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

                                   FORM 10-QSB

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

     For the quarter ended June 30, 2000
                           ------------------

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

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

                           Commission File No. 0-25167
                                     ------

                                  MCY.COM, INC.
                       -----------------------------------
                 (Name of Small Business Issuer in its Charter)

<TABLE>
<CAPTION>
<S>                                                                          <C>
        Delaware                                                             13-4049302
-------------------------------                                        --------------------------
(State or Other Jurisdiction of                                        (I.R.S. Employer I.D. No.)
 incorporation or organization)
</TABLE>

                           1133 Avenue of the Americas
                               New York, NY 10036
                            -------------------------
                    (Address of Principal Executive Offices)

                    Issuer's Telephone Number: (212) 944-6664

     Check  whether  the Issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the Company 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
               ---      ---                  ---      ---

               (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                       DURING THE PAST FIVE YEARS)

     Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.  Yes____        No ___

                 (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:

       59,554,301 at June 30, 2000 of common stock (.001 per value)

                    DOCUMENTS INCORPORATED BY REFERENCE

                              NONE.

Transitional Small Business Issuer Format   Yes      No  X
                                                ---     ---
<PAGE>
                  PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements.


<PAGE>

                         MCY.COM, INC. AND SUBSIDIARIES
                          (a development stage company)

                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 2000


<PAGE>
MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)

Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>


                                                                                              June 30,          December 31,
                                                                                                2000                1999
                                                                                            (Unaudited)           (Note*)

ASSETS
Current assets:
<S>                                                                                      <C>                 <C>
   Cash and cash equivalents                                                             $      21,034,000   $      26,060,000
   Available-for-sale securities                                                                 6,276,000                   0
   Sundry receivables                                                                            1,376,000             397,000
   Advances to officer                                                                             101,000             107,000
   Other current assets, including prepaid advertising of $2,247,000 and
      $2,075,000 and prepaid event costs of $5,460,000 and $0                                    8,405,000           2,793,000
                                                                                         -----------------   -----------------

        Total current assets                                                                    37,192,000          29,357,000

Equipment and software, net                                                                     10,588,000           1,585,000
Intangible assets, net                                                                                              25,153,000
Other assets, including security deposits of $2,515,000 and $925,000, and
   record company advances of $111,000 and $350,000, respectively                                2,657,000           1,279,000
                                                                                         -----------------   -----------------

                                                                                         $      50,437,000   $      57,374,000
                                                                                         =================   =================

LIABILITIES
Current liabilities:
   Accounts payable, accrued expenses and sundry liabilities, representing
      total current liabilities                                                          $       6,382,000   $       3,381,000
                                                                                         -----------------   -----------------

Commitments and contingencies (Note B)

STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value; 10,000,000 shares authorized;
   1,000,000 shares of Series 1 Preferred Stock issued and outstanding                               1,000               1,000
Common stock - $.001 par value; 100,000,000 shares authorized;
   59,614,301 and 54,340,988 shares issued and outstanding, respectively                            59,000              54,000
Common stock payable (110,000 shares)                                                            1,155,000           1,155,000
Additional paid-in capital                                                                     185,611,000         144,063,000
Treasury stock (277,000 shares)                                                                 (1,835,000)                  0
Deficit accumulated during the development stage                                              (127,767,000)        (72,283,000)
Accumulated other comprehensive income                                                             345,000             (15,000)
                                                                                         -----------------   -----------------

                                                                                                57,569,000          72,975,000
Unamortized deferred compensation                                                              (13,450,000)        (18,956,000)
Stock subscriptions receivable                                                                     (64,000)            (26,000)
                                                                                         -----------------   -----------------

                                                                                                44,055,000          53,993,000
                                                                                         -----------------   -----------------

                                                                                         $      50,437,000   $      57,374,000
                                                                                         =================   =================
</TABLE>


*The  balance  sheet at  December  31,  1999 has been  derived  from the audited
financial  statements at that date but does not include all the  information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. See notes to condensed consolidated financial statements

                                                                               2
<PAGE>
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>

                                                                                                                  Inception
                                               For the Three Months               For the Six Months          (January 8, 1999)
                                                  Ended June 30,                    Ended June 30,                 Through
                                               2000             1999            2000              1999          June 30, 2000

<S>                                      <C>               <C>             <C>               <C>             <C>
Revenues                                 $       225,000   $           0   $       263,000   $           0   $         606,000
                                         ---------------   -------------   ---------------   -------------   -----------------

Expenses:
   Sales, marketing and public
      relations                                2,610,000       2,750,000         6,275,000       2,781,000          14,794,000
   Product development                         2,135,000         524,000         3,390,000         524,000           5,519,000
   Content acquisition                         3,446,000         175,000         4,677,000         175,000           6,260,000
   General and administrative                  3,170,000         333,000         5,422,000         349,000           9,892,000
   Depreciation and amortization                 271,000           2,000           431,000           2,000             707,000
   Amortization of acquired
      intangibles                              1,584,000               0         3,168,000               0           6,336,000
   Write-off of impaired
      intangible assets                       21,985,000                        21,985,000                          21,985,000
   Stock based compensation                    3,631,000       2,579,000        11,242,000       2,579,000          61,146,000
                                         ---------------   -------------   ---------------   -------------   -----------------

                                              38,832,000       6,363,000        56,590,000       6,410,000         126,639,000
                                         ---------------   -------------   ---------------   -------------   -----------------

