<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                   FORM 10-QSB



(Mark One)
 [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF 1934

        For the quarterly period ended  SEPTEMBER 30, 2000
                                       ---------------------

 [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

             For the transition period from             to
                                            -----------    ---------

                      Commission file number        0-27635
                                            ----------------------


                            BASIC TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

           COLORADO                                        84-1446622
           --------                                        ----------
  (State or other jurisdiction                           (IRS Employer
of incorporation or organization)                       Identification No.)

           1026 WEST MAIN STREET, SUITE 104, LEWISVILLE, TEXAS 75067
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                  972-436-3789
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
 Yes [ ]    No [ ]      NOT APPLICABLE

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 7,793,857 common stock as of November
13, 2000

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [x]

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. (1) Yes [x] No[ ] (2) Yes [x] No [ ]



<PAGE>   2


                            BASIC TECHNOLOGIES, INC.

                                    FORM 10-Q
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                TABLE OF CONTENTS

<TABLE>
<S>       <C>                                                                             <C>
PART I      FINANCIAL INFORMATION...........................................................3

Item 1.   Financial Statements

          Consolidated Balance Sheets
          September 30, 2000 and September 30, 1999 (Unaudited) ...........................F1

          Consolidated Statements of Income (Loss)
          Three Months Ended September 30, 2000 and
          September 30, 1999 (Unaudited)...................................................F3

          Consolidated  Statements of Changes in
          Stockholders' Equity (Deficit) (Unaudited).......................................F4

          Consolidated Statements of Cash Flows
          Three Months Ended September 30, 2000 and
          September 30, 1999 (Unaudited)...................................................F-4

          Notes to Consolidated Financial statements (Unaudited)...........................F-7

Item 2.   Management's Discussion and Analysis or Plan of Operation

          (a)   Plan of Operation For The Next Twelve Months ...............................3

          (b)   Management's Discussion and Analysis of Financial Condition
                and Results of Operations. .................................................7

PART II    OTHER INFORMATION

Item 1.   Legal Proceedings................................................................12

Item 2.   Changes in Securities............................................................13

Item 3.   Default by the Company on its Senior Securities..................................13

Item 4.   Submission of Matters to a Vote of Securities Holdings...........................14

Item 5.   Other Information................................................................14

Item 6.   Exhibits and Reports on Form 8-K.................................................14
</TABLE>


                                       2
<PAGE>   3


                         PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Selected information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made. These
financial statements should be read in conjunction with the accompanying notes,
and with the historical financial information of the Company.


                                       3


<PAGE>   4
                            BASIC TECHNOLOGIES, INC.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                  September 30,      September 30,
                                                      2000               1999
                                                  -------------      -------------
<S>                                               <C>                <C>
ASSETS

CURRENT ASSETS

     Cash                                         $    25,893        $     4,280
     Accounts Receivable-Net                          102,077              4,973
     Inventories                                       70,903             90,415
     Prepaid Expenses                                   6,650                  0
     Deferred Tax Asset                               290,993             97,439
                                                  -----------        -----------

                      TOTAL CURRENT ASSETS        $   496,516        $   197,107

FIXED ASSETS

     Equipment                                    $ 1,404,838        $ 1,236,475
     Land and Buildings                                 9,974              9,974
                                                  -----------        -----------
                                                    1,414,812          1,246,449

     Less:  Accumulated Depreciation              $  (153,867)       $   (47,008)
                                                  -----------        -----------

                      TOTAL FIXED ASSETS          $ 1,260,945        $ 1,199,441

OTHER ASSETS

     Deposits                                     $     3,376        $     1,399
     Organization Costs-Net                             1,050              1,500
     Proved Developed Oil Reserves                  3,711,000          3,711,000
     Acquisition Goodwill-Net                         870,984                  0
                                                  -----------        -----------

                      TOTAL OTHER ASSETS          $ 4,586,410        $ 3,713,899
                                                  -----------        -----------

                               TOTAL ASSETS       $ 6,343,871        $ 5,110,447
                                                  ===========        ===========
</TABLE>

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



                                      F-1
<PAGE>   5


                            BASIC TECHNOLOGIES, INC.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                 September 30,      September 30,
                                                                     2000               1999
                                                                 -----------        -----------
<S>                                                              <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

     Short Term Notes Payable                                    $   401,259        $    82,209
     Accounts Payable                                                227,886            112,386
     Accrued Taxes and Interest Payable                               58,360             21,714
     Current Portion of Long Term Debt                                68,998             81,122
                                                                 -----------        -----------

                      TOTAL CURRENT LIABILITIES                  $   756,503        $   297,431

LONG TERM LIABILITIES

     Deferred Tax Liability                                      $   223,069        $         0
     Payables-Shareholders                                           463,104            191,735
     Capital Lease Payable                                            32,871             37,958
     Long Term Notes and Obligations                                 305,203            351,306
     Less: Current Maturities                                        (68,998)           (81,122)
                                                                 -----------        -----------

                      TOTAL LONG TERM LIABILITIES                $   955,249        $   499,877
                                                                 -----------        -----------

                      TOTAL LIABILITIES                          $ 1,711,752        $   797,308

STOCKHOLDERS' EQUITY

     Common Stock, $.00001 par value, 100,000,000 shares
         authorized and 7,759,857 issued and outstanding         $        77        $        68
     Preferred Stock, $.00001 par value, 10,000,000 shares
         authorized and no shares issued and outstanding                   0                  0
     Paid in Capital                                               5,162,408          4,506,332
     Paid Stock Subscriptions                                         34,500                  0
     Retained Earnings (Deficit)                                    (564,866)          (192,961)
                                                                 -----------        -----------

                      TOTAL STOCKHOLDERS' EQUITY                 $ 4,632,119        $ 4,313,439
                                                                 -----------        -----------

                               TOTAL LIABILITIES AND
                                    STOCKHOLDERS' EQUITY         $ 6,343,871        $ 5,110,747
                                                                 ===========        ===========
</TABLE>

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



                                      F-2
<PAGE>   6

                            BASIC TECHNOLOGIES, INC.
                        Consolidated Statements of Income
                           For the three months ended

<TABLE>
<CAPTION>
                                                        September 30,    September 30,
                                                            2000             1999
                                                        -------------    -------------
<S>                                                      <C>              <C>
REVENUES                                                 $ 105,262        $ 103,056

COST OF SALES                                                  779           43,507
                                                         ---------        ---------

                               GROSS PROFIT              $ 104,483        $  59,549

OPERATING EXPENSES

     Selling, General and Administrative Expenses          211,943          141,953
     Interest                                               13,761            8,937
     Amortization and Depreciation                          39,806           24,303
                                                         ---------        ---------

                               TOTAL EXPENSES            $ 265,510        $ 175,193

             NET INCOME (LOSS) FROM OPERATIONS           $(161,027)       $(115,644)

OTHER (INCOME) EXPENSE

     Gain - Note Payoff                                  $   1,818        $       0
     Interest (Income)                                         133               28
                                                         ---------        ---------

