COSMOZ COM INC/CA, 10-K, 2000-09-28

COSMOZ COM INC/CA
10-K, 2000-09-28
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
----------------------

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For Fiscal Year Ended June 30, 2000

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Transition Period From________________ to ________________

Commission File:

Cosmoz.com, Inc.
(Exact name of registrant as specified in its charter)

Delaware 94-3319536
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

Address of principal executive offices:
1515 S. El Camino Real San Mateo, California 94402
Registrant's telephone number: Voice: 650/358 1188 Fax: 650/358 0188

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

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

(Title of Class)
Common Stock, $0.001 par value

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 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 [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [ ]

The approximate aggregate market value of Common Stock held by non-affiliates of
the Registrant was $10,685,259 as of September 25, 2000.

On September 25, 2000, the Registrant had outstanding 64,514,849 shares of
voting Common Stock, $.001 par value.

DOCUMENTS INCORPORATED BY REFERENCE

1
<PAGE>

TABLE OF CONTENTS FORM 10-K ANNUAL REPORT FISCAL YEAR ENDED JUNE 30,
2000 COSMOZ.COM, INC.
<TABLE>
<CAPTION>

<S> <C>
PART I...........................................................................................3
------
ITEM 1. OUR BUSINESS................................................................................3
--------------------
ITEM 2. OUR PROPERTIES..............................................................................5
----------------------
ITEM 3. LEGAL PROCEEDINGS...........................................................................5
-------------------------
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........................................5
----------------------------------------------------------

PART II..........................................................................................5
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...................5
---------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA.....................................................................8
-------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS......10
---------------------------------------------------------------------------------------------
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................................19
---------------------------------------------------
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.......43
--------------------------------------------------------------------------------------------

PART III........................................................................................43
--------
ITEM 10. OUR DIRECTORS AND EXECUTIVE OFFICERS......................................................43
---------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION....................................................................43
-------------------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................45
-----------------------------------------------------------------------
ITEM 13. RELATIONSHIPS AND RELATED TRANSACTIONS....................................................45
-----------------------------------------------

PART IV.........................................................................................46
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K..........................46
-------------------------------------------------------------------------
SIGNATURES......................................................................................48
----------
</TABLE>

2
<PAGE>

PART I

ITEM 1. OUR BUSINESS

Company Overview

We are an accelerator/incubator company that develops and acquires Internet
companies. We provide strategic consulting, business services and seed capital
to emerging companies that are developing Internet web sites or web-enabling
technologies. We also showcase our portfolio of holdings through a
consumer-friendly marketing portal.

We were incorporated in the State of Delaware on October 15, 1996, as MIS
International, Inc., which merged with MIS Multimedia Interactive Services,
Inc., a Canadian Corp., on July 1, 1997. We changed our name to Cosmoz.com, Inc.
on December 17, 1998. On January 5, 2000, we acquired Ivory Acquisition
Corporation, a fully reporting blank check company. Following the acquisition,
we thus became the reporting company under Rule 12g-3 of the Securities Exchange
Act of 1934. Presently, our headquarters are located in San Mateo, California.

MIS Multimedia Interactive Services, Inc. and its subsidiaries, Pretzel
Franchising, Inc. and Wheel-to-Wheel Franchising, Inc., all Canadian
Corporations, were engaged in the business of operating retail stores and
selling franchise licenses. We ceased all Canadian operations by January 1,
1999, and our Canadian subsidiaries are inoperative and we are presently winding
up their affairs. In early 1999, concurrently with our name change and the
termination of our Canadian operations, we developed our current business model.
Therefore, our financial information prior to January 1, 1999 is not
instructive.

Current Operations

We offer a network of branded, technology- and community-driven Internet
Websites focused on personal finance, investing, Internet search, business to
business commerce and games. Between April 1999 and October 1999, we acquired
five wholly owned subsidiaries shares of our common stock were the sole
consideration in our acquisition of these five entities:

o BuckInvestor.com, Inc., which operates BuckInvestor.com.
o KingFine, Inc., which operates MonsterPick.com.
o MB Technologies, Inc., which operates TickerZone.com.
o StreetIQ.com, Inc., which operates StreetIQ.com.
o iTrack, Inc., which operates iTrack.com.

BuckInvestor.com presents investment information, financial advice and education
via an Internet Web site. Featured services include original articles on
investment basics, personal financial advice, daily market news, and commentary
from certified financial consultants, stock quotes, and message boards. Also
featured is a large online directory of approximately 700 investment clubs from
around the world.

MonsterPick.com provides personal online investing information and day trading
contests. MonsterPick.com members scoring the greatest cumulative gains each
month based on their stock picks win prizes provided by sponsors and
advertisers. MonsterPick.com is undergoing upgrades and recently launched an
operative and improved version, which we are testing.

TickerZone.com is an Internet-based message board community. The TickerZone.com
technology also serves as the message board software engine for our other
properties such as FinancialContent.com and BuckInvestor.com.

StreetIQ.com serves as a women's Internet Web site community with a primary
focus on finance and investing. The service offers stock quotes, personal stock
portfolios, stock research, broker ratings, initial public offering information,
free electronic mail, and a variety of commentary and discussion forums
targeting women.

iTrack.com is a personalized online auction monitoring service. The service
based upon criteria provided by customers monitors auctions that take place on
Ebay.com, Yahoo, Amazon.com, Auction Universe, BoxLot, Gold's Auctions, Haggle
Online, OnSale.com, Ubid.com, and Xoom Auctions.

3
<PAGE>

We have also acquired passive investments through direct monetary investment. We
own 56,108 shares of eCal, a privately held corporation. eCal bills itself as
"the leading application service provider of Web-based calendar communications."
We acquired our interest when eCal acquired iPing, Inc. We had formerly made a
direct investment in iPing. eCal is not currently a publicly traded company.

We also hold a passive investment in Ridgewood Venture Partners II, LLC, a
venture capital fund. The Ridgewood fund's portfolio of companies include
Medibuy.com, a medical supply ecommerce service; Metasound, an Internet
telecommunications company; Quantum Conveyors, an automated package handling
technology company; InViso, a maker of screens for portable Internet devices;
Marketfusion.com, a business to business electronic commerce company; Sycon,
specialized computer chip design software maker; and Feedroom.com, a broadband
Internet channel.

We have also recently formed two subsidiaries, FinancialContent.com and
ProfitWire.com, and one internal division, FirstParsec.

FinancialContent.com combines and formats the existing content from our
investment-related websites and redistributes this content to third party
websites which then offer the content to end users. This service has been
extremely popular in the few months it has been offered, already garnering
several hundred redistributors. FinancialContent.com provides the combined and
reformatted content to third parties without charge, but controls the content,
appearance and advertisements that are ultimately fed to end users.

ProfitWire.com is a full-service investor relations firm offering a
comprehensive package of online and offline news dissemination and communication
management solutions. ProfitWire is geared toward the needs of emerging small
cap companies.

FirstParsec is a division that offers incubation/acceleration services to
companies in the concept or early development stage. Companies selected for
incubation are given resources and support to accelerate their goals as set
forth in each candidate's business plan. Through this division, we aid our
clients in implementing their product development, strategic direction,
management building, and raising of venture capital. We designate a mentor that
documents the process and facilitates the needs of the participating company
oversees the program. This mentor meets regularly with our team and is charged
with managing the relationships between Cosmoz and the participating company.

Trademarks and Patents

We own a U.S. trademark for "iTrack". We have made application for U.S.
trademarks for "Cosmoz.com" and "ProfitWire.com", and the applications are
pending.

Suppliers

We employ the services of a number of suppliers whose services range from
providing high speed Internet access to financial and other news content
providers. Among many service providers are the following companies:

o We license from several individual authors, in the ordinary course of
our business, various articles which primarily are educational-themed
articles on investing and money-management that we publish on our
various investment-related websites.
o We license from NAQ, Inc. delayed and historical stock quotes, which we
then publish on our various investment-related websites.
o We license from Comtex News, Inc. financial news stories that we then
publish on our various investment-related websites.
o We license from StockPoint, Inc. real-time stock quotes which we then
publish on our various investment-related websites.
o We license from Uexpress.com, Inc. interactive crossword puzzles which
we then publish on our MyCosmoz.com website.

4
<PAGE>

o We license from eLingo.com translation software that it implements on
its various websites.
o We license from The Weather Channel weather
delivery services which we display on our MyCosmoz.com website.
o We license syndicated content services from iSyndicate.com, which
includes: Associated Press news feeds, general domestic news,
entertainment news, sports news, business news and accurate weather
news.
o We purchase services from AboveNet Communications, a California company
that provides domain hosting and server services. AboveNet is located
at 50 West San Fernando Street, Suite 1010, San Jose, California,
95113.

The loss of any one of these single providers would not cause a materially
adverse effect on our operations or revenues.

Employees

We currently employ 12 full time, and 4 part-time employees. We also engage the
services of outside consultants from time to time. Upon securing of additional
funding, we intend to hire an additional 10 to 15 full time employees during the
next several months.

Competition

We, our subsidiaries, and companies in which we invest compete in the electronic
technology and Internet service arenas. The market for Internet products and
services is rapidly evolving and highly competitive. Although we believe that
the diverse segments of the Internet market will provide opportunities for more
than one supplier of products and services similar to those of us and our
subsidiaries and investments, it is possible that a single supplier may dominate
one or more market segments. We believe that the principal competitive factors
in this market are name recognition, performance, ease of use, variety of
value-added services, functionality and features and quality of support.
Competitors include a wide variety of companies and organizations. Some of our
existing competitors, as well as a number of potential new competitors, have
greater financial, technical and marketing resources than we do.

Our market for investment related information delivered via the Internet is
intensely competitive. We currently or potentially compete with many other
companies. There are many other companies that offer a site or a service that
competes with sites or services offered by one or more of Cosmoz' properties.
For example, SearchAuction.com, AuctionHawk.com, AuctionWatch.com, and numerous
other auction sites compete with the auction tracking services of Cosmoz'
subsidiary, iTrack.com.

Similarly, Quicken.com, Yahoo!Finance, CNBC, RagingBull.com, and numerous other
financial websites sites compete with the financial information services
provided by Cosmoz subsidiaries such as FinancialContent.com, StreetIQ.com,
MosterQuote.com, and BuckInvestor.com. Many of our competitors are more
experienced, more well-funded, and have higher brand-recognition that our
properties (among numerous other advantages). Additionally, other competitors
undoubtedly will enter the market.

FirstParsec, our acceleration/incubation division, also faces competition.
FirstParsec provides strategic consulting and business services to emerging
companies that are developing Internet web sites or web-enabling technologies.
FirstParsec faces competition from a variety of companies in a variety of
fields.

FirstParsec faces competition from business consulting firms. Business
consulting firms primarily offer advanced knowledge of business operations and
strong networking capabilities. Business consultants with whom FirstParsec
competes include Atomic Tangerine, Ernest & Young, SiliconValley Bank,
BusinessDevelopment.com, and Startups.com.

FirstParsec faces competition from other incubators and accelerators.
Accelerators with whom FirstParsec competes include Katalyst, Summit
Accelerator, GrimaldiGroup, Cenetec.com. Incubators with whom FirstParsec
competes include Venture Frogs, Incubate.com, eHatchery, Camp6, Idealabs, and
eCompanies.

Many of our competitors in the acceleration/incubation field, and in the
business consulting field, are far more experienced and are more well-funded
that us.

<PAGE>

Also, the staff that comprises our ProfitWire subsidiary is inexperienced, and
ProfitWire does not presently maintain an active base of existing customers.
Many of our competitors are more experienced, more well funded, and have higher
brand-recognition than us and our subsidiaries, among numerous other advantages.
Additionally, other competitors undoubtedly will enter the market.

There can be no assurance that our competitors will not develop Internet
products and services that are superior to ours or that achieve greater market
acceptance than our offerings. There can be no assurance that the Company will
be able to compete successfully against its current or future competitors or
that competition will not have a material adverse effect on the Company's
business, results of operations and financial condition.

ITEM 2. OUR PROPERTIES

On March 1, 2000, we relocated our principal executive offices to a 5,900 square
foot facility at 1515 So. El Camino Real, Suite 100, San Mateo, California
94402. We lease the facility under a 3-year agreement that terminates on
February 28, 2003, with no renewal option. The aggregate annual rental rate for
the entire facility for the first, second, and third years of the lease term is
$248,094, $255,182, and $262,271, respectively. We are also obligated to pay
33.34% of increases in operating expenses and property taxes paid or incurred by
the landlord in the second and third years of the lease term. All operations
including system development, control, and maintenance are performed at this
facility.

ITEM 3. LEGAL PROCEEDINGS

We are not currently aware of any legal proceedings or claims that we believe
will have, individually or in the aggregate, a material adverse effect on our
financial position or results of operations.

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

No matters were submitted for a vote of our stockholders during our fourth
quarter ended June 30, 2000.

PART II

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

Our common stock is listed on the Over-the-Counter Bulletin Boards under the
symbol "CMOZ". The following table reflects the high and low sales price per
share of common stock as quoted from the OTCBB transactions for the fiscal
period indicated.
<TABLE>
<CAPTION>

Fiscal Year Ended 1999 Fiscal Year Ended 2000
---------------------- ---------------- ---------------- ------------------- ----------------
High Low High Low
---------------------- ---------------- ---------------- ------------------- ----------------
<S> <C> <C> <C> <C>
First Quarter N/A N/A 2.4688 1.3125
---------------------- ---------------- ---------------- ------------------- ----------------
Second Quarter N/A N/A 1.9062 0.9062
---------------------- ---------------- ---------------- ------------------- ----------------
Third Quarter 4.1875 0.1406 1.875 1.000
---------------------- ---------------- ---------------- ------------------- ----------------
Fourth Quarter 6.3125 0.9062 1.2188 0.2969
---------------------- ---------------- ---------------- ------------------- ----------------
</TABLE>

6
<PAGE>

As of September 25, 2000 a share of our common stock was $ 0.1875. The
over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commissions and may not represent actual transactions.

As of September 25, 2000, there were 64,514,849 shares of common stock
outstanding. As of July 17, 2000, our stock was held by approximately 438
shareholders of record.

The Company has followed a policy of reinvesting earnings in the business and
consequently has not paid any cash dividends. At the present time, no change in
this policy is under consideration by the Board of Directors. The payment of
cash dividends in the future will be determined by the Board of Directors in
consideration of business conditions then existing, including the Company's
earnings, financial requirements and condition, opportunities for reinvesting
earnings, and other factors.

