YOUTHLINE USA INC, 10KSB, 2000-04-28

YOUTHLINE USA INC
10KSB, 2000-04-28
EDUCATIONAL SERVICES

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

REPORT ON FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
-----------------

COMMISSION FILE NO. 0-28725

YOUTHLINE USA, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 22-3674998
--------------------------------- -------------------
(STATE OF OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

4581 US9
HOWELL, NEW JERSEY 07731
--------------------- ----------
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (732) 886-0833

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE.
-----

SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:

COMMON STOCK, PAR VALUE $.0001 PER SHARE

(TITLE OF CLASS)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of the Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

Issuer's revenues for its most recent fiscal year were $168,967.

The aggregate market value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the closing price of such stock as of
March 31, 2000, was approximately $46,571,551.

Number of shares outstanding of the issuer's common stock, as of March 31,
2000 was 10,071,665.

Documents Incorporated by Reference: None

<PAGE>

PART I

ITEM 1. BUSINESS

FORWARD LOOKING STATEMENTS

Certain information contained in this Annual Report are forward-looking
statements (within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended).
Factors set forth that appear with the forward-looking statements could cause
the Company's actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company in this Annual
Report. Such potential risks and uncertainties include, but are not limited to,
the risk factors contained in this Annual Report. The Company undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.

GENERAL/HISTORICAL INFORMATION

Youthline USA, Inc. (the "Company" or "YOUTHLINE USA") is a multimedia
company focused on providing education and entertainment products and services
to America's youth. The Company was incorporated on July 27, 1999 pursuant to
the laws of the State of Delaware as the successor to Ult-I-Med Health Centers,
Inc., a Utah corporation ("Ult-I-Med"), which was incorporated in 1983 under the
laws of the State of Utah (originally under the name Picadilly Technology,
Inc.). The Company was organized to effectuate a reincorporation of Ult-I-Med
with and into the Company on August 16, 1999. The Company maintains its
executive offices at 4581 US9, Howell, NJ 07731 and its telephone number is
(732) 886-0833.

Ulti-I-Med was originally organized to engage in the mining of
metalliferous chemicals. In 1988, Ulti-I-Med ceased such activities and began
engaging in the business of owning and operating camping and recreation
facilities. In 1991, Ulti-I-Med ceased such activities and began engaging in the
business of owning and operating supervised primary care, health and
rehabilitation centers. In January 1996, Ulti-I-Med filed a Chapter 11
bankruptcy petition. Ult-I-Med liquidated all of its assets and its plan of
reorganization was filed with the court in February 1998. All of Ult-I-Med debts
were paid, and the court entered a final decree in September 1999.

In August 1999, Ult-I-Med acquired all of the outstanding capital stock of
S&S Plus, Inc., a wholly-owned subsidiary of the Company which operates the
publication Youthline USA, in exchange for the issuance of 5,500,000 shares of
its common stock, representing a majority of the total issued and outstanding
capital stock of the Company. On such date, the directors and officers resigned
and were replaced with some of the current officers and directors.

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THE COMPANY

YOUTHLINE USA is an innovative compilation of a website, a newspaper, a
magazine, curriculum aids, and other educational and entertainment resources for
children, educators and parents. The Company provides America's youth, ages
8-13, with world and national news, feature articles, and curriculum related
educational features and programs in a manner that mirrors the way in which
adults receive the same information. Youthline USA specializes in providing
content and resources that correlate with the core curriculums of schools
throughout the country. Through various media (at present, a web site, a
newspaper, and a magazine), Youthline USA educates and entertains today's youth
while brightening their future by teaching them crucial skills they will need to
be successful as adults. The Company believes it has found a unique niche in the
school and home market which is eager for products which can teach
technological, communication and learning skills while at the same time cover
curriculum basics--an absolute necessity for schools everywhere.

WWW.YOUTHLINE-USA.COM includes world and national news with daily updates,
archives (sports, animals, book reviews, science, news articles, etc.),
interactive games, puzzles, a stockmarket game and many other educational and
entertainment features. A subscription-based portion of the website for schools
provides students with a complete Internet environment, including limited
e-mail, stock tips, news updates, and complete access to regular news archives.
Students will check their e-mail, stock portfolios and the latest news archives
daily. On-line activities are created with daily news articles in order to
reinforce reading curriculum goals. Activities, all of which are accompanied by
a listing of the national standards covered for each grade level, can be
designed to fit the requirements of each school's unique curriculum and specific
needs of students. Activities may be used in conjunction with the news article,
or searched for later to be used as stand-alone activities for either
educational or entertainment purposes. The website also includes lesson plans
that demonstrate how to use the website to tie in with curriculum standards. The
goal of the website is to provide subscribers with a "Epcot Center" on the
Internet. Each article in the news is linked to archival information about
countries and states, all of which contain their own interactive video segments.
Readers are also directed to people mentioned in news articles to get additional
background information. Once in the archive sections, students are able to do
searches on people, places, and events for school-related research or just to
learn more about a particular subject. Similar sections are set up for career
choices, health issues, political figures, animals, entertainment (books,
movies, music, sports), and much more. The Company anticipates that children
will be instructed by their teachers in school to use the website for the
educational material, and that they will use it again at home for the
entertainment features and the homework help. In addition, in September 2000,
the website will open its YouthMall section, an on-line shopping center for kids
and educators, offering appropriate products along with a brief description.
Kids will be able to use either real money or e-money earned from contests and
activities on the website.

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YOUTHLINE USA is a 16 page weekly national newspaper with additional four
page regional inserts written especially for kids ages 8-13. In every respect,
it is similar to an adult newspaper, except that it is written at the kids'
level, and it filters out news that is not age appropriate. Every issue is
prepared with easy-to-read articles with eye-catching photos and graphs, ideal
for grabbing the attention of its target audience. In addition to weekly news,
every newspaper is also filled with fun activities, contest, feature articles,
and interactive games. While the national newspaper attracts nationally-based
advertisers, the regional inserts are ideal vehicles for local businesses and
corporate sponsors. Every issue comes with lesson plans to enable teachers to
incorporate the newspaper into their core curriculum. Management believes that
nothing like it exists in the country. Articles in the newspaper also direct its
readers to the appropriate segment of the website, thereby guaranteeing
increased usage of the website.

Youthline USA's Fun and Feature Magazine is a monthly publication that
focuses on a particular theme. This 20-page magazine, similarly geared for ages
eight to 13, takes a new topic each month that is both relevant to youth and
timely in the news. The purpose of the magazine is to present its readers with
an in-depth look at important issues (such as, money matters, health issues,
environmental topics, etc), all of which are displayed in an exciting and
eye-catching manner. Every magazine is accompanied by lesson plans that will
help educators cover core curriculum material by incorporating the magazine into
the classroom. All lesson plans are based on the McRel national standards, which
are clearly displayed on the lesson plans and again on the website. The magazine
is specifically created as a publication that will be read again and again.
This, combined with its more flashy appearance, serves as a more attractive
medium for potential advertisers and corporate sponsors.

Both the website and the print products are unique, and the Company
believes that this innovative combination, together with the curriculum
resources, will be extremely appealing to the educational community. Although
the newspaper has competition, the website appears to be the only one of its
kind. The website is rich in educational and entertainment content, and also
introduces kids to the world of e-mail and the Internet; a world that they need
to be familiar with for tomorrow's world. At the same time, it offers curriculum
basics and lesson plans, making it an extremely appealing package for educators.
Management believes that it has found a significant niche, and plans on
instituting an aggressive sales campaign directed at schools. Phase One of the
web site was completed on January 15, 2000. Phase Two is expected to be
completed by September 1, 2000.

The Company generates revenue (as detailed in part below) through the sale
of website subscriptions, newspaper subscriptions, magazine subscriptions,
advertisement space and corporate sponsorships, and eventually, through
e-commerce on its YouthMall.

Website subscriptions: Sold to schools for $500 - $15,000 per school per
year, depending on the number of students in each school.

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Newspaper subscriptions: Either bulk subscriptions ($7 per year) ordered
by schools or individual home subscriptions ($30).

Magazine subscriptions: $25 per year; $35 per year for both
the magazine and newspaper. Bulk subscriptions are available
to schools at the same rates as the newspapers.
National newspaper ad: $6,500 per page.
Regional newspaper ad: $2,000 per page.
Magazine ad: $15,000 per page.
All ad rates are subject to change as a variable of circulation.

Advertising and corporate sponsorships is expected to be a substantial
source of revenue. The Company has developed various media that offers corporate
America a unique opportunity to reach such a focused market. With this in mind,
the Company produces a national newspaper, regional inserts, the monthly
magazine, and the website. It is an all-encompassing package designed to appeal
to corporations nationwide. Corporations that sell directly to kids would
naturally have an interest in advertising in a newspaper and on a website that
serves such a focused market. Management believes that even corporations who do
not sell directly to children will be interested in securing and increasing name
recognition with the next generation, in addition to the fact that the newspaper
reaches parents and educators as well as children.

In addition, Youthline USA, Inc., seeks to acquire companies that either
1) can enhance and complement the newspaper, or 2) provide products or services
which are consistent with the general goals of the Company - to educate and
entertain children and broaden their horizons. During fiscal year 1999,
Youthline USA, Inc. has acquired Ingenius and Lesson Stop, both of which serve
to enhance the newspaper and the website.

Youthline USA is currently concentrating on the United States market, yet
the newspaper and website easily lend themselves to international expansion.
Plans for the future include adapting world and regional news for individual
countries and languages. Management believes that the international scope of the
Internet offers virtually unlimited opportunities for growth.

YOUTHLINE USA was first published in July 1997, and has increased paid
circulation as of December 15, 1999 to approximately 21,000. As of December 15,
1999, requested circulation has increased to approximately 550,000. School
districts in Washington D.C., Atlanta, Ohio, Tennessee, Chicago, and Florida
have already ordered website subscriptions for next year. The Company considers
the present circulation together with its new interactive website to be
attractive to potential advertisers and sponsors. The Company has built its
infrastructure in such a manner as to maximize the potential of the Company.
Each department has been carefully set up while acquiring talented, dedicated
and energetic personnel. The Company has the manpower and the organization to
perfect and enhance its products and to conquer its target markets - today's
youth, the education market and corporate America.

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PRODUCT

Youthline USA is an innovative compilation of a website, a newspaper and a
magazine, rich in both educational and entertainment material for kids.

THE WEBSITE:

Youthline USA combines the excitement and speed of the Internet with the
traditional appeal of a newspaper. At present, the website includes world and
national news articles with daily updates, archives of YOUTHLINE USA features
(animal of the week, author of the week, etc.), puzzles, games, prizes, "ask the
expert" columns, recommended books and websites, and much more.

The website includes a virtual "Epcot Center." Each country and state has
its own interactive video segment on our website, and articles in the newspaper
direct the readers to the appropriate segment. Similar sections are set up for
career choices, health issues, political figures, animals, entertainment (books,
movies, music, sports), and much more.

There are many websites dedicated to kids. However, YOUTHLINE-USA.com is
unique in that (like a newspaper) it is rich in both educational and
entertainment content. We know of no other sites that present this appealing and
substantive combination to America's youth.

In addition, the website has a guaranteed source of extensive usage from
the newspaper. Articles in the weekly newspaper direct kids to the appropriate
section of the website. The Company expects that teachers will encourage
(perhaps require) their students to access the website for additional
information. While there, the kids will be attracted to the entertainment aspect
as well. It is expected that kids who are required to visit the site during
school hours, will gladly return from home computers to take advantage of the
fun and entertainment offered at youthline-usa.com.

The website design, content, and hosting are chosen from a variety of
sources to provide subscribers with maximum reliability and outstanding content.
Much of the design is being done by Entertainment Boulevard, an Internet
entertainment company that utilizes cutting-edge streaming video and audio
technology to offer quality programming to Internet users. Management believes
that combining Entertainment Boulevard's technology and know-how with the
Company's unique content will provide the Company's users with an unmatched
Internet experience. In addition, the Company is constantly searching for fresh,
innovative ideas and content for the website.

THE NEWSPAPER:

YOUTHLINE USA is a weekly national newspaper with regional inserts geared
for children ages 8 to 13. Its design and looks are identical to that of an
adult newspaper, making it the only product of its kind in the country. Each
issue consists of sixteen pages of interesting and timely articles on a variety
of topics, including world and national news, politics, economics, science,

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sports, and weather. Relevant health and computer issues are presented as well,
always in an eye and mind-catching manner. By covering both national and
international news, YOUTHLINE USA connects children across the nation, while
simultaneously introducing children to different cultures around the world. Each
issue comes with lesson plans to help teachers incorporate the newspaper into
their curriculum.