                      TOTAL OTHER (INCOME) EXPENSE           1,951               28
                                                         ---------        ---------

             NET INCOME (LOSS) BEFORE TAXES              $(159,076)       $(115,616)

DEFERRED TAX BENEFIT                                        54,086           39,309
                                                         ---------        ---------

                               NET INCOME (LOSS)         $(104,990)       $ (76,307)

     Beginning Retained Earnings (Deficit)                (459,876)        (116,654)
                                                         ---------        ---------

             ENDING RETAINED EARNINGS (DEFICIT)          $(564,866)       $(192,961)
                                                         =========        =========

EARNINGS PER SHARE

     Income (Loss) for Common Stockholders               $   (0.01)       $   (0.01)
                                                         =========        =========
</TABLE>

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



                                      F-3
<PAGE>   7

                            BASIC TECHNOLOGIES, INC.
                  Statement of Changes in Stockholders' Equity
                 For the three months ended September 30, 2000

<TABLE>
<CAPTION>
                                                                   Additional       Retained
                                 Common            Stock            Paid In         Earnings
                                 Stock          Subscriptions       Capital         (Deficit)           Total
                               ----------       -------------      ----------       ----------        ----------
<S>                            <C>              <C>                <C>              <C>               <C>
BALANCE, JUNE 30, 2000                $77           $28,500        $5,162,408        $(459,876)       $4,731,109

Receipt of Subscriptions                              6,000                                                6,000

Net Loss, Current Year                                                                (104,990)         (104,990)
                               ----------        ----------        ----------       ----------        ----------
BALANCE, SEPT 30, 2000                $77           $34,500        $5,162,408        $(564,866)       $4,632,119
                               ==========        ==========        ==========       ==========        ==========
</TABLE>

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


                                      F-4
<PAGE>   8

                            BASIC TECHNOLOGIES, INC.
                      Consolidated Statements of Cash Flows
                           For the three months ended

<TABLE>
<CAPTION>
                                                          September 30,    September 30,
                                                              2000             1999
                                                          -------------    -------------
<S>                                                        <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income (Loss)                                     $(104,990)       $ (76,307)
     Adjustments to reconcile net income to net cash
          provided by operating activities:

             Depreciation and Amortization                    39,806           24,303
             Changes in Accounts Receivable                    6,805           (1,871)
             Changes in Inventories                                0           (3,080)
             Changes in Deferred Tax Asset (net)             (54,086)         (39,309)
             Changes in Accounts Payable
                  and Accrued Liabilities                      3,908           38,077
             Changes in Prepaid Expenses                      (6,650)               0
                                                           ---------        ---------

                      NET CASH USED BY
                               OPERATING ACTIVITIES        $(115,207)       $ (58,187)

NET CASH USED BY INVESTING ACTIVITIES

             Purchase of Equipment                                 0          (32,419)
                                                           ---------        ---------

                      NET CASH USED BY
                               INVESTING ACTIVITIES        $       0        $ (32,419)

CASH FLOWS FROM FINANCING ACTIVITIES

     Principal Payments on Bank and Other Notes              (22,466)         (54,360)
     Proceeds of Notes Payable                               115,000          104,726
     Proceeds of Shareholder Loans                            26,224           52,342
                                                           ---------        ---------

                      NET CASH PROVIDED BY
                               FINANCING ACTIVITIES        $ 118,758        $ 102,708
                                                           ---------        ---------

                               NET INCREASE IN CASH        $   3,551        $  12,102

                               CASH AT BEGINNING
                               OF PERIODS                     22,342           (7,822)
                                                           ---------        ---------

                               CASH AT END
                               OF PERIODS                  $  25,893        $   4,280
                                                           =========        =========
</TABLE>

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


                                      F-5

<PAGE>   9

                            BASIC TECHNOLOGIES, INC.
                          Table of Reportable Segments
                  For the three months ended September 30, 2000

<TABLE>
<CAPTION>
                                                      Oil & Gas   Environmental  Equipment    Internet &
                                                      Production   Remediation    Leasing     E-Business  Eliminations  Consolidated
                                                      ----------  -------------  ---------    ----------  ------------  ------------
<S>                                                   <C>         <C>            <C>          <C>         <C>           <C>
Sales to Unaffiliated Customers                       $    1,345     $     0     $       0     $103,917     $           $   105,262
Inter-Segment Sales                                            0                                                                  0
                                                      ----------     -------     ---------     --------     --------    -----------
         Total Sales                                  $    1,345           0             0      103,917            0        105,262
                                                      ==========     =======     =========     ========     ========    ===========

Operating Income (Loss)                               $    1,345     (13,950)      (24,810)     (66,020)                   (103,435)
                                                      ==========     =======     =========     ========     ========
Corporate Expenses                                                                                                          (57,592)
                                                                                                                        -----------
         Total Operating Income (Loss)                                                                                     (161,027)
                                                                                                                        ===========

Depreciation & Amortization                           $        0         551        24,805       14,311            0         39,667
                                                      ==========     =======     =========     ========     ========
Corporate Expenses                                                                                                              139
                                                                                                                        -----------
         Total Depreciation & Amortization                                                                                   39,806
                                                                                                                        ===========
Interest Revenue (Not Allocated to Segments)                                                                                    133
                                                                                                                        ===========
Interest Expense                                      $        0       4,614         1,823        1,009            0          7,446
                                                      ==========     =======     =========     ========     ========
Corporate Expenses                                                                                                            6,315
                                                                                                                        -----------
         Total Interest Expense                                                                                              13,761
                                                                                                                        ===========
                                                                                                                                  0

Segment Assets                                        $3,711,000     640,644     1,177,096      985,665     (201,838)     6,312,567
                                                      ==========     =======     =========     ========     ========
General Corporate Assets                                                                                                     31,304
                                                                                                                        -----------
         Total Assets                                                                                                     6,343,871
                                                                                                                        ===========

Expenditures for Segment Assets                       $              $13,548     $       0     $  1,640     $      0    $    15,188
                                                      ==========     =======     =========     ========     ========    ===========
</TABLE>

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


                                      F-6
<PAGE>   10
                            BASIC TECHNOLOGIES, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2000

NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

         Nature of Activities and Basis of Accounting

         The Company, a Corporation, is engaged in the diversified operations of
         environmental remediation and recovery of oil and gas properties in
         Texas and Oklahoma, and development of oil and gas ventures and related
         interests, and as an internet service provider and e-business
         consultant in Hawaii, with its corporate headquarters located in
         Lewisville, Texas. The Company incorporated in the state of Colorado on
         January 21, 1998 and its fiscal year end is June 30.

         The accompanying financial statements have been prepared on the accrual
         basis of accounting in accordance with generally accepted accounting
         principles.

         Consolidation

         The Company was formed as a parent holding company to operate through
         subsidiaries. The financial statements consolidate the activities of
         the parent along with:

                  Yankee Development Corp., a Texas corporation
                  P & A Remediation, LLC, a Texas limited liability company
                  Simpco, Inc., a Texas corporation
                  P & A Remediation, LLC, an Oklahoma limited liability company
                  Cyber Cities Technologies, Inc., an Hawaii corporation

         All significant intercompany transactions and balances have been
         eliminated.