RECENT SALES OF UNREGISTERED SECURITIES

In the three years preceding the filing of this annual report, we have issued
the following securities, all Class A Common, our sole class of securities, that
were not registered under the Securities Act:

Number of
Date Persons Receiving Shares Shares Consideration Received, Exemption, and Supporting Facts
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2/5/98 Corworth Investments, 7,356,117 Issued as consideration to retire a loan owed to Corworth in the amount
Inc. of $147,122. We issued these shares under Regulation S, because the
sale took place outside the United States.
2/5/98 Times Square 7,500,000 Issued as consideration to retire a loan owed to Times Square
International International in the amount of $150,000. We issued these shares under
Regulation S, because the sale took place outside the United States.
2/17/98 to Various Parties 6,390,000 We received $798,750 from a Regulation D, Rule 504 private placement
2/28/98 that we underwent between 2/17/98 and 2/28/98.
3/17/98 National Resources 100,000 Issued as consideration for broker-dealer services provided to us. We
Investment, Inc. issued these shares under Regulation D, Rule 505.
4/23/98 Asia Pacific Ventures 600,000 $75,000, through a private placement. We issued these shares under
Inc. Regulation S, because the sale took place outside the United States.
4/23/98 Asia Pacific Ventures 800,000 $100,000, through a private placement. We issued these shares under
Inc. Regulation S, because the sale took place outside the United States.
6/16/98 NIR Group 110,000 Issued as consideration for finder's fee services provided to us in
connection with private placements.
3/4/99 to Various Parties 12,000,000 We received $718,750 in cash and $281,250 in services, for a total of
4/14/99 $998,633, from a Regulation D, Rule 504 private placement that we
underwent between 3/4/99 and 4/14/99. The services for which we issued
shares included consulting on strategic business and financial
plans, and assistance in negotiations with potential investors.
4/12/99 North American 100,000 Issued as consideration for investor relations services provided to us.
Corporation Consulting We issued these shares under Regulation D, Rule 505.
4/15/99 Stephen Carnes 50,000 In connection with the acquisition of MB TECHNOLOGIES, INC., the shares
were issued in exchange for a portion of Mr. Carnes's shares of MB
Technologies, Inc. We issued these shares under Regulation D, Rule 505.
4/15/99 Wing Yu 50,000 In connection with the acquisition of MB TECHNOLOGIES, INC., the shares
were issued in exchange for a portion of Mr. Yu's shares of MB
Technologies, Inc. We issued these shares under Regulation D, Rule 505.
5/6/99 Gurkan Fidan 450,000 In connection with the acquisition of BuckInvestor.com, Inc., the
shares were issued in exchange for Mr. Fidan's shares of
BuckInvestor.com, Inc. We issued these shares under Regulation D, Rule 505.
5/6/99 Justin Keener 405,000 In connection with the acquisition of BuckInvestor.com, Inc., the
shares were issued in exchange for Mr. Keener's shares of
BuckInvestor.com, Inc. We issued these shares under Regulation D, Rule 505.
</TABLE>

6
<PAGE>

5/6/99 T. Penn & Mary Jo Nugent 45,000 In connection with the acquisition of BuckInvestor.com, Inc., the shares
were issued in exchange for the Nugent's shares of
BuckInvestor.com, Inc. We issued these shares under Regulation D, Rule 505.
6/1/99 Stephen B. Mare 50,000 In connection with the acquisition of KingFINE, Inc., the shares were
issued in exchange for Mr. Marek's shares of KingFINE, Inc. We issued
these shares under Regulation D, Rule 505.
6/1/99 Stephen W. Carnes 50,000 In connection with the acquisition of KingFINE, Inc., the shares were
issued in exchange for Mr. Carnes shares of KingFINE, Inc. We issued
these shares under Regulation D, Rule 505.
6/1/99 Wing Yu 50,000 In connection with the acquisition of KingFINE, Inc., the shares were
issued in exchange for Mr. Yu's shares of KingFINE, Inc. We issued
these shares under Regulation D, Rule 505.
6/1/99 Benjamin Friedman 50,000 In connection with the acquisition of KingFINE, Inc., the shares were
issued in exchange for Mr. Friedman's shares of KingFINE, Inc. We
issued these shares under Regulation D, Rule 505.
7/15/99 Stephen Carnes 75,000 In connection with the acquisition of MB TECHNOLOGIES, INC., the shares
were issued in exchange for the remaining portion of Mr. Carnes's
shares of MB Technologies, Inc. We issued these shares under Regulation
D, Rule 505.
7/15/99 Wing Yu 75,000 In connection with the acquisition of MB TECHNOLOGIES, INC., the shares
were issued in exchange for the remaining portion of Mr. Yu's shares of
MB Technologies, Inc. We issued these shares under Regulation D, Rule 505.
7/27/99 Tupelo Investments 2,750,000 $2,750,000, through a private placement. We issued these shares under
Regulation S, because the sale took place outside the United States.
7/27/99 Bill Tunnell 50,000 Issued as consideration for investor relations services provided to us.
We issued these shares under Regulation D, Rule 505.
9/10/99 Corporate Imaging, Inc. 50,000 Issued as consideration for investor relations services provided to us.
We issued these shares under Regulation D, Rule 505.
9/16/99 Wanda Cavanaugh 24,500 In connection with the acquisition of iTrack.com, Inc.; the shares were
issued in exchange for Ms. Cavanaugh's shares of iTrack.com, Inc.
9/16/99 Kevin Savetz 12,250 In connection with the acquisition of iTrack.com, Inc.; the shares were
issued in exchange for Mr. Savetz's shares of iTrack.com, Inc. We
issued these shares under Regulation D, Rule 505.
9/16/99 Judi Wellnitz 12,250 In connection with the acquisition of iTrack.com, Inc.; the shares were
issued in exchange for Ms. Wellnitz' shares of iTrack.com, Inc. We
issued these shares under Regulation D, Rule 505.
9/16/99 Ashley E. Taylor Trust 49,000 In connection with the acquisition of iTrack.com, Inc.; the shares were
issued in exchange for the Trust's shares of iTrack.com, Inc. We issued
these shares under Regulation D, Rule 505.
9/16/99 Susan Cooney 98,000 In connection with the acquisition of iTrack.com, Inc.; the shares were
issued in exchange for Ms. Cooney's shares of iTrack.com, Inc. We
issued these shares under Regulation D, Rule 505.
9/16/99 Don Taylor & Sybill 61,250 In connection with the acquisition of iTrack.com, Inc.; the shares were
Taylor as Joint Tenants issued in exchange for Mr. & Mrs. Taylor's shares of iTrack.com, Inc.
We issued these sharesunder Regulation D, Rule 505.
9/16/99 Robert M. Dunlap 61,250 In connection with the acquisition of iTrack.com, Inc.; the shares were
issued in exchange for Mr. Dunlap's shares of iTrack.com, Inc. We
issued these shares under Regulation D, Rule 505.
9/16/99 Eric Ward 49,000 In connection with the acquisition of iTrack.com, Inc.; the shares were
issued in exchange for Mr. Ward's shares of iTrack.com, Inc. We issued
these shares under Regulation D, Rule 505.
9/16/99 Linda M. Dunlap & Dave 857,500 In connection with the acquisition of iTrack.com, Inc.; the shares were
Taylor issued in exchange for Ms. Dunlap's and Mr. Taylor's shares of
iTrack.com, Inc.We issued these shares under Regulation D, Rule 505.
</TABLE>

7
<PAGE>

9/22/99 Kelly King 400,000 In connection with the acquisition of StreetIQ.com, Inc., the shares
were issued in exchange for Kelly King's shares of StreetIQ.com, Inc.
We issued these shares under Regulation D, Rule 505.
10/27/99 Bill Tunnell 100,000 Issued as consideration for public relations services provided to us.
We issued these shares under Regulation D, Rule 505.
10/27/99 Eric Ward 20,000 Issued as consideration for online public relations services provided
to us. We issued these shares under Regulation D, Rule 505.
10/27/99 Wanda Cavanaugh 90,000 Issued as consideration for public relations services provided to us.
We issued these shares under Regulation D, Rule 505.
12/9/99 National Financial 50,000 Issued as consideration for investor relations services provided to us.
Communication We issued these shares under Regulation D, Rule 505.
12/9/99 TPG Capital Corp. 250,000 Issued as consideration for services incident to our December 1999
merger with Ivory Acquisition Corp. We issued these shares under
Regulation D, Rule 505. Ivory Acquisition Corp. is an accredited
investor.
12/14/99 RBM Financial 1,500,000 Issued as consideration for consulting services provided to us. We
issued these shares under Regulation S, because the sale took place
outside the United States.
5/5/00 Eric Tyson 50,000 Issued as consideration for Mr. Tyson's services as an author of
investment-related articles for publishing on our websites. We issued
these shares under Regulation D, Rule 506.
5/10/00 Tupelo Investments 3,030,303 $1,000,000, through a private placement. We issued these shares under
Regulation S, because the sale took place outside the United States.
6/27/00 Financial Communication 150,000 Issued as consideration for public relations services provided to us.
Partners We issued these shares under Regulation D, Rule 505.
</TABLE>

The foregoing sales of securities were made in reliance upon the exemption from
the registration provisions of the Securities Act provided for by Section 4(2)
thereof for transactions not involving a public offering. All of the foregoing
securities are deemed restricted securities for the purposes of the Securities
Act.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth our operating results for the two fiscal years
ended June 30, 2000. This data has been derived from audited financial
statements that, in the opinion of our management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of such information when read in conjunction with our annual
audited financial statements and notes thereto appearing elsewhere in this
prospectus. These operating results are not necessarily indicative of results
for any future period.
<TABLE>
<CAPTION>

Years Ended June 30
2000 1999
---------------------------------------
<S> <C> <C>
Statement of Operations Data:
Revenues $ 431,392 $ 47,912
Cost of revenues 57,050 -
---------------------------------------

Gross profit 374,342 47,912
Operating expenses:
Sales and marketing 661,159 105,741
Product development 803,270 117,626
General and administrative 2,610,306 592,490
Amortization of intangibles 490,560 26,656
Other - non-recurring costs 100,000 16,315
Depreciation and amortization 31,432 1,136
---------------------------------------
Total operating expenses 4,696,727 859,964
</TABLE>

8
<PAGE>

<S> <C> <C>
Loss from operations (4,322,385) (812,052)
Other income (loss), net (32,471) 4,924
---------------------------------------
Net loss (4,354,856) (807,128)
Provision for income tax (7,200) (800)
---------------------------------------
Loss after income taxes from operations (4,362,056) (807,928)
Extraordinary loss - (200,000)
---------------------------------------
Net loss from continuing operations (4,362,056) (1,007,928)

Discontinued operations:
Net loss from discontinued operations - (297,945)
Gain on disposal of division, change in
estimate of loss during phase out period 25,623 -

Net loss $ (4,336,434) $ (1,305,873)

Net loss per common share Basic
Continuing operations:
Before extraordinary loss 0.0714 0.0175
Extraordinary loss - 0.0043
---------------------------------------
Total continuing operations 0.0714 0.0219

Discontinued operations (0.0004) 0.0065
---------------------------------------
Net loss per share 0.0710 0.0283

Shares used in per share calculation - basic 61,111,623 46,118,595

Net loss per common share Fully Diluted
Continuing operations:
Before extraordinary loss 0.0688 0.0166
Extraordinary loss - 0.0041
---------------------------------------
Total continuing operations 0.0688 0.0207

Discontinued operations (0.0004) 0.0061
---------------------------------------
Net loss per share 0.0684 0.0269

Shares used in per share calculation - fully diluted 63,364,131 48,628,416

Years Ended June 30,
2000 1999

Balance Sheet Data:
Cash, cash equivalents and short 179,022 1,990,051
term investments
Working capital (667,700) 2,046,687
Total assets 4,238,829 4,426,978
Long term obligations, net of current portion - -
Shareholders' equity 3,314,096 3,370,626
</TABLE>

9
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

For an overview of our company and our operations, please see the section
entitled "Our Business" in Part 1.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that address, among other
things, market acceptance of our solutions, expansion into new targeted
industries, product development, sales and marketing strategies, development and
maintenance of strategic alliances, technological advancement, global expansion,
use of proceeds, projected capital expenditures, liquidity and availability of
additional funding sources. These statements may be found throughout this
report. In some cases, you can identify forward-looking statements by
terminology such as may, will, should, expects, plans, anticipates, believes,
estimates, predicts, potential, continue or the negative of such terms or other
comparable terminology. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including all the risks discussed in the Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this report. We
undertake no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events occur in
the future.

Overview

We earn operating revenues from two principal sources. First, we earn revenues
from the sale of banner and sponsorship advertisements that appear on our
Internet websites. Sponsorship advertising contracts have terms ranging from one
month to one year, longer-than-standard banner advertising contracts and also
involve more integration with our web-sites, such as the placement of buttons
that provide users with direct links to our advertisers' websites. Advertising
revenues on both banner and sponsorship contracts are recognized on a prorated
basis over the period in which the advertising is displayed, if no significant
company obligations remain at the end of a period and collection of the
resulting receivable is probable. We have agreements that provide revenue from
electronic commerce transactions. We recognize these revenues upon notification
from the advertiser of revenues earned by us.

We earn our second revenue source from providing investor relations services to
other companies through our ProfitWire subsidiary. We distribute advertisements
and reports through our family of financial websites and through an opt-in email
list on behalf of growth stock companies. We obtained this opt-in email list
through marketing efforts in our family of investment-related websites.
ProfitWire also recently began offering standard investor relations services. We
often receive payment in shares of stock in lieu of cash.

Costs and expenses are recognized as incurred. The majority of costs and
expenses are related to advertising, salaries, management fees, public and
investor relations services, and amortization of goodwill.

Cost of revenue includes purchase of electronic mail distribution lists and any
directly related customer acquisition costs.

Sales and marketing expenses consist principally of salaries and benefits for
sales, marketing and associated support group personnel. Also included are the
costs for public relations, advertising, tradeshows and marketing materials.

Product and development expenses consist primarily of salaries and benefits for
research and development personnel and also include related expenses, such as
general hardware and software costs and fees paid to outside contractors for
quality assurance activities, maintenance activities, web hosting, financial
content news feeds and stock quotes. Costs incurred in the development of new
products or properties and enhancements to existing products are charged to
expense as incurred until technological feasibility is achieved. Material
software development costs incurred subsequent to the establishment of
technological feasibility are capitalized. Technological feasibility is
determined based on the completion of a working model. We have not incurred
material software development costs and accordingly have not capitalized any
software development costs.

10
<PAGE>

General and administrative expenses consist of salaries and benefits for
executive staff and administrative personnel, management fees paid to
SharpManagement for the services of Wilfred Shaw, chairman and chief executive
officer, facility costs, recruiting, legal, accounting and other general
corporate expenses.

Amortization expenses consist of amortization of goodwill. Goodwill from the
acquisition of Internet properties is amortized over seven years.

Investment gain/loss resulted from sales of marketable securities that are
classified as available-for-sale as of the balance sheet date and are reported
at fair value, with unrealized gains and losses, net of tax recorded in
shareholders' equity. We invest our excess cash in mutual funds and equity
securities traded on national stock markets. Realized gains or losses and
permanent declines in value, if any, on available-for-sale securities are
reported in other income or expense as incurred.

During the fiscal year ended June 30, 1999, we terminated our acquisition of
Investors Guru, a website specializing in providing financial content to
investors. Under the terms of the purchase agreement, we made an initial payment
of $200,000 to the owners of Investors Guru, which was forfeited when the
acquisition was terminated by us. Accordingly, we recorded a one-time charge of
$200,000 as a result of the terminated acquisition.