Operating loss                               (38,607,000)     (6,363,000)      (56,327,000)     (6,410,000)       (126,033,000)
Share of loss of predecessor
   companies                                           0        (279,000)                0        (663,000)           (663,000)
Interest income, net of interest
   expense                                       408,000          33,000           843,000          33,000           1,499,000
                                         ---------------   -------------   ---------------   -------------   -----------------

Net loss                                 $   (38,199,000)  $  (6,609,000)  $   (55,484,000)  $  (7,040,000)  $    (125,197,000)
                                         ===============   =============   ===============   =============   =================

Net loss per common share -
   basic and diluted                          $(0.64)          $(0.19)          $(0.96)          $(0.23)
                                              ======           ======           ======           ======

Weighted average common
   shares outstanding                       59,599,000       34,717,000       57,699,000       30,928,000
                                            ==========       ==========       ==========       ==========
</TABLE>



See notes to condensed consolidated financial statements                       3
<PAGE>



MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)

Condensed Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>

                                                    Preferred Stock            Common Stock          Common       Additional
                                                  Number of               Number of                   Stock         Paid-In
                                                   Shares      Amount       Shares       Amount      Payable        Capital

<S>               <C>                              <C>        <C>         <C>          <C>         <C>          <C>
Balance - January 1, 2000                          1,000,000  $  1,000    54,340,988   $  54,000   $ 1,155,000  $ 144,063,000
Sale of common stock (Note C[1])                                           5,006,390       5,000                   34,348,000
Repurchase of stock (Note C[2])                                             (277,000)
Exercise of options (Note C[3])                                              187,626
Options granted (Note C[4])                                                                                         5,678,000
Options exercised (Note C[4])                                                 25,000                                   38,000
Options cancelled (Note C[4])                                                                                      (2,422,000)
Warrants issued (Note C[5])                                                                                         3,906,000
Warrants exercised (Note C[5])                                               331,297
Amortization of deferred compensation
Comprehensive loss:
   Gain on foreign currency translation
   Unrealized gain on securities
   Net loss for period
Total comprehensive loss
                                                 ----------   --------   -----------   ---------   -----------  -------------

Balance - June 30, 2000                            1,000,000  $  1,000    59,614,301   $  59,000   $ 1,155,000  $ 185,611,000
                                                 ===========  ========   ===========   =========   ===========  =============

--------------------------------------------------------------------------------------------------------------------------------
                                                    Deficit
                                                  Accumulated       Accumulated
                                                   During the          Other         Unamortized        Stock
                                     Treasury     Development      Comprehensive       Deferred      Subscription
                                       Stock         Stage            Income         Compensation     Receivable        Total

Balance - January 1, 2000                        $ (72,283,000)   $(15,000)         $ (18,956,000)   $(26,000)      $  53,993,000
Sale of common stock (Note C[1])                                                                                       34,353,000
Repurchase of stock (Note C[2])     $(1,835,000)                                                                       (1,835,000)
Exercise of options (Note C[3])
Options granted (Note C[4])                                                            (5,678,000)                              0
Options exercised (Note C[4])                                                                          (38,000)                 0
Options cancelled (Note C[4])                                                           2,422,000                               0
Warrants issued (Note C[5])                                                                                             3,906,000
Warrants exercised (Note C[5])
Amortization of deferred
   compensation                                                                         8,762,000                       8,762,000
Comprehensive loss:
   Gain on foreign currency
      translation                                                   198,000                                               198,000
   Unrealized gain on securities                                    162,000                                               162,000
   Net loss for period                             (55,484,000)                                                       (55,484,000)
                                                                                                                    -------------
Total comprehensive loss                                                                                              (55,124,000)
                                    -----------  -------------   ----------         -------------   ----------      -------------

Balance - June 30, 2000             $(1,835,000) $(127,767,000)   $345,000  *       $ (13,450,000)   $(64,000)      $  44,055,000
                                    ===========  =============    ========          =============    ========       =============
</TABLE>

 *Consists of unrealized gains on securities of $162,000 and cumulative  foreign
     currency transaction adjustment of $183,000.


See notes to condensed consolidated financial statements                       4
<PAGE>
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>

                                                                                                                  Inception
                                                                                   For the Six Months         (January 8, 1999)
                                                                                    Ended June 30,                 Through
                                                                                 2000             1999          June 30, 2000
Cash flows from operating activities:
<S>                                                                        <C>               <C>              <C>
   Net loss                                                                $   (55,484,000)  $  (7,040,000)   $(125,197,000)
   Adjustments to reconcile net loss to cash used in operating
      activities:
        Depreciation and amortization                                              431,000           2,000             707,000
        Amortization of intangibles                                              3,168,000               0           6,336,000
        Write-off of impaired intangible assets                                 21,985,000                          21,985,000
        Stock-based compensation                                                11,242,000       2,579,000          61,146,000
        Share of loss of predecessor companies                                           0         663,000             663,000
        Changes in:
           Record company advances                                                 195,000        (123,000)           (287,000)
           Receivables                                                            (979,000)       (256,000)         (1,240,000)
           Prepaid expenses                                                     (2,921,000)       (408,000)         (3,271,000)
           Accounts payable, accrued expenses and sundry liabilities             3,001,000         870,000           4,664,000
                                                                           ---------------   -------------   -----------------

              Net cash used in operating activities                            (19,362,000)     (3,713,000)        (34,494,000)
                                                                           ---------------   -------------   -----------------