As a member of the Associated Press (AP) and a subscriber to the Reuters
News Agency, YOUTHLINE USA shares news sources with the major newspapers. While
the news is the same, each article is carefully written with consideration of
our readers' age and reading level. Recognizing that our readership is of
multiple ages and reading levels, writers prepare articles of different lengths
and difficulties so that every reader can find articles of interest. All
articles are reviewed by a clinical psychologist to ensure that they are written
with our children's best interests in mind, and that they are sensitive to the
children's developmental level.

One of the challenges of a children's newspaper is to present news stories
that will spark a child's interest. Almost half of the paper is devoted to
various news stories and accompanying graphics, all of which are chosen and
formatted with the aim of capturing a young reader's interest. In addition to
several longer articles, YOUTHLINE USA offers World News and National News in
Brief, which provide concise news stories with striking photographs. These
reports are ideal for younger readers who may have difficulty sustaining
attention for a full-length article.

In addition to introducing children of this age to the world via news,
YOUTHLINE USA attempts to ignite within its readership an excitement for
literature, art, music, and theater, by reviewing books, movies, and shows, and
by describing the lives of authors, artists, and musicians.

In each issue, a suitable website for children is included to enhance
reader's familiarity with, and comfort level on, the computer. Children are
encouraged to communicate with the newspaper by e-mail (or phone, fax, and
regular mail); children repeatedly contacted the Company with questions about
its stock market game, answers to puzzles and editorial comments. An elaborate
reporter program encourages every child to formulate and express opinions
through letters to the editor, earn a reporter's badge, set up and conduct
interviews with political, sports or entertainment figures, and then write up
the interview for publication in the newspaper or on the website.

YOUTHLINE USA also features short stories, games, jokes, puzzles, and
weekly detailed science experiments, magic tricks, or recipes that captivate the
children and encourage them to try new and exciting ideas at home. These items
are especially designed to keep readers coming back each week. Short stories are
often printed in parts, continuing from one issue to the next, giving our
readers yet another reason to return to the pages of YOUTHLINE USA.

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Management believes that YOUTHLINE USA is unique. While there are
successful curriculum aids available (such as the Weekly Reader and Scholastic
News), those publications only discuss topics that are related to recent events.
YOUTHLINE USA, however, is a full-fledged newspaper which covers the weekly news
and includes all the features and sections of an adult newspaper. Its numerous
sections (business, sports, technology, health, etc.), in addition to its
monthly features, enable it to broaden the horizons of today's youth and to
encourage better communication between parents and kids.

YOUTHLINE USA has a number of features that help kids develop the skill of
reading a newspaper. Extensive research went into the development of the perfect
newspaper for children, from its appearance and set-up to content and format.
YOUTHLINE USA is unique, with distinct columnar margins and clear markings of
where to find continuing articles. Difficult words are printed in bold and
defined at the bottom of each page. The large print and easy language help start
these young readers on the lifelong road to newspaper reading.

In a world filled with indifference, the newspaper is one place to show
that individuals do have thoughts, feelings, and opinions about what goes on
around them. Many of our readers have already taken advantage of the opportunity
to express themselves. We encourage our readers to write in and tell us their
thoughts, and our goal is to provide them with the vehicle to present their
opinions to others.

YOUTHLINE USA's wide variety of topics and activities, as well as its
focus on news stories, distinguishes it from other children's publications, many
of which focus on a particular topic, such as sports or animals, or offer very
little news information. This is important for two reasons: first, similar to an
adult's method of reading a daily newspaper, we expect children to skim the
newspaper and pick and choose what interests them. Also, since parents are often
actively involved in the purchasing decisions of their children's reading
material, they will prefer a higher-quality, news-oriented publication. We are
confident that the diversity of topics, combined with the "clean," high-quality
nature of the newspaper, and its focus on news information, will spark and
retain the interest of both parents and children.

Youthline USA has recently added regional inserts to its newspaper. The
regional inserts give local news and have two major benefits. First, they
attract the readers, giving them access to news that may affect them more
directly or that they may be more familiar with. Second, they open up the doors
to more advertisers on each regional level.

THE MAGAZINE:

Youthline USA's Fun and Feature Magazine is a monthly publication directed
at the same market. It contains a monthly theme that is supplemented with
appropriate and relevant news items, as well as entertainment materials that
make the topic more interesting and fun for readers. The magazine is important

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not only because it is another medium through which the Company reaches today's
youth, but also because it is perhaps the most attractive medium for advertisers
and corporate sponsors.

Each monthly magazine features one educational topic which is
explored in full detail. Colorful graphics, activity suggestions, relevant news
articles, book and movie reviews, and interviews are included to make the
magazine appealing for its audience. The magazine's durable format encourages
children to collect each issue and re-read the articles, which is particularly
appealing to advertisers and corporate sponsors.

YOUTHMALL:

The YouthMall section of the website is scheduled to open in September
2000. This on-line shopping center for kids and educators will offer appropriate
products along with a brief description. Kids will be able to use either real
money or e-money earned from contests and activities on the website to purchase
the items of their choice.

Because YouthMall will offer only age-appropriate items for its audience,
parents can safely allow their children to purchase products online. Educators
will be able to purchase hard-to-find, curriculum-based material.

RECENT ACQUISITIONS

Lesson Stop

Youthline USA, Inc. acquired Lesson Stop (HTTP://WWW.LESSONSTOP.ORG), a
web-site for K-12 teachers who need good ideas for classroom activities. Lesson
Stop has numerous educational features that enhance both the Youthline USA
newspaper and website. The site provides links to over 500 lesson plan sites on
the web, which gives teachers access to thousands of lesson plans.

Lesson Plan links are categorized by subject area and sub-topic, making it
easy for teachers to locate the lesson plans they need. Subject areas include
The Arts, Science, Math, and Language Arts. Grade level notations are made at
each link, so finding the right lesson plan is even easier.

INGENIUS

Ingenius was founded in 1994 as a partnership between Telecommunications
Incorporated (TCI) and Reuters New Media to provide high quality interactive
multimedia current events programming to the children's consumer and
institutional (education) markets.

Ingenius created several award winning programs for the K-12 educational
market including:

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What on Earth (WOE) - A weekly-published interactive current events
program with six new top topics discussed every week. Included with each topic
(news story) were hot links to certain vocabulary, video clips, audio clips,
photographs, links to Did You Know (more in-depth information on a
sub-category), and links to "gamelits" (mini games to reinforce the learning and
educational values of the news story). In addition to this, WOE included weekly
lesson plans for the teacher that were designed specifically for each individual
news story. Characters were used in many cases to guide the student and to be a
figurehead for the specific curriculum category that the news story was tied to.

Ask ANDIE - An interactive research and learning website that focuses on
curriculum based subject areas and topics as well as having a strong financial
services component.

MARKETING

THE WEBSITE:

In marketing the subscription portion of the website to schools, the
Company believes that the most effective method will be through a sales team
that will make direct contact with principals, superintendents, and Board of
Education officials. Educators will be presented with an extensive demo of the
capabilities and uniqueness of the website. Currently, the Company is
concentrating on nine major cities across America, and dependent on the success
of this initial step, it plans to expand its sales team to reach all cities in
the United States.

With this in mind The Company recently hired Mark Siegel to
be Vice President of Educational Sales. Mr. Siegel comes with
years of experience in reaching the educational market, and he is
well focused and highly energetic.

Another vehicle used by the Company to target its audience is to attend
technology and educational expositions to showcase its products.

THE NEWSPAPER:

In the first two years of its existence, YOUTHLINE USA tested a number of
different methods in order to determine which marketing strategies were most
effective. Advertising on radio and in magazines proved to be more effective
than advertising and inserts in newspapers. Advertising in library journals
proved to be extremely effective, as did direct mail to schools. As expected,
advertising during the holiday gift-giving season produced exciting results.
YOUTHLINE USA is easily marketed as the ideal gift - clean, educational, fun,
and ongoing.

YOUTHLINE USA plans to expand its marketing efforts. It will intensify its
marketing efforts, using the strategies that have already been proven to work
and branching out to new methods (TV, the Internet, direct mail to individuals,
mail-order catalogues). The Company also has hired salespeople and attends
appropriate conventions and expositions.

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ADVERTISERS, CORPORATE SPONSORS:

YOUTHLINE USA markets itself to corporate America as an established,
focused, growing publication which serves as an excellent all-encompassing
vehicle for companies to reach their target audience. Advertisers can use the
entire Youthline package - national newspaper, regional paper, magazine,
website. YOUTHLINE USA has already received advertisements from Loew's Theater,
Six Flags Great Adventure, Space Farm, Walmart, Broadway's The Sound of Music,
NJ Nets, Sesame Place and Radio Disney.

YOUTHLINE USA's sponsorship department will emphasize building long-term
relationships with corporate America. Large companies are expected to be drawn
to the rich educational and entertainment content that is available both in the
newspaper and on the website. In order to develop and sustain these
relationships, the Company has hired Melissa Coopersmith to be Vice President of
Marketing.

The Company has hired Beth Kallman to be Vice President of Advertising
Sales. She will concentrate on large national companies. In addition, the
Company has hired two regional salespeople -- one in New York and one in
Philadelphia -- as an initial step. Additional regions will be added as the
Company grows.

With the goal of increasing advertising revenue, the Company introduced
the regional inserts and the magazine. Regional inserts will attract smaller
local companies who are interested in reaching the regional market. The magazine
serves as a more attractive medium for advertisers, not only because it is more
colorful and attractive to the kids, but also because it is designed - in terms
of content and durability - to be read over and over again

INTELLECTUAL PROPERTY

The Company's ability to compete successfully and achieve future revenue
growth will depend, in part, on its ability to protect its proprietary
technology and operate without infringing the rights of others. The Company has
received a Notice of Allowance for its trademark YOUTHLINE USA(TM). In addition,
the Company owns various domestic and foreign trademarks relating to the assets
purchased in connection with the acquisition of Ingenius, including: Ingenius,
Who on Earth, What on Earth, Where on Earth, Ask A.N.D.I.E. and Adam Electron.

EMPLOYEES

As of December 31, 1999, the Company had a total of 39 employees. The
Company has 3 employees in corporate management; 10 employees in production,
including writers and graphic designers; 11 employees in marketing, including

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website advertising and corporate sponsorships; 6 employees in educational
sales, who market the web site to schools throughout the country; 5 employees in
business operation, which includes secretaries, accounting, and computer
maintenance; and 4 employees in circulation. In addition, the Company hires
freelance writers. The Company believes its future performance will depend in
large part on its ability to attract and retain highly skilled employees. None
of the Company's employees is represented by a labor union and the Company has
not experienced any work stoppages. The Company considers its employee relations
to be good.

RISK FACTORS

IN ADDITION TO OTHER INFORMATION IN THIS ANNUAL REPORT, THE FOLLOWING
IMPORTANT FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND
ITS BUSINESS BECAUSE SUCH FACTORS CURRENTLY HAVE A SIGNIFICANT IMPACT ON THE
COMPANY'S BUSINESS, PROSPECTS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

WE HAVE A RECENT HISTORY OF LOSSES. We have incurred net losses of
$323,835 and $4,787,000 ($3,403,768 of which was stock compensation expenses)
for the years ended December 31, 1998 and 1999, respectively. We expect that
losses will increase and continue until such time, if ever, as we can generate
sufficient revenue through website and newspaper subscribers and/or obtain
sufficient advertisements and sponsorships. We will need to generate a
substantial increase in revenues to become profitable. In addition, we had an
accumulated deficit of $5,287,238 at December 31, 1999.

WE ARE IN OUR EARLY STAGES OF DEVELOPMENT. We have generated limited
revenues to date. While we are able to finance certain of our current operations
from revenues, we will require additional financing to increase our marketing
campaign, to improve and update our web-site and to develop new products. Our
operations are subject to all of the risks inherent in the commercialization of
new products. The likelihood of our success must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered when developing new products, particularly those related to the
Internet.