We have incurred net losses and negative cash flows from operations. For the
year ended June 30, 1999, we had a net loss of $1,007,928 from continuing
operations and a net loss of $297,945 from discontinued operations. We have been
able to raise capital through the sale of our common stock. The cash we raised
is used to fund operations. We intend to continue to fund, acquire and develop
Internet companies by providing strategic consulting services, business services
and seed capital to emerging companies that are developing Internet web sites or
web-enabling technologies. We believe that we will continue to incur operating
losses and negative cash flow for the foreseeable future. In addition, we
believe that as a result of the rapidly evolving nature of our business and our
limited operating history, period-to-period comparisons of our revenues and
operating results are not meaningful and should not be relied upon as indicators
of future performance.

During fiscal year ended June 30, 1999, we had net loss from discontinued
operations of $297,945. We discontinued operations in Canada by July 1998;
however, some minor costs associated with the closing were incurred till October
1998.

Results of Operations for the fiscal years ended June 30, 2000 and 1999

Revenues increased to approximately $431,000 in the year ended June 30, 2000
from approximately $48,000 in the year ended June 30, 1999. This growth in
revenues was primarily attributable to revenues derived from ProfitWire. The
revenues derived from ProfitWire since inception were approximately $387,000.

Cost of revenues. Cost of revenues increased to approximately $57,000 in the
year ended June 30, 2000 from $0 in the year ended June 30, 1999 as a result of
electronic mail distribution expenses related to ProfitWire.

Sales and marketing. Sales and marketing expenses increased to approximately
$661,000 for the year ended June 30, 2000 from approximately $106,000 for the
year ended June 30, 1999. The primary reason for the increase resulted from
advertising costs. Of the increase in sales and marketing costs, $359,197 is a
result of expenses incurred by participation in trade shows, advertising online
and traditional media through radio.

Product development. Product development expenses increased to approximately
$803,000 for the year ended June 30, 2000 from approximately $118,000 for the
year ended June 30, 1999. The increase was the result of an increase in product
development personnel and other related expenses.

11
<PAGE>

General and administrative. General and administrative expenses increased to
approximately $2,610,000 for the year ended June 30, 2000 from approximately
$594,000 for the year ended June 30, 1999. The increase was the result of
increase in administrative personnel, third party public relations services,
investor relations expenses, general operating facilities, legal, accounting
fees, telephone and other support costs.

Amortization of intangibles. Amortization of intangibles expenses increased to
approximately $491,000 for the year ended June 30, 2000 from approximately
$27,000 for the year ended June 30, 1999. The increase was the result of various
acquisitions of Internet properties recorded under the purchase method in
accordance with the provisions of APB 16. Intangible assets are being amortized
on a straight-line basis over seven years.

Non-recurring costs. Non-recurring costs of $100,000 for the year ended June 30,
2000 from approximately $16,000 for the year ended June 30, 1999. The increase
was the result of transaction costs of acquisition (primarily legal fees) and
initial filing fees.

Depreciation and amortization. Depreciation and amortization expenses increased
to approximately $31,000 for the year ended June 30, 2000 from approximately
$1,000 for the year ended June 30, 1999. Property and equipment is being
depreciated over the estimated useful life of the related assets, generally
three to seven years using the straight-line method.

Other income (loss). Net other loss was approximately $32,000 for the year ended
June 30, 2000 as compared to net other income $5,000 for the year ended June 30,
1999. The increase resulted from loss on sale of marketable securities.

Extraordinary loss. Extraordinary loss was $200,000 for the year ended June 30,
1999 resulted from loss of initial payment made to Investors Guru upon the
termination of purchase agreement.

Loss on disposal of operations. Loss of disposal of operations from discontinued
operations was approximately $298,000 for the year ended June 30, 1999.

Gain on disposal of division. Gain on disposal of division resulted from changes
in estimate of loss during phase out period was approximately $26,000. We have
reviewed our outstanding claims that resulted from operations discontinued in
September 1998, we have reduced our reserves to $60,000.

Income Taxes. We have not recorded income tax benefit of $10,000,000 primarily
due to loss carryforwards from continuing operations, which may be used to
offset future United States income taxes and which begin to expire in 2019 due
to the uncertainty surrounding the realization of deferred tax assets. The
income tax expense of $7,200 and $800 for the year ended June 30, 2000 and June
30, 1999 respectively represented minimum state income taxes paid.

Liquidity and Capital Resources

To date, we have financed our operations primarily through the private placement
of equity securities and conversion of debt to common stock. As of June 30,
2000, we had approximately $175,678 of cash, cash equivalents and short-term
investments and working capital deficit of $667,700.

Net cash used in operating activities was $2,546,956 in 2000 compared to
$698,246 in 1999. The cash used during these periods was primarily attributable
to net operating losses of $4,336,434 in 2000 and $1,305,873 in 1999, offset in
part by depreciation and amortization. These losses were principally related to
increased expenses as more fully described in the section entitled "Results of
operations." Our losses were principally related to increased sales and
marketing expenses, product development and general and administrative expenses.

<PAGE>

Net cash provided by investing activities was $1,256,586 in 2000 compared to
cash used in investing activities of $1,723,176 in 1999. Cash provided in 2000
primarily related to sale of marketable securities of $1,589,978. Cash provided
in 1999 resulted from net cash acquired in the amount of $11,543 when we
acquired BuckInvestor.com and KingFine, Inc. Cash used in investing activities
in 2000 included purchases of capital expenditures and long-term investments of
$208,893, and restricted cash of $125,000 on deposit as collateral for the
letter of credit required pursuant to the lease agreement of our office
facility. Cash used in investing activities in 1999 included purchases of
marketable securities, net of capital expenditures and equipment disposal and
long-term investments of $1,734,719. The purchases of marketable securities were
incurred due to our excess cash from equity raised.

For the year ended June 30, 1999, we generated net proceeds from financing
activities of $2,803,258. For the year ended June 30, 2000, we generated net
proceeds from financing activities of $1,041,267. Net cash used in operating
activities for the year ended June 30, 1999 was $698,247 and resulted from net
losses, decreases in accounts receivable, and decreases in inventory. These
amounts were partially offset by an increase of accrued expenses and non-cash
charges. Net cash used in operating activities for the year ended June 30, 2000
was $2,546,956 and resulted from net losses, decreases in accounts receivable.
These amounts were partially offset by an increase of accrued expenses, security
deposits required for our new office and non-cash charges.

Our future capital requirements depend on numerous factors, including market
acceptance of our services, the timing and rate of expansion of our business,
the resources we allocate to our customers and FirstParsec/Acceleration projects
and other factors. We have experienced substantial increases in our expenditures
since January 1, 1999 consistent with growth in our operations and personnel,
and we anticipate that our expenditures will continue to increase in the
foreseeable future. Our continued existence is dependent upon our ability to
increase operating revenues and/or raise additional equity financing. If
additional funds are raised through the issuance of equity securities, then the
percentage ownership of our existing stockholders will be reduced, stockholders
may experience additional and significant dilution and such equity securities
may have rights, preferences or privileges senior to those of our common stock.
There can be no assurance that additional financing will be available on terms
acceptable to us or at all. If adequate funds are not available or are not
available on terms acceptable to us, we may be unable to continue our business,
sales or marketing plan, respond to competitive forces or take advantage of
perceived business opportunities, which could have a material adverse effect on
our business, financial condition and operating results.

Acquisitions

We obtained initial working capital for our new Internet related operations
through a blend of equity and debt financing. In January 1999, we commenced our
Internet operations and we raised $715,875 in cash and $281,250 in services from
the sale of common stock in accordance with Regulation D, Rule 504. We converted
$2,750,000 of short term debt financing into 2,750,000 shares of restricted
common stock in July 1999. We issued common stock for services. Our initial
focus was to develop an Internet-portal for age 21-35 investors. We developed
our own portal, and we made strategic acquisitions of Internet properties. The
following is a summary of the Internet properties we acquired:

o On May 5, 1999, we completed the acquisition of BuckInvestor.com, Inc., a
privately held online financial information content provider, through the
issuance of 900,000 shares of our common stock, having a market value of
$1,012,500 at the time of the transaction. The acquisition was accounted for as
a purchase in accordance with the provisions of APB 16. We recorded goodwill of
$1,006,700, which we will amortize over seven years. Results of operations for
BuckInvestor.com have been included with our results subsequent to the date of
acquisition. The historical financial results of BuckInvestor.com were de
minimis, prior to date of the acquisition.

o On May 6, 1999, we acquired a 49% interest in MB Technologies, Inc., a
privately held operator of online message boards. Under the terms of the
acquisition, we issued 100,000 shares of our common stock with a market value of
$112,800 for 49% interest in MB Technologies. The difference between the amount
paid and the value of the pro rata share of MB's stockholders' equity was
recorded as goodwill. We recorded goodwill of $112,899, which we will amortize
over seven years. The historical financial results of MB Technologies were de
minimis. We exercised our option to purchase the remaining 51% interest in MB
Technologies on July 30, 1999. We issued 150,000 shares of our common stock with
a market value of $315,000 to acquire the remaining 51% ownership interest. We
recorded goodwill of $315,149, which we will amortize over seven years.

<PAGE>

o On June 10, 1999, we completed the acquisition of all outstanding shares of
KingFine, Inc., a privately-held online financial information content provider
and operator of an online message board, through the issuance of 200,000 shares
of our common stock for all of KingFine's outstanding shares. The acquisition
was accounted for as a pooling of interests. The consolidated financial
statements for the year ended June 30, 1999 and the accompanying notes reflect
our financial position and the results of operations as if KingFine were our
wholly owned subsidiary since inception.

o On August 9, 1999, we completed the acquisition of all outstanding shares of
StreetIQ, Inc., a privately-held online financial information content provider
focusing on women investors, through the issuance of 400,000 shares of our
common stock, a market value of $800,000 at the time of transaction. The
acquisition was accounted for as a purchase in accordance with the provision of
APB 16. Results of operations for StreetIQ, Inc. have been included with our
results subsequent to the date of acquisition. We recorded goodwill of $800,199,
which we will amortize over seven years. The historical financial results of
StreetIQ, Inc. were de minimis.

o On October 7, 1999, we completed the acquisition of all outstanding shares of
iTrack, Inc., a privately-held online auction monitoring service that lets users
track specific products on various online auction houses, through the issuance
of 1,225,000 shares of our common stock, a market value of $1,722,595 at the
time of transaction, for all of iTrack's outstanding shares. The acquisition was
accounted for as a purchase in accordance with the provision of APB 16. Results
of operations for iTrack have been included with our results subsequent to the
date of acquisition. We recorded goodwill of $1,722,594, which we will amortize
over seven years. The historical financial results of iTrack were de minimis.

o On January 5, 2000, we completed the acquisition of Ivory Acquisition
Corporation, a fully reporting company under regulation 12(g) of the Securities
Exchange Act of 1934. Ivory has no material assets or liabilities. The business
combination is accounted for under the pooling of interest method of accounting.
The operations of Ivory before the acquisition date were de minimis. We incurred
acquisition related cost of $100,000. We issued 250,000 shares of our common
stock in exchange for all outstanding shares of Ivory.

Factors That Will Affect Our Future Results of Operations

You should carefully consider the risks described below and other information in
this annual report. The risks and uncertainties described below are not the only
ones we will face. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial also may impair our business operations. If
any of the following risks actually occur, our business could be harmed. In such
case, the trading price of our common stock could decline, and you may lose all
or part of your investment.

We Have a Limited Operating History

We were incorporated in 1996, and we have operated under our current business
model since early 1999. Our operations prior to January 1, 1999 offer little or
no instructive guidance for our post-January 1, 1999 operations. We have only a
limited operating history on which you can base an evaluation of our business
and prospects. We have yet to achieve profitability. As an Internet company in
the early stage of development, we face increased risks, uncertainties, expenses
and difficulties. You should consider an investment in our company in light of
these risks, uncertainties, expenses and difficulties.

We Are Not Yet a Profitable Company

We have incurred significant losses and cannot predict when, if ever, we will
make a profit. We have incurred net losses and negative cash flows from
operations. For the year ended June 30, 1999, we had a net loss of $1,007,928
from continuing operations and a net loss of $297,945 from discontinued
operations. These losses have resulted primarily from our historical inability
to achieve a level of revenues that is sufficient to cover our general operating
expenses. We expect to incur additional operating losses in the future unless
and until we are able to generate operating revenues sufficient to support
expenditures. We cannot guarantee that sales of our products and services will
ever generate sufficient revenues to fund our continuing operations, that we
will generate positive cash flow from operations or that we will attain and then
continue to make a profit in any future period.

<PAGE>

We May Need Additional Capital in the Near Future

We have limited cash resources and need additional capital to pay our operating
costs that are in excess of our revenues, manage our present portfolio of
companies, and continue to increase our program of incubating and developing
internet and technology companies. Based on the rate of our cash operating
expenditures and our current plans, we anticipate our cash requirements for the
next twelve months may be met primarily from the proceeds to be obtained from
puts of our shares to Swartz under our investment agreement with them. However,
our ability to obtain funds under the agreement is subject to certain
conditions. These conditions include the effectiveness of this registration
statement covering the resale of the shares sold under the investment agreement
and a limitation on our ability to issue shares based on the volume of trading
in the common stock. Although we are planning to satisfy our future cash
requirements from improved sales, the recoupment of venture capital investments,
the sale of wholly owned subsidiaries, the sale of Internet e-commerce services
and advertising, we cannot guarantee that any funds required during the next
twelve months or thereafter will be generated from these, or any other potential
sources. The lack of additional capital could force us to substantially curtail
or cease operations, which would have a material adverse effect on our business.
Further, we cannot guarantee that any funds, if available, will be available on
attractive terms or that they will not have a significantly dilutive effect on
our existing shareholders.

Our Financial Statements Contain Going Concern Language

The auditor's report accompanying our audited financial statements for our
fiscal year ended June 30, 2000, state that because of our net losses and
liquidity problems, there is a concern that we will be unable to continue to
operate. Our failure to manage future growth could harm us. We currently are
experiencing a period of significant expansion in our staffing requirements,
facilities and infrastructure and we anticipate that further expansion will
occur. This expansion has placed, and we expect it will continue to place, a
significant strain on our management, operational and financial resources.

We Need to Constantly Maintain and Update Our Infrastructure

We anticipate a need to constantly add new hardware, update software and add new
engineering personnel to accommodate increased use of our websites. If we are
unable to increase the capacity of our systems at least as fast as the growth in
demand for this capacity, our websites may become unstable and may cease to
operate for periods of time. Unscheduled downtime could harm our business and
also could discourage users of our websites and reduce future revenues. If we
are unable to hire and successfully train sufficient employees or contractors in
the customer support area, users of our websites may have negative experiences
and current and future revenues could suffer.

We Are Dependent on Key Personnel

Although current management has had experience in the development and operation
of other businesses, it does not have direct prior experience in establishing or
operating an incubator/accelerator business. We will need to retain experienced
management for these segments of the business. The loss of the services of any
of our executive officers or other key employees could harm our business. We do
not have long-term employment agreements with any of our key personnel and we do
not maintain any key person life insurance policies. The majority of our
employees today have been with us less than one year and we expect that our rate
of turnover and hiring will continue at a high pace. Our future success will
depend on our ability to attract, train, retain and motivate highly skilled
technical, managerial, marketing and customer support personnel. Competition for
these personnel is intense and we may be unable to successfully attract,
integrate or retain sufficiently qualified personnel. Our current and planned
personnel, systems, procedures and controls may not be adequate to support our
future operations.

