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 September 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:

     59,631,801 at September 30, 2000 of common stock (.001 per value)

                    DOCUMENTS INCORPORATED BY REFERENCE

                              NONE.

Transitional Small Business Issuer Format   Yes      No  X
                                                ---     ---
<PAGE>
                         MCY.COM, INC. AND SUBSIDIARIES
                          (a development stage company)

                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2000



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

Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>

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

ASSETS
Current assets:
<S>                                                                                      <C>                 <C>
   Cash and cash equivalents                                                             $      19,128,000   $      26,060,000
   Sundry receivables                                                                              531,000             397,000
   Advances                                                                                         95,000             107,000
   Other current assets, including prepaid advertising of $1,035,000 and
      $2,247,000 and prepaid event costs of $5,839,000 and $0                                    8,062,000           2,793,000
                                                                                         -----------------   -----------------

        Total current assets                                                                    27,816,000          29,357,000

Equipment and software, net                                                                     12,535,000           1,585,000
Intangible assets, net                                                                                   0          25,153,000
Other assets, including security deposits of $2,515,000 and $925,000, and
   record company advances of $100,000 and $350,000, respectively                                2,682,000           1,279,000
                                                                                         -----------------   -----------------

                                                                                         $      43,033,000   $      57,374,000
                                                                                         =================   =================

LIABILITIES
Current liabilities:
   Accounts payable, accrued expenses and sundry liabilities, representing
      total current liabilities                                                          $       5,205,000   $       3,381,000
                                                                                         -----------------   -----------------

Commitments, contingencies and subsequent event (Notes B & E)

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;
   59,631,801 and 54,340,988 shares issued and outstanding, respectively                            59,000              54,000
Common stock payable (1,330,063 and 110,000 shares, respectively)                                2,367,000           1,155,000
Additional paid-in capital                                                                     184,422,000         144,063,000
Deficit accumulated during the development stage                                              (136,833,000)        (72,283,000)
Accumulated other comprehensive income                                                            (243,000)            (15,000)
                                                                                         ------------------  -----------------

                                                                                                49,773,000          72,975,000
Unamortized deferred compensation                                                              (11,881,000)        (18,956,000)
Stock subscriptions receivable                                                                     (64,000)            (26,000)
                                                                                         -----------------   -----------------

                                                                                                37,828,000          53,993,000
                                                                                         -----------------   -----------------

                                                                                         $      43,033,000   $      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>
MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)


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

                                                                                                                  Inception
                                              For the Three Months               For the Nine Months          (January 8, 1999)
                                               Ended September 30,               Ended September 30,               Through
                                              2000             1999            2000              1999         September 30, 2000

Revenues                                $       211,000   $     165,000   $       474,000   $       165,000  $         817,000
                                        ---------------   -------------   ---------------   ---------------  -----------------

Expenses:
<S>                                           <C>             <C>               <C>               <C>               <C>
   Sales, marketing and public
      relations                               2,120,000       2,302,000         8,395,000         5,083,000         16,914,000
   Product development                        1,488,000         815,000         4,878,000         1,339,000          7,007,000
   Content acquisition                        1,550,000         475,000         6,227,000           650,000          7,810,000
   General and administrative                 2,312,000       1,908,000         7,734,000         2,257,000         12,204,000
   Depreciation and amortization                406,000         120,000           837,000           122,000          1,113,000
   Amortization of acquired
      intangibles                                     0       1,664,000         3,168,000         1,664,000          6,336,000
   Write-off of impaired
      intangible assets                               0               0        21,985,000                 0         21,985,000
   Stock based compensation                   1,894,000      37,943,000        13,136,000        40,522,000         63,040,000
                                        ---------------   -------------   ---------------   ---------------  -----------------

                                                             45,227,000        66,360,000        51,637,000        136,409,000
                                        -------------------------------   ---------------   ---------------  -----------------
                                        9,770,000

Operating loss                               (9,559,000)    (45,062,000)      (65,886,000)      (51,472,000)      (135,592,000)
Share of loss of predecessor
   companies                                          0               0                 0          (663,000)          (663,000)
Deferred income tax benefit                           0         133,000                 0           133,000                  0
Interest income, net of interest
   Expense                                      493,000         195,000         1,336,000           228,000          1,992,000
                                        ---------------   -------------   ---------------   ---------------  -----------------

