SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

|X|  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934. For the fiscal year ended DECEMBER 31, 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. 2-96392-A

                       ELECTRONIC BUSINESS SERVICES, INC.
                 (Name of small business issuer in its charter)

Delaware                                                         65-0952956
(State or other jurisdiction of incorporation or organization)   (IRS Employer
                                                                 Identification)

                 6801 Powerline Road, Fort Lauderdale, FL 33309
               (Address of principal executive offices) (Zip Code)

Issuer's telephone number, including area code:     (954) 935-8100

Securities registered pursuant to Section 12(b)
  of the Exchange Act:                              None
Securities Registered pursuant to Section 12(g)
  of the Exchange Act:                              Common Stock, $.001Par Value
                                                    (Title of Each Class)

(Name of Each Exchange on which Registered):        None

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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [_] No [X]

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

Issuer's revenues for the fiscal year ended December 31, 2000 were $3,422,745.

The aggregate market value of the voting and non-voting stock held by
non-affiliates computed by reference to the average bid and asked price of such
stock on August 15, 2001, was $0. As of such date, the average high and low
sales price was $[N/A]. (The stock of the Company has not traded since May 15,
2001, the effective date of the Joint Plan of Reorganization).

The number of shares outstanding of the Issuer's common stock, par value $.001
per share, as of August 15, 2001, was 49,893,625.

Transitional Small Business Disclosure Format (check one):  Yes [_]  No [X]

Documents incorporated by reference: Certain exhibits listed in Part III, Item
14 of this Annual Report on Form 10-KSB are incorporated by reference from the
Registrant's Current Reports on Form 8-K filed with the Commission on October
25, 1999, December 23, 1999 and February 22, 2000.

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 [X] No [_]



<PAGE>



                       Electronic Business Services, Inc.


                                Table of Contents

                                                                            Page
                                                                            ----

Part I

Item 1.  Business..............................................................1
Item 2.  Properties............................................................8
Item 3.  Legal Proceedings....................................................10
Item 4.  Submission of Matters to a Vote of Security Holders..................10


Part II

Item 5.  Market for Common Equity and Related Stockholder Matters.............11
Item 6.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations .......................................12
Item 7.  Financial Statements                                   ..............16
Item 8.  Changes In and Disagreements With Accountants on Accounting and
             Financial Disclosure.............................................16


Part III

Item 9.  Directors and Executive Officers of the Registrant...................17
Item 10. Executive Compensation...............................................19
Item 11. Security Ownership of Certain Beneficial Owners and Management.......21
Item 12. Certain Relationships and Related Transactions.......................22


Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K......23

Signatures




<PAGE>




PART I

Item 1.    BUSINESS

Overview

     Electronic Business Services, Inc., a Delaware corporation, through its
operating subsidiaries (collectively with the subsidiaries, the "Company"),
creates software and provides services primarily to the mortgage lending and
credit agency industries. The Company also fulfills requests from independent
membership clubs for credit information products. All of the Company's business
operations are conducted through Engineered Business Systems, Inc. ("EBS") and
QuickCREDIT Corp. ("QCC"). EBS, acquired by the Company in December 1996,
develops and sells software quality assurance products and services for the
mortgage and credit industry. QCC is a wholly owned corporation, formed by the
Company in February 1998, which compiles information provided by
credit-reporting agencies, organizes the information in the form of reports and
sells the comprehensive credit reports to its customers.

     On October 8, 1999 the Company's Florida predecessor merged with and into
Electronic Business Services, Inc., a Delaware company that survived the merger.

Reorganization

     In fiscal year 2000 the Company continued to suffer significant financial
losses. On September 1, 2000 (the "Petition Date"), the Company filed a
voluntary petition for creditor protection under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Southern District
of Florida. On November 24, 2000, the presiding CEO transferred management and
control of the Company to former management. The Company under creditor
protection (the "Debtors") was operating the business as debtor-in-possession
("DIP"). The U.S. Trustee for the Southern District of Florida did not appoint a
statutory committee of unsecured creditors, thus proceedings are not being
jointly administered for procedural purposes.

     The Company, under new management, embarked immediately in implementing
operational and systems improvements. The Company has reorganized its affairs
under the protection of Chapter 11 and has proposed a plan of reorganization for
itself and other filing subsidiaries which was submitted to the Bankruptcy Court
overseeing the Chapter 11 proceedings for confirmation after submission to any
vote and approval required by affected parties.

     On May 1, 2001, the Bankruptcy Court confirmed the Company's Plan of
Reorganization dated March 12, 2001 (the "Plan"). On May 15, 2001, the Effective
Date of the Plan, the Company consummated several transactions, most of which
were dated as of July 18, 2001. The Company:

     -    issued 40,760,292 shares of Common Stock to Creditors, Employees and
          DIP investors;


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<PAGE>

     -    completed a $685,000 private offering by selling 9,133,333 shares of
          its common stock.

     These transactions are more fully described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" under Item 6. of this
report.

     Since the Bankruptcy Court approved the plan of reorganization, the Company
is required to adopt "fresh start" accounting under GAAP. This accounting
requires that assets and liabilities be recorded at fair value based on the
values determined in connection with the plan of reorganization. As a result,
the reported amounts in the Consolidated Financial Statements will materially
change effective May 1, 2001 to give effect to the adjustment to the carrying
value of assets and liabilities. To date, information prior to December 31, 2000
does not reflect any changes as a result of the implementation of "fresh start"
accounting.

The Subsidiaries

ENGINEERED BUSINESS SYSTEMS, INC.

     EBS designs, develops, markets and supports a family of PC-based software
products for the credit reporting and mortgage banking industries. EBS software
products include (i) the ACES(TM) Quality Control System, a quality assurance
program for mortgage lenders, (ii) the EBS Xchange(R), an automated merged
infile system with electronic data interchange (EDI) capabilities, (iii) the
CRIS(R) Mortgage Reporting System, credit reporting software and (iv) DESC (Data
Evaluation and Selection Criteria module).

     In 1997, EBS announced the introduction of two (2) new software products,
ACES(TM) 98, a Windows 95 and Windows NT version of ACES(TM), and DESC(TM).

     In 1998, EBS announced the creation and implementation of its new
consulting services division. This division is currently dormant.

     In 1999, EBS introduced a new 32 bit version of ACES(TM) 98 v2.0, followed
by ACES(TM) 2000 with Business Intelligence Reporting which incorporated a
third-party software product into ACES(TM) and substantially increased the
program's reporting capabilities.

Products and Services

     ACES(TM)

     ACES(TM) software has been created, developed and sold by EBS to assist
mortgage lenders in assessing the accuracy of the information gathered in
connection with making a loan. When considering a loan, a mortgage lender has
potential borrowers complete a mortgage application. From this application and
other accumulated data, the lender determines whether the applicant qualifies
for a loan. As part of this loan process, the lender must also assess whether
the property being acquired is of sufficient value to collateralize the loan. If
the information obtained regarding the potential borrower and the property to be
pledged as collateral satisfy lending criteria, the mortgage lender can then
make the loan. Frequently, the


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<PAGE>

mortgage lender then bundles a number of loans together and sells the portfolio
of loans to investors, such as Fannie Mae, Freddie Mac, Federal Housing
Authority ("FHA"), Veterans Administration ("VA") and other mortgage investors.

     In order to effectuate the sale of a mortgage portfolio, a lender, or loan
originator, must review the information compiled in connection with originating
the loan on a representative sample of loans in the portfolio. ACES(TM) software
simplifies this process. The ACES(TM) product enables its licensees to perform
quality control reviews based upon the risk management philosophy determined by
their company.

     ACES(TM) provides either a questionnaire, which the customer may modify, or
an exception based analysis. The questionnaire enables the analyst reviewing the
information gathered during the origination of the loan to quickly and
accurately determine whether any information was omitted or misstated. ACES(TM)
then creates re-verification letters for the application, employment, deposits
(source of funds), credit, and sometimes property appraisal. The exception-based
analysis enables the reviewer to identify specific exceptions, or items of
concern.

     ACES(TM) receives mortgage loan information in an ASCII comma delimited
format created by the user from their loan origination system ("LOS"). This
provides automatic downloads of the loans each company originates and reduces
redundant duplicate data input. Alternatively, the customer may manually input
any or all of the loan detail elements.