Our Stock Price is Volatile

The trading prices of Internet stocks in general, and ours in particular, have
experienced extreme price and volume fluctuations in recent months. These
fluctuations often have been unrelated or disproportionate to the operating
performance of these companies in general, and ours in particular. The
valuations of many Internet stocks, including ours, are still extraordinarily
high, based on conventional valuation standards such as price to earnings and
price to sales ratios. These trading prices and valuations may not be sustained.
Negative changes in the public's perception of the prospects of Internet or
e-commerce companies are likely to depress our stock price regardless of our
results

<PAGE>

Our Services Are Not Diverse, and We Must Expand Our Services

We will need to develop new services, features and functions in order to expand.
Right now, we receive substantially all of our revenues from online advertising
and through offering investor relations services. We plan to expand our
operations by developing new or complementary services, products or transaction
formats or by expanding the breadth and depth of services. We may be unable to
expand our operations in a cost effective or timely manner. Even if we do
expand, we may not maintain or increase our overall market acceptance. If we
launch a new business or service that is not favorably received by consumers, it
could damage our reputation.

We Are Very Dependent on Third Parties

We may pursue strategic relationships with third parties to provide many of our
services. By using third parties to deliver these services, we may be unable to
control the quality of the services, and our ability to address problems will be
reduced if any of these third parties fails to perform adequately. Expanding our
operations also will require significant additional developmental expense and
will strain our management, financial and operational resources. The lack of
market acceptance of any new services could harm our business. Acquisitions
could result in dilution, operating difficulties and other harmful consequences.

We Are Subject to Liability Risks

We are subject to risks associated with information disseminated through our
Websites. We provide financial information such as investment advice and stock
quotes. Similarly, we operate financial-related message boards. The participants
in such message board activity may subject us to suit or subpoena as a result of
their statements. As we do not currently carry any liability insurance that
covers this type of exposure, any costs incurred as a result of this liability
or asserted liability could harm our business. Because materials may be
downloaded from the Internet and subsequently distributed to others, there is a
potential that claims will be made against us for defamation, negligence,
copyright or trademark infringement, personal injury or other theories based on
the nature, content, publication and distribution of such materials.

We Are Dependent on Our Physical and Technological Infrastructure

System failures could harm our business. Our future success in the Internet
business, and ability to provide high quality customer service to our members,
will depend on the efficient and uninterrupted operation of our computer and
communications hardware and software systems. The computer web servers for
operating our services are currently located off-site. These systems and
operations are vulnerable to damage or interruption from hurricanes, floods,
fires, power loss, telecommunication failures and similar events. Our systems
are also subject to break-ins, sabotage, intentional acts of vandalism and
similar misconduct. We do not have fully redundant systems, a formal disaster
recovery plan or alternative providers of hosting services, and we do not carry
any business interruption insurance to compensate us for losses that may occur.
Despite any precautions we may take, the occurrence of a natural disaster or
other unanticipated problems with our servers could result in interruptions in
our services. In addition, the failure by our communications providers to
provide our required data communications capacity could result in interruptions
in our service. Any damage to or failure of our systems could result in
interruptions in our service. Such interruptions would harm our future revenues
and profits if our members believe that our system is unreliable.

Computer Break-Ins, Vandalism, and Computer Viruses Can Harm Us

Unauthorized break-ins to our service or computer or communications systems
could harm our business. Our servers and systems are vulnerable to computer
viruses. Viruses are becoming more common and more sophisticated. Our servers
and systems are also subject to physical or electronic break ins and similar
disruptions, which could lead to interruptions, delays, loss of data or the
inability to complete on line transactions. In addition, unauthorized persons
may improperly access our data.

<PAGE>

We Are Controlled by Some Shareholders, Executive Officers and Directors

As of the date of this Offering, our executive officers and directors and their
affiliates own significant amounts of our outstanding common stock. Several
other shareholders hold a significant percentage of our shares and can thus
exercise significant control over us. As a result, they may have the ability to
control our company and direct our affairs and business, including the election
of directors and approval of significant corporate transactions. This
concentration of ownership may have the effect of delaying, deferring or
preventing a change in control of our company and may make some transactions
more difficult or impossible without the support of these shareholders. Any of
these events could decrease the market price of our common stock.

We Have Indemnified Our Directors, Officers, Employees, and Agents

Our Articles of Incorporation provide for the indemnification of our officers,
directors, employees and agents. Under most circumstances, they are indemnified
against attorneys' fees and other expenses incurred by them and judgments
rendered against them in any litigation to which they become a party arising
from their association with or activities on our behalf. We may also bear the
expenses of such litigation for any of our officers, directors, employees or
agents, upon their promise to repay such sums if it is ultimately determined
that they are not entitled to indemnification. This indemnification policy could
result in substantial expenditures by us that we may be unable to recoup even if
we are entitled to do so.

We Expect That Many Existing Shareholders Intend to Sell Their Shares

A significant number of shares are eligible for sale and their sale could
depress our stock price. We have a significant market overhang on our common
stock because in the past we have paid many of the people with whom we have done
business with restricted shares of our common stock instead of cash. It is
likely that these stockholders will continue to sell in the future. Sales of
substantial amounts of our common stock including shares issued upon the
exercise of outstanding options in the public market after this offering could
depress the market price of our common stock. These sales also might make it
more difficult for us to sell equity or equity related securities in the future
at a time and price that we deem appropriate.

We Do Not Manage Some of Our Assets

Some of our assets are represented by ownership interests in other companies.
Often, the operation of such other companies is beyond our control. The
management of such companies may make decisions that we are powerless to
control, and the value of our investment may suffer, and our business may be
adversely affected.

We Expect our Operating Results to Fluctuate Greatly

We expect significant fluctuations in future quarterly operating results. Such
fluctuations have been and may in the future be caused by numerous factors, many
of which are outside our control including demand for our products and services,
incurrence of costs associated with acquisitions, divestitures and investments,
the timing of divestitures, market acceptance of new products and services,
specific economic conditions in the Internet industry, and general economic
conditions. The emerging nature of commercial use of the Internet makes
predictions concerning future revenues difficult. We believe that
period-to-period comparisons of its results of operations will not necessarily
be meaningful and should not be relied upon as indicative of future performance.
Also, it is possible that in some future quarters our operating results will be
below the expectations of securities analysts and investors. In such
circumstances, the price of our common stock may be adversely affected.

<PAGE>

We Do Not and Will Not Pay Dividends

To date, we have not paid any dividends on our common stock and we do not intend
to declare any dividends in the foreseeable future. Any future profits will be
reinvested in our company to attempt to expand its business operations.

Related Party Transactions

There are some transactions to which we are a party and some matters affecting
us that have or will result in a material benefit to certain of our directors
and executive officers, or may create conflicts of interest.

Internet Regulation Could Harm Us

New and existing regulation of the Internet could harm our planned business
activities. We are subject to the same federal, state and local laws as other
companies conducting business on the Internet. Today there are relatively few
laws specifically directed towards Internet services. However, due to the
increasing popularity and use of the Internet, it is possible that laws and
regulations will be adopted for the Internet or online services. Changes to
existing laws or the passage of new laws intended to address these issues could
directly affect the way we do business or could create uncertainty in the
marketplace. This could reduce demand for our services, increase the cost of
doing business because of litigation costs or increased service delivery costs,
or otherwise harm our business. In addition, because our services are accessible
worldwide, and we intend to facilitate sales of goods to members worldwide,
foreign jurisdictions may claim that we are required to comply with their laws.
Our failure to comply with foreign laws could subject us to penalties ranging
from fines to bans on our ability to offer our services. In the United States,
companies are required to qualify as foreign corporations in states where they
are conducting business. As an Internet company, it is unclear in which states
we are actually conducting business. Our failure to qualify as a foreign
corporation in a jurisdiction where we are required to do so could subject us to
taxes and penalties for the failure to qualify and could result in our inability
to enforce contracts in those jurisdictions. Any new legislation or regulation,
or the application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could harm our business.

We Are Dependent Upon the Continued Growth of the Internet

Our future success is dependent upon the continued growth of the Internet.
Assuming we are successful in achieving an acceptable level of market
recognition, our future revenues and profits will be substantially dependent
upon the widespread acceptance of the Internet. Rapid growth in the use of and
interest in the Web, the Internet and online services is a recent phenomenon.
This acceptance and use may not continue. Even if the Internet is accepted,
concerns about fraud, privacy and other problems may mean that a sufficiently
broad base of consumers will not adopt the Internet as a medium of commerce. In
particular, our websites require users to make publicly available their email
addresses and other personal information that some potential users may be
unwilling to provide. These concerns may increase as additional publicity over
Internet privacy issues increases. Market acceptance for recently introduced
services and products over the Internet is highly uncertain, and there are few
proven services and products. In order to expand our member base, we must appeal
to and acquire consumers who historically have used traditional means of
commerce to purchase goods.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

COSMOZ.COM, INC.
Consolidated Financial Statements
June 30, 2000 and 1999

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders -
Cosmoz.com, Inc.

We have audited the accompanying consolidated balance sheets of Cosmoz.com,
Inc., a Delaware Corporation, as of June 30, 2000 and 1999, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows for the fiscal years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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 Cosmoz.com, Inc. as of June 30,
2000 and 1999, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 11 to the
financial statements, the Company experienced a significant net loss in the year
ending June 30, 2000, with losses incurred subsequently, and generated negative
cash flows from operating activities. These matters raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in note 11. In the event
additional funds are raised, continuation of the business thereafter is
dependent upon the ability of the Company to achieve sufficient cash flow. The
accompanying financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

By: /s/ Berg & Company, LLP
---------------------------
Berg & Company, LLP
San Francisco, California
September 6, 2000

19
<PAGE>

Consolidated Balance Sheet

For the periods ended June 30, 2000 and June 30, 1999

<TABLE>
<CAPTION>
June 30, June 30,
2000 1999
---- ----
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 175,678 $ 424,781
Short-term investments in marketable securities 3,344 1,565,270
Accounts receivable - trade, net 8,717 24,846
Prepaid expenses 69,296 --
Note receivable - related party -- 900,000
Amounts due from shareholders -- 188,142
----------- -----------

Total Current Assets 257,033 3,103,039
----------- -----------

Property and Equipment
Office furniture 57,789 13,127
Leasehold Improvements 10,891 --
Equipment 142,877 55,519
----------- -----------
211,557 68,646

Accumulated depreciation (32,568) (1,136)
----------- -----------

Total Property and Equipment 178,989 67,510
----------- -----------

Other Assets:
Long-term investments 335,982 145,000
Deposits 26,500 18,486
Intangible assets, net 3,440,325 1,092,943
----------- -----------

Total Other Assets 3,802,807 1,256,429
----------- -----------

Total Assets $ 4,238,829 $ 4,426,978
=========== ===========
</TABLE>

20
<PAGE>

Consolidated Balance Sheet
(continued)
For the periods ended June 30, 2000 and June 30, 1999
<TABLE>
<CAPTION>

June 30, June 30,
2000 1999
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 155,893 $ 81,849
Reserve for discontinued operations 60,000 85,623
Payroll sales tax payable - discontinued operations 117,509 116,696
Accrued expenses - Discontinued operations 130,394 160,720
Management fees due-Related party 248,427 --
Other accrued expenses 47,921 --
Due to related parties 150,000 596,875
Notes payable - other 14,589 14,589
------------ ------------

Total Current Liabilities 924,733 1,056,352
------------ ------------

Stockholders' Equity
Preferred stock, $0.001 par value; 50,000,000
shares authorized;
none issued or outstanding -- --
Common stock, $0.001 par value; 200,000,000 shares
authorized;
64,514,849 and 58,899,546 issued and 64,514 58,899
outstanding respectively
Additional paid-in-capital 13,505,657 9,259,417
Accumulated other comprehensive loss (17,543) (45,592)
Accumulated deficit (10,238,532) (5,902,098)
------------ ------------

Total Stockholders' Equity 3,314,096 3,370,626
------------ ------------

Total Liabilities and Stockholders' Equity $ 4,238,829 $ 4,426,978
============ ============
</TABLE>

21
<PAGE>

Consolidated Statements of Operations

For the years ended June 30, 2000 and June 1999
<TABLE>
<CAPTION>

Year Ended Year Ended
June 30, 2000 June 30, 1999
<S> <C> <C>
Revenues:
Net revenues $ 431,392 $ 47,912
Costs of revenues (57,050) --

374,342 47,912

Operating Expenses:
Sales and marketing 661,159 105,741
Product development 803,270 117,626
General and administrative 2,610,306 592,490
Amortization of intangibles 490,561 26,656
Non-recurring costs-Acquisition expense 100,000 16,315
Amortization and depreciation 31,432 1,136

Total operating expenses 4,696,728 859,964

Loss from operations (4,322,386) (812,052)

Other Income (loss):
Interest income 5,812 4,608
Dividend income 37,466 --
Interest expense (9,602) (12)
Gain/(loss) on investment (26,988) 328
Investment expenses (39,159) --

Total other income (32,471) 4,924

Net loss before taxes (4,354,857) (807,128)

Provision for income tax (7,200) (800)

Loss from operations after income taxes (4,362,057) (807,928)

Extraordinary loss -- (200,000)

Net loss from continuing operations (4,362,057) (1,007,928)

Discontinued operations:
Net loss from discontinued operations -- (297,945)

Change in estimate of loss reserve during phase out 25,623 --
period

Net loss $(4,336,434) $(1,305,873)
</TABLE>

Consolidated Statement of Operations

For the years ended June 30, 2000 and June 1999
<TABLE>
<CAPTION>

June 30, 2000 June 30, 1999
------------- -------------
Net loss per share (Note 1):

Basic Fully Diluted Basic Fully Diluted
-------- --------- ------- -----------
<S> <C> <C> <C> <C>
Continuing operations:
Before extraordinary loss $ 0.0714 $ 0.0688 $ 0.0175 0.0166
Extraordinary loss - - 0.0043 0.0041
-------- --------- -------- -----------
Total continuing operations 0.0714 0.0688 0.0219 0.0207

Discontinued operations (0.0004) (0.0004) 0.0065 0.0061
(Income)/Loss

Net loss per share $ 0.0710 $ 0.0677 $ 0.0283 0.0269
======== ========= ======== ===========

Shares used in per share calculation
- basic 61,111,623 46,118,595
========== ===========

Shares used in per share calculation
- diluted 63,364,131 48,628,416
========== ===========
</TABLE>

22
<PAGE>

Consolidated Statement of Changes in
Shareholders' Equity
for the years ended June 30, 2000 and 1999
Split Table
<TABLE>
<CAPTION>

Accumulated
Additional Other
Preferred Stock Common Stock Paid-in Comprehensive
Shares Amount Shares Amount Capital Income (loss)
------ ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1998 - $ -- 41,348,546 $ 41,348 $ 4,335,141 $ --

Comprehensive income (loss):
Net loss from operations
during the period - -- -- -- -- --
Foreign currency translation
adjustment - -- -- -- -- (10,887)
Net unrealized loss on
securities - -- -- -- -- (34,705)