         Cash

         For purposes of the statement of cash flows, the Company considers all
         short term securities purchased with a maturity of three months or less
         to be cash equivalents. There are no restrictions on any balances.

         Accounts Receivable

         Bad Debt expense is recognized by use of the allowance method, but not
         allowance has been made this year to date. There are no significant
         concentrations of credit risk.


                                      F-7
<PAGE>   11

         Inventories

         Inventories are shown at cost, using the first-in, first-out method. In
         addition to direct purchases, inventory is acquired through the
         performance of services (See note about revenues). No inventory sales
         have been made for the year to date.

         Pipe inventory, in the form of a 35-mile long abandoned oil gathering
         pipeline, was acquired for the issuance of a $35,000 promissory note.
         The Company plans to dig up the pipeline and prepare it for sale.

         Fixed Assets

         These assets are carried at acquisition cost. Depreciation is provided
         using the straight-line method over the estimated economic lives of the
         assets, which range from 20 years for buildings to 3 to 15 years for
         all other assets.

         The Company rebuilt and upgraded certain newly acquired used operating
         equipment prior to placing the equipment in the field. All costs,
         including related payroll costs, were capitalized.

         Intangibles

         Amortization of Organization Costs is calculated over 60 months.
         Goodwill, created from the purchase of Cyber Cities Technologies, Inc.
         is being amortized over 20 years.

         Income Taxes

         Income from the corporation is taxed at regular corporate rates per the
         Internal Revenue Code.

         Deferred Tax Liability

         The Company purchased Cyber Cities Technologies, Inc. and accounted for
         the transaction using the "purchase" method of accounting. This
         requires the acquisition to be accounted for at the fair value of the
         assets received or given up, whichever is more readily available.
         Further, this transaction caused a Deferred Tax Liability to be booked,
         due to the difference between the book basis and tax basis of the
         assets received. The offset to this entry increased Goodwill.

         Common Stock

         The Company's common stock is stated at par value ($.00001) and the
         paid in capital represents the difference between the fair value of the
         assets received and the common stock at par value. There are no
         commitments or provisions for


                                      F-8
<PAGE>   12

         stock options, stock compensation, conversion rights, redemption
         requirements or unusual voting rights.

         Revenues

         Services

         The Company sells services as an Internet service provider and
         consultant in Hawaii.

         Services for oil well plugging are provided using two types of
         contracts: cash and salvage. Under the salvage type, the Company
         receives as its compensation specified types of used oil well equipment
         or pipe. Revenue is recognized and the items taken into inventory based
         upon the relevant wholesale market prices, or the prices at which the
         Company could buy the items for resale on the open market. No such
         services were performed during the period.

         Sales

         Inventory, whether acquired by purchase or through services, is resold
         to oil and construction customers. No inventory was sold during the
         period.

         $1,345 in revenues has been earned from oil and gas production during
         the fiscal year to date.

         Interest

         Interest expensed for the period is $ 13,761. No interest has been
         capitalized.

         Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect certain reported amounts and disclosures.
         Accordingly, actual results could differ from those estimates.

NOTE 2 - INVESTMENTS IN WHOLLY OWNED SUBSIDIARIES

On April 23, 1998, the Company issued 5,305,625 restricted common shares in
exchange for 100% of Yankee Development Corporation. Upon consummation of the
transaction, the former owners of Yankee Development Corporation controlled
approximately 90% of the issued and outstanding shares of Basic Technologies,
Inc. and Yankee Development Corporation became a wholly owned subsidiary of
Basic Technologies, Inc.


                                      F-9
<PAGE>   13

The transaction was consummated as a purchase of assets, rather than a pooling
of interests. The valuation assigned to the purchase of Yankee Development
Corporation is based on the underlying net assets, which consist of working
interests in proven oil and gas reserves discounted to net present value of net
revenues less development and operating costs. The discount applied was 10%. The
oil and gas reserves are the only substantial assets in the subsidiary company.


<TABLE>
<S>                                                           <C>
         Cost of Acquiring Yankee Development Shares          $3,711,000
</TABLE>

The valuation of the oil and gas reserves is based on the market price of oil.
At the time of the valuation, the price used was $15/bbl. The price of oil at
the balance sheet date was $28.00 per barrel, and the current price of oil is
$33.00; however, the reserves are not to be revalued in excess of their original
valuation.

In October 1998, the Company formed a Limited Liability Company (P & A
Remediation, LLC) with Simpco, Inc. (a wholly owned subsidiary) with the
intention of developing environmental remediation in oil and gas fields. The
Company owns 99% of the stock of P & A Remediation, LLC, and Simpco, Inc. owns
1%.

In January, 1999, the Company issued 850,000 shares of its authorized but
previously unissued shares of voting common stock in exchange for all of the
outstanding common stock of Simpco, Inc., a Texas corporation. There is a
contingency clause in the acquisition agreement, which provides for the issuance
of additional shares of stock should the value of the Simpco, Inc. assets exceed
a certain level within eighteen months of the acquisition. That corporation, now
a wholly owned subsidiary, is intended to be the owner and lessor of the
consolidated entities' operating equipment. A promissory note for $110,000.00
was also issued to the shareholders of Simpco, Inc. as part of the acquisition
cost. The transaction was accounted for under the purchase method.

On November 24, 1999, P&A Remediation LLC, an Oklahoma Limited Liability
Company, was formed for the purpose of beginning remediation and sales
operations in Oklahoma.

Effective January 1, 2000, the Company issued 979,232 shares of its authorized
but unissued shares of voting common stock in exchange for all of the assets and
operations, subject to certain liabilities, of Cyber City Honolulu, Inc., a
Hawaii corporation. Included in the exchange was the acquisition of all
intangibles including all trade names, customer lists, goodwill and other
intangibles. The assets and liabilities were then transferred into a newly
formed, wholly owned Hawaii corporation, Cyber Cities Technologies, Inc. The
acquisition was accounted for using the "purchase" method of accounting. The
predecessor and successor companies are a regional Internet service provider and
Internet web page hosting service. The Company recognized goodwill in the amount
of $681,848. A related deferred tax liability of $223,069 was recognized, which
also increased goodwill.


                                      F-10
<PAGE>   14

NOTE 3 - EMPLOYEE BENEFITS

There are currently no qualified or non-qualified employee pensions, profit
sharing, stock option or other plans authorized for any class of employees.

NOTE 4 - LEASES

Capital Leases

All leases for physical facilities are for a period of one year or less, with no
written option periods. There is one equipment lease, the terms of which mandate
accounting as a capital lease. The leased assets are depreciated with interest
imputed.

Amortization of capitalized lease costs is included with depreciation.

<TABLE>
<CAPTION>
                              Year Ending
                                June 30        Amount
                              -----------      ------
                              <S>             <C>
                                 2001          $ 7,148
                                 2002            7,817
                                 2003            8,552
                                 2004            9,354
                                               -------

                                Total          $32,871
                                               =======
</TABLE>

Operating Leases

One subsidiary, which operates as an Internet service provider leases certain
computer/communication equipment. There are two leases which are paid on a
month-to-month basis. Management expects to exercise the fair market value
buyout options on these.