     EBS licenses the ACES(TM) software program. When a licensee is under a
non-transactional license agreement, an annual software maintenance fee is
included. When a licensee is under a transactional license agreement, the
Company charges a monthly usage fee.

     At its ACES(TM) Users' Conference in November 1997, EBS introduced its ACES
98 software. ACES 98, a Year 2000 compliant program, is a Windows 95 and Windows
NT based product that includes enhanced reporting modules. These new reporting
modules generate clearer and more concise reports as well as trend information,
which was not available in the previous versions of ACES(TM). As a result, ACES
98 functions more efficiently and effectively than earlier versions of ACES(TM).

     In the summer of 2000, EBS released ACES(TM) 2000, which contained all the
features of its ACES(TM) 98 product and added a new reporting module, Business
Intelligence. This new feature enables users to remain within the ACES(TM)
environment and eliminates the need to export data to spreadsheets or other
report generating programs

     EBS, through its Outsourcing Division, provided third party quality review
services for professional reviews of conventional, FHA, VA, jumbo and specialty
mortgage loans. The ACES(TM) quality control software also enables EBS to
perform reviews for various transactions including preliminary reviews prior to
funding, post lending reviews and reviews of portfolios in connection with
acquisitions or divestitures. On September 1, 2000, the date the Company filed
for Chapter 11 relief, the Outsourcing Division was sold. The Company claims
that the division was sold without adequate consideration and legal action is
being taken by the Company to reverse this sale and recover this division.


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<PAGE>

     DESC(TM)

     In the fall of 1997, EBS introduced DESC(TM) (Data Evaluation and Selection
Criteria module), a program that enables the customer to review certain selected
mortgages, based on user specified risk criteria. Used in conjunction with the
ACES(TM) software product, DESC(TM) allows mortgage lenders to maximize the
benefit from quality reviews while targeting problem areas. The Company believes
that use of this software will result in greater efficiency for the mortgage
lender because a more accurate sample may be analyzed, while reviewing fewer
loans in trying to assess the overall quality of a given portfolio.

     EBS Consulting Services

     EBS Consulting Services has provided advice to a variety of mortgage
lenders on operations, systems and personnel. Aimed at supporting the efforts of
the mortgage quality professional, the consulting division ensures that all
clients are assisted in the effective implementation of software products
marketed by EBS. This program is focused towards a process measurement approach
that has proven to be effective in providing mortgage-lending management with
key process quality information. EBS Consulting Services also provides an
analysis of overall quality control operations for lenders and has the ability
to assist them in the development and implementation of large-scale quality
initiatives.

     The Mortgage Institute

     As a leading company in quality review for the mortgage lending industry,
EBS intends to re-launch The EBS Mortgage Institute later in 2001. The Mortgage
Institute will provide advanced training and certification in the use of
ACES(TM) and DESC(TM) software to mortgage quality control staff in order to
enhance their knowledge and efficiency in the mortgage quality control/risk
management processes. The Mortgage Institute intends to offer counseling, study
materials and testing through correspondence courses and during the Company's
annual User Conference. Additionally, the Institute will offer continuing
education programs to maintain certification status.

     CRIS(R)

     CRIS(R) software has been created, developed and sold by EBS to assist
Credit agencies in compiling comprehensive credit reports for their customers.
To date, over 350 mortgage credit agencies have purchased the personal computer
based CRIS(R) program, each of which have also entered into a software
maintenance agreement with the Company. The CRIS(R) program enables credit
agencies through its built-in communication software to access information from
all three major credit information repositories, Experian, Equifax and
Trans-Union. The CRIS(R) program then automatically consolidates the credit
information obtained from these sources and creates a simplified, comprehensive
credit report. The program can then generate, upon demand, letters requesting an
explanation of information in the report that requires clarification. In
addition, CRIS(R) also provides credit agencies with an accounts receivable and
billing system to charge their customers for reports generated by the CRIS(R)
program.

     CRIS(R), a Year 2000 compliant program, is installed by EBS on a customer's
personal computer or sold pre-packaged on new computer hardware.



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<PAGE>

     EBS Xchange(R)

     EBS creates credit reports for its credit agency and mortgage-lending
customers. Typically, a customer will need a credit report on an individual
usually because a lender is considering making a loan to such individual. The
credit agency will then request electronically through the EBS Xchange(R) that a
report be compiled on such individual. By using the CRIS(R) internally, EBS can
generate and communicate a full credit report to its customer in a few minutes.
EBS charges a fee for compiling each report and charges an additional fee if its
credit agency customer does not have its own account with each of the credit
information repositories.

     QuickCREDIT for Windows(TM)

     QuickCREDIT for Windows(TM) is a software application that enables mortgage
credit reporting agency clients to access the EBS Xchange(R) system for the
purpose of requesting and compiling individual credit reports. This application
operates on Windows 3.1, Windows 95(R) and Windows NT(R) operating systems.
QuickCREDIT for Windows(TM) is provided without cost to the client, however it
derives revenue on a transactional basis when used. The application has been
upgraded by the development of QuickINFO for Windows (below).

     QuickINFO for Windows

     QuickINFO ("QI") for Windows is the Company's newest product. QI is a
Microsoft Windows based communications software system that is used to initiate
and send credit report requests via modem or the Internet (TCP/IP). QI includes
advanced features such as 128-bit ssl encryption for security as well as a new
graphic print output. Users include mortgage companies, property management
companies, credit card companies, real estate agencies, finance companies and
local credit reporting agencies. QI is extremely flexible, supporting and
interfacing with many popular loan origination systems.

     The Company currently uses server-based technology to communicate and
deliver the needs of the club members. However, the conversion of the PC-based
technology to IBM's iSeries (formerly known as AS400) technology is in process
to provide extreme reliability, scalability and endless expansion capability.
Regardless of the size and/or number of membership clubs QCC serves, this new
technology will have full scalability for all of the Company's needs. This
technology transformation is scheduled for completion in early in 2002.

     The Company currently uses Microsoft Windows NT servers and Microsoft SQL
database technology in its existing system for club membership. In process is
the move of all back-end processes to the IBM iSeries using the UDB2 database,
integrating these processes with a new ERP system, and resulting in the highest
reliability and scalability in the industry using best of breed software (IBM's
UDB, Apache 2 Web Server, Websphere and Visual Age C++, and Java). The Company
is now an IBM business partner and has been working with IBM's development labs
to accelerate its plan.

     The Company is under a three-year contract with TruSecure (ICSA) for full
security certification. This will ensure not only that it is using all of the
necessary security measures now, but also that it will stay current in the
future. This covers every aspect of security, including, but not limited to the
physical site, internal procedures, passwords, and encryption.


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<PAGE>

All of the information residing on, being sent to, or sent from the Company's
computer systems is safe and secure from intrusion and theft. In addition to the
initial Internet port scans and intrusion detection, this is repeated on a
regular basis with notification given to EBS of any changes that must be made.
The Company's firewall is on the ICSA approved list. The new facility is being
customized to provide an ICSA secure server environment. The Company has paid
its annual fee and expects to be certified as a "secure facility" during fiscal
2001.

     Computer backups are made on a daily, weekly, and monthly basis, currently
using high-speed DLT tape drives that are stored in a fireproof safe.

     EBS Sales and Marketing

     In order to service its customers, the Company presently employs an
experienced sales and marketing manager who is accomplished in sales and in the
development of national marketing programs. Sales representatives work on a
salary plus commission basis and are responsible for the sales of ACES(TM) and
DESC software products. The department is responsible for developing new
prospective Licensees for the Company's products and demonstrations of these
products to mortgage brokers, savings and loan associations, credit unions and
other lenders. This sales and marketing effort will be supplemented by (i)
additional sales, marketing and advertising, including a national Certified
Reseller Program, the formation of strategic alliances within the industry
including: outsourcing companies, mortgage banking associations and investors in
the mortgage banking industry and (ii) strategically placed advertising in
select industry publications, the review of the Company's quality control
software products by respected industry publications, national investors and for
the purpose of forming "total solution" partnership with IBM. The department
includes a sales support person who works closely with upper management as well
as the Company's technical support, IT and programming staff.

     In addition, customers acquire CRIS(R) and EBS Xchange(R) through referrals
to EBS or contacts within the organization. EBS derives revenue from these
products based upon sale of software and hardware, annual service maintenance
agreement payments, and monthly transactional fees.