Sale of common stock, net of
issuance costs - -- 8,625,000 8,625 708,758 --

Issuance of commons stock for
acquisitions - -- 1,200,000 1,200 1,134,743 --

Conversion of short-term debt to
commonstock - -- 2,750,000 2,750 2,747,250 --

Issuance of common stock for
services - -- 4,976,000 4,976 267,629 --

Compensation expense recognized on - -- -- -- 65,896 --
option grants

Balance, June 30, 1999 - $ -- 58,899,546 $ 58,899 $ 9,259,417 $ (45,592)

Comprehensive income (loss):
Net loss from operations
during the period - -- -- -- -- --
Net unrealized loss on
securities - -- -- -- -- 28,049

Issuance of common stock for
acquisitions - -- 2,075,000 2,075 2,836,370 --

Issuance of common stock for - -- 510,000 510 811,500 --
services

Compensation expense on grants - -- -- -- 201,400 --

Sale of common stock
- -- 3,030,303 3,030 396,970 --

Balance, June 30, 2000
- -- 64,514,849 64,514 13,505,657 (17,543)
</TABLE>

<PAGE>

Total
Accumulated Shareholders' Comprehensive
Deficit Equity Income (loss)
---------- --------- ------------
<S> <C> <C> <C>
Balance, June 30, 1998 $ (4,596,225) (219,736) $ --

Comprehensive income (loss):
Net loss from operations
during the period (1,305,873) (1,305,873) (1,305,873)
Foreign currency translation
adjustment -- (10,887) (10,887)
Net unrealized loss on
securities -- (34,705) (34,705)

Sale of common stock, net of
issuance costs -- 717,383 --

Issuance of commons stock for
acquisitions -- 1,135,943 --

Conversion of short-term debt to
commonstock -- 2,750,000 --

Issuance of common stock for
services -- 272,605 --

Compensation expense recognized on -- 65,896 --
option grants

Balance, June 30, 1999 (5,902,098) 3,370,626 $ (1,351,465)

Comprehensive income (loss):
Net loss from operations
during the period (4,336,425) (4,336,425) (4,336,425)
Net unrealized loss on
securities -- 28,049 28,049

Issuance of common stock for
acquisitions -- 2,838,445 --

Issuance of common stock for -- 812,010 --
services

Compensation expense on grants -- 201,400 --

Sale of common stock
-- 400,000 --

Balance, June 30, 2000
(10,238,532) 3,314,096 (4,308,376)
</TABLE>

24
<PAGE>

Consolidated Statements of Cash Flows

For the years ended June 30, 2000 and June 30, 1999
<TABLE>
<CAPTION>

June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Operating Activities:
Net Loss $(4,336,434) (1,305,873)
Adjustments to reconcile net (loss) to
net cash provided by (used in) operating activities:
Intangible amortization 490,561 26,656
Stock based compensation 201,400 65,896
Amortization and depreciation 31,432 1,136
(Gain)/Loss on discontinued operations (25,623) 98,039
Issuance of common stock for services 812,010 272,605

Changes in operating assets and liabilities:
Accounts receivable - trade, net 16,129 (16,025)
Other Accounts receivable -- 33,229
Prepaid expenses (69,296) (18,487)
Inventory -- 16,583
Security deposit (8,014) --
Accounts payable 74,044
Accrued liabilities 266,835 127,994

Net cash used in operating activities (2,546,956) (698,247)

Investing activities:

Sale of of marketable securities 1,589,979 --
Purchase of marketable securities -- (1,599,975)
Cash acquired in acquisitions 500 11,543
Restricted cash (125,000)
Change in other investments, net (65,982) (145,000)
Proceeds from disposal of property and equipment -- 78,902
Purchases of property and equipment (142,911) (68,646)

Net cash used in investing activities 1,256,586 (1,723,176)

Financing activities:
Proceeds from issuance of common stock 400,000 717,383
Conversion of debt to common stock -- 2,750,000
Proceeds from short term debt 250,000 --
Payments on notes payable (100,000) (361,000)
Proceeds from (Loan to) to related party 900,000 (900,000)
Payment received on loan to related party 188,142 --
Due to related party (596,875) 596,875

Net cash provided by financing activities 1,041,267 2,803,258

Increase in cash and cash equivalents (249,103) 381,835

Cash and cash equivalents, beginning of period 424,781 42,946

Cash and cash equivalents, end of period $ 175,678 424,781
</TABLE>

25
<PAGE>

Consolidated Statements of Cash Flows
(Continued
For the years ended June 30, 2000 and June 30, 1999

June 30, June 30,
2000 1999
---- ----
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 9,573 12
Taxes $ 4,800 -

The following non cash transactions occurred during the year ended June 30,
1999:

Acquisition of BuckInvestor, Inc.
Intangibles $ 1,006,700
Issuance of common stock for acquisitions
(1,012,700)
-----------
Cash received $ (6,000)
===========
Acquisition of MBMagic, Inc.
Intangibles $ 112,900
Issuance of common stock for acquisitions (112,900)
-----------
Cash received $ --
===========

The following noncash transactions occurred during the year ended June 30, 2000:

Acquisition of MBMagic, Inc
Intangibles $ 315,149
Issuance of common stock for acquisition (315,149)
-----------
Cash received $ --
===========
Acquisition of StreetIQ
Intangibles $ 800,199
Issuance of common stock for acquisition (800,199)
-----------
Cash received $ --
===========
Acquisition of iTrack.Com
Intangibles $ 1,722,594
Issuance of common stock for acquisition
(1,722,594)
-----------
Cash received $ --
===========

1. Summary of Significant Accounting Policies
------------------------------------------

A. General Description of Business

Cosmoz.com, Inc., ("Cosmoz" or the "Company"), a Delaware corporation,
(http://www.cosmoz.com), offers through the World Wide Web a network of
branded, technology and community-driven Websites focused on the
following categories: personal finance and investing; search and
directory; commerce; and games; and it provides incubation services to
companies in the Internet industry. The Company provides strategic
consulting, business services, and seed capital to emerging companies
that are developing Internet Websites or Web-enabling technologies.

The Company was incorporated in Delaware on October 15, 1996, as MIS
International, Inc., which merged with MIS Multimedia Interactive
Services Inc., a Canadian corporation, as of July 1, 1997. MIS
Multimedia Interactive Services Inc. and its subsidiaries (Pretzel
Franchising, Inc. and Wheel to Wheel Franchising, Inc.) were engaged in
the business of developing and selling franchises. Wheel to Wheel
Franchising, Inc. ("WTW"), concentrated on the marketing of franchises
for automotive service centers that used recycled automotive parts, and
it operated an automotive service center in Ontario, Canada. Pretzel
Franchising, Inc. ("PFI"), concentrated on the marketing of franchises
for "Pretzel Twister" and it operated a store in Toronto, Ontario.
These two Canadian subsidiaries are inactive as of September 30, 1998.

During 1999, the Company consummated the acquisitions of
BuckInvestor.com, Inc., and KingFine, Inc. The shareholders of these
corporations exchanged all of their shares for shares of the Company's
Common Stock in business combinations that were accounted for under the
pooling of interest method for KingFine, Inc., and under the purchase
method for BuckInvestor.com, Inc.

All financial information has been retroactively adjusted to reflect
the combined operations of the Company and KingFine, Inc., as if it
were a wholly-owned subsidiary of the Company since inception.

26
<PAGE>

During the year ended June 30, 2000, the Company consummated the
acquisitions of Ivory Acquisition Corporation, StreetIQ, Inc., iTrack,
Inc., and the remaining 51% interest in MB Technologies, Inc. The
shareholders of these corporations exchanged all of their shares for
shares of the Company's Common Stock.

The Company's wholly-owned Internet properties include:

o BuckInvestor.com, Inc. (www.buckinvestor.com), which provides
financial and investment information in a format targeted to
investors under the age of 35;

o KingFine, Inc. (www.monsterpick.com), which operates an
investment content website and online message boards targeted to
active investors;

o MB Technologies, Inc. (www.tickerzone.com), a message board
community solutions provider;

o StreetIQ, Inc.(www.streetiq.com), which provides focused online
investment information and a community for women;

o iTrack, Inc. (www.itrack.com), operates an online auction
monitoring service that allows consumers to track specific
products on the various online auction houses; and

o Other Company Internet properties include www.monsterquote.com;
www.profitwire.com; www.financialcontent.com; www.casinowhiz.com;
and www.cosmozmall.com.

B. Basis of Presentation and Organization

These consolidated financial statements represent the financial
activity of Cosmoz.com, Inc., a publicly traded company listed and
traded on the NASDAQ Over the Counter Bulletin Board ("OTCBB"). The
consolidated financial statements for the years ended June 30, 2000 and
1999 have been prepared in accordance with generally accepted
accounting principles. The consolidated financial statements include
the accounts of the Company and its majority-owned subsidiaries. All
inter-company transactions have been eliminated. The Company's fiscal
year ends on June 30 each year.

In December 1998, the Company changed its focus from operating and
franchising pretzel kiosks, retail stores and an automotive service
center (as described above) to investments and acquisitions of
Internet-related businesses and web-based technologies. The Company's
Internet acquisitions offer both a content source and an application
source for investors. All activity related to Pretzel Franchising,
Inc., and Wheel to Wheel, Inc. is shown as discontinued operations.

The equity and net loss attributable to the minority shareholder
interests that related to the Company's subsidiaries are shown
separately in the consolidated balance sheet and consolidated statement
of operations, respectively. Losses in excess of the minority interest
in equity would be charged against the Company.

C. Cash and Cash Equivalents, Short and Long-Term Investments

For purposes of cash flows, the Company considers all highly liquid
investments purchased with a maturity of three months or less to be
cash equivalents, those with original maturities greater than three
months and current maturities less than twelve months from the balance
sheet date are considered short-term investments, and those with
maturities greater than twelve months from the balance sheet date are
considered long-term investments. All of Cosmoz's short-term
investments are classified as available-for-sale at the balance sheet
dates. Investments classified as available-for-sale are recorded at
fair value and any material temporary difference between the cost and
fair value of an investment is presented as a separate component of
accumulated other comprehensive income/loss.

The Company invests in equity instruments of privately held information
technology companies for business and strategic purposes. These
investments are included in other long-term assets and are accounted
for under the cost method when ownership is less than 20%. For these
non-quoted investments, the Company's policy is to regularly review the
assumptions underlying the operating performance and cash flow
forecasts in assessing the carrying values.

27
<PAGE>

Restricted Cash

In accordance with the letter of credit agreement with Shanghai Bank,
the Company is required to keep $125,000 on deposit as collateral for
the letter of credit issued by the bank. The letter of credit is
required pursuant to the lease agreement for the Company's office
facilities.

D. Property and Equipment

Property and equipment are recorded at cost and are depreciated over
the estimated useful lives of the assets using the straight-line
method. Estimated useful lives for financial reporting purposes are as
follows: furniture and fixtures, five to seven years; computer hardware
and software, three years; leasehold improvements, over the shorter of
five years or the lease term. The cost and related accumulated
depreciation of all property and equipment retired or otherwise
disposed of are removed from the accounts. Any gain or loss is
recognized in the current period. Various accelerated methods are used
for tax purposes.

Maintenance and repair costs are charged to expense as incurred, and
renewals and improvements that extend the useful lives of the assets
are added to the property and equipment.

E. Income Taxes

The Company accounts for its income taxes using the Financial
Accounting Standards Board Statements of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," which requires the
establishment of a deferred tax asset or liability for the recognition
of future deductible or taxable amounts and operating loss and tax
credit carryforwards. Deferred tax expense or benefit is recognized as
a result of timing differences between the recognition of assets and
liabilities for book and tax purposes during the year.

Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards, and then a valuation
allowance is established to reduce that deferred tax asset if it is
"more likely than not" that the related tax benefits will not be
realized.

F. Revenue Recognition

The Company's revenues are derived principally from two sources. The
first source is the sale of banner and sponsorship advertisements that
appear on the Company's website properties.

The Company's standard rates for banner advertising are based on cost
per thousand impressions for run of network. The price depends on
whether the advertising is targeted to specific audiences and
properties. To date, the duration of the Company's banner advertising
commitments has ranged from one week to 2 months.

Sponsorship advertising contracts have longer terms (ranging from one
month to one year) than standard banner advertising contracts and also
involve more integration with Cosmoz services, such as the placement of
buttons that provide users with direct links to the advertiser's Web
site. Advertising revenues on both banner and sponsorship contracts are
recognized ratably over the period in which the advertising is
displayed, provided that no significant Company obligations remain at
the end of a period and collection of the resulting receivable is
probable.

28
<PAGE>

Company obligations typically include guarantees of minimum number of
"impressions," or times that an advertisement appears in pages viewed
by users of the Company's on-line properties. To the extent minimum
guaranteed impressions are not met, the Company defers recognition of
the corresponding revenues until the remaining guaranteed impression
levels are achieved. The Company has agreements that provide revenue
from electronic commerce transactions. These revenues are recognized by
the Company upon notification from the advertiser of revenues earned by
Cosmoz.

The Company's second source of revenues is the distribution of
advertisements and reports on behalf of growth stock companies via
electronic mail to the Company's opt-in email distribution list. This
opt-in email list was obtained through marketing efforts in its family
of investment-related websites.

The Company often receives payment in shares of stock, in lieu of cash,
from customers who receive services from its ProfitWire Media Group.
The Company policy is to sell such securities within three months.

G. Product and Web-site Development

Costs incurred in the development of new products or properties and
enhancements to existing products are charged to expense as incurred.
Material software development costs incurred subsequent to the
establishment of technological feasibility are capitalized.
Technological feasibility is determined based on the completion of a
working model. The Company has not capitalized any software development
costs.

H. Advertising Costs

All advertising costs are expensed as incurred. Advertising expense
totaled approximately $359,197 and $93,157 in 2000 and 1999,
respectively.

I. Marketable Securities

The Company's marketable securities are classified as
available-for-sale as of the balance sheet date and are reported at
fair value, with unrealized gains and losses, net of tax recorded in
shareholders' equity. The Company invests its excess cash in mutual
funds and equity securities traded on national stock markets. Realized
gains or losses and permanent declines in value, if any, on
available-for-sale securities are reported in other income or expense
as incurred. The Company recorded a net unrealized gain of $28,049 in
2000 and a net unrealized loss of $34,705 in 1999 , on these types of
investments.

The Company invests in equity instruments of privately held, Internet
and information technology companies for business and strategic
purposes. These investments are included in other long-term assets and
are accounted for under the cost method when ownership is less than
20%. For these non-quoted investments, the Company's policy is to
regularly review the assumptions underlying the operating performance
and cash flow forecasts in assessing the carrying values. The Company
identifies and records impairment losses on long-lived assets when
events and circumstances indicated that such assets might be impaired.
To date, no such impairment has been recorded.

J. Use of Estimates

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

29
<PAGE>

Management makes estimates that affect reserves for discontinued
operations, deferred income tax assets and reserves for any other
commitments or contingencies. Any adjustments applied to estimates are
recognized in the year in which such adjustments are determined.

K. Earnings per Share

The Company follows SFAS No. 128, "Earnings per Share," which
establishes standards for computing and presenting earnings per share
("EPS") and applies to entities with publicly held common stock or
potential common stock.

Basic EPS is computed by dividing net income (loss) by the weighted
average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur from common shares
issuable through stock options, warrants and other convertible
securities when the effect would be dilutive. Shares issued during the
period and shares repurchased by the Company are weighted for the
portion of the period that they were outstanding for both basic and
diluted EPS calculations.

