common  stock into which the  security  is  convertible,  multiplied  by the
number of shares into which the security is convertible.  The discount resulting
from the allocation of proceeds,  in effect,  increases the interest rate of the
security and should be amortized as a charge to interest expense over the period
from the date the security is issued to the date it first  becomes  convertible.
The  beneficial  conversion  feature of the  debentures  were  accounted  for as
additional interest expense,  and as a result, such interest expense was charged
to operations for the year ended October 31, 1999 and for the period December 1,
1997 (inception)  through October 31, 1998,  amounted to approximately  $340,000
and $21,000, respectively.

                                     F-19
<PAGE>

Stock Options and Warrants

During  October  1998,  Saratoga  approved a Qualified and  Non-Qualified  Stock
Option Plan ("1998 option Plan").  A total of 8,000,000 shares are available for
future grants to directors,  officers,  employees and  consultants  who are in a
position to make significant contributions to the success of Saratoga.

The exercise  price of each option will be  determined  by  Saratoga's  board of
directors, in its discretion,  at the time of grant, provided that such exercise
price shall not be lower than the fair market  value at the time of grant in the
case of  options  that are  intended  to  constitute  incentive  stock  options.
Further,  at the time of grant and at the  discretion of the board of directors,
the vesting period and the expiration date shall not exceed ten years. Under the
1998 option plan,  incentive stock options that become exercisable in any fiscal
year may not exceed the fair market value of $100,000 as  determined at the time
the options are granted.

The following table  summarizes the activity with regard to options and warrants
for the period December 1, 1997  (inception) to October 31, 1998, the year ended
October 31,1999 and the three months ended January 31, 2000 (unaudited)
<TABLE>

                                                   Stock options                                   Warrants
                                     ------------------------------------------  ---------------------------------------------
<CAPTION>                                          Weighted Average                            Weighted Average
                                                       Exercise                                    Exercise
                                         Shares         Price       Exercisable      Shares         Price       Exercisable
                                     ------------------------------------------  ---------------------------------------------
<S>              <C>                 <C>           <C>              <C>            <C>            <C>           <C>

Outstanding at
   01-Dec-97                               -               -                -              -              -               -
                   Granted                 -               -                -              -              -               -
                                     ------------------------------------------  ---------------------------------------------
Outstanding at
   31-Oct-98                                  -            -               -
                 a)Granted              250,000      $ 0.100          250,000
                 b)Granted            1,525,000      $ 0.167        1,525,000
                 c)Granted              250,000      $ 0.100          250,000
                 d)Granted              150,000      $ 0.180          150,000
                 e)Granted                                                         1,700,000       $  0.029       1,700,000
                 f)Granted                                                         1,000,000       $  0.100       1,000,000
                 g)Granted                                                         2,000,000       $  0.175       2,000,000
                 h)Exercised                                                      (1,700,000)                    (1,700,000)
                                     ------------------------------------------  ---------------------------------------------
Outstanding at
   31-Oct-999                         2,175,000      $  0.15        2,175,000      3,000,000       $   0.15       3,000,000
                 b)Exercised           (250,000)     $ 0.100         (250,000)
Outstanding at                       ------------------------------------------  ---------------------------------------------
   31-Jan-00                          1,925,000      $  0.16        1,925,000      3,000,000       $   0.15       3,000,000
                                     ==========================================  =============================================
</TABLE>

                                     F-20
<PAGE>

a)   Officers,  directors  and  employees - exercise  price less than grant date
     fair value of $0.14 - Weighted Average remaining life, 4.6 years
b)   Officers,  directors and employees - exercise price greater than grant date
     fair value of $0.14 Weighted Average remaining life 4.7 years
c)   For  services -  exercise  price less than grant date fair value of $0.14 -
     Weighted  Average  remaining  life,  4.6
d)   For services - exercise price greater than grant date fair value of $0.17 -
     Weighted Average remaining life,
e)   For services - exercise price greater than grant date fair value of $0.023
f)   Purchase of  operational  rights from  Interview - exercise price less than
     grant date fair value of $0.14
g)   For services - exercise  price greater than grant date fair value of $0.135
     - Weighted Average remaining life,1.5 years

Saratoga   granted  400,000  options  under  the  1998  stock  plan  to  various
consultants for services rendered in fiscal 1999. The options expire from two to
five  years  from the  date of  grant,  are  currently  exercisable  and have an
exercise  price  ranging  from $.10 to $.20 per  share.  Saratoga  has  recorded
approximately $34,000 of consulting costs relating to these options.

As of October 31, 1999,  options to purchase  1,775,000 shares have been granted
to employees, officers and directors under the 1998 stock plan. The options have
an exercise  price  ranging from $.10 to $.20 per share,  expire five years from
the date of grant and all options  granted to employees,  officers and directors
are exercisable.


In February,  1999,  Saratoga entered into a corporate public relations  service
agreement  with  PMR and  Associates  whereby  PMR  provides  investor  relation
services  to  Saratoga.  In  connection  therewith,   Saratoga  issued  Warrants
entitling  PMR to purchase up to 1,700,000  shares of common stock at $0.029 per
share.  These Warrants had a one year life and were exercised in fiscal 1999. In
addition,  Saratoga issued 500,000 shares of common stock,  valued at $0.023 per
share or $11,500,  for services  performed.  The date of issuance for the common
stock was the  measurement  date (see Note 9, Common Stock  Issuances,  February
1999 summarized transactions).

In May 1999,  Saratoga extended the corporate public relations services contract
with PMR and  Associates.  In  connection  therewith  Saratoga  issued  warrants
entitling  PMR to purchase up to  1,000,000  shares of its common stock at $0.15
per share and 1,000,000  shares at $0.20 per share. The warrants are exercisable
at any time and expire May 18, 2001.  None have been  exercised at this time. In
addition,  Saratoga issued 550,000 shares of common stock,  valued at $0.131 per
share or $72,000, for services. Saratoga has recorded $45,000 as prepaid expense
as this portion of the balance is for future services.  The date of issuance for
the common stock was the measurement  date (See Note 9. Common Stock  Issuances,
May 1999 summarized transactions).