     The Engineered Business Systems, Inc. (EBS) sales and marketing department
is directed by Ms. Susan Connors, an experienced sales and marketing
professional. Since she was hired on January 2, 2001, Ms. Connors has rewritten
all of the sales contract forms for EBS, has put together a complete training
course for new and potential sales and has completed two major sales for the
Company; all this, while reestablishing excellent public relations with the
existing client base and giving them assurance that EBS still is the leading
Company in mortgage quality control software. The industry is responding
positively. The Company has recently entered into a sales acceleration agreement
with "Profisy" a sales and marketing organization specializing in mortgage
services.

QuickCREDIT CORP.

     QCC was formed by the Company as a wholly owned subsidiary in February 1998
for the purpose of acquiring, consolidating and operating credit reporting
agencies. In April and May


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<PAGE>

1998, QCC acquired three mortgage credit report servicing companies. QCC
operates its business through two divisions: the Report Division (which uses EBS
software to compile available credit information from credit-reporting agencies
and then sells the report) and the Consumer Guardian Division (currently
servicing only one client, Brand Direct, to alert subscribers to changes in
their credit status).

     QCC invested significant time and resources in 1999 to develop the
fulfillment center software application, which supports the delivery and
management of these products and services and is believed by QCC management to
create a significant barrier to competition. QCC has recruited and trained
dedicated customer service representatives to national credit repository
standards for these products.

     QCC sales and marketing is led by Dennis Bellezza, an experienced credit
sales and marketing professional. Dennis also doubles as Credit Compliance
Officer. Dennis leads an all-new team that has already begun to market our
brand-new QuickINFO software package. QuickINFO replaces the aging QuickCREDIT
software. The main features of QuickINFO include its ability to be accessed by
way of the Internet (TCP/IP), and its "new look" modern output that the industry
has accepted extremely favorably. This QuickINFO software, now in Beta testing,
will be rolled-out immediately following our "ICSA Secure Certification".
Following the roll-out of QuickINFO, a marketing plan, already designed, will be
implemented on a national basis.

     On December 23, 1999, QuickCREDIT Corp. and Brand Direct Marketing, Inc.
entered into an agreement for the sale and marketing by Brand Direct of the two
products developed by QCC pursuant to the agreement with Interfinancial Services
Corp. that was terminated in November 1999. Brand Direct markets the products to
bankcard and oil card customers as potential benefits in a membership service
created by Brand Direct. Pursuant to the agreement, Brand Direct is responsible
for the design and preparation, subject to QCC's approval, of all marketing and
sales materials used by Brand Direct to market or describe the products and for
marketing the membership service including the products through direct mail and
telemarketing sales efforts. Product orders are delivered to QCC either directly
from the end customers or through Brand Direct. QCC has responsibility for all
aspects of product fulfillment and product delivery including the design and
preparation, subject to Brand Direct approval, of all registration materials and
other reports and fulfillment materials to be delivered to subscribers to the
membership service that purchase either or both of the products.

     Brand Direct has publicly acknowledged their own financial difficulties and
has not paid the Company for several months. The Company has recently notified
Brand Direct of a termination of service until the Company is reimbursed for all
out-of-pocket costs and is advised of a payment schedule for future services and
for all arrearage in their payables to the Company. The Company has recently
submitted proposals to two new membership clubs offering virtually the same
benefits as the Brand Direct membership club. A proposal for a third membership
club is in progress and will be submitted in the very near future. There appears
to be little competition for these three potential clubs; consequently, the
Company expects this potential new business to compensate for the loss in
revenue from the Brand Direct association, however,


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<PAGE>

the Company is hopeful that Brand Direct can reorganize and strengthen its own
operations and will honor its contract with the Company.

     Brand Direct began test marketing the products in January 2000 and
continued to do so until June 16, 2000. The purpose of the test marketing was to
assess the feasibility of further rollout of the products to begin during or
immediately after the test period. BrandDirect, after several contract
extensions providing minimum monthly guaranteed payments to the Company, agreed
to the product rollout which included a guaranteed minimum payment of $40,000
per month. The commencement date was February 1, 2001.

     Brand Direct is responsible for the design and preparation, subject to
QCC's approval, of all marketing and sales materials used by Brand Direct to
market or describe the products and for marketing the membership service
including the products through direct mail and telemarketing sales efforts.
Product orders will be delivered to QCC either directly from the end customers
or through Brand Direct. QCC has responsibility for all aspects of product
fulfillment and product delivery including the design and preparation, subject
to Brand Direct approval, of all registration materials and other reports and
fulfillment materials to be delivered to subscribers to the membership service
that purchase either or both of the products.

     QCC is currently in contract negotiation with two additional clients for
Q-3 implementation and is in contract with a marketing organization for
marketing and sale of additional products and services for future implementation
in late 2001 and beyond. No assurances can be given that any contracts will
materialize or that the Company's relationship with Brand Direct will
successfully result in revenues to the Company.

Backlog

     At December 31, 2000, the Company had no contract backlog. Revenue from
sales is recorded upon software delivery, hardware delivery, and training. The
Company has entered into one to two year contracts for services that obligate
customers to specific minimum transactions with the Company.

Employees

     The Company's total workforce consisted of approximately 26 employees of
which 23 are full time at August 15, 2001. Of the approximately 26 people
employed with the Company as of the date of this report, five (5) are engaged in
marketing and sales, sixteen (16) are engaged in product development and support
and customer service and five (5) are involved in finance and administration.
None of the employees are union members and none are covered under any
collective bargaining agreements.


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Patents and Trademarks

     The EBS Xchange(R) and QuickCREDIT(R) trademarks have been registered in
International Class 9 in the United States Patent and Trademark Office ("PTO")
and the Company has several applications for registration pending in the PTO.
Through the Company's five (5) year long use of the ACES(TM) trademark in the
United States in connection with computer software, the Company has also
acquired common law trademark rights in the ACES(TM) trademark. There can be no
assurance, however, that the Company will be able to effectively obtain rights
in the Company's mark throughout all the countries of the world. The failure of
the Company to protect such right from unlawful and improper appropriation may
have a material adverse effect on the Company's business, financial condition
and results of operation.

Insurance

     The Company maintains insurance with respect to its properties and
operations in such form, in such amounts and with such insurers as is customary
in the businesses in which the Company is engaged. The Company believes that the
amount and form of its insurance coverage are adequate at the present time.

Research and Development

     During 2000, the Company expensed $364,134 of research and development
costs. The development activities were primarily focused on upgrading the ACES
and QCC products. The Company estimates the future spending for research and
development for the fiscal year 2001 to be approximately $375,000.

Competition

     The market for the Company's products is intensely competitive. The Company
expects competition to increase and the Company's market share to remain stable
as other companies introduce additional and more competitive Microsoft
Windows(R)-based products in this market segment. Many of the Company's present
or anticipated competitors have substantially greater financial, technical,
marketing and sales resources than the Company. Many credit-reporting agencies
have other software programs that generate credit reports from information
supplied by the credit information repositories. As a result, both CRIS(R) and
Xchange(R) have significant competition. There can be no assurance that the
Company will be able to compete successfully in the future.

Item 2.    PROPERTIES

     Until June 30, 2001, the Company leased a facility in Fort Lauderdale,
Florida consisting of approximately 6,000 square feet of office space at a base
monthly rental of approximately $9,000 per month.

     The Company moved to new facilities as of July I, 2001 and has signed a
five-year lease that commenced on Aug 1, 2001 at 6801 Powerline Road, Fort
Lauderdale, Florida 33309


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consisting of approximately 10,000 square feet of office and research and
development space. The lease provides for a monthly rental during the first year
of $8,333 per month in addition to all provisions of a net net lease. The
facilities are being customized to provide an ICSA secure server environment.

Item 3.    LEGAL PROCEEDINGS

     Please refer to Item 1. BUSINESS - Reorganization and Item 6. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION - Recent Developments, concerning
the Company's proceedings in Bankruptcy Court.