The difference between Basic and Diluted EPS is due to the effect of
dilutive stock options and warrants.

L. Segments of an Enterprise and Related Information

The Company follows SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 requires that a
public business enterprise report financial and descriptive information
about its reportable operating segments on the basis that is used
internally for evaluating segment performance and deciding how to
allocate resources to segments. The Company has reported its
franchising operations in Canada as discontinued operations, and the
results of its Internet operations as continuing operations. Currently,
the Company operates in only one segment.

M. Comprehensive Income

In 1999, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income and its components in a full set
of financial statements. Comprehensive income consists of net income
and unrealized gains (losses) on available for sale marketable
securities and is presented in the consolidated statements of
shareholders' equity and comprehensive income. The Statement requires
only additional disclosures in the consolidated financial statements
and does not affect the Company's financial position or results of
operations.

N. Business Risks and Credit Concentrations

The Company operates in the Internet-Portal industry segment, which is
relatively new, rapidly evolving and highly competitive. The Company
relies on third-party suppliers of topical and relevant information
content. There can be no assurance that the Company will be able to
continue product development and secure content sufficient to support
its operations.

Financial instruments that potentially subject the Company to
significant concentration of credit risk consist primarily of cash,
cash equivalents, short and long-term investments, and accounts
receivable. Substantially all of the Company's cash, cash equivalents,
and short and long-term investments are managed by two financial
institutions.

Accounts receivable are typically unsecured. The Company performs
ongoing credit evaluations of its customers' financial condition. It
generally requires no collateral and maintains reserves for potential
credit losses on customer accounts, when necessary. Management
estimates that no such reserves are warranted at June 30, 2000.

30
<PAGE>

O. Foreign Currency and International Operations

The functional currency of the Company's international subsidiaries,
PFI and WTW, is the Canadian dollar. The financial statements of these
subsidiaries are translated to US dollars using year-end rates of
exchange for assets and liabilities, and average rates of exchange for
the year for revenues, costs, and expenses. Translation gains (losses),
which are deferred and accumulated as a component of shareholders'
equity, were not significant in 2000 and were $10,887 in 1999,
respectively. Net gains and losses resulting from foreign exchange
transactions are included in the consolidated statement of operations
and were not significant during the periods presented.

International operations were discontinued during the year, and there
are no foreign assets as of June 30, 1999. There were no foreign
exchange transactions during the year ended June 30, 2000.

P. Recent Accounting Pronouncements

In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 137 (SFAS 137), "
Accounting for Derivative Instruments and Hedging Activities-Deferral
of the Effective Date of FASB Statement No. 133." SFAS 133, "Accounting
for Derivative Instruments and Hedging Activities," establishes methods
of accounting for derivative financial instruments and hedging
activities related to those instruments as well as other hedging
activities. SFAS 137 defers its effective date for fiscal years
beginning after June 15, 2000. The Company is currently not engaged in
hedging activities nor does it have any derivative instruments, thus
there is no impact on the current period financial statements.

Q. Software Developed for Internal Use

The American Institute of Certified Public Accountants issued Statement
of Position 98-1 ("SOP 98-1"), "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This standard
requires companies to capitalize qualifying computer software costs,
which are incurred during the application development stage and
amortize them over the software's estimated useful life. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998. The
Company has adopted SOP 98-1 and is deemed to not have a material
impact on the financial statements and related disclosures.

R. Intangibles

Intangible assets consist of goodwill resulting from acquisition of
websites and other Internet properties. The difference between the fair
market value of the assets acquired and consideration paid is recorded
as goodwill. The Company estimates that the economic useful life of the
goodwill is seven years.

S. Long-lived Assets

The Company identifies and records impairment losses on long-lived
assets and identifiable intangible assets, when events and
circumstances indicate that such assets might be impaired. To date, no
such impairment has been recorded.

T. Stock Based Compensation

The Company accounts for its stock based compensation plan based on
accounting Principles Board ("APB") Opinion No. 25. In October 1995,
the Financial Accounting Standards Board issued SFAS No. 123,
Accounting for Stock-Based Compensation. The Company has determined
that it will not change to the fair value method and will continue to
use APB Opinion No. 25 for measurement and recognition of any expense
related to employee stock based transactions. As such, compensation
expense would generally be recorded on the date of grant only if the
current market price of the underlying stock exceeds the exercise
price.

31
<PAGE>

In March 2000, the FASB released Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation." This Interpretation
addresses certain practice issues related to APB Opinion No. 25. The
provisions of this Interpretation are effective July 1, 2000, and
except for specific transactions noted in paragraphs 94-96 of this
Interpretation, shall be applied prospectively to new awards, exchanges
of awards in business combinations, modifications to an outstanding
award, and exchanges in grantee status that occur on or after that
date. Certain events and practices covered in this Interpretation have
different application dates, and events that occur after an application
date but prior to July 1, 2000, shall be recognized only on a
prospective basis. Accordingly, no adjustment shall be made upon
initial application of the Interpretation to financial statements for
periods prior to July 1, 2000. Thus, any compensation cost measured
upon initial application of this Interpretation that is attributed to
periods prior to July 1, 2000 shall not be recognized. The Company will
adopt the provisions of this Interpretation starting July 1, 2000.

2. Income Taxes
------------

The Company incurred $7,200 and $800 in state taxes for the years ended
June 30, 2000 and 1999, respectively. No provision for federal taxes in
the US has been recorded for the years ended June 30, 2000 and 1999.
The Company incurred net operating losses for this period. The Company
has incurred net operating losses from its operations in Canada
(discontinued by September 1998), and accordingly no provision for
Canadian income taxes is recorded.
<TABLE>
<CAPTION>

Income Before Income Taxes 2000 1999
----------- -----------
<S> <C> <C>
United States $(4,362,057) $(1,007,928)
Canada 25,623 (297,945)
----------- -----------
$(4,336,434) $(1,305,873)
=========== ===========

Income Tax Provision 2000 1999
----------- -----------
Current:
Federal $ -- $ --
State 7,200 800
Foreign -- --
----------- -----------
$ 7,200 $ 800
=========== ===========

Deferred:
Federal $ -- $ --
State -- --
Foreign -- --
----------- -----------
-- --
=========== ===========

Effective Tax Rate Reconciliation 2000 1999
----------- -----------
Federal income tax rate 34% 34%
State and local taxes, net of
federal tax benefit 3.01% 3.01%
----------- -----------
37.01% 37.01%
=========== ===========
</TABLE>

32
<PAGE>

The following table summarizes the deferred tax assets and liabilities for the
years ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>

Deferred Tax Year Ended
Assets and Liabilities 2000 1999
---------------------- ---- ----
Federal State Federal State
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Deferred income tax assets:
Net operating loss
Carryforwards $ 1,683,137 $ 205,322 $ 342,696 $ 84,666
Capital loss 19,944 5,188 11,800 2,915
Property & equipment 6,359 1,653 1,843 455
Federal benefit for
state taxes 60,373 -- 1,786 --
Other 3,540 920 -- --
----------- ----------- ----------- -----------

Total deferred tax assets 1,773,353 213,083 358,125 88,036
----------- ----------- ----------- -----------

Deferred income tax liabilities:
Intangible assets (40,442) (10,515) (4,823) (1,194)
Unrealized investment loss (2,229) (579) (68,000) (16,800)
Nondeductible reserves (93,931) (24,422) (102,643) (25,359)
----------- ----------- ----------- -----------

Total deferred tax liabilities (136,602) (35,516) (175,466) (43,353)
----------- ----------- ----------- -----------

Net deferred tax assets before
valuation allowance 1,636,751 177,567 182,659 44,683
Valuation allowance (1,636,751) (177,567) (182,659) (44,683)
----------- ----------- ----------- -----------

Net deferred tax assets $ -- $ -- $ -- $ --
=========== =========== =========== ===========
</TABLE>

Due to the uncertainty surrounding the realization of deferred tax assets, the
Company has recorded a valuation allowance against its net deferred tax asset.
The Company has loss carryforwards of approximately $10,166,132 from continuing
operations, which may be used to offset future United States income taxes and
which begin to expire in 2019.

3. Investments
-----------

At June 30, 1999, short and long-term investments in
marketable securities were classified as available-for-sale as follows:

Gross Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gain Loss Fair Value
---------- ---------- ---------- ----------
Corporate equity $ 596,875 $ -- $ (44,375) $ 552,500
securities

Mutual Funds:
Equity securities 301,524 11,260 -- 312,784
Debt securities 701,576 (1,590) 699,986
---------- ---------- ---------- ----------
Total short-term
investments 1,599,975 11,260 (45,965) 1,565,270

Corporate equity
securities,
privately-held 145,000 -- -- 145,000
---------- ---------- ---------- ----------

Total $1,744,975 $ 11,260 $ (45,965) $1,710,270
========== ========== ========== ==========

33
<PAGE>

At June 30, 2000, short and long-term investments in marketable securities were
classified as available-for-sale as follows:

Gross Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gain Loss Fair Value
-------- -------- -------- --------
Mutual Funds:
Equity securities $ 10,000 $ -- $ (6,657) $ 3,343
-------- -------- -------- --------
Total short-term

investments 10,000 (6,657) 3,343

Corporate equity
securities,

privately-held 210,982 -- -- 210,982

-------- -------- -------- --------
Total $220,982 $ -- $ (6,657) $214,325
======== ======== ======== ========

Investments in corporate equity securities of privately held companies,
in which the Company holds a less than 20% equity interest, are
classified as long-term.

On April 26, 2000, eCal Corporation ("eCal") acquired iPing, Inc.
("iPing"). The Company had made an early-stage investment in iPing. The
acquisition of iPing by eCal resulted in 500,000 Series B iPing
Preferred Stock owned by Cosmoz being converted into $375,000, (the
original cash investment), and 56,108 shares of eCal Common Stock.
Currently, eCal is a privately held corporation, and the value of eCal
shares is not determinable.

4. Stock Option Plan
-----------------

On November 17, 1999, the Company's board of directors approved the
Cosmoz.com, Inc. 1999 Stock Option Plan (the "Plan"). On December 20,
1999, the Company's shareholders, at the Company's annual meeting,
approved the Plan, and authorized a pool of 6,000,000 shares of common
stock to be issued according to the Plan. Options are usually granted
at the prices equal to the current fair value of the Company's common
stock at the date of grant. The vesting period is usually related to
the length of employment or consulting contract period.

The Board of Directors has granted management the authority to issue
non-statutory stock options to employees and consultants of the
Company. As of June 30, 2000 and 1999, the Company has granted options
exercisable for the Company's common stock to its employees and other
eligible participants. The exercise price varies depending on the
trading price of the Company's common stock on the date of issuance
among other factors.

34
<PAGE>

Under this plan, no option may be exercised after the expiration date
of ten years from the date of grant. There are two categories of
options: Incentive Stock Options (ISO) and Non-Qualified Stock Options
(NSO).

ISOs are granted to employees and the purchase price shall not be less
than the Fair Market Value of the common stock share at the date of
grant and no ISO shall be exercisable more than ten (10) years from
date of grant, and, no NSO shall be exercisable more than five (5)
years from date of grant. NSOs may be granted to any eligible
participant, and ISO are granted only to employees of the Company.

In general, granted ISO's expire three months after the termination
date. If employment termination is due to cause, the options shall
expire immediately; and if employment termination is due to permanent
and total disability, the options may be exercised up to one year
following termination.

Stock options issued as of June 30, 2000 and 1999 are summarized as follows:
<TABLE>
<CAPTION>

2000 1999
---- ----
Number Weighted Number of Weighted
of average options average
options exercise exercise
price price
---------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 2,700,000 $ 0.21 2,500,000 $ 0.15
Granted 1,552,500 0.98 200,000 1.25
Exercised
Forfeited/Cancelled (3,460,000) 0.40 - -
---------------- ------------- -------------- --------------

Outstanding at end of year 792,500 0.36 2,700,000 0.24
================ ------------- ============== --------------

Exercisable at end of year 434,028 $ 0.32 2,625,000 $ 0.21
================ ============= ============== ==============
</TABLE>

The non-statutory stock options are for periods of three to four years.
Options to purchase 434,028 shares were vested as of June 30, 2000.

The following table summarizes information about options outstanding at
June 30, 2000.
<TABLE>
<CAPTION>

Weighted Weighted Average
Average Remaining Number Exercisable
Exercise Price Contractual Life as of
Exercise prices Number Outstanding per Share in Years June 30, 2000
--------------- ------------------ --------- -------- -------------
<S> <C> <C> <C> <C>
$0.59 517,500 $ 0.59 2.80 259,028
$1.00 100,000 1.00 1.25 100,000
$1.50 175,000 1.50 3.07 75,000
--------------------- ---------------------

792,500 434,028
===================== =====================
</TABLE>

The exercise period for the options range from two to four years from
the date of the grant, and have various vesting requirements.

35
<PAGE>

The Company has adopted only the disclosure provisions of SFAS No. 123.
It applies APB Opinion No. 25 and related interpretations in accounting
for its stock option plan. Accordingly, during the fiscal year ended
June 30, 2000, no compensation cost has been recognized for its stock
option plan other than for options issued to outside third parties. If
the Company had elected to recognize compensation expense based upon
the fair value at the grant date for awards under this plan consistent
with the methodology prescribed by SFAS No. 123, the Company's net loss
and loss per share would be reduced to the pro forma amounts indicated
below for the years ended June 30:
<TABLE>
<CAPTION>

2000 1999
--------------- ----------------
<S> <C> <C>
Net loss:
As reported $ (4,336,425) $ (1,305,873)
Pro forma $ (4,754,401) $ (1,423,015)

Basic and diluted loss per common share:
As reported:
Basic $ (0.071) $ (0.028)
Diluted $ (0.068) $ (0.027)
Pro forma:
Basic $ (0.078) $ (0.031)
Diluted $ (0.075) $ (0.029)
</TABLE>

Options are granted at prices are equal to the current fair value of
the Company's common stock at the date of grant. The vesting period is
usually related to the length of employment or consulting contract
period. During the years ended June 30, 2000 and 1999, the Company
recorded compensation expense related to certain stock options issued
with exercise prices below fair market value of the related common
stock. Under APB-25, the cost of compensation is measured by the excess
of the quoted market price of the stock over the option price on the
measurement date. This is referred to as the intrinsic value method.
The Company recorded compensation expense in the amount of $201,400 and
$65,896 for the years ended June 30, 2000 and 1999, respectively.

The fair value of these options was estimated at the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions: 1999: dividend yield of 0%; expected
volatility of 200%; risk-free interest rate of 6.0%, and expected life
of 5 years; 2000: dividend yield of 0%; expected volatility of 200%;
risk-free interest rate of 6.3%, and expected life of 5 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from 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.

5. Acquisitions
------------

A. Acquisition of BuckInvestor.com, Inc.

On May 5, 1999, the Company completed the acquisition of all
outstanding shares of BuckInvestor.com, Inc. ("BuckInvestor.com"), a
privately held online financial information content provider, through
the issuance of 900,000 shares of Cosmoz Common Stock, a market value
of $1,012,500 at the time of the transaction. The acquisition was
accounted for as a purchase in accordance with the provisions of APB
16.

Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on their
fair values at the date of the acquisition. The excess purchase price
over the estimated fair value of the assets acquired and liabilities
assumed has been allocated to goodwill. Results of operations for
BuckInvestor.com have been included with those of the Company
subsequent to the date of acquisition. The Company estimated that the
economic useful life of the goodwill was seven years. Upon acquisition,
the historical financial results of BuckInvestor.com were de minimis.

36
<PAGE>

B. Acquisition of KingFine, Inc.

On June 10, 1999, the Company completed the acquisition of all
outstanding shares of KingFine, Inc. ("KingFine"), a privately-held
online financial information content provider and operator of an online
message board, through the issuance of 200,000 shares of Cosmoz Common
Stock for all of KingFine's outstanding shares. The acquisition was
accounted for as a pooling of interests. The consolidated financial
statements for the year ended June 30, 1999 and the accompanying notes
reflect the Company's financial position and the results of operations
as if KingFine was a wholly-owned subsidiary of the Company since
inception.

C. Acquisition of MB Technologies, Inc.

On May 6, 1999, the Company completed the acquisition of 49% of all the
outstanding shares of MB Technologies, Inc. ("MB"), privately held
operator of online message boards. Under the terms of the acquisition,
the Company exchanged 100,000 shares of Cosmoz Common Stock with a
market value of $112,800 for 98 shares of MB Technologies. The
difference between the amount paid and the value of the pro rata share
of MB's stockholders' equity was recorded as goodwill. The Company
estimated that the economic useful life of the goodwill was seven
years. The Company has an option to purchase the remaining 51% interest
in MB from its shareholders. The financial results of MB were de
minimis for the year ended June 30, 1999.

The Company exercised its option to purchase the remaining 51% interest
in MB on July 30, 1999 for 150,000 shares of Cosmoz Common Stock with a
market value of $315,000.

D. Ivory Acquisition Corporation

On January 5, 2000, the Company concluded the acquisition of Ivory
Acquisition Corporation ("Ivory"), a fully reporting company under
regulation 12(g) of the Securities Exchange Act of 1934. Ivory has no
material assets or liabilities. The business combination will be
accounted for under the pooling method of accounting. The operations of
Ivory previous to the acquisition date were de minimis.

The Company paid the transaction costs of acquisition (primarily legal
fees) and initial filing fees in the amount of $100,000. The Company
issued 250,000 shares of its common stock in exchange for all the
outstanding common stock of Ivory. The acquisition was accounted for
under the pooling method in accordance with the provisions of APB 16.

E. StreetIQ.com, Inc.

On August 9, 1999, the Company completed the acquisition of all
outstanding shares of StreetIQ.com, Inc. ("StreetIQ"), a privately-held
online financial information content provider and publisher of "whisper
numbers", through the issuance of 400,000 shares of Cosmoz's Common
Stock, with a market value of $800,000. The acquisition will be
accounted for as a purchase in accordance with the provisions of APB
16. Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on their
fair values at the date of the acquisition. The excess purchase price
over the estimated fair value of the assets acquired and liabilities
assumed will be allocated to goodwill. Results of operations for
StreetIQ will be included with those of the Company subsequent to the
date of acquisition. The Company estimated that the economic useful
life of the goodwill was seven years. Upon acquisition, the historical
financial results of StreetIQ were de minimis.

37
<PAGE>

F. iTrack.com, Inc.

In October 1999 Cosmoz through an asset purchase agreement acquired all
the assets of iTrack.com, Inc. ("iTrack"), a privately held online
auction monitoring site. Under the proposed terms of the acquisition,
iTrack will be acquired by Cosmoz in exchange for a maximum of
1,275,000 shares of Cosmoz's Common Stock, with a market value of
$1,722,594. The acquisition was accounted for under the purchase method
in accordance with APB 16. The historical operating results of iTrack
are not considered to be significant.

6. Extraordinary Loss
------------------

During 1999, the Company terminated its acquisition of Investors Guru,
a website specializing in providing financial content to investors.
Under the terms of the purchase agreement, the Company forwarded an
initial payment of $200,000 to the owners of Investors Guru, which was
lost when the acquisition was terminated prior to completion.
Accordingly, the Company has recorded a one-time charge of $200,000 for
the failed acquisition.

7. Discontinued Operations
-----------------------

The Company's management and its Board of Directors decided to
discontinue operations in Canada as of July 1998. Operations in Canada
consisted of operating and franchising "Pretzel Twister" stores, and
the operation of an automotive service center "Wheel to Wheel". To
implement this decision, the Company concluded the following
transactions:

A. On August 31, 1998, the Company abandoned all operations of Wheel to
Wheel, including its facilities lease. The Company disposed of the
assets of the Wheel to Wheel store and used the proceeds to settle
liabilities to the extent of available funds.

B. In July 1998, the Company abandoned all operations of Pretzel
Franchising, Inc. The Company informed its franchisees that PFI will
cease to operate, and the Company operated store in Toronto, Ontario
was closed.

In consideration of the issues listed above, the Company maintains a
reserve for potential loss contingencies from discontinued operations
of approximately $60,000. The estimate for loss contingencies from
discontinued operations was reduced during 2000.

There are no assets from discontinued operations on the balance sheet.
The liabilities attributable to discontinued operations are identified
as such on the balance sheet. There were no net sales attributable to
discontinued operations in 2000, and net sales attributable to
discontinued operations were $48,753 in 1999. Income (loss) from
discontinued operations of $25,623 and $(297,945) for the years ended
June 30, 2000 and 1999 is reported net of income tax expense (benefit),
which was zero for both years.

8. Common Stock Transactions
-------------------------

The Company concluded several private placement offerings of its common
stock during 2000 and 1999 and converted short-term debt into common
stock. The Company raised approximately $400,000 and $3,500,000 in cash
in 2000 and 1999, respectively, from these placements. The Company has
a subscription receivable for $600,000 as of June 30, 2000. The Company
also issued common stock to individuals and companies in lieu of cash
compensation.

On February 10, 1999, the Company issued warrants to purchase 4,000,000
shares of its common stock at an exercise price of $0.75. The warrants
are for a three- year period and expire on February 9, 2002.

On January 10, 2000, the Company issued 3,375,000 shares of its common
stock to three executive officers, who are also directors of the
Company, and to one employee. This distribution was made to secure the
services of these officers and employee, and to serve as a continuing
incentive to remain with the Company. The Company, these officers and
one employee subsequently canceled all 3,375,000 shares. These
financial statements give retroactive effect to this transaction in
calculating the weighted average of shares outstanding.

38
<PAGE>

The Company issued 50,000 shares of its common stock to an individual
in lieu of cash compensation, which had a market value of $75,000 in
exchange for drafting weekly articles for publishing on the Company's
websites. The Company also issued common stock to individuals and
companies in lieu of cash compensation for services provided to the
Company.

On May 6, 2000, the Company signed a subscription agreement with Tupelo
Investment Co., Ltd. to purchase 3,030,303 shares of the Company's
restricted common stock at a discount from market price of $0.33 per
share, for an aggregate consideration of One Million Dollars
($1,000,000). Total payment shall be made in five equal monthly
installments commencing May 31, 2000. Each installment payment shall be
paid no later than 30th of the month until the aggregate amount of
$1,000,000 is fully paid. As of June 30, 2000, the Company had received
payment of $400,000 from Tupelo Investment under this agreement.

On June 26, 2000, the Company entered into an investment agreement with
Swartz Private Equity, LLC. ("Swartz"). According to this investment
agreement, Cosmoz may, in its sole discretion and subject to certain
restrictions, periodically sell shares of its common stock to Swartz.
The sale of shares is called a "put". Under the investment agreement,
the Company may sell up to $20,000,000 of its shares. The Company may
begin putting shares when the shares become registered, in accordance
with the Securities and Exchange Act of 1933, and for three years
after. The investment agreement allows the Company to choose to sell
common stock to Swartz at times that it decides are advantageous. The
investment agreement is not a debt instrument. Any put exercised by the
Company is the sale of common stock and not a loan. The investment
agreement with Swartz operates as follows:

o Cosmoz is permitted to sell to Swartz up to $20,000,000
worth of its common stock;
o The Company determines number of shares that it wishes to
issue to Swartz, but the amount it sells is subject to
volume limitations;
o Swartz pays the Company either the market price of the
common stock less 7.5 cents, or 91% of the market price,
whichever is less;
o Swartz may either hold the shares, or sell them in the
public market; o The Company also issued a warrant to Swartz
as part of this agreement;
o Specifically, it issued warrants which are convertible into
2,400,000 shares of common stock.Warrants for 1,200,000
shares bear an exercise price of $0.375, which is based upon
the lowest closing price for the five days preceding June
26, 2000. The other warrants for 1,200,000 shares bear an
exercise price that is the lower of the lowest closing price
for the 5 trading days prior to the effective date of this
registration statement; or the lowest closing price for the
5 trading days prior to October 27, 2000. The exercise price
is subject to adjustment every six (6) months and is tied to
the lowest closing price for the five trading days preceding
the adjustment;
o Swartz also has the right to additional warrants.
Specifically, Swartz is entitled to warrants for 10% of the
number of shares that the Company sells to them under this
agreement. The price per share under these warrants will be
110% of the market price when the warrant is issued. The
exercise price is subject to adjustment every six (6) months
and is tied to the lowest closing price for the five trading
days preceding the adjustment.

Warrants

A summary of the Company's outstanding warrants as of June 30,
2000 and 1999 is presented below:

Exercise
Shares Price
--------- --------------
Outstanding at June 30, 1998 - -

Issued 4,000,000 $ 0.75
---------

Outstanding at June 30, 1999 4,000,000 $ 0.75

Issued 2,400,000 $ 0.375
---------

Outstanding at June 30, 2000 6,400,000
=========

39
<PAGE>

The warrants issued in 2000 have a clause that causes the exercise
price to be adjusted down, based on the quoted share price measured on
certain incremental measurement dates. The warrants expire 3-5 years
from the date of grant.

9. Related Party Transactions

The following transactions occurred between the Company and certain
related parties:

A. Asia Pacific Ventures

Asia Pacific Ventures (APV) is a company whose headquarters are in Hong
Kong, and its authorized representative was Wilfred Shaw, the current
CEO of Cosmoz. APV has loaned money to the Company in previous years.
The net of advances due from shareholders and officers consists of
overpayments by Cosmoz on loans made by APV to the Company.
Additionally, APV is a shareholder holding greater than 10% of the
outstanding common stock of the Company and whose current authorized
representative is a family member of Wilfred Shaw, current CEO of the
Company. The amount due from shareholder at June 30, 1999 was $188,142.
This amount was repaid in full to the Company in January 2000. . In
February 2000, APV advanced to the Company $250,000. The note payable
is due upon demand and bears an annual interest rate of 12%, and the
balance as of June 30, 2000 is $150,000.

B. Advances from Shareholders that were converted to common stock
during the year ended June 30, 1999, are noted as follows:

Shares Amount
----------------- ----------------

Note payable to shareholders 2,750,000 $ 2,750,000
----------------------------
----------------- ----------------
2,750,000 $ 2,750,000
================= ================

There were no conversions of notes payable into common stock
in 2000.

C. Wilfred Shaw

The following transactions took place between the Company and Wilfred
Shaw, the CEO and Chairman of the Board of Directors: The Company
received an advance from Wilfred Shaw of $596,875 in the form of
publicly traded securities. The borrowing does not bear any interest,
and it was due on demand. In 2000, the corporate equity securities were
returned to Mr. Shaw in full settlement of the outstanding debt.

On May 2, 1999, the Company advanced Mr. Shaw $900,000 in a
non-interest bearing note. In 2000, Mr. Shaw repaid the Company in
full.

Mr. Wilfred Shaw has been performing the duties of Chairman and CEO of
Cosmoz starting July 1, 1998 to December 31, 1999, and he has received
no remuneration for his services, which is pursuant to his decision. He
has performed these services pro bono.

40
<PAGE>
Mr. Shaw also did not receive any compensation for the period starting
July 1, 1998 to December 31, 1999 for serving as the Chairman of the
Board of Directors. Mr. Shaw has $60,000 in director fees due from the
Company for serving as the Chairman of the Board of Directors for the
period prior to June 30, 1998. The amount is included in the
liabilities for discontinued operations. On October 15, 1999, options
convertible to 2,500,000 shares of common stock, which were granted to
CEO Wilfred Shaw, expired without being exercised.

D. Sharpmanagement.com, LLC.

The Company has signed a consulting contract with Sharpmanagment.com,
LLC ("SharpManagement") to secure the services of Wilfred Shaw. Under
the terms of this contract the Company is required to pay an initial
payment of $180,000 and a payment of $15,000 per month for each month
that Mr. Shaw provides services to the Company. SharpManagement is 100%
owned by Wilfred Shaw. As of June 30, 2000, SharpManagement is due
$248,427.

E. Common Stock transactions

On April 12, 1999, the Company sold 8,625,000 shares of stock for $.083
per share. The total proceed from these transactions was $717,383. Of
this amount, the Company sold 1,025,000 of these shares to a family
member of Wilfred Shaw, the CEO and Chairman of the Board of Directors
of Cosmoz.

F. Wing Yu

Mr. Wing Yu, an officer of the Company, held a 25% in KingFine which
was acquired by Cosmoz on June 10, 1999. As a result of this
transaction, Mr. Yu received 50,000 shares of Cosmoz Common Stock in
exchange for his 25% interest in KingFine.

10. Commitments and Contingencies
-----------------------------

A. Legal

The Company is periodically involved in legal actions and claims that
arise as a result of events that occur in the normal course of
operations, including claims of alleged infringement of trademarks,
copyrights and other intellectual property rights. The Company is not
currently aware of any legal proceedings or claims that the Company
believes will have, individually or in the aggregate, a material
adverse effect on the Company's financial position or results of
operations.

B. Operating Leases

The Company signed a lease termination agreement on March 27, 2000 with
G & I Howard, LLC in connection with its previously leased principal
office at 55 Hawthorne Street, Suite 550, San Francisco, California,
94105. The Company paid a $3,081 termination fee. The lease termination
agreement constitutes a full and final accord and satisfaction and
general release from any and all obligations and liabilities in
connection with the lease.

On March 1, 2000, the Company's principal executive offices relocated
to a 5,900 square foot facility at 1515 S. El Camino Real, Suite 100,
San Mateo, California 94402. The Company leases the facility under a
3-year agreement that terminates on February 28, 2003, with no renewal
option. The aggregate annual rental rate for the entire facility for
the first, second, and third years of the lease term is $248,094,
$255,182, and $262,271, respectively. The Company is also obligated to
pay 33.34% of increases in operating expenses and property taxes paid
or incurred by the landlord in the second and third years of the lease
term. All operations including system development, control, and
maintenance are performed at this facility.

For the years ended June 30, 2000 and 1999, rent expense was $146,707
and $12,884, respectively.

41
<PAGE>

C. Letter-of-credit

As of June 30, 2000, the Company was contingently liable under an
outstanding irrevocable letter of credit from a bank in the principal
amount of $125,000, issued in connection with the lease of certain
office space. The letter of credit is collateralized by a $125,000 cash
deposit with the bank.