Net loss                                $    (9,066,000)  $ (44,734,000)  $   (64,550,000)  $   (51,774,000) $    (134,263,000)
                                        ================  =============   ===============   ===============  =================

Net loss per common share -
   basic and diluted                         $(0.15)          $(0.89)          $(1.10)          $(1.38)
                                             ======           ======           ======           ======

Weighted average common
   Shares outstanding                        59,970,000      50,295,000        58,556,000        37,398,000
                                        ===============   =============   ===============   ===============
</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])
Cancellation of treasury stock                                              (277,000)                              (1,835,000)
Stock payable (Note C[7])                                                                            1,842,000
Stock payable reduction (Note C[7])                                                                   (630,000)

Non-cash 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])                                                                                      (2,571,000)

Sale of warrants (Note C[5])                                                                                          750,000
Warrants issued (Note C[5])                                                                                         3,951,000
Warrants canceled (Note C[7])                                                 17,500
Non-cash exercise of warrants (Note C[6])                                    331,297

Amortization of deferred compensation Comprehensive loss:
   Loss on foreign currency translation
   Net loss for period
Total comprehensive loss
                                                 ----------   --------   -----------   ---------   -----------  -------------

Balance - September 30, 2000                       1,000,000  $  1,000    59,631,801   $  59,000   $ 2,367,000  $ 184,422,000
                                                 ===========  ========   ===========   =========   ===========  =============

                                                      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)
Cancellation of treasury stock         1,835,000                                                                                0
Stock payable (Note C[7])                                                                                               1,842,000
Stock payable reduction (Note C[7])                                                                                      (630,000)

Non-cash exercise of                                                                                                            0
   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])                                                           2,571,000                               0

Sale of warrants (Note C[5])                                                                                              750,000
Warrants issued (Note C[5])                                                                                             3,951,000
Warrants canceled (Note C[7])
                                                                                                                                0
Non-cash exercise of
                                                                                                                                0
   Warrants (Note C[6])

Amortization of deferred                                                               10,182,000                      10,182,000
compensation
Comprehensive loss:
   Loss on foreign currency
      translation                                                      (228,000)                                         (228,000)
   Net loss for period                               (64,550,000)                                                     (64,550,000)
                                                                                                                    -------------
Total comprehensive loss                                                                                              (64,778,000)
                                      -----------  -------------  -------------     -------------   ----------      -------------

Balance - September 30, 2000          $         0  $(136,833,000)  $(243,000)  *    $ (11,881,000)   $(64,000)      $  37,828,000
                                      ===========  =============   ==========       =============    ========       =============
</TABLE>

 *Consists of a cumulative foreign currency translation adjustment of $243,000.


See notes to condensed consolidated financial statements

                                                                               4
<PAGE>
MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)

Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>

                                                                                                                  Inception
                                                                                  For the Nine Months         (January 8, 1999)
                                                                                 Ended September 30,               Through
                                                                                 2000             1999        September 30, 2000
Cash flows from operating activities:
<S>                                                                        <C>               <C>              <C>
   Net loss                                                                $   (64,550,000)  $ (51,774,000)   $(134,263,000)
   Adjustments to reconcile net loss to cash used in operating
      activities:
        Depreciation and amortization                                              837,000         122,000           1,113,000
        Amortization of intangibles                                              3,168,000       1,664,000           6,336,000
        Write-off of impaired intangible assets                                 21,985,000               0          21,985,000
        Stock-based compensation                                                13,136,000      40,522,000          63,040,000
        Stock-based sales and marketing                                          1,212,000               0           1,212,000
        Deferred tax benefit                                                             0        (133,000)                  0
        Share of loss of predecessor companies                                           0         663,000             663,000
        Changes in:
           Record company advances                                               1,422,000        (171,000)            940,000
           Receivables                                                            (134,000)       (428,000)           (395,000)
           Prepaid expenses                                                     (6,141,000)       (459,000)         (6,491,000)
           Accounts payable, accrued expenses and sundry liabilities               623,000         647,000           2,286,000
                                                                           ---------------   -------------   -----------------

              Net cash used in operating activities                            (28,442,000)     (9,347,000)        (43,574,000)
                                                                           ---------------   -------------   -----------------