     Since the entry of the confirmation order by the U.S. Bankruptcy Court, the
Company has been pursuing objections to claims that have been outstanding and
delayed. There are two remaining issues as follows:

     In connection with the 1998 acquisitions of Credit Bureau Services, Inc.
("CBS"), Steven and Kim Naimoli, shareholders of CBS, have asserted a claim for
$600,000 (referred to in the financial statements as QCC Puts Payable). It is
the Company's position that the Naimoli claim is merely equity and, pursuant to
the Plan of Reorganization, all equity has been cancelled. The Naimoli Claims
Objection has been delayed due to Mr. Naimoli's own personal filing of
bankruptcy which necessitated relief from stay in his bankruptcy case.
Furthermore, other proceedings in his case have delayed the Company's ability to
schedule the matter for hearing. The Company expects the matter to be scheduled
and resolved in September 2001.

     In regard to the disposition of the Outsourcing Services Division, the
Company has asserted that the assets were transferred prior to the bankruptcy
filing without adequate consideration and has filed an Adversary Complaint to
recover those assets. The assets constitute the outsourcing division of EBS and
upon recovery of the assets, EBS intends to operate, once again, the outsourcing
division. The trial on the Adversary Proceeding has been set for September 2001.
It is expected that the trial will be short as the defendant has defaulted as to
liability and will be defending the damage/remedy portion of the Complaint.

     In addition to the Company's proceeding in Bankruptcy Court, from time to
time, various claims, charges, and litigation have been and may be asserted or
commenced against the Company arising from, or related to, contractual matters,
intellectual property, personal injury, insurance coverage and personnel and
employment disputes. The Company may be involved in some litigation that, while
the outcome cannot be predicted with certainty, the Company does not expect to
have a material or adverse effect on the consolidated financial position.

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

     During the Company's fourth fiscal quarter of the year ended December 31,
2000, no matters were submitted to a vote of security holders of the Company.




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PART II

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

     Prior to the Effective Date of the Plan, prices for the common stock of the
Company were traded on the OTC Bulletin Board (the "Bulletin Board") under the
trading symbol "AEBS". The common stock was regularly quoted and traded on the
Bulletin Board.

     As of August 15, 2001, there was no closing bid price for the Company's old
common stock as they were cancelled on May 1, 2001 effective with the Bankruptcy
Confirmation. The new common stock of the Company was not trading on August 15,
2001.

     The following table sets forth, on a per share basis for the periods
indicated, the high and low closing prices for the Company's common stock
("AEBS") for the two year period ending December 31, 2000 based upon information
supplied by the Bulletin Board. Prices represent quotations between dealers
without adjustments for retail markups, markdowns or commissions, and may not
represent actual transactions.

                                                  HIGH ($)        LOW ($)
                                                  --------        -------

Calendar 2000

January 1 through March 31                          0.59           0.25
April 1 through June 30                             0.50           0.09
July 1 through September 30                         0.16           0.03
October 1 through December 31                       0.03           0.01

Calendar 1999

January 1 through March 31                          1.50           0.88
April 1 through June 30                             1.53           0.88
July 1 through September 30                         1.06           0.31
October 1 through December 31                       0.53           0.13

Holders. As of August 15, 2001, there were no shares of old common stock issued
and outstanding. As of August 15, 2001, there were 49,893,625 of new common
stock issued and outstanding with approximately 181 holders of record of the
Company's common stock.

Dividends. During fiscal 2000, the Company issued 1,423,821 shares of common
stock as payment of accrued preferred stock dividends of $1,423,821. Except for
such dividend, the Company has never paid dividends on its shares of capital
stock and does not expect to pay any in the immediate future. The future
dividend policy will depend on the Company's earnings, capital requirements,
financial condition and other factors considered relevant to the Company's
ability to pay dividends.



                                       11
<PAGE>

Item 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

Statements in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and elsewhere in this document as well as statements
made in press releases and oral statements that may be made by the Company or by
officers, directors or employees of the Company acting on the Company's behalf
that are not statements of historical or current fact constitute "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements involve known and unknown
risks, uncertainties and other unknown factors that could cause the actual
results of the Company to be materially different from the historical results or
from any future results expressed or implied by such forward looking statements.
In addition to statements which explicitly describe such risks and
uncertainties, readers are urged to consider statements labeled with the terms
"believes", "belief", "expects", "intends", "anticipates or plans" to be
uncertain forward looking statements. The forward looking statements contained
herein are also subject generally to other risks and uncertainties that are
described from time to time in the Company's reports and registration statements
filed with the Securities and Exchange Commission.

This section presents a review of the Company's financial condition and results
of operations and should be read in conjunction with the consolidated financial
statements of the Company and the notes included elsewhere herein.

Twelve Months Ended December 31, 2000 vs. Twelve Months Ended December 31,1999

Consolidated

     An overall change in management took place on November 24, 2000. Harold
Fischer, who headed the preceding management team, appointed the former Chairman
and CEO of the Company, Vito A. Bellezza, as the new CEO of the Company.
Immediately thereafter, the former management group voluntarily resigned as
officers and/or directors of the board of the Company. The inability by previous
management to cut expenses and to raise the necessary capital for the future
operations of the Company precipitated their resignations.

     Since the new leadership assumed control of the Company, many important and
strategic changes have taken place. Operating expenses were reduced
dramatically, redundant personnel were dismissed, salaries for highly
compensated employees were reduced and the new administration, comprised partly
by former employees of the Company, were hired at salaries equivalent to 50% or
less of their former salaries. Within weeks, total payroll was reduced in excess
of 50%. "Debtor In Possession" financing in the amount of $450,000 was raised so
that the Company could operate during the reorganization. The entire sales force
was replaced with a superior group of motivated personnel and there was a
noticeable and positive change in the attitude of the employees. A new direction
was set for the Company and management decided to focus on the core business of
its flagship software products of ACES(TM) and DESC. Products and services were
re-priced. Pricing was fixed and discounting on all products and services was
prohibited. New commission structures were implemented to incentivize the sales
force. QuickCREDIT Corp. was revitalized by eliminating certain unprofitable
services, re-pricing its


                                       12
<PAGE>

core products and launching a new product called "QuickInfo" to upgrade its
QuickCREDIT software.

     Sales for the twelve months ended December 31, 2000 were $3,422,745 or a
decrease of 47% from the $6,486,533 in sales for the period ended December 31,
1999. Management believes that a major factor that contributed to the Company's
reduction in sales was due to the focus of pre-November 2000 management on
research and development for new products and services. Additionally the rise in
residential mortgage interest rates in fiscal 2000 resulted in a significant
reduction in the volume of credit reports associated with home mortgage
originations and mortgage re-financings and the continued consolidation within
the Company's wholesale credit client base. Management also believes that, since
the filing of the Chapter 11 Bankruptcy Petition on September 1, 2000, sales
were adversely affected due to lack of confidence in the Company to operate as a
viable going concern by potential and existing clients.

     On September 1, 2000, the Company purportedly divested itself of the EBS
Outsourcing Division. Although the Division was income producing, it was unable
to meet payroll when the pre-November 2000 management made the divestiture
decision. It is the current management's position that there was no
consideration received by the Company for the Division. The purported sale is
currently being contested by current management in litigation under the
jurisdiction of the United States Bankruptcy Court.

     The cost of sales during 2000 was $2,210,645 representing a decrease of
$920,688 from the cost of sales of $3,131,333 for the same period last year. The
decrease in cost of sales is due largely to the lower volume in sales. Gross
profit, as a percentage of revenue, has decreased to 35% for the full year 2000
from 52% for the full year 1999.

     Selling, general and administrative ("SG&A") expenses were $5,936,332 for
the year ending December 31, 2000 representing an increase of 6% from SG&A
expenses of $5,559,030 for the year ending December 31, 1999. The increase in
SG&A is attributable, for the most part, to a substantial impairment loss due to
the bankruptcy. New management has been able to curtail SG&A expenses,
including, in particular, labor, taxes and insurance costs.

     Development expenses during the year were $364,134 compared with $848,208
for the same period in 1999, a reduction of 57%. Development costs incurred
during the year were mainly associated with the development of new products for
resale to consumers and for the development of QuickINFO. Management believes
that investment in these products is essential to the Company's growth and
product diversification. Management believes that the Company must expand its
sources of revenue into areas that are less interest rate sensitive to reduce
the impact of interest rate fluctuations that may be unfavorable to the mortgage
industry, and thus unfavorable to the Company's business.

     Outside legal expenses for the period ending December 31, 2000 were
$179,532 compared to $89,352 for the period ending December 31,1999. The
increase is largely attributable the Company's bankruptcy proceedings.