WE WILL REQUIRE ADDITIONAL FINANCING. We believe that the current cash on
hand together with cash flow from operations will be adequate to fund our
operations for at least six (6) months. There can be no assurance, however, that
we will not require additional financing prior to or after such time. There can
be no assurance that any additional financing will be available to us on
acceptable terms, or at all. If adequate funds are not available, we may be
required to delay, scale back, or eliminate some of our marketing campaign or
obtain funds through arrangement with partners or others that may require us to
relinquish rights to certain of our products or other assets. Accordingly, the
inability to obtain such financing could have a material adverse effect on our
business, financial condition and results of operations.

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WE ARE DEPENDENT UPON KEY EMPLOYEES AND THE RECRUITMENT OF ADDITIONAL
PERSONNEL. We are dependent upon the efforts of and abilities of Saki Dodelson,
Susan Gertler and on other members of our staff. To date, we have been able to
attract and retain the personnel necessary for our operations. However, there
can be no assurance that we will be able to do so in the future. If we are
unable to attract and retain personnel with necessary skills when needed, our
business and expansion plans could be adversely effected.

OUR LIMITED SALES AND MARKETING EXPERIENCE MAY ADVERSELY AFFECT OUR
BUSINESS. We intend to market and sell our products in the United States,
through a direct sales force. Establishing significant marketing and sales
capability will require significant resources. There can be no assurance that we
will be able to recruit and retain skilled sales management, or direct
salespersons, or that our sales effort will be successful.

COMPETITION AND TECHNOLOGICAL CHANGES COULD ADVERSELY AFFECT OUR BUSINESS.
Our success depends upon establishing and maintaining a competitive position in
areas of focus. We compete with, and will compete with numerous companies, many
of which have significantly larger operations and greater financial, marketing,
human and other resources than us such as The Weekly Reader, Scholastic News and
Times for Kids. Accordingly, such competitors may have substantial competitive
advantages over us. In addition, we plan to develop or acquire additional
products in order to expand our product portfolio. No assurance can be given
that we will successfully compete in any market in which we conduct or may
conduct operations.

THE LIMITED PRIOR PUBLIC MARKET AND TRADING MARKET MAY CAUSE POSSIBLE
VOLATILITY IN OUR STOCK PRICE. There has only been a limited public market for
our securities and there can be no assurance that an active trading market in
our securities will be maintained. In addition, the stock market in recent years
has experienced extreme price and volume fluctuations that have particularly
affected the market prices of many smaller companies. The trading price of our
common stock is expected to be subject to significant fluctuations in response
to variations in quarterly operating results, changes in analysts' earnings
estimates, announcements of innovations by us or our competitors, general
conditions in the industry in which we operate and other factors. These
fluctuation, as well as general economic and market conditions, may have a
material or adverse effect on the market price of our common stock.

PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY
OF OUR SECURITIES. The Securities and Exchange Commission (the "Commission") has
adopted regulations which generally define a "penny stock" to be any equity
security that has a market price (as defined) of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. As a
result, our Common Stock is subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with their spouse). For transactions covered by these rules, the

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broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the Commission relating
to the penny stock market. The broker-dealer must also disclose the commission
payable to both the broker-dealer and the registered representative, current
quotations for the securities and, if the broker-dealer is the sole market
maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our securities
and may affect the ability of purchasers in this Offering to sell our securities
in the secondary market and the price at which such purchasers can sell any such
securities.

ANTI-TAKEOVER PROVISIONS MAY ADVERSELY AFFECT THE VALUE OF OUR OUTSTANDING
SECURITIES. Pursuant to our Certificate of Incorporation, the Board of Directors
may issue up to 5,000,000 shares of Preferred Stock in the future with such
preferences, limitations and relative rights as the Board may determine without
stockholder approval. The rights of the holders of Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of delaying or preventing a change in
control of the Company without further action by the stockholders. We have no
present plans to issue any shares of Preferred Stock. In addition, we are
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which will prohibit us from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the persons became an interested
stockholder, unless the business combination is approved in a prescribed manner.
The application of Section 203 also could have the effect of delaying or
preventing a change of control of our company.

ADDITIONAL AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK AVAILABLE
FOR ISSUANCE MAY ADVERSELY AFFECT THE MARKET. We are authorized to issue
50,000,000 shares of our Common Stock. As of December 31, 1999 there were
10,071,665 shares of our Common Stock issued and outstanding. However, the total
number of shares of Common Stock issued and outstanding does not include the
exercise of up to 450,000 shares of Common Stock issuable upon exercise of the
warrants at $1.00 per share, 590,000 shares of Common Stock issuable upon
exercise of warrants at $3.00 per share, 1,050,000 shares of Common Stock
issuable upon exercise of warrants at $5.00 per share, 350,000 shares of Common
Stock issuable upon exercise of warrants at $7.00 per share, 50,000 shares of

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Common Stock issuable upon exercise of warrants at $.10 per share, 350,000
shares of Common Stock issuable upon exercise of the warrants at $10.00 per
share and 4,000,000 shares of Common Stock issuable upon exercise of options
that may be granted pursuant to our Incentive Stock Option Plan. After reserving
a total of 6,840,00 shares of Common Stock for issuance upon the exercise of all
options and warrants, we will have at least 33,088,335 shares of authorized but
unissued Common Stock available for issuance without further shareholder
approval. As a result, any issuance of additional shares of Common Stock may
cause our current shareholders to suffer significant dilution which may
adversely affect the market.

In addition to the above-referenced shares of Common Stock which may be
issued without shareholder approval, we have 5,000,000 shares of authorized
preferred stock, the terms of which may be fixed by the Board of Directors. We
presently have no issued and outstanding shares of preferred stock and while we
have no present plans to issue any shares of preferred stock, the Board of
Directors has the authority, without shareholder approval, to create and issue
one or more series of such preferred stock and to determine the voting, dividend
and other rights of holders of such preferred stock. The issuance of any of such
series of preferred stock could have an adverse effect on the holders of Common
Stock.

SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET. As of
December 31, 1999, the Company had 10,071,665 shares of its Common Stock issued
and outstanding, 5,663,465 of which are "restricted securities". Rule 144
provides, in essence, that a person holding "restricted securities" for a period
of one year may sell only an amount every three months equal to the greater of
(a) one percent of a company's issued and outstanding shares, or (b) the average
weekly volume of sales during the four calendar weeks preceding the sale. The
amount of "restricted securities" which a person who is not an affiliate of our
company sell is not so limited, since non-affiliates may sell without volume
limitation their shares held for two years if there is adequate current public
information available concerning our company. In such an event, "restricted
securities" would be eligible for sale to the public at an earlier date. The
sale in the public market of such shares of Common Stock may adversely affect
prevailing market prices of our Common Stock.

THE EXERCISE OF OUTSTANDING OPTIONS AND WARRANTS MAY ADVERSELY AFFECT THE
MARKET FOR OUR COMMON STOCK. As of December 31, 1999, there were outstanding
stock options and warrants to purchase an aggregate of 50,000 shares of Common
Stock at an exercise price of $.10 per share, an additional 450,000 shares of
Common Stock at an exercise price of $1.00 per share, an additional 590,000
shares of Common Stock at an exercise price of $3.00 per share, an additional
1,050,000 shares of Common Stock at an exercise price of $5.00 per share, an
additional 350,000 shares of Common Stock at an exercise price of $7.00 per
share and an additional 350,000 shares of Common Stock at an exercise price of
$10.00 per share. In addition, we have reserved 4,000,000 shares of our Common
Stock for issuance pursuant to our Incentive Stock Option Plan. None of such
options or warrants are available for public resale and such shares would be
subject to Rule 144 of the Act upon issuance thereof. The exercise of such
outstanding options and warrants will dilute the percentage ownership of our
stockholders, and any sales in the public market of shares of Common Stock

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underlying such securities may adversely affect prevailing market prices for the
Common Stock. Moreover, the terms upon which we will be able to obtain
additional equity capital may be adversely affected since the holders of such
outstanding securities can be expected to exercise their respective rights
therein at a time when we would, in all likelihood, be able to obtain any needed
capital on terms more favorable to the Company than those provided in such
securities.

LIMITATION ON DIRECTOR LIABILITY. As permitted by Delaware law, our
Certificate of Incorporation limits the liability of our directors for monetary
damages for breach of a director's fiduciary duty except for liability in
certain instances. As a result of our charter provision and Delaware law,
stockholders may have limited rights to recover against directors for breach of
fiduciary duty.

FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE. This Registration
Statement contains forward-looking statements and information that are based on
management's beliefs as well as assumptions made by, and information currently
available to, management. When used in this Registration Statement (including
Exhibits), words such as "anticipate," "believe," "estimate," "expect," and,
depending on the context, "will" and similar expressions, are intended to
identify forward-looking statements. Such statements reflect our current views
with respect to future events and are subject to certain risks, uncertainties
and assumptions, including the specific risk factors described above. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, believed, estimated or expected. We do not intend to update these
forward-looking statements and information.

ITEM 2. PROPERTIES.

The Company leases (from an unaffiliated party) approximately 2,280 square
feet at 4581 US9, Howell, NJ 07731, which serves as the Company's executive
offices. The annual rental is $42,180. The lease expires on October 31, 2004.

ITEM 3. LEGAL PROCEEDINGS

The Company is not a party to any litigation or governmental proceedings
that, management believes, would result in judgments or fines that would have a
material adverse effect on the Company.

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

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Prior to August 1999, the Company's shares of Common Stock were quoted on
the OTC Bulletin Board under the symbol "UMHCD". Since August 1999 the Common
Stock has been trading under the symbol "YLNE".

The following table sets forth the range of high and low closing sales
prices for the Common Stock, in the 3rd and 4th Quarter of 1999 and the first
quarter of 2000, as reported by the OTC Bulletin Board. The quotes represent
inter-dealer prices without adjustment or mark-ups, mark-downs or commissions
and may not necessarily represent actual transactions. The trading volume of the
Company's securities fluctuates and may be extremely limited (or non-existent)
during certain periods. As a result, the liquidity of an investment in the
Company's securities may be adversely affected. For several years prior to
August 1999, the Company's Common Stock did not trade.

COMMON STOCK

HIGH LOW

1999

Quarter ended
September 30, 1999* $10-3/8 $ 3

Quarter ended
December 31, 1999 $ 10 $ 3

2000

Quarter ended
March 31, 2000 $ 15 $8 1/2

* Limited trading on the OTC Bulletin Board commenced in August 1999.

On March 31, 2000, the closing sales price as reported by the OTC Bulletin
Board was $106/32 for each share of Common Stock. As of March 31, 2000, there
were 10,071,665 shares of Common Stock outstanding, held of record by
approximately 310 record holders.

DIVIDEND POLICY

It is the policy of the Board of Directors to retain earnings for use in
the maintenance and expansion of the Company's business. The Company has not

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declared any cash dividends to the shareholders of its capital stock and does
not intend to declare such dividends in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW

In August 1999, the Company acquired all of the outstanding capital stock
of S&S Plus, Inc., a wholly owned subsidiary of the Company which operated the
publication of Youthline USA, in exchange for the issuance of 5,500,000 shares
of its common stock, representing a majority of the total issued and outstanding
capital stock of the Company. On such date, the previous management's directors
and officers resigned and were replaced with the current officers and directors.

This exchange has been accounted for as a reverse acquisition, under the
purchase method of accounting, since the former owners of S & S Plus, Inc. owned
a majority of the outstanding stock of Youthline USA, Inc after the acquisition.
Accordingly, the combination of the two companies is recorded as
recapitalization of shareholders' equity of S & S Plus, Inc, pursuant to which S
& S Plus, Inc. is treated as the continuing entity for accounting purposes and
the historical financial statements presented are those of S & S Plus, Inc.

YouthLine USA, Inc. (the "Company") was incorporated on July 27, 1999
pursuant to the laws of the State of Delaware as the successor to Ult-I-Med
Health Centers, Inc., a Utah corporation ("Ult-I-Med"), which was incorporated
in 1983 under the laws of the State of Utah (originally under the name Picadilly
Technology, Inc.). The Company was organized to effectuate a rein-corporation of
Ult-I-Med with and into the Company on August 16, 1999.

Ult-I-Med was originally organized to engage in the mining of
metalliferous chemicals. In 1988, Ult-I-Med ceased such activities and began
engaging in the business of owning and operating camping and recreation
facilities. In 1991, Ult-I-Med ceased such activities and began engaging in the
business of owning and operating supervised primary care, health and
rehabilitation centers. In January 1996, Ult-I-Med filed a Chapter 11 bankruptcy
petition. Ult-I-Med liquidated all of its assets and its plan of reorganization
was filed with the court in February 1998. All of Ult-I-Med debts were paid
subsequent to June 30, 1999, and the court entered a final decree on September
24, 1999.