All of the PMR  Warrants  were fully  vested and  exercisable  immediately  when
issued.  The issue date was the  measurement  date and the Warrants  were valued
using  the   Black-

                                     F-21
<PAGE>

Scholes option pricing model,  including the following significant  assumptions;
risk free interest rate of 6%;  expected lives ranging from 3 months to 2 years;
expected volatility of 50%; and expected dividends of $0.  Approximately  $7,500
was charged to consulting expense for these Warrants.

In  June  1999,   Saratoga  issued  1,000,000  common  stock  purchase  warrants
("warrants")  at an exercise price of ten cents per share to purchase  1,000,000
shares of the Company's common stock.  Management has estimated the value of the
warrants,  based on the Black-Scholes option pricing model, in order to record a
$102,666  intangible  asset as a result of the operational  right purchased from
Internet Interview Inc. (see Notes 1, 2(d) and 3).

In January, 2000, an option for 250,000 shares was exercised. The share price at
date of grant was $0.065 per share.  The exercise  price was $0.10 and the price
on date of exercise was $0.328.

All of the options and warrants  that have been  granted  from  December 1, 1997
(inception) to January 31, 2000 were non-forfeitable.

Stock Option Compensation

For disclosure purposes of employees and officers stock option compensation, the
fair value of options is estimated on the date of grant using the  Black-Scholes
option pricing model with the following  weighted  average  assumptions used for
stock options  granted  during  fiscal 1999:  annual  dividends of $0;  expected
volatility of 50%;  risk-free  interest  rate of 6%; and expected  lives ranging
from 2 years to 5 years.  The  weighted  average  fair  values of stock  options
granted to employees and officers during the fiscal year 1999 was  approximately
$125,000 and Saratoga's pro forma loss and net loss per share would have been as
follows:

                                   Year Ended

                                October 31, 1999

         Net loss applicable to
         common share

         As reported                                             $1,460,943
                                                                 ==========

         Pro forma                                               $1,586,035
                                                                 ==========

         Net loss per common share

         As reported                                             $0.04
                                                                 =====

         Pro forma                                               $0.04
                                                                 =====
                                      F-22
<PAGE>

The  Black-Scholes  option pricing model was developed for use in estimating the
fair value of traded options,  which have no vesting  restrictions and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Saratoga's
employee stock options have characteristics  significantly  different from those
of traded  options,  and since  changes  in  subjective  input  assumptions  can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options and warrants.

10.  NON-RECURRING EXPENSES

Saratoga's merger with  Knightsbridge  (see Note 1) was effective July 28, 1998.
Prior to such merger,  Knightsbridge,  under former management,  entered into an
agreement to acquire controlling interest in a language  translation  technology
company,  Language  Force  Inc.  ("LFI")  in  exchange  for cash and  shares  of
Knightsbridge.  Shares called for by the  agreement  were issued by both parties
and  placed  in an  escrow  account  to  be  released  subject  to  and  pending
finalization   of  the   transaction.   Knightsbridge   also   advanced  to  LFI
approximately $306,000 in connection with the transaction. The agreement between
Knightsbridge  and LFI was  never  fulfilled  and the  parties  are  seeking  in
negotiations to rescind the agreement.  Knightsbridge is also seeking to recover
the cash it  advanced to LFI and return of the  2,000,000  (post  reverse  stock
split) shares issued to LFI and being held in escrow.  Saratoga believes it will
recover the 2,000,000  shares of its common stock held in escrow and is pursuing
negotiations  with LFI to recover the sums of cash  advanced to LFI.  The escrow
agent is holding the shares of both companies  until this matter is resolved and
will dispose of the shares in accordance with the terms of the resolution. These
2,000,000 shares are treated for accounting  purposes as unissued shares because
they are not entitled to a vote on shareholder matters. They were not considered
outstanding for purposes of computing loss per share.

Prior to Western's reverse merger transaction with Knightsbridge, Prime Ventures
Corporation,  was engaged by Knightsbridge to manage the LFI matter. At the time
of the reverse  merger,  Saratoga  entered into a ten-month  consulting  service
agreement  with final  resolution  and to provide  Saratoga with other  business
advisory services as needed from time to time.

In June 1999,  Saratoga agreed to a further extension of Prime Ventures services
to manage the LFI matter. Under their June 1, 1999 agreement, Prime Ventures and
Saratoga agreed upon the following payment and incentive terms:

Saratoga  agreed to pay  $10,000  toward  legal  fees  regarding  the LFI matter
recoverable from the first cash proceeds, if any, from the LFI settlement. Prime
Ventures and another  creditor agreed to settle $95,000 of amounts owing to them
by Saratoga, including the forgiveness of $50,000 of a note payable, in exchange
for an assignment of the cash proceeds, if any, from the LFI settlement.

                                      F-23
<PAGE>

If any LFI shares are received  from the LFI  settlement,  the first 300,000 LFI
shares are to be the  property of Saratoga,  the  balance,  if any, in excess of
300,000 shares is to be split based on future negotiations  between Saratoga and
Prime Ventures.

Settlement  of the LFI  matter is subject to the prior  approval  of  Saratoga's
Board of Directors.

Due to the uncertainty of the outcome of Saratoga's  negotiations  with LFI, the
investment  in LFI has been written off in the amount of $255,500 in fiscal 1998
and $50,000 in fiscal 1999.