                                       13
<PAGE>

     The Company's loss from operations for the year ending December 31, 2000
was $4,724,232. This loss represents a decrease of $2,520,402 from the loss from
operations of $2,203,830 for the prior year ending December 31, 1999 for the
reasons stated above. Net loss was $4,426,445 for the period ending December 31,
2000, compared to $2,104,246 for the same period in 1999. The difference of
$2,322,199 was largely due to several factors that occurred in 1999 that did not
recur in 2000: the charge of $473,771 associated with the discontinued Trimax
and Mutitask operations, charges of $191, 269 related to the acquisitions of the
several bureaus within QuickCREDIT Corp., restructuring charges of 174,000, and
a 1998 tax provision of $226,000. During 2000, preferred dividends of $435,897
were recorded. Net Loss to Common Stockholders was $4,862,342 compared to
$2,368,930 for the same period in 1999.

Engineered Business Systems, Inc.

     Sales for EBS accounted for $1,858,356 or 46% of the Company's total
revenue for the year ended December 31, 2000 compared to $5,170,197 or 80% of
the Company's total revenue for the year ended December 31, 1999. The revenue
decrease was a result of higher interest rates that have caused a reduction in
the volume of new home sales and residential mortgage re-financings, a reduction
of software sales brought on by the reluctance of clients to install new
software applications prior to Year 2000, the continued decline of the revenue
generated from the CRIS product line due to the consolidation of the CRIS client
base and the loss of revenue due to the disposition of the Outsourcing Services
Division.

Quick CREDIT Corp.

     Total QCC revenues for the twelve months ended December 31, 2000 were
$1,575,271 compared to $1,316,337 for the period December 31, 1999. Cost of
sales during the period ending December 31, 2000 was $1,081,750 compared to cost
of sales of $993,178 that was recorded during the same period in 1999. Gross
profit as a percentage of revenues was 31% for the period ending December 31,
2000 compared to 25% for the period ending December 31, 1999. In February 2000,
the Company closed its Jacksonville, FL location and consolidated the operation
in Fort Lauderdale, FL. The Company expects to save in excess of $200,000 per
year by operating this business unit from Fort Lauderdale.

Liquidity and Capital Resources

     The Company has funded its working capital and capital expenditures
requirements with cash provided from operations, the private sale of the
Company's stock, and debt and other equity financing. In 2000, the primary
source of cash receipts was from payments for software and services. Management
believes that cash flows from the issuance of equity and debt financing will be
required to fund day-to-day operational expenditures, planned expansion and
research and development in the immediate future. Management also believes that
the cash available to the Company at present is sufficient to satisfy all of its
working capital needs through fiscal 2001, although no assurances can be given.



                                       14
<PAGE>

     Between September 1 and December 31, 2000, the Company raised additional
financing as part of total financing in the form of loans to the Company in the
amount of $700,000 as of May 1, 2001 as described more fully in `Recent
Developments" below.

     At December 31, 2000 the Company had a working capital deficit of
$4,537,106 as compared to working capital deficit of $3,289,092 at December
31,1999. The increase of $1,248,014 in the working capital deficit is
essentially because of an increase in current payables and obligations of almost
$750,000 and a decrease in cash and receivables of approximately $500,000.

     Year 2000 issues did not affect the Company's business, results of
operations or financial condition.

Recent Developments

     Management arranged for the completion of its "Debtor In Possession"
financing in the form of a convertible "line of credit". The total amount raised
was $700,000 as of May 1, 2001. The funds were used for operations related to
the Company and its subsidiaries while in Chapter 11 Bankruptcy. Much of this
funding was used to settle negotiated amounts with key vendors of the Company.
Without these key vendors, the Company could not operate. These essential
vendors include the credit repositories, equipment vendors, and
telecommunication providers. The funds were also used to settle outstanding
obligations with secured creditors of the Company. During this reorganization
period, the Company, in accordance with Bankruptcy law, rejected numerous
contracts. These contract rejections resulted in substantial initial savings to
the Company and has reduced the financial burden of the Company significantly.
Management submitted, on behalf of the "Debtor In Possession" lenders, a "Joint
Plan of Reorganization", subsequently amended, that was accepted by the United
States Bankruptcy Court and confirmed by the Court on May 1, 2001.

     Highlights of the "Plan" included: (1) the cancellation of all of the
existing Capital Stock of the Company, including all Common and Preferred Stock,
Options and Warrants; (2) the issuance of new Common Stock to (a) unsecured
creditors of the Company (2%), (b) employees of the Company (2%), (c) DIP
investors, upon conversion of the "line of credit" and (d) to "service provider
professionals" during the Chapter 11 Bankruptcy proceedings. Upon confirmation
of the Joint Plan of Reorganization, the DIP investors converted their entire
"line of credit" into 36,000,000 New Common Shares of the Company. Additionally,
all of the unsecured creditors will be paid in installments an amount equal to
5% of their unsecured filed claims.

     See also Item 1. BUSINESS - Reorganization and Item 3. LEGAL PROCEEDINGS.

     Following the confirmation of the Joint Plan of Reorganization, the Company
raised $685,000 by selling 9,133,333 shares of its common stock pursuant to a
private placement under Regulation D of the Securities Act. Net funds will be
used for general working capital and should be sufficient to meet the working
capital needs through the fourth quarter of 2001.



                                       15
<PAGE>

     Management believes that the Company is positioned well towards meeting its
business objectives as it embarks on a post bankruptcy stratagem. Most
importantly, the Company was successful in emerging out of bankruptcy on terms
significantly favorable to the Company. The Company has succeeded in forming a
credible management team that has gained the confidence of outside investors who
have contributed the necessary funding to sustain the Company during the
uncertainty of the bankruptcy proceedings and beyond, as well as provide an
attractive organizational strategy for success. Further, the Company is
extremely encouraged by a dynamic marketing and sales group that has gained the
respect and support of Company personnel and has revitalized its recognition in
the industry and anticipates new and profitable contracts to be consummated in
the near future. The Company has taken every precaution in assuring that
expenses are kept at a minimum, and as indicated earlier, salaries have been
kept at a modest level and expenses have been reduced. The Company is encouraged
by the research and development of the two previous years by the prior
administration, such effort being the foundation for additional R&D to improve
and upgrade its proprietary software in the marketplace. Finally, the Company
has moved to a new site that has, at the very least, provided a boost in morale
among the employees. The Company believes that all the above factors have
collectively contributed to a positive outlook for the Company and better
opportunities for it to meet its business goals.

Item 7.    FINANCIAL STATEMENTS

     The financial statements required by Item 7. are included in this report
beginning on page F-1.

Item 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

     On May 1, 2001, the Company dismissed its independent auditors, Radin,
Glass & Co., LLC and on the same date engaged the firm of Sweeney, Gate & Co as
its independent auditors for the fiscal year ending December 31, 2000. The Board
of Directors of the Company unanimously approved each of these actions.

     The report of Radin, Glass & Co, LLC on the financial statements of the
Company for the fiscal year ended December 31, 1999 did not contain any adverse
opinion or a disclaimer of opinion, nor was it qualified or modified as to audit
scope or accounting principals. The report was modified to include a paragraph
as to uncertainty relating to the Company's ability to continue as a going
concern. In connection with the audit of the fiscal year ended December 31, 1999
and the un-audited interim period through September 30, 2000, there were no
disagreements with Radin, Glass & Co, LLC on any matter of accounting principal
or practice, financial statement disclosure, or audit procedure or scope which
disagreement, if not resolved to the satisfaction of Radin, Glass & Co, LLC,
would have caused it to make reference to the subject matter of the disagreement
in its report.



                                       16
<PAGE>

     In connection with the audit of the fiscal year ended December 31, 1999 and
the un-audited interim period through September 30, 2000, Radin, Glass & Co, LLC
did not advise the Company (i) that the internal controls necessary for the
Company to develop reliable financial statements did not exist; (ii) that
information had come to its attention that led it to no longer be able to rely
on management's representations, or that made it unwilling to be associated with
the financial statements prepared by management; (iii) that there existed a need
to expand significantly the scope of its audit, or that information had come to
Radin, Glass & Co, LLC's attention during the fiscal periods, that if further
investigated may (a) materially impact the fairness or reliability of a
previously issued audit report or the underlying financial statements, or (b)
cause Radin, Glass Co, LLC to be unwilling to rely on management's
representations or be associated with the Company's financial statements, and
due to Radin, Glass & Co, LLC dismissal did not expand the scope of its audit or
conduct such further investigation; or (iv) that information had come to Radin,
Glass & Co, LLC attention that it concluded materially impacts the fairness or
reliability of a previously issued audit report or the underlying financial
statements, and due to Radin, Glass & Co, LLC's dismissal, the issue has not
been resolved to Radin, Glass & Co, LLC's satisfaction prior to its dismissal.