Cash flows from investing activities:
   Datatek acquisition, net of acquired cash of $565,000                                 0      (1,748,000)         (1,748,000)
   Payment of security deposits                                                 (1,625,000)       (619,000)         (2,550,000)
   Cost of developing internal-use software                                     (6,202,000)       (590,000)         (6,979,000)
   Purchase of equipment                                                        (3,683,000)       (408,000)         (4,372,000)
                                                                           ---------------   -------------   -----------------

              Net cash used in investing activities                            (11,510,000)     (3,365,000)        (15,649,000)
                                                                           ---------------   -------------   -----------------

Cash flows from financing activities:
   Sale of                                                                         750,000               0             750,000
warrants
   Payment on line of credit                                                             0         (40,000)            (40,000)
   Purchase of treasury stock                                                   (1,835,000)              0          (1,835,000)
   Proceeds from sale of stock, net of related costs                            34,353,000      44,271,000          80,009,000
                                                                           ---------------   -------------   -----------------

              Net cash provided by financing activities                         33,268,000      44,231,000          78,884,000
                                                                           ---------------   -------------   -----------------

Effect of exchange rate changes                                                   (248,000)              0            (533,000)
                                                                           ----------------  -------------   ------------------

Change in cash and cash equivalents                                             (6,932,000)     31,519,000          19,128,000
Cash and cash equivalents - beginning                                           26,060,000               0                   0
                                                                           ---------------   -------------   -----------------

Cash and cash equivalents - ending                                         $    19,128,000   $ 31,519,000     $     19,128,000
                                                                           ===============   ============     ================

Supplemental disclosures of noncash activities:
   Issuance of warrants relating to events                                 $     3,889,000                    $      3,889,000
   Issuance of stock for receivable                                        $        38,000   $      26,000    $         64,000
   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 and warrants for software development                 $     1,835,000                    $      1,835,000
   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
September 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  during the nine month period ended September 30, 2000 of impaired
intangible  assets  described  in  Note  D)  considered  necessary  for  a  fair
presentation  have been included.  The results of operations for the nine months
ended  September  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
September 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,  the  Company  received a notice from the
American   Arbitration   Association  ("AAA")  indicating  that  a  request  for
arbitration had been filed. To date,  however,  the Company has not received any
documents  indicating  the  basis or the  grounds  for the  claim.  The  Company
believes that it is unlikely that it 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>
MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)

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

NOTE C - STOCKHOLDERS' EQUITY  (CONTINUED)

[4]    During the nine months  ended  September  30, 2000,  the Company  granted
       additional  options to  employees  to purchase an  aggregate of 2,245,000
       common  shares  at an  average  exercise  price of $6.00  per  share.  In
       addition,  unvested options  previously  granted to certain  employees to
       purchase  approximately  1,142,000  shares  of common  stock at  exercise
       prices of $1.50 to $12.75 per share were  cancelled due to termination of
       employment and vested options to purchase approximately 209,000 shares of
       common  stock at  exercise  prices of $1.50 to $12.00  per share  expired
       unexercised.

[5]    During the nine months  ended  September  30,  2000,  the Company  issued
       warrants,  principally to artists in connection with contracts to provide
       pay-per-view  webcasts of concerts and to vendors.  Such warrants  permit
       the  purchase of 1,161,200  shares of common stock at exercise  prices of
       $2.13 to  $16.63.  The  warrants  were  valued  using  the  Black-Scholes
       valuation model at approximately  $3,951,000 and are exercisable over one
       to three year  periods.  All of the  warrants  were  issued for  services
       rendered. In addition, the Company sold to a vendor a warrant to purchase
       1,071,428  shares of stock at an  exercise  price of $2.25  for  $750,000
       cash.

[6]    During the nine months ended  September 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.

[7]    During the nine months  ended  September  30,  2000,  the Company  signed
       agreements  with  vendors to issue  1,280,063  shares of common  stock in
       payment for services. Additionally, the Company entered into a settlement
       agreement  to reduce the number of shares  payable to a  consultant  from
       110,000 to 50,000.  Finally,  the Company  issued 17,500 shares of common
       stock to one vendor in  exchange  for the  cancellation  of a  previously
       issued warrant to purchase 33,333 shares of common stock at $5 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,  and the  delayed
development of technology conducive to its intended 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>
MCY.COM, INC. AND SUBSIDIARIES
(a development stage company)