The Company, through its wholly owned subsidiary, S & S Plus, Inc.,
publishes YOUTHLINE USA, a weekly newspaper written and designed for children
ages 8 through 13. In every respect, it is similar to an adult newspaper, except
that it is written at the children's level and it filters out news that is not
age appropriate. It is designed to attract and engage the attention of children

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within this age range. The Company generates revenue through the sale of
subscriptions, advertisement space and corporate sponsorships. Subscriptions can
either be bulk subscriptions ordered by schools, or as individual subscriptions
for children to read at home.

Paid subscriptions have increased dramatically over the previous year, and
the Company has spent from May to December to set up effective sales and
marketing departments to better reach schools and potential advertisers. Also,
we currently send 550,000 free (requested) subscriptions to schools. We believe
that this will attract advertisers and corporate sponsors. In addition, the
Company has simultaneously been working on completing and marketing its website
for schools. Management believes that the sale of website subscriptions to
schools will be a significant source of revenue.

COMPONENTS

Through December 31, 1999 there were two sources of revenue:

1) Sale of newspaper subscriptions

An individual subscription costs $30.00 per year. Bulk subscriptions to
schools cost $9.00 per subscription for 25 or more, and $7.00 per
subscription for 50 or more.

2) Advertisements

The cost for a full-page ad was $1,000

The bulk of revenue received until September, 1999 was from the sale of
newspaper subscriptions. The increase in net sales from 1998 to 1999 was
due almost totally to the increase in paid subscriptions. Beginning
December 31, 1999 requested (non-paid) circulation was increased to
550,000, which management believes will significantly increase revenue from
advertisements. In addition, management intends to sell subscriptions to
its website, the first phase of which was completed on January 15, 2000 and
the second phase is due to be completed on September 1, 2000.

LIQUIDITY AND CAPITAL RESOUCES.

Management anticipates that the continued increase in subscribers will
increase advertising revenues and any future additional proceeds from financings
will result in improved liquidity during the coming year. The improved liquidity
reflected in the December 31, 1999 financial statements would be needed to
finance the continued operations. The Company does not have any plans that would
materially affect its current demands and to the best of management's belief
there are no events that would result in major increase or decreases in the
Company's liquidity other than in the normal course of its operations. To date
the Company has funded its operations and expansion through bridge financing,

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capital contribution and the sale of convertible promissory notes. The Company's
potential sources of liquidity will be additional financings through the sale of
convertible notes and credit facilitates with banks. At December 31, 1999, the
Company's current assets consisted of $572,720 of cash, $91,542 of receivables
and prepaid expenses of $20,753. At December 31, 1999 the current liabilities
exceeded its currents assets by $1,125,103. Current debt consisted of $500,000
bridge financing which was paid off in January 2000 and two $500,000 convertible
promissory notes due December 14, 2000 and December 21, 2000. Management
anticipates that it will satisfy its liquidity and capital requirements in the
coming year through additional capital and funds generated by operations.

BREAK EVEN

The projected expenses for the year ending December 31, 2000 are
anticipated to be $534,000 monthly including the cost of production, advertising
and marketing. Based on current projected operating expenses, the Company must
have gross monthly revenues of $534,000 to breakeven. It is anticipated that by
September 2000, sales will be approximately $600,000 monthly.

CUSTOMER RETENTION

From inception through December 31, 1999, we have had a favorable response
from subscribers to our newspaper. Our customer retention experience has been
91% for 1998 and 93% for 1999, respectively.

Year Ended December 31, 1999 compared to Year Ended December 31, 1998.

RESULTS OF OPERATIONS

In 1999 and 1998, the Company's main source of revenues were from the sale
of newspaper subscriptions. Total revenues from subscriptions were $168,967 and
$14,707 for 1999 and 1998, respectively. The Company incurred net operating
losses of $4,787,000 in 1999, compared to $322,351 in 1998. The losses incurred
in 1999 included expenses from the issuance of the Company's' common stock and
warrants recorded at the fair market value at the time of issuance. The
aggregate amount expensed in 1999 was $3,403,768 from common stock and warrants
issued for services. The Company incurred substantial costs for printing,
reproduction, mailing and design of the newspaper during these periods.
Additionally, the Company incurred substantial costs in marketing, advertising
and payroll expense during the initial start up of operations.

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Revenues.

During the year ended December 31, 1999, sales revenues increased
$154,260, (1,048%) to $168,907 from $14,707 for the corresponding period in
1998. The increase was attributable to increased subscribers and advertising
revenues.

Cost of Goods Sold.

These costs include, but are not limited to printing and distribution
costs. Until September 1999 we printed 20,000 copies each week. The printing
costs per newspaper are very high when printing so few (as much as $.10 per
newspaper). However, now that we print over 550,000 newspapers per week, the
cost per newspaper has been lowered to $.04 per newspaper. We therefore expect
to see a significant profit on every paid subscription. Costs of goods sold also
include mailing and shipping costs. During 1999 costs of goods sold was
$321,320, an increase of $158,096 or 92% from 1998. This increase was
attributable to an increase in paid and unpaid subscriptions.

Net Losses and Unusual Charges.

The Company incurred a net loss from operations of $4,787,000, or $.51 per
share as compared to a loss of $322,351, or $.06 per share in the comparable
period in 1998. During 1999, the Company recorded an aggregate of $3,403,768 of
charges to the income statement. Theses charges consisted of $1,352,868 in
common stock issued for services and $1,800,900 of services recorded at the fair
market value of warrants issued to employees and consultants and $250,000
representing the intrinsic value of the conversion feature of the convertible
promissory notes. The fair market value of the warrants were computed using the
Black-Scholes Option Pricing Model at the time the warrants were granted. See
Note 12 to the financial statements.

Operating Expenses.

Operating expenses during 1999 increased as follows: payroll costs
increased $406,943 to $455,324 (an increase of 411%) from $48,381 for the
corresponding period in 1998. The increase was attributable to a substantial
increase in the number of employees hired as support staff. Professional fees
increased $143,615 to $158,060 (an increase of 994%) from $14,445 for the
corresponding period in 1998. The increased professional fees were mainly legal
and accounting fees relating to the reorganization of the Company. Selling
expenses increased $281,666 to $333,580 (an increase of 543%) from $51,914 for
the corresponding period in 1998. General & administrative costs increased
$137,181 from $25,047 (an increase of 548%) from $25,048 for the corresponding
period in 1998. The increase in selling expenses and general and administrative
expenses is attributable to the continued investment in the Company's aggressive
sales and marketing, finance and other general and administrative infrastructure
necessary to support the Company's business development and expansion.

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Interest Expense.

Interest expense increased $1,339,734 to $1,362,952 (including non-cash
adjustments of $1,275,500) for the year ended December 31, 1999 from $23,218 for
the corresponding period ending December 31, 1998. The increase is primarily
associated with the increased borrowing used to fund the operations of the
Company as well as its expansion and the non-cash adjustments.

Interest Income.

Interest income was $3,786 in 1999 compared to $0 in 1998. This increase
was attributable to higher average balances of invested cash and cash
equivalents.

During the 1999 period, the Company increased its (non-paid) circulation
to 550,000 subscriptions, which should significantly increase its revenues in
the coming year. The Company, however, will continue to incur expenses
attributable to the growth of its business and therefore, management cannot
estimate the amount of losses it may incur in the future.

Income Taxes.

The Company incurred substantial losses form its inception through the
current period. From inception to August 16, 1999, the Company operated as a
Sub-Chapter S corporation. Accordingly, losses aggregating $1,300,493 generated
during this period flowed through to the individual shareholders. Subsequent to
the reorganization, losses aggregating $3,986,745 incurred by the Company will
be utilized against future operating profits. However, as a result of the net
operating losses sustained by the Company, a provision for corporate taxes was
not required and deferred taxes will be recognized when the Company achieves
profitability.

Year Ended December 31, 1998 compared to Year Ended December 31, 1997.

RESULTS OF OPERATIONS

Revenues.

Revenues for the calendar year ended December 31, 1998 were $14,707, an
increase of $4,604 or 46% from the prior year. The increase was attributable to
increased paid subscriptions from the prior year.

Costs of Goods Sold.

During 1998 costs of goods sold was $163,224, an increase of $95,247 or
140% from 1997. This increase was attributable to an increase in paid and unpaid
subscriptions.

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Operating Expenses.

Operating expenses during 1998 increased as follows: payroll costs
increased $48,381 compared to the corresponding period in 1997. The Company
incurred no payroll expense during its inception period in 1997. The increase
was mainly attributable to the hiring of several support staff. Professional
fees increased. Selling expenses and general and administrative decreased
$21,958 to $91,706 (a decrease of 19%) from $113,664 for the corresponding
period in 1997.

Interest Expense.

Interest expense increased $22,955 to $23,218 for the year ended December
31, 1998 from $263 for the corresponding period ending December 31, 1997. The
increase is primarily associated with increased borrowing used to fund the
operations of the Company as well as its expansion

YEAR 2000

Many computer software systems in use today cannot properly process
date-related information beginning on and continuing after January 1,2000. This
will not pose a problem for the Company since its accounting programs are all
Y2K compliant. In addition, the Company has inquired of its commercial banks and
other service providers so to determine if they will be prepared for the Year
2000. While all have indicated they are taking the necessary steps to be in
compliance, there can be no assurance that all exposure will be eliminated. It
is anticipated that the Company will incur no material expenses related to the
Year 2000 issue.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See financial statements following Item 13 of this Annual Report on Form
10-KSB.

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

None.

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PART III

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

The names and ages of the directors and executive officers of the Company
are set forth below. All Directors are elected annually by the stockholders to
serve until the next annual meeting of the stockholders and until their
successors are duly elected and qualified. Officers are elected annually by the
Board of Directors to service at the pleasure of the Board.

NAME AGE POSITION(S) WITH THE COMPANY

Jacob Y. "Rocky" Stefansky 33 Chairman of the Board
Saki Dodelson 36 President, Treasurer and Director
Susan Gertler, Ph.D. 36 Vice President, Secretary and Director
Emanuel Yarmish 50 Director
David Stefansky 28 Director
Asher Low 39 Director

BACKGROUND OF EXECUTIVE OFFICERS AND DIRECTORS

Jacob Y. "Rocky" Stefansky, has been a Director of the Company since June 1999.
From November 1991 to present, Mr. Stefansky has been the President and Director
of KID International, Inc., an international trading company. From 1997 until
present, Mr. Stefansky has been the President and director of Portugal
Investment Group, Inc., a privately held investment fund involved with
undervalued and start-up companies. In 1999 Mr. Stefansky became the President
and a director of Greenwood Capital Partners, Inc., a privately held investment
fund involved with Internet and media companies.

Saki Dodelson, has been the President, Treasurer and Director of the Company
since August 1999 and has been the President, Treasurer and Director of the
Company's subsidiary S&S Plus, Inc., since inception. Ms. Dodelson was the
co-founder of the Youthline USA newspaper. Ms Dodelson has fifteen years
experience in business and finance, computer science, and marketing. From 1987
through May 1999, Ms. Dodelson was a manager of business and finance at AT&T.

While at AT&T, Ms. Dodelson was contacted by the Israeli government and asked to
redesign, improve and market acclaimed Israeli 2000 project--the Israeli
Knesset's website dedicated to the memory of former Prime Minister Yitzhak
Rabin. She has been credited with turning a cumbersome government project into
an efficient, profitable project.

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From 1993 to present, Ms. Dodelson has been the President of Harton Financial, a
currency trading company. She has a BS in computer science and a BA in
education. Ms. Dodelson is the sister-in-law of Ms. Gertler.

Susan Gertler Ph.D., has been the Vice President, Secretary and a Director of
the Company since August 1999 and has been Vice President, Secretary and
Director of this Company's subsidiary S&S Plus, Inc., since inception. Dr.
Gertler was the co-founder, publisher, and executive editor, and created the
YOUTHLINE USA concept in 1996. As publisher and executive editor, she manages
content, lay-out, and presentation, coordinating development of the newspaper
and web site to guarantee a coherent presentation of all aspects of YOUTHLINE
USA's suite of products and services. Dr. Gertler is also responsible for
contacts with all independent contributors, freelance writers, and external
publishers as well as production of print and website design.