11. Going Concern Uncertainties
---------------------------

The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. However, the Company
has experienced recurring operating losses and negative cash flows from
operations. The Company's continued existence is dependent upon its
ability to increase operating revenues and/or raise additional equity
financing.

In view of these matters, management believes that actions presently
being taken to expand the Company's operations and to continue its
web-site development activity provide the opportunity for the Company
to return to profitability. The Company's focus on strategic
technological investments will improve the Company's cash flow,
profitability, and ability to raise additional capital so that it can
meet its strategic objectives.

Management raised additional capital during the year, and is currently
in the process of negotiating additional equity financing with
potential investors. In August 2000, the Company has filed a
registration statement (Form S-1) with the US Securities and Exchange
Commission to register shares for sale. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

12. Risks Presented by the Year 2000 Issue
--------------------------------------

The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields
containing a 2-digit year is commonly referred to as the Year 2000
Compliance issue. As of June 30, 2000, the Company has not had any
systems that were unable to accurately process certain date-based
information.

The Company management does not anticipate the Year 2000 issue to have
a significant impact on its operations or financial operations. The
Company has not incurred material costs to date in this process, and
currently does not believe that the cost of additional actions will
have a material effect on its results of operations or financial
condition.

Although Cosmoz currently believes that its systems are Year 2000
compliant in all material respects, the current systems and products
may contain undetected errors or defects with Year 2000 date functions
that may result in material costs. The Company is not aware of any
material operational issues or costs associated with preparing its
internal systems for the Year 2000, the Company may experience serious
unanticipated negative consequences (such as significant downtime for
one or more Cosmoz's Internet properties) or material costs caused by
undetected errors or defects in the technology used in its internal
systems. In addition, the Company utilizes third-party equipment,
software and content, including non-information technology systems
("non-IT systems"), such as its building equipment and non-IT systems
embedded micro-controllers that may not be Year 2000 compliant. The
Company has assessed that there are no material effects on operations
from these third parties providing service to the Company.

13. Subsequent Events
-----------------

In August 2000, the Company filed a Registration Statement, Form S-1,
pertaining to the sale of 26,666,667 shares of its common stock, of
which none are issued and outstanding, and the shares are issuable upon
exercise of "put" options with Swartz and for shares issuable under
warrants outstanding. The shares are issuable upon sale or exercise of
securities, which were issued, by the Company in private placement
transactions. The Securities and Exchange Commission is currently
reviewing the Registration Statement filing.

42
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. OUR DIRECTORS AND EXECUTIVE OFFICERS

Our directors, executive officers and other management employees and their
respective ages and positions as of August 15, 2000, are as follows.

Name Age Title
-------------------------------------------------
Wilfred Shaw 29 Director, Chairman, CEO
Wing Yu 31 Director, Chief Operating Officer
Owen Naccarato 50 Director (non-employee)
Michael Spadaccini 35 General Counsel, Corporate Secretary

Wilfred Shaw has been our chairman of the board of directors since our
formation. We have entered into a consulting contract with SharpManagement.com,
LLC, for the services of Mr. Shaw to perform the duties of the Chief Executive
Officer. Mr. Shaw owns SharpManagement.com, LLC. Mr. Shaw has spent the last
eight years in the venture capital and investment industries, serving as Vice
President for Business Development for Intertech Group, a conglomerate of small
companies based in Southeast Asia. From 1994 to 1996, Mr. Shaw was employed as
the Vice President for Business Development for IG International, Inc., a
pharmaceutical company based in the San Francisco Bay area. Mr. Shaw earned his
Bachelor of Arts in Economics degree at Saint Mary's College.

Wing Yu, director and COO, has served as director since December of 1999, and as
COO since May of 2000. Prior to serving as COO, Mr. Yu was our Vice President of
Web Development. Prior to joining us, Mr. Yu was a teacher and a freelance Apple
Macintosh developer for 6 years. While coordinating online advertising for
Ticketmaster.com CitySearch.com Online, he developed various websites as a
freelance web developer. He holds a Bachelor of Arts in History from Occidental
College, and a Masters in Arts degree in Instructional Technology.

Owen Naccarato, director, is not an employee of ours. For more than the past
five years, Mr. Naccarato, an attorney, has practiced law as a sole practitioner
in Irvine, CA. Mr. Naccarato formerly served as our lead securities counsel. Mr.
Naccarato is admitted to the bar in the State of California.

Michael Spadaccini, General Counsel and Corporate Secretary, joined us in March
of 2000. Mr. Spadaccini practiced law as a sole practitioner specializing in
business law and intellectual property in San Francisco from 1993 until joining
us in March of 2000. In his practice, Mr. Spadaccini represented businesses in a
wide range of industries including furniture, fashion, farming, retail,
computers, and the Internet. Mr. Spadaccini is admitted to the California Bar,
as well as the Bars of the U.S. District Court for Northern California, the U.S.
Court of Appeals for the 9th Circuit, and the U.S. Court of Appeals for Federal
Circuit.

43
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

Effective 1/1/2000, we entered into an agreement with SharpManagement, LLC, an
entity entirely controlled by Wilfred Shaw, to secure the services of Wilfred
Shaw as our CEO. Under the agreement, we are obligated to pay to SharpManagement
an initial payment of $180,000, and annual payments of $180,000. As of the date
of this filing, payments under the agreement have not been paid to either Mr.
Shaw or SharpManagement.

No executive officer or other employee is reasonably expected to earn
compensation in excess of $100,000 in the fiscal year ending June 30, 2000.

However, two employees in addition to Mr. Shaw are expected to earn more than
$100,000.00 in the fiscal year ending June 30, 2001. Michael Spadaccini, General
Counsel and Corporate Secretary, began his employ on March 13, 2000. He earns an
annual salary of $100,000.00, and in May of 2000, received options to purchase
84,000 shares of our common stock at a strike price of $0.5938 per share. Wing
Yu, a director, was promoted to chief operating officer on May 11, 2000. He
earns an annual salary of $120,000.00, and received a signing bonus of
$6,800.00.

Owen Naccarato was appointed as our director on April 10, 2000. On March 20,
2000, Mr. Naccarato executed a director's agreement in which he was granted
options to purchase 250,000 restricted shares of our common stock for $0.5938
per share.

On November 17, 1999, our Board of directors approved our 1999 stock option
plan. On December 20, 1999, our shareholders, at our annual meeting, approved
the plan, and authorized a pool of 6,000,000 shares of common stock to be issued
according to the plan. The plan authorizes both incentive stock options and
non-statutory stock options.

We do not yet have a compensation committee that approves or offers
recommendations on compensation for our employees.

INDEMNIFICATION OF OUR DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides, in effect, that
any person made a party to any action by reason of the fact that he is or was
our director, officer, employee or agent may and, in some cases, must be
indemnified by us against, in the case of a non derivative action, judgments,
fines, amounts paid in settlement and reasonable expenses including attorneys'
fees incurred by him as a result of such action, and in the case of a derivative
action, against expenses including attorneys' fees, if in either type of action
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to our best interests. This indemnification does not apply, in a
derivative action, to matters as to which it is adjudged that the director,
officer, employee or agent is liable to us, unless upon court order it is
determined that, despite such adjudication of liability, but in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity for
expenses, and, in a non derivative action, to any criminal proceeding in which
such person had reasonable cause to believe his conduct was unlawful.

Article V of our certificate of incorporation, as amended, provides that all of
our directors shall be protected from personal liability to the fullest extent
permitted by law.

Article VII of our Bylaws provides that we shall indemnify our officers and
directors to the fullest extent permitted or authorized by current or future
legislation or judicial or administrative decision against all adverse
consequences.

44
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial
ownership of common stock as of August 15, 2000 for a total of 64,514,848 shares
of common stock, by:

o each shareholder known by us to own beneficially more than 5% of our common
stock; o each person or entity known to us to own beneficially more than 5% of
our common stock; o each of our directors; o each of our executive officers; and
o all executive officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF CLASS
(1) TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)
--------------------------- ----------------------------------------- ----------------------------- --------------------
<S> <C> <C> <C>
CLASS A COMMON Asia Pacific Ventures (2) Suite 13 16th 6,000,000 9.30%
Floor, Kinwick Centre,
32 Hollywood Road
Central Hong Kong, Hong Kong
CLASS A COMMON Times Square International, Inc. 7,500,000 11.63%
C/O MIS International, Inc. 145 Traders
Blvd, E. #40, Mississauga, Ontario,
Canada L4Z 3L3
CLASS A COMMON Corworth Investment, Inc. C/O MIS 7,356,117 11.40%
International, Inc.
145 Traders Blvd, E. #40 Mississauga,
Ontario, Canada L4Z 3L3
CLASS A COMMON Tupelo Investments, Ltd., Box 107 5,780,303 8.96%
Oceanic House, Grand Turk, Turk &
Caicos Islands
CLASS A COMMON Wilfred Shaw, Chairman and CEO 1,526,798 2.37%
1515 So. El Camino Real, Suite 100, San
Mateo, CA 94402
CLASS A COMMON Wing Yu, Director and COO 175,000 0.27%
1515 So. El Camino Real, Suite 100, San
Mateo, CA 94402
CLASS A COMMON Michael Spadaccini, General Counsel and 5,700 0.0088%
Corporate Secretary
1515 So. El Camino Real, Suite 100,
San Mateo, CA 94402
</TABLE>

(1) These percentages are based upon 64,514,848 shares of our common stock
outstanding.
(2) Asia Pacific Ventures is a related party to Mr. Wilfred Shaw, Chairman and
Chief Executive Officer.

ITEM 13. RELATIONSHIPS AND RELATED TRANSACTIONS

Some transactions to which we are a party and some matters affecting us have or
will result in a material benefit to some of our directors and executive
officers, or may create conflicts of interest, as follows:

45
<PAGE>

On January 7, 2000, our board approved a grant of 875,000 restricted shares to
Justin Keener, who at that time was serving as our chief operating officer, and
as a director. On May 12, 2000, Mr. Keener surrendered the share certificate and
cancelled the shares. The board has recently proposed, but has not yet approved,
a resolution that Mr. Keener receive non-qualified stock options to purchase
467,466 shares of our common stock. On or about May 12, 2000, Mr. Keener
resigned from his position as chief operating officer and resigned from the
board.

On January 7, 2000, our board approved a grant of 625,000 restricted shares to
Wing Yu, who at that time was serving as our Chief Technology Officer, and as a
director. On May 11, 2000, Mr. Yu surrendered the share certificate and
cancelled the shares. The board has recently proposed, but has not yet approved,
a resolution that Mr. Yu receive non-qualified stock options to purchase 937,500
shares of our common stock.

On January 7, 2000, our board approved a grant of 625,000 restricted shares to
Gurkan Fidan, who at that time was serving as our Vice President of Internet
Operations. On May 11, 2000, Mr. Fidan surrendered the share certificate and
cancelled the shares. The board has recently proposed, but has not yet approved,
a resolution that Mr. Fidan receive non-qualified stock options to purchase
937,500 shares of our common stock.

On January 7, 2000, our board approved a grant of 1,250,000 restricted shares to
SharpManagement, an LLC wholly owned by our CEO and Chairman, Wilfred Shaw. On
May 10, 2000, SharpManagement surrendered the share certificate and cancelled
the shares. The board has recently proposed, but has not yet approved, a
resolution that SharpManagement receive non-qualified stock options to purchase
1,875,000 shares of our common stock.

Owen Naccarato, an attorney that performs legal services for us was appointed as
our director on April 10, 2000. On March 20, 2000, Mr. Naccarato executed a
director's agreement, in which he was granted options to purchase 250,000
restricted shares of our common stock at a price of $0.5938 per share.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
AND EXHIBITS

(A)(1) INDEX TO FINANCIAL STATEMENTS PAGE

Independent Auditors' Report 19
Consolidated Balance Sheets 20
Consolidated Statements of Operations 22
Consolidated Statements of Changes in
Shareholders' Equity 23
Consolidated Statements of Cash Flows 25
Notes to the Financial Statements 26

(a)(3) INDEX TO EXHIBITS

Number of Sequential
Item Numbering
Assigned in System
Regulation Page Number
S-K, Item 601 Description of Exhibit of Exhibit
-------------- -------------------------- -----------

(2) 2.1. Agreement and Plan of Reorganization
between Cosmoz.com, Inc. and Ivory Acquisition
Corporation dated January 5, 2000. Certificate
of Ownership and Merger Merging Ivory
Acquisition Corporation into Cosmoz.com, Inc.
Incorporated by reference to Exhibit 2 to Form
8-K/A, File No.: 000-28377)

46
<PAGE>

(3) 3.1. Articles of Incorporation of Cosmoz.com,
Inc. (Incorporated by reference to Exhibit 3.(I)
to Form 8-K/A, File No.: 000-28377)

3.2. By-Laws of Cosmoz.com, Inc. (Incorporated by
reference to Exhibit 3.(II) to Form 8-K/A, File
No.: 000-28377)

(10) 10.1. Cosmoz.com, Inc. 1999 Stock option plan.
(Incorporated by reference to Exhibit 10.1 to
Form 10-Q, File No.: 000-28377)

10.2. Owen Naccarato Director's Agreement.
(Incorporated by reference to Exhibit 10.2 to
Form 10-Q, File No.: 000-28377)

10.3. Management and Consulting Agreement
Between Us and SharpManagement, LLC.
(Incorporated by reference to Exhibit 10 to Form
S-1 filed August 24, 2000, File No.: 333-44406)

10.4. Investment Agreement Between Us and Swartz
Private Equity, LLC. (Incorporated by reference
to Exhibit 10 to Form S-1 filed August 24, 2000,
File No.: 333-44406)

10.5. Warrant to Purchase Our Common Stock Issued
in Connection With the Investment Agreement
Between Us and Swartz. (Incorporated by reference
to Exhibit 10 to Form S-1 filed August 24, 2000,
File No.: 333-44406)

10.6. Registration Rights Agreement issued in
connection with the Investment Agreement Between
Us and Swartz. (Incorporated by reference to
Exhibit 10 to Form S-1 filed August 24, 2000, File
No.: 333-44406)

10.7. Warrant Side Agreement Issued in
Connection With Investment Agreement Between Us
and Swartz. (Incorporated by reference to
Exhibit 10 to Form S-1 filed August 24, 2000,
File No.: 333-44406)

10.8. Commitment Warrant to Purchase Our Common
Stock Issued in Connection With Investment
Agreement Between Us and Swartz. (Incorporated by
reference to Exhibit 10 to Form S-1 filed August
24, 2000, File No.: 333-44406)

(21) 21.1. Subsidiaries of the Registrant.

(b) Reports on Form 8-K

None.

47
<PAGE>

SIGNATURES

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

COSMOZ.COM, INC.

By: /s/ Willfed Shaw
-------------------------------------
Wilfred Shaw
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been duly signed below by the following persons on behalf of the Registrant
and in the capacities and on the date set forth above.

SIGNATURE TITLE DATE
--------- ----- ----
/s/ Wing Yu
-----------------
Wing Yu COO and Director September 27, 2000

/s/ Willfed Shaw
----------------
Wilfred Shaw Chairman and September 27, 2000
Chief Executive Officer

/s/ Michael Spadaccini
----------------------
Michael Spadaccini General Counsel, Secretary September 27, 2000