Under the reverse merger agreement dated July 28, 1998 between Knightsbridge and
Western they agreed to issue four additional  shares of Saratoga's  common stock
to the former  shareholders of Western for each share of Saratoga's stock issued
to LFI  ("LFI  shares")  which is  released  from  escrow  and not  returned  to
Saratoga's treasury. If all of the 2,000,000 LFI shares currently held in escrow
are released  from escrow and none  returned to its  treasury,  Saratoga will be
required to issue 8,000,000  additional common shares to former  stockholders of
Western.  Management  believes it is unlikely  these shares will ever be issued.
These shares have not been considered in the loss per share calculation  because
they  would be  anti-dilutive.  Both  parties  have  agreed  that  the  original
agreement should be rescinded and have agreed to binding  arbitration to resolve
the manner in which to finalize  rescission  of the  agreement.  An  arbitration
hearing is scheduled for this matter in May, 2000.

In fiscal 1998,  Saratoga  wrote off $99,043  relating to the  acquisition  of a
retail tire company because the agreement expired and was terminated.

11.  COMMITMENTS AND CONTINGENCIES

In June 1999,  Saratoga  entered into an  employment  agreement  with the former
Chief  Executive  Officer and minority  shareholder  of Internet  Interview Inc.
which entitles this employee to a base salary plus  performance  bonus and stock
options to purchase up to 250,000  shares of Saratoga.  Further,  in  connection
with the acquisition of the telecom operation right from Internet Interview Inc.
Saratoga  entered into a consulting  agreement with AJAY  Enterprises Inc. which
entitles  AJAY to a monthly  service  fee and stock  options to  purchase  up to
250,000 shares of Saratoga. The stock options were granted on June 16, 1999, the
same date as the consulting agreement.  Ajay is controlled by a former principal
shareholder of Internet  Interview Inc. The  consulting  service  agreement with
AJAY was  terminated  by mutual  agreement in August,  1999 except for the stock
options  granted to Ajay.  The fair value of the options  for 250,000  shares of
common  stock  granted  to AJAY was  approximately  $21,000  and was  charged to
consulting  expense  in  fiscal  year  1999.  The  options  were  fully  vested,
non-forfeitable  and exercisable when they were issued in June 1999,  therefore,
the issue date was used as the measurement date.

The Black Scholes  option  pricing model was used to determine the fair value of
the options,  which is a more reliable  measurement  than the services  received
from  AJAY.  The  following  significant  assumptions  were  applied:  risk free
interest rate of 6 percent,  expected life of five years; expected volatility of
50%; and expected dividends of $0.

                                      F-24
<PAGE>

On October 1, 1999 Saratoga  entered into three year employment  agreements with
Patrick F.  Charles,  Chief  Executive  Officer of the Company  and  Terrence K.
Picken,  Executive Vice President of the Company.  Each agreement provides for a
base salary for each of the three years plus performance bonus and stock options
to purchase up to 500,000 shares each of Saratoga's  common stock. The agreement
provides  that at each  Officers  option,  part of the  payments  may be paid in
common stock of Saratoga.

Saratoga Telecom has an operating lease on 1500 square feet of office space at a
rate of $1,506 per month through June, 2000.

12.  SUBSEQUENT EVENT (UNAUDITED)

On February 16, 2000,  Saratoga acquired all of the outstanding  common stock of
Virtual Media Group Inc. of Kirkland,  Washington. In exchange,  Saratoga issued
to the shareholders of Virtual,  1,053,940 shares of its common stock, valued at
$264,961,  and as partial  payment  for loans  made to  Virtual by their  former
shareholders in the amount of $15,400.  The common stock was valued based on the
average  trading  price three days before and after the date of the  acquisition
agreement,  which was February 2, 2000. In addition,  Saratoga granted 1,000,000
warrants  exercisable  at $0.165  per  common  share and  assumed  Virtual's  9%
convertible  debenture  obligation  for  $900,000,  net  of a debt  discount  of
$100,000.

The warrants were granted to the former  shareholders/employees of Virtual Media
Group Inc. for future employment services and vest with the holder over a period
six years.  If  employment is terminated at any time prior to the vesting of the
warrants the remaining  unvested  portion of the warrants can be forfeited.  The
warrants  expire within 6 years from the date they were  granted.  Saratoga will
account  for the  warrants  in  accordance  with the  provisions  of  Accounting
Principles Board Opinion No. 25,  "Accounting for Stock Issued to Employees" and
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." These accounting standards require that the warrants be valued at
their fair value and be presented as pro forma disclosures.

On  February  11,  2000,  Virtual  issued 9% series A  subordinated  convertible
redeemable  debenture  for  $900,000,  net of a debt  discount of $100,000,  due
February 11, 2002.

The series A debenture is convertible into common stock of Saratoga, as a result
of the  assumption  of the debt.  The debt is  convertible  into common stock at
70.0% of the  average  closing  bid price of the common  stock for the five days
immediately  preceding  the date of notice of  conversion  by the holder.  As of
March 10, 2000, the debt has been converted into 4,041,501  shares of Saratoga's
common stock.

The  beneficial  conversion  feature will be accounted  for in  accordance  with
Emerging Issues Task Force No. 98-5, "Accounting for Convertible Securities with
Beneficial  Conversion Features or Contingently  Adjustable  Conversion Ratios."
Therefore,  the beneficial conversion feature, which was valued at approximately
$430,000,  will be accounted  for as  additional  interest  expense at the issue
date, which is the date the debentures first become convertible.

                                      F-25
<PAGE>

The acquisition  will be recorded using the purchase method of accounting on the
date of acquisition and has been summarized in the following table:

Purchase price                                        $       264,961
Liabilities assumed (including the convertible debt)          953,452
Less: fair market value of assets acquired                   (928,366)
                                                      -------------------
Goodwill                                              $       290,047
                                                      ===================

Goodwill  will be  amortized on the  straight-line  method over a useful life of
five years.