From September 1994 to August 1995, Dr. Gertler worked as a specialist in
testing and evaluation of intellectual and psychological disorders at a Veterans
Administration Hospital. Dr. Gertler conducted in- and out-patient psychotherapy
for individuals, groups, and families. From October 1992 to August 1994, Dr.
Gertler worked as a researcher in a long-term study. Dr. Gertler designed and
developed systems in the area of health psychology, including an on-line
application for quantitative and analysis of mental health status. From
September 1991 to May 1993, Dr. Gertler worked at the Bergen Regional Counseling
Center, a community mental health system in a disadvantaged area. She conducted
individual and family therapy, maintaining contact with schools to coordinate
and individualize treatment for optimal social and development progress. From
September 1990 to May 1991, Dr. Gertler worked at the Children's Village
residential home for aggressive, adolescent boys, Dr. Gertler performed initial
assessments and ongoing therapy for children and families, developing and
implementing programs for easing the stress of major life-cycle transitions.

As a result of her experience in the fields of psychology and education, Dr.
Gertler is comfortable working with teachers and librarians, parents, and
children, all of which are the primary market segments for the Company.

Emanuel Yarmish, has been a Director of the Company since June 1999. Form 1982
to present, Mr. Yarmish has been the President of Nicole Holdings, Inc., a
privately held real estate investment and management company.

David Stefansky, has been a Director of the Company since December 1999. From
May 1999 to present Mr. Stefansky has been the managing director of the private
equity group at Robb Peck McCooey Institutional Services, a division of Robb
Peck McCooey Clearing Corp., where he specializes in advising and financing
emerging growth companies. From September 1997 to May 1999 Mr. Stefansky was
employed in a similar capacity at Trautman Kramer & Co., where he was active in
advising and financing emerging growth companies. From May 1994 through
September 1997, Mr. Stefansky was employed as an account executive at various
securities brokerage firms. Mr. Stefansky is the brother of Jacob Y. "Rocky"
Stefansky.

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Asher Low, has been a Director of the Company since December 1999. From January
1994 to present Mr. Low has been a Director of Arisal Estates Ltd., a commercial
real estate holding company. Since 1997, Mr. Low has acted as an advisor to
various foreign investment firms.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

To the Company's knowledge, based solely upon its review of the copies of
such reports furnished to the Company during the year ended December 31, 1999,
all Section 16(a) filing requirements applicable to its officers and directors
and greater than ten percent beneficial owners were satisfied.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

No executive officer received compensation in excess of $100,000 in fiscal
years 1998 and 1999. Each director of the Company is entitled to receive
reasonable out-of-pocket expenses incurred in attending meetings of the Board of
Directors of the Company but are not compensated for services provided in their
capacities as directors.

EMPLOYMENT AGREEMENTS

The Company has entered into five-year employment agreements with each of
Saki Dodelson (President) and Susan Gertler (Vice President and Secretary). The
employment agreements provide for annual base salaries of $115,000 each. The
employment agreements provide for discretionary bonuses to be determined in the
sole discretion of the Board of Directors and contain covenants not to compete
with the Company following termination of employment.

STOCK OPTION PLANS AND AGREEMENTS

Incentive Option Plan - In January 2000, the Directors of the Company
adopted and the stockholders of the Company approved the adoption of the
Company's 2000 Incentive Stock Option Plan ("Incentive Option Plan"). The

26
<PAGE>

purpose of the Incentive Option Plan is to enable the Company to encourage key
employees and Directors to contribute to the success of the Company by granting
such employees and Directors incentive stock options ("ISOs").

The Incentive Option Plan will be administered by the Board of Directors
or a committee appointed by the Board of Directors ("Committee") which will
determine, in its discretion, among other things, the recipients of grants,
whether a grant will consist of ISOs or a combination thereof, and the number of
shares to be subject to such options.

The Incentive Option Plan provides for the granting of ISOs to purchase
Common Stock at an exercise price to be determined by the Board or the Committee
not less than the fair market value of the Common Stock on the date the option
is granted.

The total number of shares with respect to which options may be granted
under the Incentive Option Plan is 4,000,000. ISOs may not be granted to an
individual to the extent that in the calendar year in which such ISOs first
become exercisable the shares subject to such ISOs have a fair market value on
the date of grant in excess of $100,000. No option may be granted under the
Incentive Option Plan after January 2010 and no option may be outstanding for
more than ten years after its grant. Additionally, no option can be granted for
more than five (5) years to a stockholder owning 10% or more of the Company's
outstanding Common Stock and such options must have an exercise price of not
less than 110% of the fair market value on the date of grant.

Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash or in shares of Common Stock,
or in a combination of both. The Company may lend to the holder of an option
funds sufficient to pay the exercise price, subject to certain limitations.

The Incentive Option Plan may be terminated or amended at any time by the
Board of Directors, except that, without stockholder approval, the Incentive
Option Plan may not be amended to increase the number of shares subject to the
Incentive Option Plan, change the class of persons eligible to receive options
under the Incentive Option Plan or materially increase the benefits of
participants.

No options under the Incentive Option Plan were outstanding as of December
31, 1999.

27
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of December 31, 1999 with
respect to the beneficial ownership of the outstanding shares of the Company's
Common Stock (10,071,665 as of such date) by (i) any holder known to the Company
owning more than five percent (5%) of the outstanding shares; (ii) the Company's
officers and directors; and (iii) the directors and officers of the Company as a
group:

Number of Shares of
Name of Beneficial Owner* Common Stock (1) Percentage (%) of Ownership
- ------------------------- ------------------- ---------------------------

Greenwood Capital Partners, Inc.(2) 4,900,000 48.65%
Jacob Y. "Rocky" Stefansky(2) 6,100,000 54.12%
Emanuel Yarmish(3) 125,000 1.24
Saki Dodelson(4) 625,000 6.01%
Susan Gertler(5) 625,000 6.01%
David Stefansky(6) 360,000 3.57%
Asher Low(7) 25,000 **
All Officers and Directors 7,350,000 61.65%
as a group (6 persons)(8)

* Unless otherwise indicated, the address of all persons listed in this
section is c/o Youthline USA, Inc., 4581 US9, Howell, NJ 07731.

** Less than 1%.

(1) Beneficially ownership as reported in the table above has been determined in
accordance with Instruction (4) to Item 403 of Regulation S-B of the
Securities Exchange Act.

(2) Includes 4,900,000 shares owned by Greenwood Capital Partners, Inc. Mr.
Stefansky is the President and principal stockholder of Greenwood. Includes
300,000 warrants exercisable at $3.00 per share, 300,000 warrants
exercisable at $5.00 per share, 300,000 warrants exercisable at $7.00 per
share and 300,000 warrants exercisable at $10.00 per share. Such warrants
expire on December 31, 2004.

(3) Represents his indirect minority ownership interest through Greenwood
Capital.

(4) Includes 225,000 warrants exercisable at $1.00 per share, 25,000 warrants
exercisable at $3.00 per share, 25,000 warrants exercisable at $5.00 per
share, 25,000 warrants exercisable at $7.00 per share and 25,000 warrants
exercisable at $10.00 per share. Such warrants expire on December 31, 2004.

(5) Includes 225,000 warrants exercisable at $1.00 per share, 25,000 warrants
exercisable at $3.00 per share, 25,000 warrants exercisable at $5.00 per
share, 25,000 warrants exercisable at $7.00 per share and 25,000 warrants
exercisable at $10.00 per share. Such warrants expire on December 31, 2004.

(6) Represent his indirect minority ownership interest through Greenwood
Capital.

(7) Represent his indirect minority ownership interest through Greenwood
Capital.

(8) Includes 1,200,000 warrants owned by Mr. Stefansky and 325,000 warrants
owned by each of Ms. Dodelson and Ms. Gertler. See Notes 2, 4 and 5.

28
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

To the best of management's knowledge, other than as set forth below,
there were no material transactions, or series of similar transactions, or any
currently proposed transactions, or series of similar transactions, to which the
Company was or is to be a party, in which the amount involved exceeds $60,000,
and in which any director or executive officer, or any security holder who is
known by the Company to own of record or beneficially more than 5% of any class
of the Company's common stock, or any member of the immediate family of any of
the foregoing persons, has an interest.

In February 1998 each of Saki Dodelson and Susan Gertler, the Company's
President and Secretary, respectively, loaned the Company's subsidiary, S&S
Plus, Inc., $125,000 ($250,000 in the aggregate). The notes bear interest at 9%
per annum. Interest payments only are made until the gross annual sales of the
subsidiary reach $1 million, at which time the subsidiary will begin to repay
$15,000 of principal until the notes are paid in full.

In March 1999, Robert Dodelson, the father-in-law of Saki Dodelson, loaned
the Company's subsidiary, S&S Plus, Inc., $35,000. The loan was paid in full in
December 1999.

The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
stockholder or court approval is required to effectuate indemnification.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by an officer, director or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such officer, director or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.

Transactions between the Company and its officers, directors, employees
and affiliates will be on terms no less favorable to the Company than can be
obtained from unaffiliated parties. Any such transactions will be subject to the
approval of a majority of the disinterested members of the Board of Directors.

29
<PAGE>

PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(A)(1) FINANCIAL STATEMENTS.

The following financial statements are included in Part II, Item 7:

Index to Financial Statements F-1

Report of Independent Certified Public Accountants F-2

Consolidated Balance Sheets F-3 - F-4

Consolidated Statements of Operations F-5

Consolidated Statements of Stockholders' Equity F-6

Consolidated Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-8 - F-17

Report of Independent Certified Public Accountants F-18

Statement of Expenses F-19

Statement of Stockholder's Equity (Deficit) F-20

Statement of Cash Flow F-21

Notes to the Financial Statements F-22 - F-23

(A) (2) EXHIBITS

2.1 Certificate of Incorporation of the Company*
2.2 Certificate of Merger (Delaware)*
2.3 Articles of Merger (Utah)*
2.4 Plan of Merger*
2.5 By-Laws of the Company*
3.1 Specimen Certificate for shares of Common Stock*
6.1 Employment Agreement between the Company and Saki Dodelson.*
6.2 Employment Agreement between the Company and Susan Gertler.*
10.1 Consent of Michael C. Finkelstein & Co., Independent Certified Public
Accountants.
27 Financial Data Schedule

30
<PAGE>

* Incorporated by Reference to the Company's Registration
Statement on Form 10-SB, No. 0-28725.

(b) REPORTS ON FORM 8-K

The Company did not file any reports on Form 8-K during the fourth
quarter of fiscal 1999.

31
<PAGE>

Table of Contents
Page

Independent Auditor's Report . . . . . . . . . . . . . . . . . F-2

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . F-3 - F-4

Consolidated Statements of Operations . . . . . . . . . . . . . F-5

Consolidated Statements of Stockholders' Equity . . . . . . . . F-6

Consolidated Statements of Cash Flows . . . . . . . . . . . . . F-7

Notes to the Consolidated Financial Statements . . . . . . . . F-8 - F-17

Independent Auditors' Report . . . . . . . . . . . . . . . . . F-18

Statement of Expenses . . . . . . . . . . . . . . . . . . . . . F-19

Statement of Stockholders' Equity (Deficit) . . . . . . . . . . F-20

Statements of Cash Flows . . . . . . . . . . . . . . . . . . . F-21

Notes to the Financial Statements . . . . . . . . . . . . . . . F-22 - F-23

<PAGE>

Independent Auditors' Report

To the Board of Directors and Shareholders YouthLine USA, Inc.

We have audited the consolidated balance sheet of YouthLine USA, Inc. (the
"Company") as of December 31, 1999 and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1999 and 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

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

As discussed in Note 7, effective January 1996, the Company adopted a new basis
of accounting, whereby all remaining assets and liabilities were adjusted to
their estimated fair values upon confirmation under chapter 11 by the United
States Bankruptcy Court for the Northern District of Texas. The reorganization
plan under chapter 11 was consummated on September 24, 1999. Accordingly, the
financial statements for periods subsequent to the reorganization are not
comparable to the financial statements presented for prior periods.

Michael C. Finkelstein & Co.