Cash flows from investing activities:
   Investment in available-for-sale securities, net                             (6,115,000)                         (6,115,000)
   Datatek acquisition, net of acquired cash of $565,000                                 0               0          (1,748,000)
   Loans to affiliates                                                                   0      (1,243,000)
   Payment of security deposits                                                 (2,863,000)              0          (3,788,000)
   Cost of developing internal-use software                                     (6,202,000)              0          (6,979,000)
   Purchase of equipment                                                        (3,200,000)        (99,000)         (3,889,000)
                                                                           ---------------   -------------   -----------------

              Net cash used in investing activities                            (18,380,000)     (1,342,000)        (22,519,000)
                                                                           ---------------   -------------   -----------------

Cash flows from financing activities:
   Purchase of treasury stock                                                   (1,835,000)              0          (1,835,000)
   Payment on line of credit                                                                                           (40,000)
   Deferred offering costs                                                                        (190,000)
   Proceeds from sale of stock, net of related costs                            34,353,000      10,790,000          80,009,000
                                                                           ---------------   -------------   -----------------

              Net cash provided by financing activities                         32,518,000      10,600,000          78,134,000
                                                                           ---------------   -------------   -----------------

Effect of exchange rate changes                                                    198,000               0             (87,000)
                                                                           ---------------   -------------   ------------------

Change in cash and cash equivalents                                             (5,026,000)      5,545,000          21,034,000
Cash and cash equivalents - beginning                                           26,060,000               0                   0
                                                                           ---------------   -------------   -----------------

Cash and cash equivalents - ending                                         $    21,034,000   $   5,545,000    $     21,034,000
                                                                           ===============   =============    ================

Supplemental disclosures of noncash activities:
   Issuance of warrants relating to events                                 $     3,889,000                    $      3,889,000
   Issuance of stock for receivable                                                          $      26,000    $         26,000
   Issuance of stock and warrants in connection with acquisition                                              $     25,590,000
   Deferred compensation by grant of options                               $     5,678,000                    $     47,125,000
   Issuance of stock for notes payable and accrued interest                                                   $        730,000
   Issuance of warrants relating to prepaid expenses in connection
      with joint venture agreement.                                                                           $      2,247,000

</TABLE>

See notes to condensed consolidated financial statements                       5
<PAGE>
MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)

Notes to Condensed Consolidated Financial Statements
June 30, 2000
(Unaudited)

NOTE A - THE COMPANY

The accompanying financial statements include the accounts of MCY.com, Inc. (the
"Company")  and  its  wholly-owned   subsidiaries   after   elimination  of  all
intercompany transactions.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-QSB. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals, except for
the  write-off of impaired  intangible  assets  described in Note D)  considered
necessary for a fair presentation have been included.  The results of operations
for the six months  ended June 30, 2000 are not  necessarily  indicative  of the
results to be expected for the full year. For further information,  refer to the
Company's  annual  report  filed on Form 10-KSB for the year ended  December 31,
1999.

The Company operates an Internet website offering an interactive environment and
virtual music store where music buyers can purchase  digital music downloads and
webcasts in an encrypted and enhanced  format,  as well as other  products.  The
Company also intends to engage in the  production  of  entertainment  events and
other related activities. The Company is in the development stage, since planned
operations have commenced but there have been no significant revenues therefrom.

The Company is subject to those general risks associated with development  stage
companies,  as well as special  risks  unique to emerging  E-commerce  companies
which, by definition,  seek to create new markets for their innovative  products
and services. As shown in the accompanying financial statements, the Company has
incurred  substantial  net  losses  since  inception  and  the  Company  and its
predecessor  companies have generated  minimal revenues related to the Company's
planned operations.  Further,  the Company's business concept and business model
are unproven and, accordingly, the Company's viability is uncertain. There is no
assurance that the Company will ever attain profitable  operations and operating
cash flow.


NOTE B - COMMITMENTS AND CONTINGENCIES

On December 16,  1999,  a  former  employee  of  MCY  Music   World,   Inc.,  a
subsidiary,  filed a complaint  against  the  Company in New York State  Supreme
Court. The complaint asserts five claims including breach of contract,  wrongful
termination  and fraud  related to  compensation  due to him for the signing and
distribution  of content as well as fees  related to a private  placement of the
Company's  stock  on  October  25,  1999.  The  complaint  asks for  damages  of
approximately $23,000,000 on each claim including 20,000 shares of the Company's
common stock, stock options,  fees and royalties.  The Company believes that the
former  employee's  claims lack  substantial  merit,  and intends to  vigorously
defend  against this action.  On January 14, 2000, the Company filed a motion to
dismiss the complaint.  The Company's motion to dismiss was partially granted on
June 6, 2000 in a decision and order which  dismissed  three of the  plaintiff's
claims. The decision and order,  however,  allow the plaintiff to pursue certain
contract claims pending the results of discovery.  Management  believes that the
outcome  of this  litigation  will not have a  material  adverse  effect  on the
financial position or results of operations of the Company.


                                                                               6
<PAGE>
MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)

Notes to Condensed Consolidated Financial Statements
June 30, 2000
(Unaudited)


NOTE B - COMMITMENTS AND CONTINGENCIES  (CONTINUED)

A former trade  partner,  contributed  DM 1,600,000  to the  development  of the
Company's  technological  platform  and  subsequently  demanded  repayment of DM
1,210,000 of this amount on January 30, 1998.  Fritsch & Friends  rejected  this
demand on  February 3, 1998,  and since then the  partner  has not pursued  this
alleged claim. In addition,  Fritsch & Friends entered into an agreement with an
investment  group  in  November  1997,  which  it  subsequently  revoked.  In an
unrelated  matter,  in February  2000,  we  received a notice from the  American
Arbitration  Association  ("AAA")  indicating that a request for arbitration had
been filed. To date, however, we have not received any documents  indicating the
basis or the grounds for the claim.  We believe that it is unlikely that we will
sustain  material  losses in connection  with these matters in excess of amounts
previously accrued.