                                      F-26


<PAGE>


                            Virtual Media Group Inc.
                              Financial Statements
                               October 31, 1999
                                Auditors' Report

To the Shareholders of Virtual Media Group Inc.:

We have audited the balance  sheet of Virtual Media Group Inc. as at October 31,
1999 and the  statements  of loss and  deficit  and cash flows for the year from
November 1, 1998 (date of commencement  of business) to October 31, 1999.  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.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  required that we plan and perform an audit to obtain reasonable
assurance 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 provides a reasonable basis for our opinion.

It is our opinion,  these financial  statements  present fairly, in all material
respects,  the financial  position of the Company as at October 31, 1999 and the
results of its  operations and the changes in cash flows for the year then ended
in accordance with generally accepted accounting principles.

                              /s/ Kenway Mack Slusarchuk Stewart

April 24, 2000                Kenway Mack Slusarchuk Stewart
Calgary, Alberta, Canada      Chartered Accountants

                                      F-27


<PAGE>
<TABLE>

                            Virtual Media Group Inc.

                                  Balance Sheet

                             (stated in US dollars)

                                     Assets
<CAPTION>

                                                                                       October 31,        January 31,
                                                                                          1999               2000
<S>                                                                                  <C>                <C>

Current assets:                                                                                           (unaudited)
    Cash                                                                             $         209      $        1,018
    Accounts receivable                                                                      8,470               3,976
                                                                                     --------------     --------------
                                                                                             8,679               4,994
                                                                                     --------------     --------------
Capital assets (Note 3):

    Cost                                                                                    37,247              37,905
    Less - Accumulated amortization                                                         12,742              14,533
                                                                                     --------------     --------------
                                                                                            24,505              23,372
                                                                                     --------------     --------------
                                                                                     $      33,184      $       28,366
                                                                                     ==============     ==============
                      Liabilities and Shareholders' Deficit

Current liabilities:

    Accounts payable                                                                 $       1,746      $          169
    Due to shareholders (Note 4)                                                            42,992              48,809
    Bank loan  (Note 5)                                                                     17,165              19,874
                                                                                     --------------     --------------
                                                                                            61,903              68,852
                                                                                     --------------     --------------
Share capital (Note 6)                                                                          78                  58

Deficit                                                                                    (28,797)           (40,544)
                                                                                     --------------     --------------
                                                                                           (28,719)           (40,486)
                                                                                     --------------     --------------
                                                                                     $      33,184      $       28,366
                                                                                     ==============     ==============
</TABLE>

                                      F-28

<PAGE>


<TABLE>

                          Statement of Loss and Deficit

                             (stated in US dollars)

                           For the Year from November
                                1, 1998 (Date of
                                 Commencement of
                              Business) to October
                                    31, 1999

<CAPTION>
                                                                                            Three months ended

                                                                   October 31,                  January 31,

                                                                      1999                1999               2000

<S>                                                              <C>                 <C>                <C>
                                                                                       (unaudited)        (unaudited)
Revenue                                                          $       40,204      $       4,483      $        9,423
Direct costs                                                             30,385              3,714               9,330
                                                                 ---------------     --------------     --------------
Gross margin                                                              9,819                769                  93
General and administrative expenses                                      37,827              2,540              11,410
                                                                 ---------------     --------------     --------------
Loss before the following                                              (28,008)             (1,771)           (11,317)
Interest on bank loan                                                     (789)             -                    (430)
                                                                 ---------------     --------------     --------------
Net loss                                                               (28,797)             (1,771)           (11,747)
Deficit, beginning of year                                              -                   -                 (28,797)
                                                                 ---------------     --------------     --------------
Deficit, end of year                                             $     (28,797)      $      (1,771)     $     (40,544)
                                                                 ===============     ==============     ==============
</TABLE>

                                      F-29


<PAGE>

<TABLE>


                             Statement of Cash Flows

                             (stated in US dollars)

                           For the Year from November
                                1, 1998 (Date of
                                 Commencement of
                              Business) to October
                                    31, 1999
<CAPTION>

                                                                                            Three months ended

                                                                   October 31,                  January 31,
                                                                                     ---------------------------------
                                                                      1999                1999               2000
                                                                 ---------------     --------------     --------------
<S>                                                             <C>                  <C>                <C>
Operating activities:                                                                  (unaudited)        (unaudited)
    Loss                                                         $     (28,797)      $       (1771)     $     (11,747)
    Items not involving cash
           Amortization                                                  12,742                263               1,791
                                                                 ---------------     --------------     --------------
                                                                       (16,055)             (1,508)            (9,956)
                                                                 ---------------     --------------     --------------
    Changes in working capital balances
           Accounts receivable                                          (8,470)               (471)              4,494
           Accounts payable                                               1,746             -                  (1,577)
                                                                 ---------------     --------------     --------------
                                                                        (6,724)               (471)              2,917
                                                                 ---------------     --------------     --------------
                                                                       (22,779)             (1,979)            (7,039)
                                                                 ---------------     --------------     --------------
Investing activities:

    Purchases of capital assets                                        (37,247)             (6,133)              (657)
                                                                 ---------------     --------------     --------------
Financing activities:

    Advances from shareholders                                           42,992              8,217               5,816
    Proceeds from bank loan                                              17,165             -                    2,709
    Proceeds on issue of share capital                                       78                 58                (20)
                                                                 ---------------     --------------     --------------
                                                                         60,235              8,275               8,505
                                                                 ---------------     --------------     --------------
Increase in cash                                                            209                163                 809
Cash, beginning of year                                                 -                   -                      209
                                                                 ---------------     --------------     --------------
Cash, end of year                                                $          209      $         163      $        1,018
                                                                 ===============     ==============     ==============
</TABLE>


                                      F-30



<PAGE>





1.    Nature of Organization

      Virtual Media Group Inc. ("The  Company") was  incorporated on October 20,
      1998.  The Company is engaged in the business of designing  internet world
      wide sites, online databases and promotional CD ROMS.