Morganville, New Jersey
Certified Public Accountant
February 22, 2000

F-2

<PAGE>

YOUTHLINE USA, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999

ASSETS
CURRENT ASSETS:
Cash $ 572,720
Accounts Receivable 91,542
Prepaid Expenses 20,753
-------------
TOTAL CURRENT ASSETS 685,015
-------------

FIXED ASSETS
Office equipment and software (net of
accumulated depreciation of $35,071) 107,795
-------------
OTHER ASSETS
Organization costs (net of
accumulated amortization of $2,578) 3,272
Intangible Assets - Trademarks, Goodwill and Customer Lists
(Net of accumulated amortization of $13,000) 192,000
-------------

TOTAL OTHER ASSETS 195,272
-------------

TOTAL ASSETS $ 988,082
=============

The accompanying notes are an integral part of the financial statements

F-3

<PAGE>

YOUTHLINE USA, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses $ 203,938
Unearned Revenue 76,180
Current Portion of Notes Payable 1,530,000
-----------

TOTAL CURRENT LIABILITIES 1,810,118
-----------

LONG TERM LIABILITIES
Notes Payable 220,000
-----------

TOTAL LONG TERM LIABILITIES 220,000
-----------

TOTAL LIABILITIES 2,030,118
-----------
STOCKHOLDERS' EQUITY:
Preferred Stock, $.0001 Par Value, 5,000,000 Shares Authorized,
No Shares Outstanding --
Common Stock, $.0001 par value, 50,000,000 Shares 1,007
Authorized; 10,071,665 shares issued and outstanding
Additional Paid In Capital 4,244,195

(Deficit) (5,287,238)
-----------

TOTAL STOCKHOLDERS' EQUITY (1,042,036)
-----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 988,082
===========

The accompanying notes are an integral part of the financial statements

F-4

YOUTHLINE USA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

1999 1998
----------- -----------
<S> <C> <C>
NET SALES $ 168,967 $ 14,707
----------- -----------
OPERATING EXPENSES:
Cost of Goods Sold (Exclusive of Depreciation and Amortization,
shown separately below) 321,320 163,224
Payroll and Related Costs (Stock Based Compensation - $900,000) 1,355,324 48,381
Consulting Services (Non Cash Compensation - $1,228,268) 1,228,268 --
Selling Expenses 333,580 51,914
Professional Fees 158,060 14,445
General and Administrative 162,228 25,047
Depreciation and Amortization 34,035 10,529
----------- -----------
TOTAL OPERATING EXPENSES 3,592,815 313,540
----------- -----------

Loss from operations before provision for income taxes (3,423,848) (298,833)
----------- -----------
OTHER INCOME AND EXPENSES
Interest Expense (Net of Interest Income of $3,786 in 1999
and $0 in 1998) ($250,000 interest on Convertible Notes -
Beneficial Conversion Interest and Non-Cash Interest - $1,025,500) 1,362,952 23,218
----------- -----------
Loss before provision for Income Taxes (4,786,800) (322,051)
----------- -----------
PROVISION FOR STATE INCOME TAX 200 300
----------- -----------
Net Loss $(4,787,000) $ (322,351)
=========== ===========
Net Loss per Common Share (Basic and Diluted) $ (0.51) $ (0.06)
=========== ===========
Weighted Average Common Shares Outstanding 9,435,216 5,507,972
=========== ===========
</TABLE>

The accompanying notes are an integral part of the financial statement

F-5

YOUTHLINE USA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

Common Stock Capital Accumulated
Number of Par in Excess of Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 5,500,000 $ 550(1) $ 103,429(1) $ (177,887) $ (73,908)

Reverse Merger - Recapitalization 8,200 1 14,783(2) -- 14,784

Net Loss for Period -- -- -- (322,351) (322,351)
----------- ----------- ----------- ----------- -----------

Balance at December 31, 1998 5,508,200 551 118,212 (500,238) (381,475)

Contribution to Paid-in-Capital -- -- 523,215 -- 523,215
Sale of Common Stock 4,400,000 440 44,000 -- 44,440
Stock Issued for Services and
Value Ascribed to Warrants 163,465 16 3,308,768 -- 3,308,784
Convertible Notes - Beneficial Interest -- -- 250,000 -- 250,000

Net Loss for Period -- -- -- (4,787,000) (4,787,000)
----------- ----------- ----------- ----------- -----------

Balance at December 31, 1999 $10,071,665 $ 1,007 $ 4,244,195 $(5,287,238) $(1,042,036)
=========== =========== =========== =========== ===========
</TABLE>

(1) During 1997, officers of the Company contributed $103,979 to the Common
Stock of S & S Plus, Inc.

(2) To restate Common Stock and accumulated deficit of the Company in order to
recapitalize the stockholders' equity as a result of the reverse
acquisition on August 16, 1999. Therefore, the Common Stock of S & S Plus,
Inc. with No Par Value, 1,000 shares authorized and issued is replaced with
the Common Stock of Youthline USA, Inc. with $.0001 Par Value, 50,0000,000
shares authorized, 5,500,000 shares issued and outstanding, including 8,200
shares of Common Stock resulting from the reverse stock split. Accordingly,
there were 5,508,200 shares of Common Stock issued and outstanding as of
December 31, 1998.

The accompanying notes are an integral part of the financial statements

F-6

YOUTHLINE USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS FROM OPERATIONS $(4,787,000) $ (322,351)
Adjustments to reconcile net loss from operations
to net cash used by operating activities:
Depreciation and Amortization Expense 34,035 10,529
Common Stock Issued for Services and Interest 1,507,868 --
Stock Based Compensation 1,800,900 --
Interest Expense - Beneficial Conversion Interest 250,000 --
Increase in Accounts Receivables (89,708) (1,729)
Increase in Prepaid Expenses (20,753) 35,269
(Decrease) Increase in Accounts Payable and Accrued Expenses 142,854 25,215
Increase in Unearned Revenues 50,965 --
----------- -----------

NET CASH USED BY OPERATIONS (1,110,839) (253,067)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Trademarks (205,000) --

Purchase of Office Equipment (114,157) (3,124)
----------- -----------

NET CASH USED BY INVESTING ACTIVITIES: (319,157) (3,124)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in Loans and Exchanges 15,346 311,973
(Decrease) in Loans and Exchanges (80,373) (305,799)
Issuance of Convertible Promissory Notes 1,000,000 --
Proceeds of Bridge Financing 500,000 --
Proceeds from Notes Payable - Officers -- 250,000
Sale of Common Stock and Contributions to Paid-in-Capital 567,655 --
----------- -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES 2,002,628 256,174
----------- -----------

Net Increase in Cash and Cash Equivalents 572,632 (17)
Cash and Cash Equivalents at Beginning of Year 88 105
----------- -----------

Cash and Cash Equivalents at End of Year $ 572,720 $ 88
----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid During the Period for
Interest $ 15,325 $ 2,567
=========== ===========
Income Taxes $ 200 $ 300
=========== ===========

NON CASH INVESTING ACTIVITIES:

Capitalization of Officers' Loans $ -- $ 103,479
=========== ===========
</TABLE>

The accompanying notes are an integral part of the financial statements

F-7

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
PRINCIPLES

Reverse Acquisition

In August 1999, the Company acquired all of the outstanding
capital stock of S&S Plus, Inc., a wholly owned subsidiary of
the Company which operated the publication of Youthline USA,
in exchange for the issuance of 5,500,000 shares of its common
stock, representing a majority of the total issued and
outstanding capital stock of the Company. On such date, the
previous management's directors and officers resigned and were
replaced with the current officers and directors.

This exchange has been accounted for as a reverse acquisition,
since the former owners of S & S Plus, Inc. owned a majority
of the outstanding stock of Youthline USA, Inc after the
acquisition. Accordingly, the combination of the two companies
is recorded as recapitalization of shareholders' equity of S &
S Plus, Inc, pursuant to which S & S Plus, Inc. is treated as
the continuing entity for accounting purposes and the
historical financial statements presented are those of S & S
Plus, Inc. Youthline USA had nominal assets consisting of cash
in the amount of $11,826, and had no operations for the two
years ended December 31, 1999.

A) Background

YouthLine USA, Inc. (the "Company") was incorporated on July
27, 1999 pursuant to the laws of the State of Delaware as the
successor to Ult-I-Med Health Centers, Inc., a Utah
corporation ("Ult-I-Med"), which was incorporated in 1983
under the laws of the State of Utah (originally under the name
Picadilly Technology, Inc.). The Company was organized to
effectuate a reincorporation of Ult-I-Med with and into the
Company on August 16, 1999.

Ult-I-Med was originally organized to engage in the mining of
metalliferous chemicals. In 1988, Ult-I-Med ceased such
activities and began engaging in the business of owning and
operating camping and recreation facilities. In 1991,
Ult-I-Med ceased such activities and began engaging in the
business of owning and operating supervised primary care,
health and rehabilitation centers. In January 1996, Ult-I-Med
filed a Chapter 11 bankruptcy petition. Ult-I-Med liquidated
all of its assets and its plan of reorganization was filed
with the court in February 1998. All of Ult-I-Med debts were
paid subsequent to June 30, 1999, and the court entered a
final decree on September 24, 1999. Ult-I-Med had prepetition
indebtedness of $268,919 in its entirety, consisting of
secured and unsecured liabilities. All but $132,033 of the
secured liabilities were discharged in the chapter 11
bankruptcy.

B) Description of Business

The Company, through its wholly owned subsidiary, S & S Plus,
Inc., publishes YOUTHLINE USA, a weekly newspaper and a
monthly magazine written and designed for children ages 8
through 13. In every respect, it is similar to an adult
newspaper, except that it is written at the children's level
and it filters out news that is not age appropriate. It is
designed to attract and engage the attention of children
within this age range.

F-8

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
(Continued) ACCOUNTING PRINCIPLES

The Company also produces its website, YOUTHLINE-USA.COM which
is a subscription based website rich in educational and
entertainment content. The Company generates revenue through
the sale of print and website subscriptions, advertisement
space and corporate sponsorships. Subscriptions can either be
bulk subscriptions ordered by schools, or as individual
subscriptions for children to read at home.

C) Consolidated Financial Statements

The consolidated financial statements include the accounts of
the Company and its subsidiary. All significant inter-company
accounts and transactions are eliminated. Management of the
Company has made estimates and assumptions relating to the
reporting of assets and liabilities and disclosure of
contingent liabilities to prepare these financial statements
in conformity with generally accepted accounting principles.

D) Cash Equivalents

For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

E) Accounts Receivable and Revenue Recognition

Accounts receivable consists of balances due the Company for
newspaper and advertising revenues. Accounts receivable are
current, accordingly, a provision for bad debt is not
required. The Company recognizes revenues through the sale of
newspaper subscriptions, website subscriptions and
advertising. Subscription revenues are recognized over the
term of the contract which is generally one year. Advertising
revenues are recorded upon the placement of a sponsor's
advertisement in the Company's newspaper and delivery to
subscribers.

F) Fixed Assets

Computer equipment and furniture and fixtures are depreciated
using the straight-line method over their estimated useful
lives ranging from five to seven years. The costs of additions
and betterment are capitalized, repairs and maintenance costs
are charged to general and administrative expenses.
Organization costs are amortized over a period of five years
on a straight-line basis.

Intangible assets represents the purchase price at fair market
value of trademarks, goodwill and customer lists. Intangible
assets are being amortized over a period of five years using
the straight line method. The annual amortization expense for
1999 was $13,000. At December 31, 1999, accumulated
amortization was $13,000.

F-9

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
(Continued) ACCOUNTING PRINCIPLES

G) Earnings Per Share

Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share" discusses the computation and
presentation of earnings per share ("EPS"). Basic EPS, as
defined by SFAS No. 128, is computed by dividing income
available to common shareholders by the weighted average
number of common shares outstanding for the reporting period,
ignoring any potential effects of dilution. Diluted EPS
reflects the potential dilution that would occur if
securities, or other contracts to issue common stock, were
exercised for which the market price of the common shares
exceeds the exercise price, less shares which could have been
purchased by the Company with related proceeds. The additional
shares of common stock converted would then share in the
earnings of the entity.

There were 2,840,000 common stock options outstanding as of
December 31, 1999. As a result of the losses reported in the
periods presented, these options, if exercised, would be
antidilutive. Accordingly, Basic EPS and diluted earnings per
share are the same as presented in the financial statements.
The weighted-average number of shares used in the computation
of per share data was 5,507,972 in 1998 and 9,435,216 in 1999.