On May 3, 2000, an  individual,  who had been retained by MCY America,  Inc. and
MCY Music World,  Inc. to obtain equity capital from a specific investor for MCY
Music World,  Inc.,  filed a complaint  against MCY America,  Inc. and MCY Music
World,  Inc. in federal  district  court in New York City,  alleging  claims for
breach of contract,  promissory  estoppel and unjust  enrichment.  The complaint
does not appear to allege a claim for breach of a written  engagement  agreement
but rather  appears to allege that the Company  and the  subsidiaries  allegedly
breached an oral  agreement to compensate the plaintiff for enabling the Company
to obtain  financing  through a well-known  investment  banking  firm.  Claimant
asserts further that he is entitled to a cash fee, as well as stock options,  in
return for his alleged  involvement  in the  financing,  and seeks damages of at
least $13,315,000,  together with prejudgment interest and costs. As the Company
believes  that the  claims  lack  substantial  merit,  the  Company  intends  to
vigorously  defend  this  action and has filed a motion for  summary  judgement.
Management believes that the outcome of this litigation will not have a material
adverse  effect on the  financial  position  or  results  of  operations  of the
Company.

The  Company and certain of the  predecessor  companies,  are parties to various
other claims and legal  proceedings  incidental  to their  business.  Management
believes  that  adequate  liabilities  to cover any  resulting  losses have been
reflected  in the  accompanying  financial  statements,  and that the outcome of
these  claims and  proceedings  will not have a material  adverse  effect on the
financial position or results of operations of the Company.


NOTE C - STOCKHOLDERS' EQUITY

[1]    From  February  16, 2000  through  March 9, 2000,  the Company  sold in a
       private  placement an aggregate of 5,006,390  shares of common stock at a
       price of $7.50 per share, for proceeds of  approximately  $34,400,000 net
       of commissions and fees to the placement agent and others.

[2]    In May 2000,  management  initiated a stock buyback plan offering certain
       stockholders the ability to sell back a specified number of shares to the
       Company. The offer expired on May 31, 2000. One employee, one officer and
       one director sold back a total of 200,000 shares at $7.00 per share.  One
       non-employee  stockholder  sold back  25,000  shares at $7.00 per  share.
       Three employee stockholders sold back 52,000 shares at $5.00 per share.

[3]    During  January 2000,  42,500 options with an exercise price of $1.50 per
       share and 225,000  options with an exercise price of $3.20 per share were
       exercised  and paid for by the return to the Company of 79,874  shares of
       common stock at an estimated market price of $9.8125 per share.


                                                                               7
<PAGE>
NOTE C - STOCKHOLDERS' EQUITY  (CONTINUED)

[4]    During the six months ended June 30, 2000, the Company granted additional
       options to employees to purchase an aggregate of 1,245,000  common shares
       at an average  exercise price of $6.00 per share.  In addition,  unvested
       options previously granted to certain employees to purchase approximately
       734,000 shares of common stock at exercise  prices of $1.50 to $12.75 per
       share were cancelled and vested options to purchase approximately 198,000
       shares of common  stock at  exercise  prices of $1.50 to $12.00 per share
       expired unexercised.

[5]    During the six months ended June 30, 2000, the Company  issued  warrants,
       principally   to  artists  in  connection   with   contracts  to  provide
       pay-per-view  webcasts of concerts.  Such warrants permit the purchase of
       1,106,400  shares of common stock at exercise  prices of $8.44 to $16.63.
       The  warrants  were valued  using the  Black-Scholes  valuation  model at
       approximately  $3,906,000  and are  exercisable  over one to  three  year
       periods.

[6]    During the six months  ended June 30,  2000,  the holder of  warrants  to
       purchase  657,330 common shares at $6.00 per share exercised the warrants
       which  were paid for by the return to the  Company  of 326,033  shares of
       common stock at an estimated market price of $12.10 per share.


NOTE D - INTANGIBLE ASSETS

     The Company  accounts for  impairment of long-lived  assets,  including its
intangible  assets,  in  accordance  with  Statement  of  Financial   Accounting
Standards ("SFAS") No. 121,  "Accounting for the impairment of Long-Lived Assets
and for  Long-Lived  Assets to be  Disposed  of".  SFAS No.  121  requires  that
long-lived  assets be  reviewed  for  impairment  whenever  events or changes in
circumstances  indicate that the book value of the asset may not be recoverable.
The  Company   evaluates  at  each  balance   sheet  date  whether   events  and
circumstances  have occurred that indicate  possible  impairment.  In accordance
with SFAS No. 121, the Company uses an estimate of the future  undiscounted  net
cash flows of the related assets over their remaining  estimated useful lives in
measuring  whether the assets are recoverable.  Based on the limited revenues to
date  earned by the  Company  related to its  acquired  intangibles,  and giving
further  consideration to the impact of events outside of the Company's  control
such as rapidly  changing  market  circumstances  on consumer  acceptance of the
Company's business model and proposed product  offerings,  delays in delivery of
technology to the Company necessary for its inteneded operations, including, but
not limited to the development of broadband  transmission  networks, the Company
has revised its  projections of future cash flows as they relate to the acquired
intangibles.  As a result,  the Company no longer expects  reasonably  estimable
future net cash flows  related to the use of its  acquired  technology  over the
remaining  estimated  useful lives of the  intangibles to be adequate to recover
its investment in the acquired intangibles,  and further believes the fair value
of such intangibles to be nominal. Accordingly, as of June 30, 2000, the Company
has written off $21,985,000,  representing the then unamortized  balance of such
intangibles, consisting principally of the excess of cost over the fair value of
identifiable net assets acquired.