2.    Significant Accounting Policies

      Basis of Presentation

      The  financial  statements  are  stated in  United  States  dollars,  "the
      reporting  currency".  The  transactions of the Company have been recorded
      during the period in Canadian  dollars,  "the  functional  currency".  The
      translation of Canadian  dollars into United States dollars have been made
      at the period end exchange  rate for current  balance  sheet items and the
      average exchange rate for capital assets, revenues,  expenses, and losses.
      Translation adjustments for the periods presented are not material.

      These financial  statements have been prepared by management in accordance
      with generally  accepted  accounting  principles in Canada,  which are not
      materially different from generally accepted accounting  principles in the
      United States.

      Interim Financial Statements

      The accompanying  financial  statements for the three months ended January
      31, 2000 and three  months ended  January 31, 1999 have not been  audited.
      Nothing  has come to our  attention  that  causes us to  believe  that the
      interim  financial  information  is  not,  in all  material  respects,  in
      accordance with generally accepted accounting principles.

      Measurement Uncertainty

      Financial  statements  are based on  representations  that  often  require
      estimates to be made in anticipation of future transactions and events and
      include measurements that may, by their nature, be approximations.

      Credit Risk Management

      The Company is exposed to credit risk on the accounts  receivable from its
      customers. The accounts receivable of the Company is from one customer.

      Capital assets

     Capital  assets are  amortized  using the declining  balance  method at the
     following rates:

                           Software                           - 50%
                           Equipment                          - 10%
      Certain costs,  including  wage costs,  are  capitalized  when incurred in
      connection with the development or purchase of software for internal use.

      Future Income Taxes


      Income  taxes  are  accounted  for by the  future  method  of  income  tax
      allocation. Under this method, future income taxes are determined based on
      the difference between the financial statement and tax bases of assets and
      liabilities  using  enacted  tax rates in effect in the years in which the
      differences are expected to reverse.


                                      F-31

<PAGE>


2.   Significant Accounting Policies (continued)

      Revenue Recognition


Revenue is recorded using the percentage-of-completion  method. The contracts of
the Company stipulate stages.  Revenue equal to the contractually stated amounts
is recognized upon achieving each stage of the project.


3.    Capital Assets

<TABLE>
                                                         October 31,                             January 31,
                                                            1999                                    2000
<CAPTION>

                                                                                                 (unaudited)
                                                                  Accumulated                             Accumulated
                                                   Cost          Amortization             Cost           Amortization
<S>                                           <C>               <C>                 <C>                <C>

      Software                                $       22,628    $      11,314        $      22,628      $       12,762
      Equipment                                       14,619            1,428               15,277               1,771
                                              --------------    --------------       --------------     --------------

                                              $       37,247    $      12,742        $      37,905      $       14,533
                                              ==============    ==============       ==============     ==============
</TABLE>
      Software  includes  $13,600 of  capitalized  wages related to  proprietary
software development.

4.   Due to Shareholders

      The amount due to  shareholders  is payable on demand,  is  unsecured  and
      bears  no  interest.  The loan has been  repaid  subsequent  to year  end.
      Consequently, this amount has been classified as a current liability.

5.   Bank Loan

      The loan bears  interest at the bank's daily  interest  floating rate plus
      2%. As the loan was repaid  after year end,  it has been  classified  as a
      current  liability.  The Company made  payments of interest only until the
      time of  repayment.  The assets of the company are pledged as security for
      the loan under a general security agreement.

6.   Share Capital

     Authorized -
        Unlimited number of the following  classes of shares:
          Class "A" common voting shares
          Class "B" common voting shares
          Class "C" common voting shares
          Class "D" common voting shares
          Class "E" common voting shares
          Class "F" common non-voting shares
          Class "G" common non-voting shares
          Class "H" common non-voting shares
          Class "A" preferred voting, redeemable, non-cumulative shares
          Class "B" preferred voting, redeemable, non-cumulative shares
          Class "C" preferred non-voting, redeemable, non-cumulative shares
          Class "D" preferred non-voting, redeemable, non-cumulative shares

                                      F-32

<PAGE>
<TABLE>

      Issued -
<CAPTION>
                                                                                      October 31,        January 31,
                                                                                          1999               2000
                                                                                                        (unaudited)
<S>                                                                                  <C>                <C>

         71 Class "A" common shares (30 - January 31, 2000)                          $          46      $           26
         30 Class "B" common shares                                                             19                  19
         20 Class "C" common shares                                                             13                  13
                                                                                     --------------     --------------

                                                                                     $          78      $           58
                                                                                     ==============     ==============

</TABLE>
     On January 21, 2000,  the Company  redeemed 31 Class "A" common  shares for
     $0.65 per share.

7.   Income Taxes

      The Company has losses of $26,700 which can be utilized to reduce  taxable
      income in future years.  These losses expire in 2006. The potential income
      tax  benefits  of  these  losses,  estimated  at  $11,700,  has  not  been
      recognized in these financial  statements as the likelihood of realization
      of these benefits cannot be determined at this time.

8.   Nature of operations

      The Company earned $ 17,600 (41.99%) of its revenue from one customer.

9.   Subsequent Event

      On January 26,  2000,  the Company  became a wholly  owned  subsidiary  of
      Virtual Media Group Inc., a Corporation incorporated under the laws of the
      State of Washington,  which was in turn acquired by Saratoga International
      Holdings Corp. on February 16, 2000.

                                      F-33


<PAGE>


             SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)
          UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION


Introduction to Unaudited Pro Forma Condensed Combined Financial  Information of
Saratoga International Holdings Corp.