H) Income Taxes

Effective January 7, 1997, the Company applied for, and
received approval to be taxed as an "S" Corporation for
Federal and State income tax purposed. The effect of this
election is that taxable results of operations and tax credits
are reportable on the individual tax returns of the
stockholders. Accordingly, for 1999 and 1998, no Federal
Corporate income taxes have been provided in these financial
statements. However, a provision for the minimum corporate
state taxes has been included.

The Company intends to follow Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for
Income Taxes" when either operations achieve profitability or
the realization of net operating loss benefits can more
readily be measured, whichever occurs first.

I) Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities and the
reported amounts of revenues and expenses. Actual results
could differ from estimates.

F-10

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 2 FIXED ASSETS - OFFICE AND EQUIPMENT SOFTWARE

Office equipment and software consist of the following:

Office Equipment $ 45,666
Software 5,394
---------
51,060
Less: Accumulated Depreciation (20,763)
---------
Net Book Value $ 30,297
---------

Depreciation expense for the years ended December 31, 1999 and
1998 amounted to $19,677 and $9,359, respectively.

Other Assets and Organization costs consist of the following:

Organization Costs $ 5,850
Less: Accumulated Depreciation (2,287)
---------
Net Book Value $ 3,563
---------

Amortization expense for the years ended December 31, 1999 and
1998 amounted to $1,170 for each period.

NOTE 3 EMPLOYMENT AGREEMENTS

The Company executed two employment contracts on May 28, 1999
with certain senior executives for future services that vary
in length for periods of up to five years. Each employment
contract will call for a base salary of $115,000 with annual
increases of 7% per annum. The contracts also include options
to purchase 10,000 shares of the Company's common stock at a
20% discount off the maximum price per share in the Company's
next private placement. Additionally, the employment contract
also includes a one-time signing bonus equal to $30,000
payable as follows: $10,000 within 30 days of signing the
contract, and the balance of $20,000 payable upon the Company
attaining 10,000 subscribers for a period of two consecutive
months.

NOTE 4 NOTES PAYABLE

A) On February 1, 1998, the Company issued two promissory
notes in the principal amount of $125,000, payable to Saki
Dodelson (President) and Susan Gertler (Vice-President),
aggregating $250,000. The notes bear interest at an annual
rate of 9%, payable monthly. Principle repayment will be
deferred until the gross annual sales of the Company reach
$1,000,000; at which point the Company will repay $15,000
of principle on each note annually. The accrued interest
payable on these notes aggregated $30,025 through December
31, 1999.

F-11

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 4 NOTES PAYABLE
(Continued)

B) On August 31, 1999, the Company entered into a bridge
financing agreement aggregating $500,000 (the "Note"). The
note bears interest at 8% per annum, matures on January
19, 2000, and is secured by all assets and properties
owned by the Company. Additionally, in consideration for
such financing, the Company issued 100,000 shares of its
$.0001 par value common stock of $10.0 per share. The
Company recorded a $1,000,000 commission expense in
connection with the financing agreement. Additionally, in
connection with the placement of such financing, the
Company also paid a one-time fee of $50,000 to Robb Peck
McCooey Clearing Corporation and issued 50,000 warrants at
an exercise price of $.10 per share. This transaction was
with an unrelated third party.

C) On December 14, 1999, and December 21, 1999, the Company
issued two convertible promissory notes in the principal
amount of $500,000 each, aggregating $1,000,000. The notes
bear interest at an annual rate of 8.5% and mature on
December 14, 2000 and December 21, 2000, respectively.
Interest and principal will be paid at maturity.
Additionally, any portion of the notes and accrued
interest can also be converted into shares of common stock
at the lenders' option at a price equal to 20% below the
fair market value of the common shares, with a minimum
conversion price of $3.00 per share, and a maximum price
of $4.875 per share. The Company recorded a one-time
interest expense of $250,000 which is the intrinsic value
of the beneficial conversion feature of the note. The fair
market value of the stock at the date of issuance was
$3.75 and $5.00 per common share on December 14, 1999 and
December 21, 1999, respectively.
<TABLE>
<CAPTION>
Long Term Debt consists of the following:

Total Long Term Current
----- --------- -------
<S> <C> <C> <C>
A) Notes Payable - Officers $ 250,000 $220,000 $30,000

B) Bridge Financing (Paid off
January 2000) 500,000 -- 500,000

C) Convertible Promissory Notes 1,000,000 -- 1,000,000
----------- -------- -----------
$ 1,750,000 $220,000 $ 1,530,000
=========== ======== ===========
</TABLE>

At December 31, 1999, the aggregate of amount of required
payments on long-term debt was as follows:

2000 $ 1,530,000
2001 30,000
2002 30,000
2003 30,000
2004 30,000
Thereafter 100,000
-----------
Total Payments $ 1,750,000
===========

F-12

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 5 LOANS AND EXCHANGES

Certain officers advanced the Company funds. Such advances
bore no interest and had no definite repayment terms. At
January 1, 1999, these advances amounted to $79,827. During
1999, $56,596 was repaid in cash and the difference of $23,231
was contributed to additional paid-in-capital.

NOTE 6 CAPITAL STOCK

Effective March 29, 1999, the Board of Directors declared a
reverse stock split of one thousand shares of common stock for
one common share of the Company's common stock. The effect of
the reverse stock split was to reduce the total outstanding
common shares to 7,972. All references to number of shares,
except shares authorized, and to per share information in the
consolidated financial statements have been adjusted to
reflect the stock split on a retroactive basis, for all
periods presented.

The Company is currently authorized to issue 50,000,000 shares
of its common stock, $.0001par value. As of December 31, 1999,
there were 10,071,437 shares of common stock issued and
outstanding.

The Company has 5,000,000 authorized shares of preferred
stock, $.0001 par value. The Company presently has no issued
and outstanding preferred stock.

On March 30, 1999, the Company completed a private placement
offering of 4,400,000 shares of its common stock for an
aggregate price of $44,000.

In July 1999, the Company issued 33,465 shares of its common
stock to seven persons at $7.50 per share, in settlement of
any claims such persons may have against the Company. The
Company increased its expenses and paid-in-capital by
$250,988.

In August 1999, the Company issued 5,500,000 shares of its
common stock, $.0001 par value, in exchange for all the
outstanding stock of S&S Plus, Inc. The consolidated financial
statements have been restated to reflect the effect of the
acquisition of S&S Plus, Inc.

On August 19, 1999, the Company purchased the domain name
"www.Lessonstop.org", and its subscriber list, in exchange for
20,000 shares of common stock, $.0001 par value per share at a
fair market value of $7.75 per share for an aggregate amount
of $155,000. The Company did not assume any liabilities or
obligations relating to the purchased assets.

On August 31, 1999, the Company entered into a bridge
financing agreement aggregating $500,000 (the "Note"), see
Subsequent Events (Note 14). The note bears interest at 8% per
annum, matures on January 19, 2000, and is secured by all
assets and properties owned by the Company. Additionally, in
consideration for such financing, the Company issued 100,000
shares of its $.0001 par value common stock of $10.0 per
share. The Company recorded a $1,000,000 commission expense in
connection with the financing agreement.

F-13

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 6 CAPITAL STOCK
(Continued)

Additionally, in connection with the placement of such
financing, the Company also paid a one-time fee of $50,000 to
Robb Peck McCooey Clearing Corporation and issued 50,000
warrants at an exercise price of $.10 per share with a deemed
fair market value of $25,500, which expire December 31, 2004.

In September 1999, the Company issued 10,000 shares of its
common stock at $10.00 per share for consulting services
rendered. The Company increased its expense and
paid-in-capital by $100,000.

On September 28, 1999, the Company purchased all the worldwide
rights, title, interest and goodwill from a partnership
composed of R L Ingenious, Inc., and ETC Ingenious Holdings,
Inc., for an aggregate purchase price of $50,000. The asset is
an interactive multimedia educational tool consisting of a
data base of over 1,500 news stories and encompasses two full
CD's. The Company did not assume any of the liabilities or
obligations relating to the purchased assets.

NOTE 7 FRESH-START REPORTING

Youthline USA, Inc's. Reorganization Plan under Chapter 11 was
confirmed by the United States Bankruptcy Court for the
Northern District of Texas, Fort Worth Division. The formal
confirmation was entered in January 1996 and the court
consummated the reorganization plan on September 24, 1999.

As a result of the confirmation of the Reorganization Plan,
the Company implemented fresh-start reporting as of January
1996. Under the provisions of AICPA Statement of Position 90-7
("SOP 90-7"), "Financial Reporting by Entities in
Reorganizations under the Bankruptcy Code", the Company was
required to adopt fresh-start reporting upon emergence from
Chapter 11 that resulted in a new reporting entity with no
retained earnings or accumulated deficit as of January 1996.

The Company's Consolidated Balance Sheet as of December 31,
1999 was prepared as if the Company was a new reporting entity
at January 1996 and reflects certain reorganization
adjustments in 1996 that include the restatement of assets and
liabilities to approximate fair value and the discharge of
outstanding liabilities relating to creditor claims against
the Company, which have been satisfied primarily by additional
funding through bridge capital. The Company's total secured
and unsecured debts resulting from the bankruptcy aggregated
$132,033. As of October 11, 1999, the Company has satisfied
all debts.

NOTE 8 FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate
the fair value of financial instruments:

Cash and Cash Equivalents. The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its
fair value.

F-14

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 8 FAIR VALUE OF FINANCIAL INSTRUMENTS
(Continued)
Accounts Receivable and Accounts Payable. The carrying amount
of accounts receivable and accounts payable in the balance
sheet approximates fair value.

Short-Term and Long-Term Debt. The carrying amount of the
revolving credit facility approximates fair value. The
carrying amounts of the Company's financial instruments at
December 31, 1999 approximate fair value with the exception of
the interest rate swap agreement.

NOTE 9 INCOME TAXES

As of December 31, 1998 the Company has no available unused
Federal and State net operating loss carry forwards that may
be applied against future taxable income. Further, since S & S
Plus, Inc was a sub chapter S Corporation prior to the reverse
acquisition, the net operating losses are passed through to
the former stockholders of S & S Plus, Inc., and therefore
cannot be utilized by the Company. Accordingly, no deferred
tax benefit has been recorded in the consolidated statements
of operations.

NOTE 10 SECURED AND UNSECURED CREDITORS

The Company set up a provision of $132,033 for secured and
unsecured creditors, in accordance with the filing of the
bankruptcy. Ult-I-Med Health Centers, Inc., incurred this
liability prior to December 31, 1996. The liability was
satisfied in October 1999. The current outstanding balance is
zero.

NOTE 11 COMMITMENTS AND CONTINGENCIES

The Company entered into a five-year lease agreement with
United Securities Services, Inc. The lease currently calls for
monthly rental of $3,515 for approximately 2,280 square feet
of office space located in Lakewood, New Jersey.

At December 31, 1999, the Company is committed to total
minimum rental under all noncancellable operating leases of
$200,355. Generally, these leases include additional charges
for tax escalation and other expenses. The minimum future
rental commitments are payable at $42,180 per year for five
years.

NOTE 12 WARRANTS

As of December 31 1999, warrants consisted of the following:
<TABLE>
<CAPTION>
Warrants Outstanding Exercise Price Date of Expiration
-------------------- -------------- ------------------
<S> <C> <C> <C> <C>
450,000 $1.0 December 31, 2004
590,000 $3.0 December 31, 2004
1,050,000 $5.0 December 31, 2004
350,000 $7.0 December 31, 2004
350,000 $10 December 31, 2004
50,000 $.10 December 31, 2004

Total 2,840,000
</TABLE>
F-15

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 12 WARRANTS
(Continued)

As of December 31, 1999, no warrants have been exercised. All
of the outstanding warrants are restricted subject to Rule 144
of the act.

The Company has elected to follow APB No. 25, "Accounting for
Stock Issued to Employees" to account for warrants issued to
its employees. Under APB No. 25, when the exercise price of
the Company's warrants issued to its employees are less than
the fair value price of the underlying stock at the date of
the grant, than compensation will be recognized by the
Company. The Company had granted 450,000 warrants to certain
key employees at exercise prices that were below the fair
value of the underlying stock. Accordingly, the Company
recorded stock-based compensation of $900,000 for the year
ended December 31, 1999 based upon the intrinsic value of the
options at the grant date. No stock warrants were issued in
1998.