Additional leases have remaining noncancellable lease terms extending beyond the
current year. Rental payments due under existing leases are:

<TABLE>
<CAPTION>
                              Year Ending
                                June 30        Amount
                              -----------     -------
                             <S>              <C>
                                 2001         $16,698
                                 2002           2,334
                                              -------

                                Total         $19,032
                                              =======
</TABLE>

There are no contingent rentals, subleases or related party leases of equipment.

Total equipment rental expense for the year was $14,328.


                                      F-11
<PAGE>   15

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Initiated in August 2000, there are two known lawsuits involve the former owners
of Simpco, Inc., which the Company purchased in January, 1999. The former owners
allege that the Company and its officers violated applicable securities laws in
the acquisition of Simpco, Inc., and seek to return their 850,000 shares of the
Common Stock of the Company and the Company's $110,000 promissory note in return
for payment of $940,000 by the Company, plus expenses, or damages of $940,000
plus expenses and punitive damages. Management believes that both suits are
without merit and is defending both suits vigorously.

Management further believes the worst case scenario to be the return of the
assets of the Simpco transaction for redemption of the Common Stock and
cancellation of the note. This would have the effect of reducing the Company's
assets by approximately $875,000 with a corresponding reduction in equity. No
loss on the income statement would be incurred in this scenario.

In late August 2000, the Company filed a lawsuit against dismissed employees of
P & A Remediation (some of whom were the former owners of Simpco), complaining
of violation of employment agreements and to seek return of Company equipment in
the possession of the dismissed employees. Management is prosecuting the suit
vigorously.

There are several small lawsuits over disputed open commercial accounts. The
full potential cost is included in accounts payable.

NOTE 6 - PROVEN DEVELOPED OIL RESERVES

The Company owns, through a subsidiary, proven developed oil reserves on 2300
acres in west Texas. Valuation at the time of acquisition was based upon the
discounted net present value of net revenues, after development and operating
costs. The applied discount rate was 10%, and the oil price used was $15.00 per
barrel. The price of oil at the statement date was $28.00 per barrel, and the
current price of oil is $33.00 per barrel, but the reserves are not to be
revalued. Recoverable oil reserves are estimated to be 880,000 barrels. See also
Note 2 above.

NOTE 7 - INCOME TAXES

Starting in 1998, the Company has adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("SFAS No. 109), which requires
the use of the liability method in the computation of income tax expense and the
current and deferred income taxes payable. Under SFAS No. 109, income tax
expense consists of taxes payable for the year and the changes during the year
in deferred assets and liabilities. Deferred income taxes are recognized for the
tax consequences in future years of


                                      F-12
<PAGE>   16

differences between the tax bases and financial reporting bases of assets and
liabilities. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.

As there is a net operating loss in the current fiscal year, the Company has
calculated a deferred tax asset (benefit) as follows:

<TABLE>
<S>                                                           <C>
                  Through Fiscal Year June 30, 2000           $236,907
                  Current Period                                54,086
                                                              --------

                  Gross deferred tax asset                    $290,993
                                                              ========
</TABLE>

The Company has also recorded a deferred tax liability for the difference
between book bases and tax bases for the acquisition of Cyber Cities
Technologies, Inc.

<TABLE>
<S>                                                           <C>
                  Deferred tax liability                      $223,069
</TABLE>

NOTE 8 - SEGMENT REPORTING

The Company has adopted SFAS No. 131, and uses the Management approach to
determine and disclose reportable segment information.

The Company's four reportable business segments are based upon distinctive types
of activities or services: environmental remediation; equipment leasing; oil and
gas production; and Internet and e-business services. A full description of
these segments is included in Note 1. All segments operate within the United
States. The equipment leasing segment provides service only to the environmental
segment.

The accounting policies of the segments are the same as those described in the
summary of significant policies. Inter-segment services are recorded using
internal transfer prices set by the Company.

NOTE 9 - EARNINGS PER SHARE

Basic earnings (loss) per share are computed by dividing the net loss by the
weighted average number of common shares outstanding during the period. There
are no provisions or contracts that would create dilutive potential common
stock.

NOTE 10 - ACCRUALS

Local taxes and interest on notes and other payables has been accrued.

No accrual of vacation time is made, because no employee met eligibility
requirements at the statement date.


                                      F-13
<PAGE>   17

NOTE 11 - LONG-TERM DEBT

In January, 1999, the Company issued a $110,000 unsecured note, due January
2001, as part of the acquisition cost of Simpco, Inc. The note does not bear
interest, and the entire balance is due at maturity.

In March, 1999, the Company issued $50,000 in notes payable, due in March 2003
for working capital. Principal and interest accrued at 10% are payable monthly,
and the notes are secured by equipment.

In March, 1999, the Company issued a $11,500 mortgage payable, due in March 2004
for the purchase of real estate. Principal and interest accrued at 10% are
payable monthly and the mortgage is secured by real estate.

In February, 1999, the Company assumed $71,700 in unsecured notes payable, due
March 2004 for the purchase of inventory. Interest accrued at 7%, as well as the
entire principal balance, is due at maturity.

From November, 1998 through May 1999, the Company issued six notes for a total
of $73,975 in notes payable for vehicle and equipment purchases, due from August
2000 through March 2004. Principal and interest accrued at rates from 7.85% to
16.5% are payable monthly and the notes are secured by vehicles and equipment.

In August, 1999, the Company issued $19,000 in unsecured notes maturing in
August 2003 for working capital. Principal and interest accrued at 11.5% are
payable monthly.

In November, 1999, the Company issued a note for a total of $18,300 for a
vehicle purchase, due from December 1999 through November 2003. Principal and
interest accrued at 17.5% is payable monthly and the note is secured by a
vehicle.

Certain installment notes payable for equipment purchases are non-interest
bearing. On these notes, interest has been imputed at 9%, the related asset has
been discounted, and the imputed/discounted interest is included in interest
expense.

In conjunction with the acquisition of Cyber Cities, the Company assumed three
installment notes totaling $68,750. These are repaid in monthly installments of
$2,250, with no interest accrued or payable.

There are no conversion provisions for any debt, or any restrictive or
subordinate covenants other than standard liens.


                                      F-14
<PAGE>   18

Maturities of long term debt are as follows:

<TABLE>
<CAPTION>
                                 Year Ending
                                   June 30                   Amount
                                 -----------                 ------
<S>                                                        <C>
                                    2001                   $  73,138
                                    2002                     193,933
                                    2003                      40,508
                                    2004                      15,078
                                                           ---------

                                    Total                  $ 322,657
                                                           =========
</TABLE>

Short Term Notes Payable

Between November, 1999 and June, 2000, the Company issued six (6) promissory
notes totaling $ 187,791 for short term working capital needs. During the
current period, the Company issued five (5) promissory notes totaling $115,000
for short term working capital needs, with interest paid at 12%. Interest rates
varied from 5% to 12%, payable monthly on some notes, and at maturity on others.
Notes were secured by equipment and contract proceeds. Maturities varied, and
renewal and extension provisions were available.