The following  unaudited pro forma condensed combined  financial  statements are
presented for illustrative  purposes only and are not necessarily  indicative of
the combined  financial  position or results of operations for future periods or
the results of  operations or financial  position that actually  would have been
realized had Saratoga and Virtual Media Group been a combined company during the
specified  periods.   The  unaudited  pro  forma  condensed  combined  financial
statements,  including  related  notes,  are  qualified  in  their  entirety  by
reference  to,  and  should  be  read  in   conjunction   with,  the  historical
consolidated  financial  statements  and related  notes  thereto of Saratoga and
Virtual, included elsewhere in this filing.

The following  unaudited pro forma condensed combined financial  statements give
effect to the  acquisition  of Virtual using the purchase  method of accounting.
The  pro  forma  condensed  combined  financial  statements  are  based  on  the
respective  historical audited and unaudited  consolidated  financial statements
and related notes of Saratoga and Virtual.

The  unaudited  pro forma  condensed  combined  balance  sheet  assumes that the
acquisition  took place on January 31, 2000, and combines  Saratoga's  unaudited
January 31, 2000 consolidated  balance sheet with the unaudited January 31, 2000
balance  sheet  of  Virtual.  The pro  forma  condensed  combined  statement  of
operations for the year ended October 31,1999 assumes the acquisition took place
November 1, 1998 and  combines  Saratoga's  audited  consolidated  statement  of
operations for the year ended October 31, 1999 with Virtual's  audited statement
of  operations  for the year ended  October 31, 1999.  The  unaudited  pro forma
condensed  combined  statement of operations  for the three months ended January
31,  2000  assumes the  acquisition  took place  November  1, 1998 and  combines
Saratoga's unaudited  consolidated  statement of operations for the three months
ended January 31, 2000 with Virtual's  unaudited statement of operations for the
three months ended January 31, 2000.

                                      F-34


<PAGE>

<TABLE>

             SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARIES

                          (A Development Stage Company)

   UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JANUARY 31, 2000
<CAPTION>


ASSETS                                                 Historical    Historical     Pro Forma
                                                        Saratoga      Virtual      Adjustments         Pro Forma

                                                      ------------  ------------  -------------       ------------
<S>                                                   <C>           <C>           <C>                 <C>
CURRENT ASSETS:

   Cash                                               $    72,811   $     1,018   $    870,000   (1)  $   943,828
   Accounts receivable                                     10,671         3,976              -             14,647
   Deferred PIN costs                                      23,890             -              -             23,890
   Deferred financing cost                                 11,300             -         30,000   (1)       41,300
   Prepaid expense and other current assets                54,653             -              -             54,653
                                                      ------------  ------------  -------------       ------------
      TOTAL CURRENT ASSETS                                173,325         4,994        900,000          1,078,319

PROPERTY AND EQUIPMENT - at cost, net                      30,842        23,372              -             54,214
INTANGIBLE ASSET, net                                      68,950             -        290,047   (1)      358,994
                                                      ------------  ------------  -------------       ------------

                                                      $   273,117   $    28,366   $  1,190,047        $ 1,491,530
                                                      ============  ============  =============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:

   Accounts payable                                   $         -   $       169   $          -        $       169
   Note payable                                            98,163        19,874              -            118,037
   Loans payable - shareholders and officers               75,000        48,809        (15,400)  (1)      108,406
   Debentures payable, net of debt discount                     -             -        900,000   (1)      899,999
   Accrued expenses and other current liabilities         113,105             -              -            113,105
                                                      ------------  ------------  -------------       ------------
      TOTAL CURRENT LIABILITIES                           286,268        68,852        884,600          1,239,720

COMMITMENTS AND CONTINGENCIES                                   -             -              -                  -

SHAREHOLDERS' EQUITY (DEFICIT):

    Preferred stock                                       377,742             -              -            377,742
    Common stock                                           54,698            58          1,054   (1)
                                                                                           (58)  (1)       55,752
   Additional paid in capital                           2,713,460             -        263,907   (1)
                                                                                       428,571   (1)    3,405,938
   Deficit accumulated during the development stage    (3,159,051)      (40,544)        40,544   (1)
                                                                                      (428,571)  (1)   (3,587,622)
                                                      ------------  ------------  -------------       ------------
      TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                (13,151)      (40,486)       305,447            251,810
                                                      ------------  ------------  -------------       ------------

                                                      $   273,117   $    28,366   $  1,190,047        $ 1,491,530
                                                      ============  ============  =============       ============


</TABLE>
See notes to the unaudited pro forma condensed combined financial statements

                                      F-35


<PAGE>


<TABLE>

             SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARIES

                          (A Development Stage Company)

         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                           YEAR ENDED OCTOBER 31, 1999

<CAPTION>
                                            Historical    Historical     Pro Forma
                                             Saratoga      Virtual      Adjustments         Pro Forma

                                           ------------  ------------  -------------       ------------
<S>                                        <C>           <C>           <C>                 <C>

NET SALES                                  $     2,660   $    40,204   $          -        $    42,864
COST OF SALES                                   23,810        30,385              -             54,195
                                           ------------  ------------  -------------       ------------
GROSS PROFIT (LOSS)                            (21,150)        9,819              -            (11,331)

OPERATING EXPENSES

  General & administrative expenses          1,038,729        37,827         58,009   (3)    1,134,561
  Loss on impairment of investment              50,000             -              -             50,000
                                           ------------  ------------  -------------       ------------
        TOTAL OPERATING EXPENSES             1,088,729        37,827         58,009          1,184,561
                                           ------------  ------------  -------------       ------------

LOSS FROM OPERATIONS                        (1,109,879)      (28,008)       (58,009)        (1,195,892)
                                           ------------  ------------  -------------       ------------

OTHER INCOME (EXPENSE):