                                                                               8
<PAGE>
            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


         MCY.com,  Inc.  owns  and  operates  an  Internet  website  located  at
http://www.mcy.com,  which provides an interactive environment and virtual music
store where music buyers can: (i) view live concert events and purchase  various
music products and services including digital music downloads, compact discs and
pay-per-view live events;  (ii) obtain  information on various artists,  musical
genres, new music releases,  concert events,  articles,  reviews; and (iii) view
videotaped  and real-time  artist  interviews  and concerts.  In addition to its
Internet  operations,  the Company is engaged in the business of  acquiring  and
licensing complete media rights, including television and home video rights, and
reselling,  sublicensing  and  syndicating  these rights to third  parties.  The
Company  was  incorporated  on  January  8,  1999  and  has  since  been  in the
development  stage  devoting its efforts to recruiting  management and technical
staff, aggregating premium content,  acquiring operating assets, raising capital
and  organizing  itself as a public  reporting  entity.  The  Company  currently
operates within one industry segment on a global basis.

         In addition to historical  statements,  this  Quarterly  Report on Form
10QSB contains  certain  forward-looking  statements that are subject to certain
risks and  uncertainties,  which could cause actual results to differ materially
from those stated or implied.  Forward-looking statements are those that use the
words  "anticipates,"  "believes,"  "estimates,"  "expects,"  "may," "will," and
similar  expressions.  These  forward-looking  statements  reflect  management's
opinions  only as of the date hereof,  and the Company  assumes no obligation to
update this information. Risks and uncertainties include, but are not limited to
those discussed in the Company's prior SEC filings.


Results of Operations

         Through  June 30,  2000,  we  incurred  costs to design,  organize  and
develop an Internet website to conduct our businesses.  We began selling musical
recordings  over the  Internet  in August  1999 and began our first  significant
selling and marketing  initiatives  in the quarter ended  September 30, 1999. We
may experience  significant  fluctuations in operating results in future periods
due to a variety of factors, including:
<TABLE>
<CAPTION>

<S>      <C>
o        the demand for downloadable and streaming music content and Internet advertising
o        the addition or loss of advertisers
o        the level of traffic on its Internet sites
o        the amount and timing of capital expenditures and other costs relating to the expansion of its operations
o        the introduction of new sites and services by us or our competitors
o        seasonal trends in Internet use, purchases of downloadable music and advertising placements
o        price competition or pricing changes in the industry
o        technical difficulties or system downtime
o        general economic conditions and economic conditions specific to the Internet
o        the cost and availability of premium music and entertainment content
o        market conditions and demand for the sale, sublicensing and syndication of music and entertainment content
</TABLE>

<PAGE>
Net Revenues

         For the quarter and six months  ended June 30, 2000,  our  consolidated
revenues totaled $225,000 and $263,000,  respectively.  Revenues for the quarter
and six months  ended June 30,  2000  consisted  of  revenue  from  sublicensing
agreements,  webcast pay-per-view  revenue, the sale of NETrax software over the
Internet,  and rental revenue received from a sublease of certain premises.  The
Company had no revenues for the quarter or six months ended June 30, 1999 as the
Company  had not yet  begun  its sales  and  marketing  initiatives  nor had its
technological   infrastructure   been  fully   operational  to  deliver  digital
entertainment.  Revenues from inception  through June 30, 2000 totaled  $606,000
and consisted  primarily of advertising and sublicensing  revenue with a minimal
percentage arising from the sale of webcast pay-per-views, digital downloads and
NETrax software over the Internet.


Sales, Marketing and Public Relations Expenses

         Sales, marketing and public relations expenses consist primarily of:
<TABLE>
<CAPTION>

<S>      <C>
o        Sales and marketing salaries and benefits
o        The cost of presenting free events and trade shows
o        Consulting fees and related expenses for public relations activities, and
o        European  promotional  activities  including  travel and  entertainment
         costs  of  participating   individuals
</TABLE>

     Sales, marketing and public relations costs for the quarters ended June 30,
2000 and 1999 totaled $2,610,000 and $2,750,000,  respectively. Sales, marketing
and  public  relations  costs for the six months  ended  June 30,  2000 and 1999
totaled $6,275,000 and $2,781,000,  respectively.  During the quarter ended June
30, 1999,  the Company began to incur  significant  sales,  marketing and public
relations expenses due to the production of our first webcast.  Sales, marketing
and public  relations costs for the period from inception  through June 30, 2000
totaled  $14,794,000.   These  costs  increased  during  the  periods  with  the
development  of the Company's  marketing and branding  strategy.  As part of our
marketing  strategy and in an effort to aggressively  create brand awareness,  a
significant  portion of these costs were  expended on  presenting  free  events,
event  sponsorship,  trade shows and related  promotional  activities during the
twelve month period ended June 30, 2000.

     We also  expect to enter into  various  strategic  alliances,  begin  other
targeted  advertising  and direct  promotion  campaigns,  attend trade shows and
begin other activities to attract new customers. As a result, we expect to incur
significant sales and marketing expenses in future periods.