The Company also had revolving line of credit arrangements, with year-end
balances totaling $106,968. These were unsecured, with interest rates generally
10% per annum.

NOTE 12 - RELATED PARTY TRANSACTIONS

Open account cash advances have been made by various shareholders. As of the
financials statement date, no promissory notes, interest rates or repayment
schedules have been set. The balances are classified as long term obligations.

NOTE 13 - SUPPLEMENTAL DISCLOSURES-STATEMENT OF CASH FLOWS

Operating activities reflect interest paid of $ 11,753.

NOTE 14 - COMPREHENSIVE INCOME

The Company had no elements of comprehensive income during the period.


                                      F-15
<PAGE>   19

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

(a) PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS

The Company serves as a holding company for three wholly-owned corporate
subsidiaries, Yankee Development Corporation (hereafter Yankee); Simpco, Inc.
(hereafter Simpco); and Cyber Cities Technologies, Inc. (hereafter CCTech) and
two limited liability companies, P & A Remediation, LLC, a Texas limited
liability company (hereafter PAR Texas); and P & A Remediation, LLC, an Oklahoma
limited liability company (hereafter PAR Oklahoma). PAR Texas and PAR Oklahoma
are collectively `P & A Remediation'). Yankee owns a working interest in proven,
developed oil reserves on 2,300 acres in Tom Green County, Texas. The assets
owned by Yankee are held by production of other leases, and thus do not require
annual bonus or delay rental payments, and have no legal commitments of any kind
to maintain the legal integrity of the assets. Through P & A Remediation, the
Company performs environmental


                                       4
<PAGE>   20


remediation and salvage operations for the oil industry, and markets and sells
construction materials, pipe, steel tubulars and used oil field equipment
obtained from salvage operations or acquired for resale on the secondary market.
Simpco owns certain reconditioned oil field equipment and vehicles that are
leased to P & A Remediation for use in conducting oil field plugging,
remediation and salvage activities. CCTech provides high speed internet access
for residential and business customers in the state of Hawaii. CCTech also has
the capability to host commercial websites world wide. Simpco, Inc., and Yankee
Development Corporation own assets, but do not do business with any source
outside of the Company.

Subject to securing the necessary equity infusion or long term financing,
Company management hopes to re-establish currently suspended day to day
operations in both its Olney, Texas, yard location and in the Nowata, Oklahoma,
location. The Texas yard would house the Company's threading equipment, there to
establish a pipe threading and testing facility complementary to the facilities
in the to be acquired Nowata, Oklahoma location. Both locations will have large
capacity pipe threading, straightening, and testing facilities that are not
readily available in the Texas and Oklahoma markets. Company management is of
the opinion that a significant portion of the enhanced (due to the increase in
the price of oil) pipe testing market may be immediately available to the
Company. The implementation of this plan will require the Company securing
skilled employees, contractual consultants, or joint venture partners, to
establish the day to day operations. The consultants and / or venture partners
could be existing competitors in the pipe market. Based upon industry knowledge,
Company management believes that the oil & gas operators, steel tubular and pipe
dealers, and re-sale equipment marketers are candidates for operations of the
Company's pipe threading and testing facilities. Further, Company management
believes they number in the thousands as of the date hereof, and that the pipe
threading and testing facility may have an effective life of many years to come
based upon the lack of available services in the market today. However, there
can be no assurance that this pipe testing and threading market phenomenon will
continue, that the Company can establish complementary and efficient day to day
operations in its facilities, that the Company will have the resources to
complete the work under any such operations, or that the Company after
establishing operations, will be able to operate profitably.

Subject to securing the equity infusion or long term financing necessary to
finance the implementation and operation of the re-establishment of operations
of PAR Oklahoma, Company management hopes to re-establish day to day operations
in the Nowata, Oklahoma, location. It is management's plan to use the acquired
location's operations to complement the reorganized Texas yard and it's newly
established pipe threading and testing facility. In addition to the Oklahoma
pipe threading and testing, Company management hopes to re-establish a base for
oil & gas well plugging and environmental remediation operations out of the
Oklahoma yard. Based upon EPA reports on the Lake Oologah project (that the
Company successfully bid and won the first eight one (81) well phase), Company
management believes that the abandoned and inactive wells that are candidates
for this EPA project number in the thousands as of the date hereof, and that the
project may have an effective life of five years and potentially as much as $16
million in revenue available. Re-established operations will not include
previous PAR and Simpco mid-level management and should involve the operations
of three separate crews and sets of remediation equipment, rather than the one
set and one crew used by PAR Oklahoma in the initial eighty one (81) well phase
of the project.


                                       5
<PAGE>   21


The re-establishment of day to day operations in Nowata, Oklahoma, will require
the Company securing skilled employees, contractual consultants, or joint
venture partners, to work locally in northeast Oklahoma. The consultants and /
or venture partners referred could be competitors in the oil well plugging
market. Negotiations with the same are currently in the beginning phases with
Company management. There can be no assurance that the Company can successfully
negotiate with consultants or skilled employees to the Company's benefit, that
the EPA project will continue, that the Company will win any of the contracts
for the project, that the Company will have the resources to complete the work
under any such contracts, or that the Company, if it receives any such
contracts, will be able to complete them profitably.

Company management is currently negotiating with outside financial partners for
a joint venture, or private placement, to raise sufficient capital for Yankee to
cause the proper drilling and completion of a sufficient number of wells to
prove or disprove the Yankee Unit field's engineering and reserves study. This
program under consideration and negotiation could possibly mean the drilling of
up to sixteen (16) initial wells, at a total cost of up to $2,400,000 to the
financial partners. The results of drilling such wells can never be determined
in advance. The industry has a history of unprofitable efforts resulting from
dry holes, or commercial wells which fail to produce in quantities sufficient to
provide an economic return. Yankee Development, since inception, has generated
no revenues from the production of oil. No assurance can be given that Yankee
Development will successfully negotiate the funding of its development program,
generate any revenues, or achieve profitability from the production of the
proven developed reserves owned as of the date hereof, or from oil and/or gas
properties, if any, acquired in the future.

The Company intends to develop a plan for internal growth of the existing
markets of its internet subsidiary, CCTech, which services the consumers of the
State of Hawaii with high speed Internet Access for residence and business uses.
Currently doing business and maintaining offices on the islands of Oahu and
Maui, CCTech has the capability to provide computer and internet commerce
consultation services to businesses nationwide. The development of a nationwide
marketing plan of a `business to business' division is being planned. It is
contingent upon the Company securing financing necessary to re-align and
reorganize Company infrastructure to expand its core business to the islands of
Kauai and the Big Island of Hawaii. This expansion will allow CCTech to be the
only regional statewide ISP in the market. Once in place and operating, a long
term plan for nationwide internet service will be implemented. A review of
market opportunities available to the Company is currently in process by Company
management. There can be no assurance that the Company can successfully secure
financing necessary to make the expansion to state-wide operations, that the
market available for the core business will continue, that the Company will be
able to get new customers in newly opened markets, that the Company will have
the resources to provide services if such markets are opened, and if it will be
able to operate them profitably.