   Interest expense                           (393,369)         (789)      (100,000)  (2)
                                                                           (428,571)  (2)     (922,729)
   Forgiveness of note payable                  50,000             -              -             50,000
   Other income                                  7,415             -              -              7,415
                                           ------------  ------------  -------------       ------------
      NET OTHER EXPENSES                      (335,954)         (789)      (428,571)          (865,314)
                                           ------------  ------------  -------------       ------------

NET LOSS                                    (1,445,833)      (28,797)      (486,580)        (1,961,210)
LESS:

   CUMULATIVE PREFERRED STOCK DIVIDEND          15,110             -              -             15,110
                                           ------------  ------------  -------------       ------------

NET LOSS TO COMMON SHARES                  $(1,460,943)  $   (28,797)  $   (486,580)       $(1,976,320)
                                           ============  ============  =============       ============

LOSS PER COMMON SHARE, BASIC AND DILUTED   $     (0.04)                                    $     (0.04)
                                           ============                                    ============

WEIGHTED AVERAGE NUMBER OF COMMON

   SHARES OUTSTANDING, BASIC AND DILUTED    38,925,978                    5,095,441   (4)   44,021,419
                                           ============                =============       ============
</TABLE>

  See notes to the unaudited pro forma condensed combined financial statements

                                      F-36

<PAGE>

<TABLE>

             SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARIES

                          (A Development Stage Company)

         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                       THREE MONTHS ENDED JANUARY 31, 2000

<CAPTION>
                                              Historical    Historical     Pro Forma
                                              Saratoga       Virtual      Adjustments         Pro Forma

                                             ------------  ------------  -------------       ------------
<S>                                          <C>           <C>           <C>                 <C>
NET SALES                                    $     6,671   $     9,423   $          -        $    16,094
COST OF SALES                                      4,798         9,330              -             14,128
                                             ------------  ------------  -------------       ------------
GROSS PROFIT                                       1,873            93              -              1,966

OPERATING EXPENSES

  General & administrative expenses              392,131        11,410         14,502   (3)      418,039
                                             ------------  ------------  -------------       ------------
      TOTAL OPERATING EXPENSES                   392,131        11,410         14,502            418,039
                                             ------------  ------------  -------------       ------------

LOSS FROM OPERATIONS                            (390,258)      (11,317)       (14,502)          (416,077)
                                             ------------  ------------  -------------       ------------

OTHER INCOME (EXPENSE):

Interest expense                                (122,040)         (430)             -           (122,470)
                                             ------------  ------------  -------------       ------------
      NET OTHER EXPENSES                        (122,040)         (430)             -           (122,470)
                                             ------------  ------------  -------------       ------------

NET LOSS                                        (512,298)      (11,747)       (14,502)          (538,547)
LESS:

   CUMULATIVE PREFERRED STOCK DIVIDEND             7,555             -              -              7,555
                                             ------------  ------------  -------------       ------------

NET LOSS TO COMMON SHARES                    $  (519,853)  $   (11,747)  $    (14,502)       $  (546,102)
                                             ============  ============  =============       ============

LOSS PER COMMON SHARE, BASIC AND DILUTED     $     (0.01)                                    $     (0.01)
                                             ============                                    ============

WEIGHTED AVERAGE NUMBER OF COMMON

   SHARES OUTSTANDING, BASIC AND DILUTED      53,643,031                    5,095,441   (4)   58,738,472
                                             ============                =============       ============


</TABLE>

See notes to the unaudited pro forma condensed combined financial statements

                                      F-37


<PAGE>


             SARATOGA INTERNATIONAL HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)


          Notes to Unaudited Pro Forma Condensed Combined Financial Statements

A.   Basis of Presentation


          On February 16, 2000,  Saratoga acquired all of the outstanding common
          stock  of  Virtual  Media  Group  Inc.  of  Kirkland,  Washington.  In
          exchange,  Saratoga issued to the  shareholders of Virtual,  1,053,940
          shares of its common stock, valued at $264,961, and as partial payment
          for loans made to Virtual by their former  shareholders  in the amount
          of $15,400.  The common stock was valued based on the average  trading
          price  three  days  before  and  after  the  date  of the  acquisition
          agreement,  which was February 2, 2000. In addition,  Saratoga granted
          1,000,000 warrants  exercisable at $0.165 per common share and assumed
          Virtual's 9% convertible  debenture obligation for $900,000,  net of a
          debt discount of $100,000.

          The  warrants  were  granted to the former  shareholders/employees  of
          Virtual Media Group Inc. for future employment  services and vest with
          the holder over a period six years. If employment is terminated at any
          time  prior to the  vesting of the  warrants  the  remaining  unvested
          portion of the warrants can be forfeited. The warrants expire within 6
          years from the date they were  granted.  Saratoga will account for the
          warrants in accordance  with the  provisions of Accounting  Principles
          Board Opinion No. 25,  "Accounting  for Stock Issued to Employees" and
          Statement of Financial  Accounting  Standards No. 123, "Accounting for
          Stock-Based Compensation." These accounting standards require that the
          warrants be valued at their fair value and be  presented  as pro forma
          disclosures.

          On  February  11,  2000,  Virtual  issued  9%  series  A  subordinated
          convertible  redeemable debenture for $900,000, net of a debt discount
          of  $100,000,  due  February  11,  2002.  The  series A  debenture  is
          convertible  into  common  stock  of  Saratoga,  as a  result  of  the
          assumption of the debt. The debt is  convertible  into common stock at
          70.0% of the  average  closing  bid price of the common  stock for the
          five days  immediately  preceding  the date of notice of conversion by
          the holder.  As of March 10, 2000,  the debt has been  converted  into
          4,041,501 shares of Saratoga's common stock.