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


NOTE E - SUBSEQUENT EVENT

In October 2000,  the Company  signed an agreement to license their  proprietary
secure digital  encryption and distribution  technologies,  including its NETrax
software  to a  provider  of  e-business  solutions.  The  agreement  allows the
licensee   to  utilize   the   Company's   NETrax   technologies   for   certain
non-entertainment  business-to-business  applications.  Under  the  terms of the
agreement,  the Company  will receive net  consideration  of  approximately  $30
million for the grant of the  license,  consisting  of  registered  stock of the
licensee,  a publicly  held  company  whose  shares  are  traded on the  NASDAQ.
Revenue,  net of related costs,  will be recognized when certain  conditions are
met, which the Company  anticipates  will be either in the fourth quarter ending
December 31, 2000 or the first quarter ending March 31, 2001.









                                                                               9
<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.  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  September 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 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 nine months ended September 30, 2000, our  consolidated
revenues totaled $211,000 and $474,000,  respectively.  Revenues for the quarter
and nine months ended  September  30, 2000  consisted  primarily of revenue from
advertising  with a minimal  percentage  arising from  sublicensing  agreements,
webcast  pay-per-view  revenue  and  the  sale of  digital  downloads  over  the
Internet.  The Company had  revenues of $165,000 for the quarter and nine months
ended September 30, 1999, which consisted of advertising revenue.  Revenues from
inception through September 30, 2000 totaled $817,000 and consisted primarily of
advertising and sublicensing  revenue with a minimal percentage arising from the
sale of webcast pay-per-views and digital downloads 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  Sales,   marketing  and  public
         relations  costs for the  quarters  ended  September  30, 2000 and 1999
         totaled $2,120,000 and $2,302,000 respectively.
</TABLE>

     Sales,  marketing  and public  relations  costs for the nine  months  ended
September 30, 2000 and 1999 totaled  $8,395,000  and  $5,083,000,  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 September 30, 2000 totaled $16,914,000.  Sales,  marketing and
public  relations  costs  decreased  during the quarter ended September 30, 2000
because  the  Company  outsourced  less of its  activities  and  conducted  more
directed marketing programs.  These costs increased during the nine months ended
September 30, 2000 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 fifteen month period ended September 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 September 30, 2000 and
1999 were $1,488,000 and $815,000,  respectively.  Product development  expenses
for the nine  months  ended  September  30,  2000 and 1999 were  $4,878,000  and
$1,339,000,  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.  Product  development  expenses  for the period  from  inception
through  September  30,  2000  totaled  $7,007,000.   The  increase  in  product
development  costs over the periods  reflects the continuing  development of the
Company's  website.  Such costs  consist  mainly of personnel  costs  related to
technical and creative staff and managers.


Content Acquisition

     Content  acquisition  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  acquisition  costs for the quarter  ended  September  30, 2000 and 1999
totaled $1,550,000 and $475,000, respectively. Content acquisition costs for the
nine  months  ended  September  30,  2000  and  1999  $6,227,000  and  $650,000,
respectively.  We began incurring  content  acquisition costs towards the end of
the quarter ended June 30, 1999.  Content  acquisition costs for the period from
inception through September 30, 2000 totaled $7,810,000. The increase in content
acquisition 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
September  30,  2000 and 1999  were  $2,312,000  and  $1,908,000,  respectively.
General and  administrative  costs for the nine months ended  September 30, 2000
and  1999  were   $7,734,000   and   $2,257,000,   respectively.   General   and
administrative  costs totaled  $12,204,000 from inception  through September 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.  The Company's general and administrative expenses decreased
during the  quarter  ended  September  30,  2000,  primarily  due to a temporary
decrease  in staff as the  Company  refocuses  its  efforts on the growth of its
business. The Company expects general and administrative expenses to increase as
the Company expands its staff and incurs  additional costs related to the growth
of its business.
<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  was being  recorded  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  five  years,  prior to the  Company's  determination  at June 30,  2000 to
write-off such intangibles in their entirety - see below.

The  combined  amortization  expense  for the  quarter  and  nine  months  ended
September  30,  2000  were  $0  and  $3,168,000,   respectively.   The  combined
amortization  expense for the quarter and nine months ended  September  30, 1999
were $1,664,000 and $1,664,000,  respectively. Combined amortization expense for
the period from inception through September 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,  1999.  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  believed 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.