     In addition to the foregoing, during the fiscal years ended December 31,
1999 and 1998, and for the un-audited interim period through September 30, 2000,
neither the Company nor any of its representatives sought the advice of Sweeney,
Gates & Co. regarding the application of accounting principals to a specific or
contemplated transaction or the type of audit opinion that might be rendered on
the Company's financial statements, which advice was an important factor
considered by the Company in reaching a decision as to the accounting, auditing
or financial reporting issue.

     Radin, Glass & Co, LLC has furnished the Company with a letter addressed to
the Securities and Exchange Commission stating that it agrees with the above
statements.

PART III

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

     The following table sets forth certain information concerning the Company's
directors and executive officers during the 2000 fiscal year. On September 1,
2000, the Company filed a voluntary petition for relief under Chapter 11 of the
US Bankruptcy Code. All directors and officers who actively engaged in the
operations of the Company resigned at various times during the fiscal year prior
to and following the date of the official filing. On December 31, 2000, the
directors and officers of the Company consisted of the following:


                                       17
<PAGE>

Name                         Age     Position(s) with the Company
----                         ---     ----------------------------
Vito Bellezza (1)            63      Chairman of the Board, Chief Executive
                                     Officer and President

Charles M. Moche (2)         52      Secretary, Director and Chief Financial
                                     Officer

Thomas Secreto (3)           47      Director and Chief Information Officer

--------------------------------------------------------------------------------
1.   Mr. Bellezza was appointed Chairman of the Company on November 24, 2000.
     The resignation of all prior directors and officers immediately followed.

2.   Mr. Moche was appointed as a Director on January 19, 2001 and elected as an
     officer on April 24, 2001.

3.   Mr. Secreto was elected as an officer on November 24, 2001 and appointed as
     a Director on April 24, 2001.
--------------------------------------------------------------------------------

     Officers and directors are elected on an annual basis. The present term for
each director will expire at the next annual meeting of shareholders or at such
time as a successor is duly elected. Officers serve at the discretion of the
Board of Directors.

     Directors are not paid any fees for membership on the Board of Directors,
but are reimbursed for out-of-pocket expenses incurred in connection with
attending meetings. Presently, there are no family relationships between any of
the officers or directors.

     The following is a biographical summary of the business experience of the
directors and executive officers of the Company:

Vito Bellezza

     Vito Bellezza has served as a director and the CEO of the Company and its
subsidiaries since November 2000, as well as for at least four years preceding
April 1999. During the period from April 1999 through October 2000, Mr. Bellezza
served as Chairman of the Investment Managers National Conference and Exposition
and as a consultant. Mr. Bellezza previously served on the board of two NASDAQ
companies.

Charles M. Moche

     Charles M. Moche was with the auditing department at Coopers & Lybrand and
with the tax department at Price Waterhouse when he began his career in the
accounting profession. He was the Chief Financial Officer of a public company
from January 1994 through May 1996. He has practiced accounting in New Jersey
with a concentration on tax planning and consulting since June 1996. Mr. Moche
holds an Advanced Professional Certificate in Taxation from New York University
Graduate School of Business, an MBA in Accountancy from Bernard M. Baruch
Graduate School of Business and a BA in Economics from Yeshiva University. He is
a member of the American Institute of Certified Public Accountants, the New York
State Society of CPA's and the Board of Accountancy of the State of New Jersey
Consumer Affairs Division.


                                       18
<PAGE>

Thomas Secreto

     Thomas Secreto has 30 years of experience in the technology industry. For
at least five years prior to November 2000 when he joined the Company, Mr.
Secreto served as a consultant in the technology industry. From November 1992
until October 1998, Mr. Secreto served as President of TriMax Systems Corp., a
systems integration and software consulting company. From May 1985 to November
1992, Mr. Secreto served as Chairman and CEO of the Triangle Group, a publicly
traded technology company. From 1981 through 1985, he served as Information
Technology Director for the United States subsidiary of TDK Electronics
Corporation.

Item 10.   EXECUTIVE COMPENSATION

Summary Compensation Table

     The following table shows all the cash compensation paid or to be paid by
the Company to the Chief Executive Officer, and all officers who received in
excess of $100,000 in annual salary and bonus, for the fiscal years ended
December 31, 2000, 1999 and 1998:


<TABLE>
<CAPTION>
                                                                                                  Long Term Compensation
                                                                                         -----------------------------------------
                                                        Annual Compensation               Awards                     Payouts
                                            --------------------------------------------------------------------------------------
         (a)             (b)       (c)         (d)              (e)             (f)         (g)        (h)             (i)
                                                                             Restricted                LTIP         All Other
       Name and                                            Other Annual        Stock     Options/    Payouts      Compensation
  Principal Position     Year   Salary($)    Bonus($)    Compensation ($)      Awards     SARs(#)      ($)             ($)
----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>     <C>         <C>               <C>              <C>       <C>          <C>             <C>
Vito A. Bellezza, (1)    2000    $ 85,977       -0-              -0-            -0-         -0-        -0-             -0-
   CEO and President
                         1999    $156,000      $-0-            $ -0-            -0-         -0-        -0-             -0-
           (2)(3)        1998    $154,500    $30,000          $28,040           -0-       500,000      -0-             -0-


  Harold S. Fischer,     2000    $ 97,500       -0-            $-0-             -0-         -0-        -0-             -0-
  CEO and President
       Resigned          1999    $156,000      $-0-            $-0-             -0-       700,000      -0-             -0-

           (4)           1998    $154,500    $30,000          $9,600            -0-       500,000      -0-             -0-

  John M. Campbell,      2000    $ 66,750       -0-            $-0-             -0-         -0-        -0-             -0-
    Vice President
       Resigned          1999    $108,188      -0-             $-0-             -0-       100,000      -0-             -0-

   William C. Grose      2000    $ 83,500      -0-             $-0-             -0-         -0-        -0-             -0-
    Vice President
       Resigned          1999    $116,709      -0-             $-0-             -0-       182,250      -0-             -0-
</TABLE>

1.   Mr. Bellezza's employment with the Company terminated in March 1999 and
     resumed in November, 2000



                                       19
<PAGE>

2.   Housing and automobile allowance paid by the Company on Mr. Bellezza's
     behalf in 1998.

3.   Such options were cancelled in March 1999.

4.   Automobile expenses and other perquisites paid by the Company in 1998.

     The following table sets forth certain information with respect to options
granted during the last fiscal year to the Company's Executive Officers named in
the above Summary Compensation Table.

<TABLE>
<CAPTION>
                                         OPTION/SAR GRANTS IN LAST FISCAL YEAR
          (a)                      (b)                     (c)                     (d)                     (e)

                                                    % of Total Options
                           Number of Securities        Options/SARs
                                                         Granted
                            Underlying Option/       to Employees in         Exercise or Base           Expiration
          Name               SARs Granted (#)          Fiscal Year           Price (# Share)               Date
------------------------- ----------------------- ----------------------- ----------------------- --------------------
<S>                                 <C>                                             <C>                     <C>
     Vito Bellezza                                                                  0
     Charles Moche                  0                                               0                       --
     Thomas Secreto                 0                                               0                       --

----------------------------------------------------------------------------------------------------------------------
</TABLE>

     The following table sets forth certain information with respect to options
exercised during the fiscal year ended December 31, 2000, by the Company's
Executive Officers named in the Summary Compensation Table, and with respect to
unexercised options held by such person at the end of the fiscal year ended
December 31, 2000.