The Company plans to diversify its operations through the acquisition of
companies engaged in businesses unrelated to the oil and gas business. The
Company is presently engaged in negotiations for the acquisition of companies
operating in industries unrelated to the Company's core business.


                                       6
<PAGE>   22


The activities of the Company in all subsidiaries to date have been primarily
focused on evaluating and forming mid-level management teams; researching and
testing actual project operations and profitability; and developing and
identifying market opportunities that can be taken advantage of by the Company's
positions in its various subsidiaries. Accordingly, management does not consider
the historical results of operations to be representative of future results of
operation of the Company. This Form 10-QSB should be read in conjunction with
the Form 10SB which was filed by the Company on June 12, 2000.

The Company expects to meet our capital needs for the next 3 months with cash on
hand and operating cash flow. Beyond 3 months, or to make any expansion, will
require the proceeds from the sale or issuance of capital stock, lease
financing, or additional debt. Other than any extraordinary legal expenses
caused by pending litigation with former mid-level management of P & A
Remediation, and the additional filing fees and legal expenses related to the
regulatory reporting of the filing of the Company's Form 15C211 with NASD, we do
not anticipate any out of budget operational shortfalls in the coming fiscal
year. We regularly examine financing alternatives based on prevailing market
conditions and expect to access the capital markets from time to time based on
our current and anticipated cash needs and market opportunities. Over the longer
term, we will be dependent upon obtaining the long term equity infusion or
financing necessary to implement our upgraded operations in both the
environmental remediation subsidiaries and in the internet subsidiaries. Each
subsidiary will be then be dependent upon positive operating cash flow and, to
the extent cash flow is not sufficient, the availability of additional
financing, to meet our debt service obligations. Insufficient funding may
require us to delay or abandon some of our planned future expansion or
expenditures, which could have a material adverse effect on our growth and
ability to realize economies of scale.

Our business strategy has required, and is expected to continue to require,
substantial capital to fund acquisitions, working capital, capital expenditures,
and interest expense.

As of September 30,2000, the Company had approximately $25,893 in cash and cash
equivalents and $102,077 in current receivables.

The Company also has significant debt service requirements. At September 30,
2000, our secured liabilities were $728,000 and the expected annual interest
expense associated with it is approximately $55,000. The interest expense and
principal repayment obligations associated with our debt could have a
significant effect on our future operations.

Our anticipated expenditures are inherently uncertain and will vary widely based
on many factors, including operating performance and working capital
requirements, the cost of additional acquisitions and investments, the
requirements for capital equipment to operate our business and our ability to
raise additional funds. Accordingly, we may need significant amounts of cash in
excess of our plan, and no assurance can be given as to the actual amounts of
our future expenditures. We will have to increase revenue without a commensurate
increase in costs to generate sufficient cash to enable us to meet our debt
service obligations. There can be no assurance that we will have sufficient
financial resources if operating losses increase or additional acquisition or
other investment opportunities become available.


                                       7
<PAGE>   23


The Company is not in the business of producing any item that would require
product research and development, other than the continual market analysis by
Company and subsidiary management.

Other than, and subject to, securing the required financing necessary to
implement upgraded operations in its environmental and internet subsidiaries,
and the implementation of the same, there is (1) no expected purchase or sale of
plant and significant equipment; or (2) no expected significant changes in the
number of employees, relative to the size of previous year's operations.

(b) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains certain forward-looking statements regarding
future financial condition and results of operations and the company's business
operations. We have based these statements on our expectations about future
events. The words "may," "intend," "will," "expect," "anticipate," "objective,"
"projection," "forecast," "position" or negatives of those terms or other
variations of them or by comparable terminology are intended to identify
forward-looking statements. We have based these statements on our current
expectations about future events. Although we believe that our expectations
reflected in or suggested by our forward-looking statements are reasonable, we
cannot assure you that these expectations will be achieved. Our actual results
may differ materially from what we currently expect. Important factors which
could cause our actual results to differ materially from the forward-looking
statements include, without limitation (1) general economic and business
conditions, (2) ability to cost effectively integrate multiple technologies, (3)
effect of future competition, and (4) failure to raise needed capital.

The Company serves as a holding company for three wholly-owned corporate
subsidiaries, Yankee; Simpco; CCTech; PAR Texas; and PAR Oklahoma. PAR Texas and
PAR Oklahoma are collectively `P & A Remediation'.

In Texas, the Company created PAR Texas in October 1998 to take advantage of the
environmental remediation opportunities available in central west Texas
(Railroad Commission District 7B & 7C) and in north Texas (Railroad Commission
District 9). PAR Texas' environmental remediation and salvage business involved
the plugging of oil wells and the remediation and clean-up of oil fields in
accordance with government rules and regulations applicable to the environment,
and the salvage or purchase for resale on the secondary market of construction
materials, pipe, steel tubulars and used and reconditioned oil field equipment.
To the extent practicable, PAR Texas performed its services, including testing,
threading and reworking of steel pipe recovered from the field, at the oil field
salvage yards leased by the Company in Ballinger and Olney, Texas. Although PAR
Texas desired to expand its customer base to include governmental agencies such
as the State of Texas' Railroad Commission, the Company's customers were limited
to private and publicly-held oil and/or gas companies which are operators of oil
wells and fields requiring PAR Texas's plugging, remediation and/or salvage
services. The company's operations were limited to the north central and central
west regions of Texas. Since the commencement of active plugging business
operations by PAR Texas in April


                                       8
<PAGE>   24


1999, through June 30, 2000 the company's plugging activities (approximately 131
wells) have generated gross revenues from services approximating $391,470. In
addition, aggregate gross revenues approximating $113,892 generated during the
period from the date of the company's inception in October 1998 through March
2000, were attributable to resales by the company of used and reconditioned oil
field equipment purchased for resale.

Since March 2000, PAR Texas' active well plugging and pipe sales operations in
Texas have been suspended. All personnel of the Ballinger, Texas, yard have been
dismissed for cause and the yard is no longer rented. Other than storage of
equipment at three locations, there is no Company activity in Ballinger, Texas.
In October 1999, Company management decided to shift the operating focus of PAR
Texas' Olney, Texas, yard from day to day local Texas operations to move forward
to build necessary equipment to operate and to establish operations in Oklahoma.
Since March of 2000, PAR Texas has maintained operations of the Olney yard with
a skeleton crew, there only to maintain legal integrity of lease space and to
protect company assets. A large amount had been removed by mid-level management
to storage locations in Texas and / or transported to Nowata, Oklahoma, to
establish operations there with PAR Oklahoma.