<PAGE>
Product Development Expenses

         We began our  development  efforts  in June 1999.  Product  development
expenses consist principally of:
<TABLE>
<CAPTION>

<S>      <C>
o        website and content development, including software engineering, audio and video production and graphic design.
o        telecommunications charges.
o        salaries, rent, depreciation and other expenses related to building its music distribution business.
o        amortization of premium content advances made to master rights holders/artists.
</TABLE>

         Product  development  expenses for the quarters ended June 30, 2000 and
1999 were $2,135,000 and $524,000,  respectively.  Product development  expenses
for the six months ended June 30, 2000 and 1999 were  $3,390,000  and  $524,000,
respectively.  These  costs  reflect  the  ongoing  investment  in  our  product
development efforts, particularly in software engineering and graphic design. We
started to incur  product  development  costs during the quarter  ended June 30,
1999,  as the Company had not yet began its  development  towards the end of the
quarter. Product development expenses for the period from inception through June
30, 2000 totaled $5,519,000.  The increase in product development costs over the
periods  reflects the  commencement  of the Company's  operations and continuing
development  of the Company's  website.  Such costs consist  mainly of personnel
costs related to technical and creative staff and managers.


Content Development

         Content development  consists primarily of costs incurred to maintain a
department   dedicated  to  the   acquisition  of  premium   musical  and  other
entertainment-related  content,  including  the costs of employee  salaries  and
related  benefits,  fees paid to  consultants  dedicated to content  acquisition
activities  and  royalties  paid to secure  rights to music and  related  media.
Content  development  costs for the quarter ended June 30, 2000 and 1999 totaled
$3,446,000 and $175,000,  respectively.  Content  development  costs for the six
months ended June 30, 2000 and 1999  $4,677,000 and $175,000,  respectively.  We
began incurring  content  development costs towards the end of the quarter ended
June 30, 1999.  Content  development costs for the period from inception through
June 30, 2000  totaled  $6,260,000.  The increase in content  development  costs
during  the  periods  is  a  reflection  of  the  Company's  aggressive  content
acquisition strategy.


General and Administrative Expenses

         General and  administrative  expenses  consist  primarily  of executive
management,  finance, legal,  administrative and related overhead costs, such as
rent and insurance.  General and administrative  expenses for the quarters ended
June 30, 2000 and 1999 were $3,170,000 and $333,000,  respectively.  General and
administrative  costs  for the six  months  ended  June 30,  2000 and 1999  were
$5,422,000 and $349,000, respectively.  General and administrative costs totaled
$9,892,000  from  inception  through June 30, 2000.  General and  administrative
expenses  increased  during the periods  principally  as a result of  additional
headcount required to manage the Company's growing operations.
<PAGE>
Amortization of Acquired Intangibles

         During 1999,  MusicWorld acquired certain predecessor  companies.  As a
result, the Company recorded intangible assets comprised as follows:
<TABLE>
<CAPTION>

<S>                                                                                      <C>
                  Technology and related contracts                                       $  4,410,000
                  Record label contracts and catalogs                                         630,000
                  Excess of cost over fair value of identifiable net assets acquired       23,281,000
                                                                                           ----------
                                                                                         $ 28,321,000
                                                                                           ==========
</TABLE>
Amortization  of  technology  and  related  contracts  as well as  record  label
contracts  and catalogs  are being  amortized  over three years  resulting in an
amortization  expense of $420,000 per quarter  through June 2002.  The excess of
cost over fair value of  identifiable  net assets  acquired was being  amortized
over 5 years,  prior to  Company's  determination  at June 30, 2000 to write-off
such intangibles in their entirety - see below.

The combined amortization expenses for the quarter and six months ended June 30,
2000 were $1,584,000 and $3,168,000, respectively. There were no similar charges
for the  quarter  or six  months  ended  June 30,  1999.  Combined  amortization
expenses for the period from inception through June 30, 2000 totaled $6,336,000.


Write-off of Impaired Intangible Assets

     As of  June  30,  2000,  the  Company  wrote  off the  unamortized  balance
($21,985,000)  of the  intangible  assets it acquired on July 2, 1999 as part of
its  transaction  with Datatek.  The intangible  assets  consisted  primarily of
certain technology,  know how, etc., which the Company  capitalized  pursuant to
the  acquisition  which  closed  July 2, 2000.  As stated  above  prior,  to the
write-down  during the three months ended June 30, 2000, the carrying  amount of
the intangible assets was being amortized over a period of three and five years.

     Based on recent changes in the digital music landscape,  including, but not
limited to, the  proliferation  of a music  sharing  program known as "Napster",
litigation  involving the major record labels and Napster, the delay of existing
physical music labels in adopting  digital  downloading as a delivery  mechanism
for music,  the limited  penetration  of  broadband  access to the  consumer and
delays in technology  delivery,  the Company is presently of the belief that the
ability of such  intangible  assets to generate  net cash flows over the planned
amortization  period  has been  impaired  to the  extent  that the  value of the
acquired intangible assets should be written off in their entirety.
<PAGE>
Stock Based Compensation

     The Company  recorded  charges related to stock based  compensation for the
quarter  and six  months  ended June 30,  2000 of  $3,631,000  and  $11,242,000,
respectively.  The Company recorded charges of $2,579,000 related to stock based
compensation  for  the  quarter  and six  month  period  ended  June  30,  1999.
Stock-based compensation for the period from inception to March 31, 2000 totaled
$61,146,000.  Included in this amount is amortization  of deferred  compensation
arising  from options  issued to  employees  and  consultants  at various  dates
amounting to  $31,253,000.  In addition,  we recorded a  compensation  charge to
operations of approximately  $23,741,000 during August 1999 in connection with a
sale by  holders  of  4,000,000  shares  of HBI  common  stock of  approximately
3,970,000  of such  shares to certain  of our  stockholders  who also  served as
advisors to the Company.  The balance of stock based compensation  charges arose
from common stock,  warrants and options  issued to employees,  consultants  and
artists for services.