<TABLE>
<CAPTION>
                Aggregate Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End Option/SAR Values
          (a)                     (b)               (c)                  (d)                           (e)
                                                               ------------------------- --------------------------------
                                                                      Number of                     Value of
                                                                Securities Underlying              Unexercised
                                                                 Unexercised Options/             In-the-Money
                                                                  SARs at FY-End (#)             Options/SARs at
                            Shares Acquired        Value             Exercisable/              FY-End Exercisable/
                            on Exercise (#)     Realized ($)        Unexercisable               Unexercisable(1)
                          -------------------- --------------- ------------------------- --------------------------------
          Name
------------------------- -------------------- --------------- ------------------------- --------------------------------
<S>                                <C>               <C>                  <C>                           <C>
     Vito Bellezza                 0                 0                    0                             0
     Charles Moche                 0                 0                    0                             0
     Thomas Secreto                0                 0                    0                             0
</TABLE>

All options were cancelled as of May 1, 2001, with the Bankruptcy Confirmation

                                       20
<PAGE>


Employment Agreements

     Neither the Company nor its subsidiaries has employment agreements with any
of its officers or employees and each serves at the will of the Company.

Description of the Option Plans

     As of August 15, 2001, the Company has maintained the Incentive Plan that
was approved by the Company's shareholders at the 1999 annual meeting of
shareholders held on May 27, 1999. All options issued and outstanding prior to
the bankruptcy have been cancelled with the Bankruptcy proceeding. The Incentive
Plan was adopted for the purpose of attracting and retaining persons of ability
as directors, employees or consultants or advisors of the Company and its
subsidiaries, motivating and rewarding good performance, encouraging such
employees to continue to exert their best efforts on behalf of the Company and
its subsidiaries and providing opportunities for stock ownership by such
employees in order to increase their proprietary interest in the Company by
providing incentive awards to key employees, whose responsibilities and
decisions directly affect the performance of the Company and its subsidiaries.

     The Company expects to maintain a commensurate number of shares of Common
Stock with respect to which awards may be granted pursuant to the Incentive
Plan, which could be as high as, but not limited to, 4,000,000 shares. Shares
that may be issued under the Incentive Plan may be either treasury shares or
authorized but un-issued shares. The number of shares available for issuance
will be subject to adjustment to prevent dilution in the event of stock splits,
stock dividends or other changes in the capitalization of the Company. The
awards available to be granted under the Incentive Plan are incentive stock
options, non-qualified stock options, stock appreciation rights, restricted
stock, deferred stock, performance units, loans and supplemental cash payments.

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information, as of August 15, 2001
with respect to the beneficial ownership of the outstanding Common Stock by (i)
any holder of more than five (5%) percent; (ii) each of the Company's officers
and directors; and (iii) the directors and officers of the Company as a group:

                                       21
<PAGE>


        Name and Address of      Shares of Common Stock
        Beneficial Owner         Beneficially Owned           Percent of Class
        -------------------       ------------------           ----------------
    Vito A. Bellezza                    35,362,205 (1)             70.9%

      Charles Moche                             --                  0.076%

     Thomas Secreto                      1,524,000 (2)              3.0%

All Officers and Directors              36,924,339                 73.9%
  As a Group (3 persons)

     Total number of shares outstanding at August 15, 2001 was 49,893,625

(1)  Includes shares owned directly by Vito Bellezza (11,489,476), his wife
     Judith Klotz (2,007,229), other family members (3,367,500). Also includes
     shares owned by a corporation (1,000,000) and other persons, trusts or
     entities (17,498,000) over which Mr. Bellezza has voting control.

(2)  Includes shares directly owned by Thomas Secreto (724,000), his wife Marie
     Secreto (700,000) and his daughters (100,000).

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During 1999, certain minority stockholders loaned the Company $50,000 and
$100,000, due on demand, bearing interest at eight percent (8%) and twelve
percent (12%) per annum respectively. In addition, during 2000, the Company
borrowed $200,000 in the form of bridge loans from its former president and his
children. Promissory notes were issued bearing interest at ten percent (10%) per
annum. In both instances, the claims were settled in the bankruptcy proceedings
in cash payments at five percent 5% of the total, two percent (2%) was paid at
distribution date and the balance in seven monthly payments and pro-rata stock
payments of free trading shares of the new equity in accordance with the Joint
Plan of Reorganization.

     In 1999, in connection with an acquisition, the Company agreed to
repurchase 50,000 shares of the Company's common stock for $51,000 plus $100,000
evidenced by an unsecured promissory note bearing eight percent (8%) interest.
The Company was in default of the terms of the note. The claims were settled for
five percent (5%) of the total, two percent (2%) was paid at distribution date
and the balance in seven monthly payments. The claimant will also receive its
pro-rata stock payment of free trading shares of the new equity.

     Amounts due to Vito Bellezza, the current president of the Company, in the
amount of $307,700 pursuant to a settlement agreement dated in April 1999, was
settled pursuant to the Joint Plan of Reorganization at five percent (5%) of the
total, two percent (2%) was paid at distribution date and the balance in seven
monthly installments. Mr. Bellezza will also receive a pro-rata stock payment of
free trading shares of the new equity.

     In 2000, the Company raised funds in the form of DIP financing through a
company in which Vito Bellezza, the current president of the Company, has a
beneficial ownership interest. In 2000, the Company raised $78,500, and the
balance of the funds of $621,500 for a total of $700,000, was raised by May 1,
2001, the Bankruptcy Confirmation Date. The DIP financing was raised initially
as a loan to the Company at a prevailing rate of interest as determined by

                                       22
<PAGE>

guidelines suggested by the U.S. Bankruptcy Court. The principal amount of the
loan and accrued interest was converted into shares of the new equity on May 15,
2001, the Effective Date of the Joint Plan of Reorganization.

     The Company employs Dennis Bellezza as Director of Sales and Marketing for
QCC pursuant to which Mr. Bellezza is expected to earn more than $60,000 per
year. Dennis Bellezza is the son of Vito Bellezza.


ITEM 13.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit
Number     Description of Exhibit

3.1*       Certificate of Incorporation

3.2*       Bylaws

10.2*      Certificate of Ownership and Merger between @ebs, inc. and Electronic
           Business Services, Inc.

10.3*      Articles of Merger between @ebs, inc. and Electronic Business
           Services, Inc.

10.4**     Joint Product Sales and Marketing Agreement dated December 23, 1999
           between QuickCREDIT Corp. and BrandDirect Marketing, Inc.

16.1a***   Letter regarding change in certifying accountants dated February 21,
           2000

16.1b***   Letter regarding change in certifying accountants dated June 5, 2001

21.0       Subsidiaries of the Issuer Engineered Business Systems a Delaware
           Corporation and QuickCredit Corp, a Delaware corporation.

23.1       Consent of Radin Glass and Co

* Incorporated by reference to the current Report on Form 8-K filed with the
Commission on October 25, 1999.

**Incorporated by reference to the Current Report on form 8-K filed with the
Commission on December 23, 1999.

***Incorporated by reference to the Current Report on form 8-K filed with the
Commission on February 22, 2000.

(b) Reports on Form 8-K

None



                                       23
<PAGE>

                                   Signatures


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

Dated:   Fort Lauderdale, Florida
August 15, 2001



                                    ELECTRONIC BUSINESS SERVICES, INC.

                                    By:
                                       -----------------------------------------
                                         Vito Bellezza
                                         President and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.



Signature                              Title                         Date
---------                              -----                         ----



                              Chief Executive Officer,           August 15, 2001
----------------------        President and Director
Vito Bellezza



                              Chief Financial Officer and        August 15, 2001
----------------------        Director
Charles M. Moche              (Chief Accounting Officer)



                              Director                           August 15, 2001
----------------------
Tom Secreto


                                       24
<PAGE>


               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                        CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2000
                                       AND
                              REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS
















<PAGE>


               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                        CONSOLIDATED FINANCIAL STATEMENTS



                                TABLE OF CONTENTS



                                                                            Page

Report of Independent Certified Public Accountants                          F-1

Independent Auditors' Report                                                F-2

Consolidated Balance Sheet                                                  F-3

Consolidated Statements of Operations                                       F-4

Consolidated Statement of Changes in Stockholders' Deficit                  F-5

Consolidated Statements of Cash Flows                                       F-6

Notes to Consolidated Financial Statements                                  F-8


<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors
Electronic Business Services, Inc.
(Debtor-in-Possession)

We have audited the consolidated balance sheet of Electronic Business Services,
Inc. and subsidiaries, as of December 31, 2000, and the related consolidated
statements of operations, consolidated changes in stockholders' deficit, and
consolidated cash flows for the year ended December 31, 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position Electronic
Business Services, Inc. and subsidiaries as of December 31, 2000, and the
consolidated results of its operations and cash flows for the years ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has suffered losses from
operations and has a net capital deficiency that raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 3. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.