     As of  June  30,  2000,  the  Company  did  not  anticipate  the  licensing
transaction that occurred in October 2000, pursuant to which, upon closing,  the
Company  will realize net  consideration  of  approximately  $30 million for the
license of its proprietary software. See Note E to the financial statements.
<PAGE>
Stock Based Compensation

     The Company  recorded  charges related to stock based  compensation for the
quarter and nine months ended September 30, 2000 of $1,894,000 and  $13,136,000,
respectively.  Stock-based  compensation  for the quarter and nine-month  period
ended  September  30,  1999  were  $37,943,000  and  $40,522,000,  respectively.
Stock-based  compensation  for the period from  inception to September  30, 2000
totaled  $63,040,000.  Included  in this  amount  is  amortization  of  deferred
compensation arising from options issued to employees and consultants at various
dates amounting to $32,047,000.  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 and options issued to employees,  consultants  and artists for
services.

As  of  September  30,  2000,  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 October 1 through December 31)                                             $ 1,435,000                        $114,000
  2001                                                                                    5,577,000                         227,000
  2002                                                                                    4,097,000
  2003                                                                                      772,000
                                                              ----------------------------------------------------------------------

                                                                                       $ 11,881,000                        $341,000
                                                              ======================================================================
</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 nine months ended September 30, 1999 was $0 and $663,000, respectively.


Liquidity and Capital Resources

     Our cash  balance as of  September  30, 2000 was  $19,128,000.  Net cash of
$28,442,000  was  used  for  operating  activities  for the  nine  months  ended
September 30, 2000. Such amounts were used principally as a result of net losses
of $64,550,000 generated during the period and the increase in current assets of
$6,275,000,  offset by the  increase  in current  liabilities  of  $623,000  and
non-cash  expenses  associated  with  stock  and  stock-based   compensation  of
$13,136,000, stock-based sales and marketing of $1,212,000, depreciation and the
amortization  of  intangibles  of  $4,005,000  and the  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  $3,683,000 in capital
equipment and incurred  $6,202,000 to develop  internal-use  software during the
nine months ended  September  30, 2000.  In addition,  the Company made deposits
relating to the purchase of equipment totaling $1,625,000 during the nine months
ended  September  30, 2000.  The company also  repurchased  $1,835,000 of common
stock from certain shareholders during the nine months ended September 30, 2000.

     During the nine months ended  September  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.com which
occurred during the nine months ended September 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.

     In each of March,  April,  May,  June,  July,  August and  September  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,   $8.44,  $7.00,  $3.50,  and  $2.13  per  share,
respectively.
<PAGE>
     In August 2000,  MCY.com  issued 17,500 shares of common stock to Frankfurt
Balkind,  Inc. in conjunction  with an agreement to cancel a warrant to purchase
50,000 shares of common stock previously issued.

     In September 2000,  MCY.com agreed to issue the web development  consulting
company, Sapient Corporation, 1,276,313 shares of MCY.com common stock valued at
$1.44 per share.  Sapient  Corporation  also  purchased  a five year  warrant to
purchase  1,071,428  shares  of  common  stock  at  $2.25  per  share.   Sapient
Corporation  paid $750,000 for such  warrant.  In  conjunction  with the warrant
purchased,  a warrant to  purchase  50,000  shares of common  stock at $2.25 was
issued to an individual.

     In  October  2000,  the  Company  signed  an  agreement  to  license  their
proprietary  secure  digital  encryption  and  distribution  technologies.   The
agreement  allows  the  licensee  to  utilize  such   technologies  for  certain
business-to-business  applications.  The company  will  receive net  revenues of
approximately  $30 million for the grant of the license.  Such  revenues will be
recognized when certain  conditions are met, which the Company  anticipates will
be either in the fourth  quarter  ending  December 31, 2000 or the first quarter
ending March 31, 2001.

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.

     In  August  2000,  MCY.com  granted  options  to an  employee  to  purchase
1,000,000 shares at an exercise price of $6.00 per share.

     As of September  30, 2000,  7,600,265  options were  outstanding  under the
Company's  Incentive  Option Plan, at a weighted average exercise price of $4.24
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>
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: 11/14/00                   By /s/ Bernhard Fritsch
      --------                          --------------------------------
                                        Bernhard Fritsch, CEO & Chairman
                                        and President