As of June 30,  2000,  estimated  future  amortization  related  to stock  based
compensation will be:
<TABLE>
<CAPTION>

                                                                               Employees and
  Year Ending December 31,                                                      Consultants             Artists
  ------------------------
<S>               <C>                <C>                                              <C>                  <C>
  2000 (from July 1 through December 31)                                              $  2,896,000         $1,427,000
  2001                                                                                   5,791,000
  2002                                                                                   4,142,000
  2003                                                                                     621,000
                                                                         ---------------------------------------------

                                                                                      $ 13,450,000         $1,427,000
                                                                         =============================================
</TABLE>

Share of Loss of Predecessor Companies

     Share of loss of  predecessor  companies  reflects the net loss incurred by
the  Company  as part of  MusicWorld's  acquisition  of  Datatek  and  Fritsch &
Friends.  The Company's  share of loss of predecessor  companies for the quarter
and six months ended June 30, 1999 was $279,000 and $663,000, respectively.


Liquidity and Capital Resources

     Our cash and available for sale securities  balance as of June 30, 2000 was
$27,310,000.  Net cash of $19,362,000 was used for operating  activities for the
six months ended June 30, 2000.  Such amounts were used  principally as a result
of net losses of  $55,484,000  generated  during the period and the  increase in
current assets of $3,900,000,  offset by the increase in current  liabilities of
$3,001,000, non-cash expenses associated with stock and stock-based compensation
of  $11,242,000,   non-cash  expense   associated  with   depreciation  and  the
amortization  of  intangibles  of  $3,599,000  and the  non-cash  write-down  of
intangible  assets of  $21,985,000.  The Company  expects to incur negative cash
flow from operations for the foreseeable  future,  as we continue to develop our
business.
<PAGE>
     Additionally,  the Company  purchased  approximately  $3,200,000 in capital
equipment and incurred  $6,202,000 to develop  internal-use  software during the
six months ended June 30, 2000. In addition,  the Company made deposits relating
to the purchase of  equipment  totaling  $2,863,000  during the six months ended
June 30, 2000,  respectively.  The company also repurchased $1,835,000 of common
stock from certain shareholders during the quarter ended June 30, 2000.

     During the six months ended June 30, 2000,  the Company raised net proceeds
of approximately  $34,353,000 through the sale of 5,006,390 shares of its common
stock at $7.50 per share,  in a private  placement  managed  by three  placement
agents.

     The  Company  has  commitments  to spend  approximately  $1.3  million  for
computer hardware and related  equipment under a non-cancelable  operating lease
expiring in March 2003.

     Since  inception,  the  Company  has  experienced  significant  losses  and
negative cash flows from operations.  Management  believes that existing capital
resources will be sufficient to fund the planned level of operating  activities,
capital expenditures and other obligations through the next 12 months.  However,
the Company may need to raise  additional funds in future periods through public
or private  financings,  or other  sources,  to fund  operations  and  potential
acquisitions,  if any, until profitability is achieved, if ever. The Company may
not be able to obtain adequate or favorable  financing at that time.  Failure to
raise  capital when needed  could harm the  Company's  business.  If the Company
raises  additional  funds  through  the  issuance  of  equity  securities,   the
percentage  of  ownership  of  the  Company's  stockholders  would  be  reduced.
Furthermore,   these  equity  securities  might  have  rights,   preferences  or
privileges senior to the current common stock outstanding.



                              CERTAIN TRANSACTIONS


     Set forth below are certain  transactions  in securities of MCY and MCY.com
which occurred during the six months ended June 30, 2000.

     From February  through  March 2000,  MCY.com sold an aggregate of 5,006,390
shares of its common stock at $7.50 per share, in a private placement managed by
three placement agents, resulting in net proceeds of approximately $34,353,000.

     In January  2000,  MCY.com  agreed to issue the  Backstreet  Boys and their
nominees an eighteen  month  warrant to acquire up to 500,000  shares of MCY.com
common stock at a price of $9.75 per share.

     In March 2000, MCY.com agreed to issue to Bad Boy Touring,  Inc., the label
of the  artist  Sean  "Puffy"  Combs,  a twelve  month  warrant to acquire up to
100,000 shares of MCY.com common stock at a price of $16.00 per share.

     In March 2000, MCY.com agreed to issue the band *NSYNC and their nominees a
twelve month warrant to acquire up to 500,000  shares of MCY.com common stock at
a price of $13.17 per share.


<PAGE>
     In each of March,  April,  May and June 2000,  MCY.com  agreed to issue the
public relations firm, Susan Blonde,  Inc., a twelve month warrant to acquire up
to 1,600 shares of MCY.com common stock at a price of $12.75, $12.63, $9.75, and
$8.44 per share, respectively.

     In May 2000,  warrants  previously granted to a placement agent to purchase
657,330  shares of common  stock at an  exercise  price of $6.00 per share  were
exercised and paid for by the return to the Company of 326,033  shares of common
stock at an estimated market of $12.10 per share.

Incentive Option Plan

     During  January 2000,  42,500  options with an exercise  price of $1.50 per
share and  225,000  options  with an  exercise  price of $3.20  per  share  were
exercised  and paid for by the return to the Company of 79,874  shares of Common
Stock at an estimated market price of $9.81 per share.