In Oklahoma, the Company created PAR Oklahoma in October 1999 to take advantage
of the environmental remediation opportunities available with the January 2000
implementation of the Lake Oologah oilwell plugging and environmental
remediation project. The scope of the overall EPA project could span more than
five (5) years, and include the plugging of more than six thousand (6,000)
shallow oil wells in the project area. With the scope consciously in mind, the
then mid-level management of PAR Oklahoma went forward with the intent of taking
steps necessary to be the absolute lowest bidder to insure a base position in
the overall development of the EPA project. With the OCC bid contract in hand,
PAR Oklahoma, with its then mid-level management, went forward with what was
anticipated would be a sixty (60) to ninety (90) day project. The economic and
engineering estimates of the then mid-level management had serious short
comings, and such caused the delay of the initial phase of plugging eighty one
(81) oil wells for a period in excess of ninety (90) days.

PAR Oklahoma desired to expand its customer base to include private and
publicly-held oil and/or gas companies which are operators of oil wells and
fields requiring PAR Oklahoma's plugging, remediation and/or salvage services,
throughout the state of Oklahoma. The company's operations were limited to the
northeast region of Oklahoma. Since the commencement of business operations by
PAR Oklahoma in November, 1999, and the award of the first phase of the EPA
project in January 2000, the company's activities included the plugging of all
eighty-one wells, and earned $72,900 on the first awarded contract. Other than
the initial EPA bid contract, the Company has been awarded other single well
contracts from the OCC on jobs that are unrelated to the EPA cleanup project
mentioned above. These state funded contracts have not been completed.

In August of 2000, all personnel of PAR Oklahoma and Simpco were dismissed for
cause. Since the end of June 2000, the Company's well plugging operations in
Oklahoma have been suspended pending reorganization of equipment and employees,
and the acquisition of additional equipment and required local management to
efficiently operate in the EPA project.


                                       9
<PAGE>   25


The suspension of active operations of PAR Texas and PAR Oklahoma are a result
of multiple factors. These include management's overall review of staffing and a
reorganization of equipment and employees to efficiently serve the available
markets of the Olney, Texas, location and the proposed Nowata, Oklahoma,
location; the financing requirements of doing the same reorganization; and the
results of now pending litigation between the former mid-level management of PAR
Texas and PAR Oklahoma. There can be no assurance if, or as to when, operations
will resume.

The Company has a significant capital investment in PAR Texas, PAR Oklahoma, and
Simpco. In addition to third party acquisition costs, and costs to manufacture,
refurbish and upgrade the acquired equipment of Simpco, the Company issued stock
and debt instruments for the equity of the previous owners of Simpco in
equipment. Since the creation of PAR Texas and PAR Oklahoma, the Company has
used its operations and experience from its initial entry into the field to
develop what Company management believes is a successful plan for continued
operations. The Company entered the market undercapitalized and under supplied,
relative to the needs of the then target industry. Upon industry entry, Company
management had contemplated a significant investment and negative cash flow for
the initial two years of operations while building a solid basis for expansion
in the future. The negative cash flow from operations of PAR Texas and PAR
Oklahoma for the past two years has exceeded Company management's expectations
and capital budgets, and though there is a corresponding increase in equity of
the Company, the operating cash budget had significant shortfalls in the
estimation of cash reserves necessary for the refurbishment of equipment
acquired in the Simpco transaction. Company management is of the opinion that
this was due to an understatement of equipment refurbishment budget figures
provided by mid-management. Revenues from sales of pipe, tubulars, and equipment
were also over estimated by the same mid-level management. Though the operating
cash loss had an immediate negative effect on Company equity position, these two
year's operations have established a physical and potential base of operations
in both north Texas and northeast Oklahoma that will potentially allow PAR Texas
and PAR Oklahoma to generate significant revenue in the pipe threading / testing
industry and in the environmental remediation business. This revenue figure
assumes successfully meeting the expansion funding requirements and operations
are re-instituted as planned by Company management.

With regard to the subsidiaries (collectively P & A Remediation and Simpco),
save and except for pending litigation, there are no known trends, events or
uncertainties that have or are reasonably likely to have a material impact on
our short-term or long-term liquidity, or on our internal and external sources
of liquidity. Likewise, there are no material commitments for capital
expenditures. There are no known trends, events or uncertainties that have had
or that are reasonably expected to have a material impact on the net sales or
revenues or income from continuing suspended plugging and remediation
operations. Other than aforementioned pending litigation, there are no
unforeseen significant elements of income or loss that may arise from the
Company's continuing suspended operations. Any material changes from period to
period in one or more line items of the our financial statements could be caused
only by an unforeseen outcome to pending litigation with the former owners of
Simpco. There are no seasonal aspects that may have a material effect on the
financial condition or results of suspended operations.


                                       10
<PAGE>   26


There has been no activity with the Company's proven oil & gas reserves in
Yankee. There is a significant uncertainty inherent to the oil & gas production
and development industry. The worldwide trend of increasing crude oil and
natural gas prices prompted Company management to investigate numerous possible
financing vehicles that may be required to secure the equity infusion or long
term financing necessary to develop Yankee's assets. With the worldwide increase
in the price of oil, there has been renewed drilling and production activity in
the areas of Texas where the company has interests. This renewal of activity may
create unforeseen delays in the availability of subcontractors for all phases of
a oil & gas well drilling and development program. This delay could cause
financial difficulty and shortage of cash flow budgets that are relied upon to
profitably and efficiently develop the Company's asset. Other than other
historical industry and public information, Company management is not aware of
any known trends, events or uncertainties that have or are reasonably likely to
have a material impact on the Company's short-term or long-term liquidity, or on
our internal and external sources of liquidity. We have no material commitments
for capital expenditures in Yankee. Other than historical and public
information, there are no known trends, events or uncertainties that have had or
that are reasonably expected to have a material impact on the net sales or
revenues or income from continuing operations without development of the
Company's oil & gas reserves. Should the Company be successful in securing the
financing necessary to fund the development of the oil & gas reserves, there
could be a significant element of income or loss that could arise from our
continuing operations. This significant element would be a result of the Company
being able to successfully develop to production its proven oil & gas reserves,
or disproving the reserves and engineering premise of such with the drilling of
dry holes that result in no oil & gas production. The cause for such material
changes from period to period in one or more line items of our financial
statements would be the results of the Company's development drilling program.
Though the Texas winter creates moderate difficulty with any outside operations,
there are limited seasonal aspects that might have a material effect on the
financial condition or results of operation of the development drilling program.
No assurance can be given that Yankee Development will successfully negotiate
the funding of its development program, generate any revenues, or achieve
profitability from the production of the proven developed reserves owned as of
the date hereof, or from oil and/or gas properties, if any, acquired in the
future.