Pro forma information regarding earnings (loss) per common
share is required by SFAS #123, and has been determined as if
the Company had accounted for its warrants under the fair
value method of that statement. In 1999, the fair market value
of these warrants was estimated at the date of the grant using
the Black-Scholes Option Pricing Model with the following
weighted average assumptions for 1999: risk-free interest rate
of 6.5%; dividend yield of 0%; volatility factor for the
expected market price of the Company's common stock of 54.31%;
and a weighted average expected life of the option of four
years.

The Black-Scholes Option Pricing Model was developed for use
in estimating the fair value of traded options. In addition,
option valuation models require the input of highly subjective
assumptions included the expected stock price volatility.
Because the Company's stock options have characteristics
significantly different for those of traded options, and
because changes in the 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 stock
options. During the year ended December 31, 1999 the Company
recorded $900,900 in stock-based compensation on the 990,000
warrants outstanding issued to consultants.

In accordance with the provision of SFAS #123, the Company
applies APB No. 25 and related interpretations in accounting
for stock warrants issued to its employees, and, accordingly,
does not recognize compensation costs for warrants with an
exercise price greater then the fair value of common shares at
the time of the grant. However, if the Company had elected to
recognize compensation costs based on the fair value of the
warrants granted at grant date as prescribed by SFAS #123, net
income and earnings per share would have been reduced to the
pro forma amounts indicated in the table below.

1999 1998
------------- ------------
Net Loss - as reported $ (4,525,603) $ (322,351)
Net Loss - pro forma $ (5,834,603) $ (322,351)
Loss Per Share - as reported $ (.48) $ (.54)
Loss Per Share - pro forma $ (.61) $ (.54)

F-16

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 12 WARRANTS
(Continued)

The fair value of each warrant is estimated on the date of
grant using the Black-Scholes option-pricing model with the
following assumptions:

Expected dividend yield 0.0%
Expected stock price volatility 54.31%
Risk free interest rate 6.5%

The expected life of the options is 4 years, and they are
immediately exercisable upon issuance without restrictions.

The weighted average fair value of options granted during 1999
is $5.22 per share.

NOTE 13 FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISKS

The Company maintained approximately $472,720 in one bank in
excess of amounts that would be insured by the Federal
Depository Insurance Corporation. Management of the Company
feels that the bank is well capitalized under FDIC guidelines.

NOTE 14 SUBSEQUENT EVENTS

On January 7, 2000, the Company repaid the $500,000 bridge
financing note with interest of 8.0%.

F-17

<PAGE>

Independent Auditors' Report

To the Board of Directors and Shareholders YouthLine USA, Inc.

We have audited YouthLine, USA, Inc's. (the "Company") statements of operations,
shareholders' equity (deficit) and cash flows for the period January 1, 1999
through August 16, 1999 and for the year ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements schedule
based on our audits.

In our opinion, the financial statements of YouthLine USA. Inc referred to above
present fairly, in all material respects, the results of their operations and
their cash flows for the period January 1, 1999 through August 16, 1999 and the
year ended December 31, 1998 in conformity with generally accepted accounting
principles.

Michael C. Finkelstein & Co.

Morganville, New Jersey
Certified Public Accountant
February 22, 2000

F-18

<PAGE>

YOUTHLINE USA, INC.
(DEBTOR IN POSSESSION)
STATEMENTS OF EXPENSES
FOR THE PERIOD JANUARY 1, 1999 THROUGH AUGUST 16, 1999 AND
FOR THE YEAR ENDED DECEMBER 31, 1998

Administrative Expenses $ -- $ 1,484
---------- ----------

Net Loss -- (1,484)
========== ==========
Loss per Common Share $ -- $ (0.18)
========== ==========

Common Shares Outstanding 8,200 8,200
========== ==========

The accompanying notes are an integral part of the financial statements

F-19

<PAGE>

YOUTHLINE USA, INC.
(DEBTOR IN POSSESSION)
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Common Stock Capital
Number of Par in Excess of Accumulated Total
-------- -------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 8,200 $ 1 $ 16,269 -- $ 16,270
Net Loss for Period -- -- -- (1,486) (1,486)
-------- -------- -------- -------- --------
Sub-Total 8,200 1 16,269 (1,486) 14,784
Reverse Merger - Recapitalization (1) (8,200) (1) (16,269) 1,486 (14,784)
-------- -------- -------- -------- --------
Balance at December 31, 1998 -- -- -- -- --
Net Loss for Period -- -- -- -- --
-------- -------- -------- -------- --------
Balance at December 31, 1999 -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>

(1) To restate Common Stock and accumulated deficit of the Company in order to
recapitalize the stockholders' equity as a result of the reverse acquisition
on August 16, 1999. Therefore, the Common Stock of S & S Plus, Inc. with No
Par Value, 1,000 shares authorized and issued is replaced with the Common
Stock of Youthline USA, Inc. with $.0001 Par Value, 50,0000,000 shares
authorized, 5,500,000 shares issued and outstanding, including 8,200 shares
of Common Stock resulting from the reverse stock split. Accordingly, there
were 5,508,200 shares of Common Stock issued and outstanding as of December
31, 1999.

The accompanying notes are an integral part of the financial statements

F-20

<PAGE>

YOUTHLINE USA, INC.
(DEBTOR IN POSSESSION)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 1999 THROUGH AUGUST 16, 1999 AND
FOR THE YEAR ENDED DECEMBER 31,1998

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

CASH FLOWS FROM OPERATING ACTIVITIES;

NET LOSS FROM OPERATIONS $ -- $ (1,484)
--------- ---------
NET CASH USED BY OPERATIONS -- (1,484)
--------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Secured Debts (132,033) --
Contribution to Paid in Capital 143,639 --
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,606 --
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 11,606 (1,484)
Cash and Cash Equivalents at Beginning of Year 220 1,704
--------- ---------

Cash and Cash Equivalents at End of Year $ 11,826 $ 220
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid During the Period for
Interest $ -- $ 263
========= =========
Income Taxes $ -- $ --
========= =========

The accompanying notes are an integral part of the financial statements

F-21

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
PRINCIPLES

A) Background

YouthLine USA, Inc. (the "Company") was incorporated on July
27, 1999 pursuant to the laws of the State of Delaware as the
successor to Ult-I-Med Health Centers, Inc., a Utah
corporation ("Ult-I-Med"), which was incorporated in 1983
under the laws of the State of Utah (originally under the name
Picadilly Technology, Inc.). The Company was organized to
effectuate a reincorporation of Ult-I-Med with and into the
Company on August 16, 1999.

Ult-I-Med was originally organized to engage in the mining of
metalliferous chemicals. In 1988, Ult-I-Med ceased such
activities and began engaging in the business of owning and
operating camping and recreation facilities. In 1991,
Ult-I-Med ceased such activities and began engaging in the
business of owning and operating supervised primary care,
health and rehabilitation centers. In January 1996, Ult-I-Med
filed a Chapter 11 bankruptcy petition. Ult-I-Med liquidated
all of its assets and its plan of reorganization was filed
with the court in February 1998. All of Ult-I-Med debts were
paid subsequent to June 30, 1999, and the court entered a
final decree on September 24, 1999. The Company has not
engaged in any operations since 1996, and has been inactive
during 1999 and 1998.

NOTE 2 CAPITAL STOCK

Effective March 29, 1999, the Board of Directors declared a
reverse stock split of one thousand shares of common stock for
one common share of the Company's common stock. The effect of
the reverse stock split was to reduce the total outstanding
common shares to 8,200. All references to number of shares,
except shares authorized, and to per share information in the
consolidated financial statements have been adjusted to
reflect the stock split on a retroactive basis, for all
periods presented.

The Company is currently authorized to issue 50,000,000 shares
of its common stock, $.0001 par value. As of December 31, 1999
and 1998 there were 8,200 shares of common stock outstanding,
after the 1,000 to one reverse stock split. Effective December
31, 1999, there were 10,071,556 shares of common stock issued
and outstanding.

The Company has 5,000,000 authorized shares of preferred
stock, no par value. The Company presently has no issued and
outstanding preferred stock.

F-22

<PAGE>

YOUTHLINE USA, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999

NOTE 3 FRESH-START REPORTING

The Company's Reorganization Plan under Chapter 11 was
confirmed by the United States Bankruptcy Court for the
Northern District of Texas, Fort Worth Division. The formal
confirmation was entered in January 1996 and the court
consummated the reorganization plan on September 24, 1999. As
a result of the confirmation of the Reorganization Plan, the
Company implemented fresh-start reporting as of January 1996.
Under the provisions of AICPA Statement of Position 90-7 ("SOP
90-7"), "Financial Reporting by Entities in Reorganizations
under the Bankruptcy Code", the Company was required to adopt
fresh-start reporting upon emergence from Chapter 11 that
resulted in a new reporting entity with no retained earnings
or accumulated deficit as of January 1996 accordingly, all
assets and liabilities were restated to reflect their
reorganization value, which approximates fair value at the
date of reorganization.

The Bankruptcy court confirmed the Company's plan of
reorganization in January 1996. It was determined that the
Company did not have any assets as of the confirmation date,
and the prior management contributed the necessary funds to
pay off its post petition liabilities.

The Company's total secured and unsecured debts aggregated
$132,033. As of October 11, 1999, the Company satisfied all
such debts.

NOTE 4 MERGER AND RECAPITALIZATION

In August 1999, the Company acquired all of the outstanding
capital stock of S&S Plus, Inc., a wholly-owned subsidiary of
the Company which operated the publication of Youthline USA,
in exchange for the issuance of 5,500,000 shares of its common
stock, representing a majority of the total issued and
outstanding capital stock of the Company. On such date, the
previous management's directors and officers resigned and were
replaced with the current officers and directors. This
exchange will be accounted for as a reverse acquisition under
the purchase method of accounting, since the former
shareholders of the S & S Plus, Inc. will own a majority of
the outstanding stock of the Company after the acquisition.
Accordingly, the combination of the two companies will be
recorded as recapitalization of shareholders' equity of S & S
Plus, Inc., pursuant to which S & S Plus, Inc. is treated as
the continuing entity for accounting purposes and the
historical financial statements presented will be those of S &
S Plus, Inc.

F-23
<PAGE>

SIGNATURES

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

YOUTHLINE USA, INC.

By:
---------------------------------------
Name: Saki Dodelson
Title: President,
Treasurer, Principal
Executive/ Financial
and Accounting Officer
and Director

Signature Title Date

/s/ JACOB Y. "ROCKY" STEFANSKY Chairman of the April 28, 2000
- ------------------------------ Board of Directors
Jacob Y. "Rocky" Stefansky

/s/ SAKI DODELSON President, Treasurer, April 28, 2000
- ------------------------------ Principal Executive/Financial
Saki Dodelson and Accounting Officer
and Director

/s/ SUSAN GERTLER Vice President, Secretary April 28, 2000
- ------------------------------ and Director
Susan Gertler

/s/ EMANUEL YARMISH Director April 28, 2000
- ------------------------------
Emanuel Yarmish

/s/ DAVID STEFANSKY Director April 28, 2000
- ------------------------------
David Stefansky

/s/ ASHER LOW Director April 28, 2000
- ------------------------------
Asher Low

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the use in this Annual Report on Form 10-KSB of our report on
YouthLine USA, Inc. and Subsidiary dated February 22, 2000 on our examinations
for the years ended December 31, 1998 and 1999.

MICHAEL C. FINKELSTEIN
Morganville, New Jersey
Certified Public Accountant
April 28, 2000

<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0001095930
<NAME> YOUTHLINE USA, INC.
<MULTIPLIER> 1
<CURRENCY> USD

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 572,720
<SECURITIES> 0
<RECEIVABLES> 91,542
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 685,015
<PP&E> 142,866
<DEPRECIATION> (35,071)
<TOTAL-ASSETS> 988,082
<CURRENT-LIABILITIES> 1,810,118
<BONDS> 0
0
0
<COMMON> 4,245,202
<OTHER-SE> (5,287,238)
<TOTAL-LIABILITY-AND-EQUITY> 988,082
<SALES> 168,967
<TOTAL-REVENUES> 168,967
<CGS> 321,320
<TOTAL-COSTS> 4,346,995
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 287,452
<INCOME-PRETAX> (4,786,800)
<INCOME-TAX> 200
<INCOME-CONTINUING> (4,787,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,787,000)
<EPS-BASIC> (.51)
<EPS-DILUTED> (.51)

</TABLE>