          The beneficial  conversion feature will be accounted for in accordance
          with Emerging Issues Task Force No. 98-5,  "Accounting for Convertible
          Securities  with  Beneficial   Conversion   Features  or  Contingently
          Adjustable  Conversion Ratios." Therefore,  the beneficial  conversion
          feature, which was valued at approximately $430,000, will be accounted
          for as  additional  interest  expense at the issue date,  which is the
          date the debentures first become convertible.

                                      F-38
<PAGE>

     The acquisition will be recorded using the purchase method of accounting on
     the date of acquisition and has been summarized in the following table:

        Purchase price                                          %  264,961
        Liabilities assumed (including the convertible debt)       953,452
        Less: fair market value of assets acquired                (928,366)
                                                                -----------
        Goodwill                                                   290,047
                                                                ===========

     Goodwill will be amortized on the  straight-line  method over a useful life
     of five years.

     The above  acquisition  of Virtual is accounted  for in the  unaudited  pro
     forma  presentation  in accordance  with the purchase method of accounting.
     The unaudited pro forma condensed  combined  balance sheet assumes that the
     acquisition  took  place on  January  31,  2000,  and  combines  Saratoga's
     unaudited  January 31, 2000  consolidated  balance sheet with the unaudited
     January 31, 2000 balance sheet of Virtual. The pro forma condensed combined
     statement of  operations  for the year ended  October  31,1999  assumes the
     acquisition  took place  November 1, 1998 and combines  Saratoga's  audited
     consolidated  statement of  operations  for the year ended October 31, 1999
     with Virtual's  audited  statement of operations for the year ended October
     31,  1999.  The  unaudited  pro  forma  condensed   combined  statement  of
     operations  for the  three  months  ended  January  31,  2000  assumes  the
     acquisition took place November 1, 1998 and combines  Saratoga's  unaudited
     consolidated statement of operations for the three months ended January 31,
     2000 with Virtual's  unaudited statement of operations for the three months
     ended January 31, 2000.

B.   Pro Forma Adjustments

     The  following  unaudited pro forma  adjustment  to the condensed  combined
     balance sheet at January 31, 2000 is as follows:

     (1)  To record the  acquisition of Virtual,  which included the issuance of
          1,053,940 shares of common stock valued at $264,961, the assumption of
          convertible  debt  issued by  Virtual,  the  partial  payment of loans
          payable to the former shareholders of Virtual in the amount of $15,400
          and  goodwill of  $290,047.  The  recording  of the debt  includes the
          accounting  for the  additional  interest  expense from the beneficial
          conversion  feature  for  $428,571.  In  addition,   Virtual  received
          $870,000 in proceeds  from the  issuance of the  $900,000  convertible
          debenture, net of a debt discount of $100,000, and incurred $30,000 of
          debt issue  costs,  which have been  recorded  as  deferred  financing
          costs.

                                      F-39

<PAGE>

         The following unaudited pro forma adjustments to the condensed combined
         statement  of  operations  for the year ended  October 31, 1999 and the
         three months ended January 31, 2000 are as follows:

     (2)  To  record  the  additional   interest  expense  from  the  beneficial
          conversion   feature   and   amortization   of  the   debt   discount.
     (3)  To record the  amortization of the intangible  asset based on a useful
          life of five years.
     (4)  To adjust the weighted average number of common shares  outstanding to
          account for the  issuance of  1,053,940  shares  common  stock and the
          conversion  of the  convertible  debenture  into  4,041,501  shares of
          common stock.

                                      F-40
<PAGE>

PART III

                            ITEM 1 INDEX OF EXHIBITS

Exhibit

Number                                                        Description **
------                                                        --------------

     2*                               Agreement and Plan of Merger dated
                                      July 24, 1998 between Knightsbridge and
                                      Western Oil & Tire Distributors Inc.

     2.1*                             Share Exchange Agreement dated as of
                                      February 2, 2000 by and between Saratoga
                                      International Holdings Corp. and Virtual
                                      Media Group Inc.

     3.1*                             Articles of Incorporation, as amended
                                      for Parent Company, Saratoga
                                      International Holdings Corp.

     3.2*                             Articles of Incorporation, as amended
                                      for Subsidiary, Saratoga Telecom Corp.

     3.3*                             By-Laws for Parent Company, Saratoga
                                      International Holdings Corp.

     3.4*                             By-Laws for Subsidiary, Saratoga Telecom
                                      Corp.

     4*                               Specimen Stock Certificate

     5*                               $276,000 Note Purchase Agreement dated
                                      October 30, 1999

     10.1*                            Teleglobe Agreement dated August 18, 1999

     10.2*                            Agreement for Sale and Purchase of
                                      Telecom Business Assets dated June 15,
                                      1999 between Saratoga Telecom Corp. and
                                      Internet Interview Inc.

     10.3*                            Corporate Officer Employment Agreements
                                      with Patrick F. Charles and Terrence K.
                                      Picken, each dated October 1, 1999

     10.4*                            Warrant Agreement between Saratoga
                                      International holdings Corp. and Tom
                                      Morsey, President of Saratoga Telecom
                                      Corp. dated June 16, 1999

     10.5*                            Stock Option Plan

     21*                              Subsidiaries of the Registrant

     27                               Financial Data Schedule

                                       E-1
<PAGE>

** Summaries of all Exhibits  contained within this  Registration  Statement are
modified in their entirety by reference to these Exhibits.

* Exhibits were previously filed.
                                       E-2
<PAGE>

                                   SIGNATURES

In  accordance  with  Section 12 of the  Securities  Exchange  Act of 1934,  the
Registrant has caused this Registration  Statement to be signed on its behalf by
the undersigned, hereunto duly authorized.

SARATOGA INTERNATIONAL HOLDINGS CORP.

Date:  May 26, 2000                     By: /s/ Patrick F. Charles
                                            CEO, President and Director
<PAGE>



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