The Company has a significant stock investment in its internet subsidiary,
CCTech, and intends to develop a plan for internal growth of its existing
markets. With an effective January 1, 2000, acquisition by the Company, the
subsidiary has a stated purpose to provide services to the consumers of the
State of Hawaii with high speed Internet Access for residence and business uses.
With operations currently on the islands of Oahu and Maui, CCTech has operated
at a relative breakeven position in comparison to its fiscal operations prior to
acquisition by the Company. Company management has made the decision to increase
the payroll burden on operations by providing for the payment of executive
salaries of the Honolulu office. This increase in operating expenses has kept
revenue from operations at a relatively flat growth curve. The development of a
nationwide marketing plan of a `business to business' division, and the
expansion of the current operations to include statewide operations and expanded
broadband capabilities to handle DSL customers is considered critical to
continued success in the regional internet service provider's operations. This
expansion is contingent upon the Company securing financing necessary to
re-align and reorganize Company infrastructure to expand its core business to
the islands of Kauai and the Big Island of Hawaii. There can be no assurance
that


                                       11
<PAGE>   27


the Company can successfully secure financing necessary to make the expansion to
state-wide operations, that the market available for the core business will
continue, that the Company will be able to get new customers in newly opened
markets, that the Company will have the resources to provide services if such
markets are opened, and if it will be able to operate them profitably.

The expansion of the Company's core business of dialup and DSL service to
previously un-served markets may have a profound effect on the internet
subsidiary's bottom line. A significant market share and volume increase in
operating revenue could require only incremental increases in operating costs of
the core infrastructure of the subsidiary's Honolulu based main operations
center. The reconfiguring and re-allocation of the subsidiary's infrastructure
will allow the expansion of the nationwide `business to business' portal and to
allow the expansion of local business broad band development.

There are significant uncertainties inherent to the internet. However, in the
core business of the regional ISP operations of CCTech, there are no known
trends that have or are reasonably likely to have a material impact on the small
business issuer's short-term or long-term liquidity, or on our internal and
external sources of liquidity. Other than the need for expansion for profitable
operations, there are no known material commitments for capital expenditures, or
known trends, events or uncertainties that have had or that are reasonably
expected to have a material impact on the net sales or revenues or income from
continuing operations. There are no known significant elements of income or loss
that do not arise from our continuing operations, and there are no seasonal
aspects that had a material effect on the financial condition or results of
operation.

                          PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Company management does not know of any legal proceedings to which the Company
or its subsidiaries are parties or to which the property of any of such
companies is the subject which are pending, threatened or contemplated, or of
any unsatisfied judgments against the Company or its subsidiaries except as
described below.

PAR Texas with current trade accounts payable of approximately $120,000 is
involved in some disputes on open accounts, five of which have resulted in suits
on sworn account being filed in three counties in the State of Texas. In each
matter, PAR Texas has responded to the action by the Movant with denial of their
statements and claims against the company and made other contacts to attempt a
negotiated resolution. Each of the matters is being negotiated for a settlement
as of the date hereof. The disputed account balances total less than $40,000 and
management does not believe the disputes are likely to have a material adverse
effect on the Company's financial condition. The Company has accrued what it
believes to be amounts sufficient to properly reflect its liabilities in these
cases.

Other than the above matters which are considered by Company management to be
routine litigation incidental to business, there are three other known lawsuits
as of the date of this report that the Company is involved in. Two involve the
former owners of Simpco, Inc., which the Company purchased in January 1999.


                                       12
<PAGE>   28


In a suit filed in the United States District Court, Northern District Oklahoma,
on August 7, 2000, the former owners allege that the Company and its officers
violated applicable securities laws in the acquisition of Simpco, Inc., and seek
to return their 850,000 shares of the common stock of the Company and the
Company's $110,000 promissory note, in return for payment of $940,000 by the
Company, plus expenses, or damages of $940,000 plus expenses and punitive
damages. The matter is pending before the Court. Management believes that this
suit is without merit and intends to defend the matter vigorously.

In a suit filed in the District Court of Nowata County, Oklahoma, on August 7,
2000, one of the former owners of Simpco and and one other former employee of
the Company filed suit on the Company alleging non-payment of wages and
sub-contracted amounts of money due under an alleged agreement with the Company.
The matter is pending before the Court. Management believes that this suit is
without merit and intends to defend the matter vigorously.

In a suit filed in the 393rd District Court of Denton County, Texas, P & A
Remediation and Simpco filed suit against six former employees alleging
violation of written employment agreements, wrongful dominion and control over
property of the company, direct or indirect competition with the company in
direct violation of their written employment agreements, disclosed or used
proprietary information and trade secrets in direct violation of their written
employment contracts, breach of contract, conversion, tortuous interference, and
civil conspiracy. The company was granted an ex parte Temporary Restraining
Order, that was not converted to a Temporary Injunction. The matter is pending
before the Court. Management intends to vigorously prosecute this matter.

ITEM 2. CHANGES IN SECURITIES.

(a) There have been no material modifications to the instruments defining the
rights of the holders of any class of registered securities.

(b) There have been no material limitations or qualifications on the rights
evidenced by any class of registered securities by the issuance or modification
of any other class of securities.

(c) The Company did not issue additional securities during the period.

The Company made a private placement offering for additional funding. At the
balance sheet date, $34,500 in funds had been received for such stock, but the
shares were not issued until after the period. The amounts received are included
in stockholders' equity. As of the date of this report, approximately $43,500
has been collected for shares issued at $1 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a) There has been no material default in the payment of principal, interest, a
sinking or purchase fund installment, or any other material default not cured
within 30 days, with respect to any indebtedness of the small business issuer
exceeding 5 percent of the total assets of the issuer.


                                       13
<PAGE>   29


(b) There is no material arrearage in the payment of dividends and there has
been no other material delinquency not cured within 30 days, with respect to any
class of preferred stock of the registrant which is registered or which ranks
prior to any class of registered securities, or with respect to any class of
preferred stock of any significant subsidiary of the registrant.
 .
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

At the annual meeting of shareholders held in Lewisville, Texas, on July 11,
2000, the shareholders, either in person or by proxy, elected the current Board
of Directors to their offices.

In other business for shareholder vote, the shareholders, either in person of by
proxy, ratified the appointment of David S. Hall, P. C., 1660 South Stemmons,
Suite 490, Lewisville, Texas 75067, as the Company's auditors.

ITEM 5. OTHER INFORMATION.

On September 6, 2000, the Board of Directors authorized the corporation to
initiate discussions with Sierra Brokerage Services, Inc., of Columbus, Ohio, to
enlist their sponsorship of the Company's application to list and trade its
common stock on trading mechanisms of NASD.

On September 20, 2000, the Company executed a contract with Neil Rand, d/b/a
Corporate Imaging, 5800 West Glenn Drive, Suite 250, Glendale, Arizona 85301, to
be provided business management, public and investor relations and other related
corporate advisory services. As compensation for his services, Neil Rand shall
receive an initial payment of fifty thousand (50,000) shares of common stock in
the Company, and a monthly payment of five thousand (5,000) shares for his
services.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     None

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                                    BASIC TECHNOLOGIES, INC.
                                              ----------------------------------
                                                          (Registrant)

             Date  November 16, 2000           /s/ BRYAN L. WALKER
                                              ----------------------------------
                                               Bryan L. Walker, President & CEO



                                       14
<PAGE>   30
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER              DESCRIPTION
-------             -----------
<S>            <C>
  27           Financial Data Schedule
</TABLE>