     In April and May 2000,  MCY.com granted additional options to employees and
consultants  to purchase an aggregate of 1,245,000  common  shares at an average
exercise price of $6.00 per share.

     As of June 30, 2000, 7,019,500 options were outstanding under the Company's
Incentive  Option Plan, at a weighted  average exercise price of $4.38 per share
of MCY.com Common Stock. The options generally vest over a period of three years
from the date of grant and are exercisable at different prices  corresponding to
the date of grant.  Each option  entitles  the holder to  purchase  one share of
MCY.com Common Stock.
<PAGE>
                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.

     A former trade partner,  Mr. Xavier Ghali,  contributed DM 1,600,000 to the
development of our technological platform and subsequently demanded repayment of
DM 1,210,000 of this amount on January 30, 1998. Fritsch & Friends rejected this
demand on  February 3, 1998,  and since then the  partner  has not pursued  this
alleged claim. In addition,  Fritsch & Friends entered into an agreement with an
investment group in November,  1997, which it subsequently  revoked. In February
2000,  we received a notice from the American  Arbitration  Association  ("AAA")
indicating that a request for arbitration had been filed by the  above-mentioned
investment  group.  To  date,  however,  we  have  not  received  any  documents
indicating  the  basis or the  grounds  for the  claim.  We  believe  that it is
unlikely that we will sustain  material  losses in connection with these matters
in excess of amounts previously accrued.

     On December 16, 1999,  Mr. Peter  Rohde,  a former  employee of  MusicWorld
filed a complaint  against us in New York State Supreme  Court.  Mr. Rohde,  the
plaintiff,  had been employed by MCY America,  Inc., a subsidiary of MusicWorld,
as an  assistant  manager  in  November  1998  pursuant  to a letter  employment
agreement  dated  November 10,  1998.  The  plaintiff  entered into a subsequent
employment agreement with MusicWorld dated July 9, 1999 as a content manager and
a trust  and  confidentiality  agreement  which  contained  non-competition  and
confidentiality  provisions. In August 1999, the plaintiff was observed entering
our offices at unusual  hours.  On August 21, 1999, he was observed  exiting our
offices  with  what was  believed  to be a  personal  computer  and a large  bag
containing proprietary information about our company. As a result, we terminated
the plaintiff on August 27, 1999. In his complaint,  his claims  included breach
of contract,  wrongful termination and fraud related to his inability to collect
fees due to alleged fraudulent  misrepresentations by the company concerning the
effectiveness  of the  technology.  In his  complaint,  he asked for  damages of
approximately $23,000,000 including 20,000 shares of MCY.com, Inc. common stock,
stock options, fees and royalties. Based upon our understanding of the facts, we
believe  that Mr.  Rohde's  claims  lack  substantial  merit  and we  intend  to
vigorously  defend  against  this action.  We filed an answer and  counterclaims
against Mr. Rohde in March 2000.  To date,  the  plaintiff  has not provided any
calculation to support the financial basis of his claim. The defendants'  motion
to dismiss was  partially  granted on June 6, 2000 in a decision and order which
dismissed  three of the  plaintiff's  causes of action.  The decision and order,
however,  allow the  plaintiff to pursue  certain  contract  claims  pending the
results of discovery.

     On May 3, 2000, Andrew Sugerman, an individual who had been retained by MCY
America, Inc. and MCY Music World, Inc. to obtain equity capital from a specific
investor for MCY Music World, Inc., filed a complaint against the defendants MCY
America,  Inc. and MCY Music World,  Inc. in federal  District Court in New York
City,  alleging  claims for breach of contract,  promissory  estoppel and unjust
enrichment.  The  complaint  does not  appear to allege a claim for  breach of a
written  engagement  agreement but rather  appears to allege that the defendants
allegedly  breached an oral  agreement to compensate  the plaintiff for enabling
the defendants to obtain financing through a well-known investment banking firm.
The  plaintiff  asserts  further  that he is  entitled to a cash fee, as well as
stock options, in return for his alleged involvement in the financing, and seeks
damages of at least $13,315,000,  together with prejudgment  interest and costs.
As we believe that the plaintiff's  claims lack substantial  merit, we intend to
vigorously  defend  against  this  action and have  filed a motion  for  summary
judgment.  We  believe  that  the  outcome  of this  litigation  will not have a
material adverse effect on our financial position or results of operations.

     From  time to time,  we are  parties  to  various  other  claims  and legal
proceedings  incidental to our business. We believe that adequate liabilities to
cover any resulting losses have been reflected in our financial statements,  and
that the  outcome  of these  claims  and  proceedings  will not have a  material
adverse effect on our the financial position or results of operations.

<PAGE>
Item 2.   Changes in Securities.

         None; not applicable.


Item 3.   Defaults Upon Senior Securities.

          None; not applicable.

Item 4.   Submission of Matters to a Vote of Security Holders.

     No matter was submitted to a vote of the Company's  security holders during
the second quarter of the calendar year covered by this Report or during the two
previous calendar years.

Item 5.   Other Information.

         None; not applicable.

Item 6.   Exhibits and Reports on Form 8-K.

          (a)  Exhibits.

               None.

          (b)  Reports on Form 8-K.

               None.



<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                         MCY.COM, INC.

Date: 08/21/00                   By /s/ Bernhard Fritsch
      --------                          --------------------------------
                                        Bernhard Fritsch, CEO & Chairman
                                        and President