                                                     Sweeney, Gates & Co.






May 30, 2001
Fort Lauderdale, Florida


                                      F-1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

















                                                     Radin, Glass & Co., LLP


                                      F-2
<PAGE>


         ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                       (DEBTOR-IN-POSSESSION)
                     CONSOLIDATED BALANCE SHEET
                         DECEMBER 31, 2000

 ASSETS
 Current assets:
      Cash and cash equivalents                                    $     12,310
      Accounts receivable, net of allowance for doubtful accounts
         of $132,000                                                    122,905
      Other current assets                                                5,577
                                                                   ------------

            Total current assets                                        140,792
                                                                   ------------

      Property, plant and equipment, net                                 18,484
                                                                   ------------

                 Total assets                                      $    159,276
                                                                   ============

 LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities not subject to compromise:
      Current liabilities
         Accounts payable                                          $    225,340
         Loan from related party                                         78,500
         Deferred revenue                                               185,624
                                                                   ------------

            Total current liabilities                                   489,464

 Liabilities subject to compromise:
         Accounts payable                                             2,136,368
         Notes payable                                                2,514,506
         Accrued wages                                                   27,024
                                                                   ------------

            Total liabilities                                         4,677,898
                                                                   ------------

 Preferred stock, Class E; par value $1,000, 12.5% cumulative
      2,200 shares issued, redemption value $2,200,000                1,730,381
                                                                   ------------

 Stockholders' deficit:
       Common stock, par value $.001; 50,000,000 shares
           authorized; 15,472,965 issued                                 15,473
      Paid-in capital                                                 6,728,502
      Common stock subject to put                                    (1,230,000)
      Accumulated deficit                                           (12,252,442)
                                                                   ------------

            Total stockholders' deficit                              (6,738,467)
                                                                   ------------

                 Total liabilities and stockholders' deficit       $    159,276
                                                                   ============

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


                                      F-3
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                  2000            1999
                                                              ------------    ------------
<S>                                                           <C>             <C>
Sales                                                         $  3,422,745    $  6,486,533
Cost of sales                                                    2,210,645       3,131,333
                                                              ------------    ------------

     Gross profit                                                1,212,100       3,355,200
                                                              ------------    ------------

Selling, general and administrative:
     Selling, general and administrative expenses                2,215,232       4,318,111
     Product development                                           364,134         848,208
     Impairment loss                                             3,033,843         118,534
     Depreciation and amortization                                 323,123         274,177
                                                              ------------    ------------

        Total selling, general and administrative                5,936,332       5,559,030
                                                              ------------    ------------

                                                                (4,724,232)     (2,203,830)
                                                              ------------    ------------
Other income and (expense):
     Interest expense                                             (155,396)       (116,762)
     Other income                                                   11,536          34,346
     Gain from lawsuit settlement                                  475,000         182,000
                                                              ------------    ------------

           Total other income and (expense)                        331,140          99,584
                                                              ------------    ------------

                 Loss before reorganization items               (4,393,092)     (2,104,246)
                                                              ------------    ------------

Reorganization items:
     Professional fees                                             (78,243)           --
     Adjustment of prepetition liabilities to claim amounts         44,890            --
                                                              ------------    ------------

        Total reorganization items                                 (33,353)           --
                                                              ------------    ------------

             Net loss                                           (4,426,445)     (2,104,246)

Preferred dividends                                               (435,897)       (264,684)
                                                              ------------    ------------

Net loss available to common stockholders                     $ (4,862,342)   $ (2,368,930)
                                                              ============    ============

  Loss per share (basic and diluted)                          $      (0.34)   $      (0.17)
                                                              ============    ============

          Weighted average shares outstanding                   14,376,974      13,779,912
                                                              ============    ============
</TABLE>

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

                                      F-4
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                              Common
                                               Common stock         Additional   Deferred     stock
                                          -----------------------    paid-in      compen-   subject to    Accumulated
                                           Shares        Amount      capital      sation       put          deficit        Total
                                          ----------   ----------   ----------   --------  -----------   ------------   -----------
<S>                                       <C>          <C>          <C>          <C>       <C>           <C>            <C>
Balance, January 1, 1999                  13,011,978   $   13,012   $5,919,416   $(41,400) $(1,485,000)  $ (5,721,751)  $(1,315,723)

Shares and options issued for services        45,000           45       77,505         --           --             --        77,550
Shares sold                                1,386,813        1,387    1,385,427         --           --             --     1,386,814
Shares issued for options exercises          500,353          500       24,500         --           --             --        25,000
Debt converted to shares                      45,000           45       24,955         --           --             --        25,000
Shares purchased and put to the Company      (85,000)         (85)    (254,915)        --      255,000             --            --
Preferred dividends accreted and/or paid          --           --     (264,684)        --           --             --      (264,684)
Shares and options retired pursuant to                                                                                           --
  legal settlement                          (900,000)        (900)    (629,100)        --           --             --      (630,000)
Warrants issued with preferred stock              --           --      567,000         --           --             --       567,000
Amortization of deferred compensation             --           --           --     13,800           --             --        13,800
 Net loss                                         --           --           --         --           --     (2,104,246)   (2,104,246)
                                          ----------   ----------   ----------   --------  -----------   ------------   -----------

Balance, December 31, 1999                14,004,144       14,004    6,850,104    (27,600)  (1,230,000)    (7,825,997)   (2,219,489)
Charge for warrants issued in connection
   with convertible note refinance                --           --        8,500         --           --             --         8,500
Stock issued for commissions                  45,000           45       22,455         --           --             --        22,500
Stock issued for preferred dividends       1,423,821        1,424      283,340         --           --             --       284,764
Preferred dividends accreted and /or paid         --           --     (435,897)        --           --             --      (435,897)
Amortization of deferred compensation             --           --           --     27,600           --             --        27,600
 Net loss                                         --           --           --         --           --     (4,426,445)   (4,426,445)
                                          ----------   ----------   ----------   --------  -----------   ------------   -----------

Balance, December 31, 2000                15,472,965   $   15,473   $6,728,502   $     --  $(1,230,000)  $(12,252,442)  $(6,738,467)
                                          ==========   ==========   ==========   ========  ===========   ============   ===========
</TABLE>



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


                                      F-5
<PAGE>


               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DEBTOR-IN-POSSESSION)
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                    2000           1999
                                                                 -----------    -----------
<S>                                                              <C>            <C>
Cash flows from operating activities:
   Net loss                                                      $(4,426,445)   $(2,104,246)
    Adjustments to reconcile net loss to net cash used in
      operating activities:
    Depreciation and amortization                                    323,123        274,177
    Impairments                                                    3,033,843             --
    Deferred compensation                                             27,600             --
    Option charge                                                      8,500             --
    Stock based compensation                                          22,500         89,920
    Accounts receivable                                              389,360        294,976
    Other current assets                                               7,600         33,000
    Accounts payable and accrued expenses                            254,766      1,071,787
    Deferred revenues                                               (140,937)        23,141
                                                                 -----------    -----------

             Net cash used by operating activities                  (500,090)      (317,245)
                                                                 -----------    -----------

Cash flows provided by investing activities:
          Other assets                                                96,784        (45,294)
          Development and purchase of software                       (18,163)      (814,874)
          Purchase of property and equipment                          (7,248)      (198,884)
                                                                 -----------    -----------

              Net cash provided (used) by investing activities   $    71,373    $(1,059,052)
                                                                 -----------    -----------
</TABLE>





(Continued)







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



                                      F-6
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DEBTOR-IN-POSSESSION)
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                              2000           1999
                                                          -----------    -----------
<S>                                                       <C>            <C>
Cash flows provided from financing activities:
          Sale of common stock                            $        --    $ 1,386,813
          Proceeds from option exercises                           --         25,000
          Cost of purchasing and retiring stock                    --       (255,000)
          Preferred dividends paid                                 --       (184,615)
          Purchase of common stock per settlement                  --       (630,000)
          Debt converted into shares                               --         25,000
          Proceeds from sale of preferred stock                    --        632,700
          Increase in notes payable to claims amounts         224,197             --
          Funds provided by new financing                     778,447        748,000
          Repayment of debt                                  (679,284)      (483,357)
                                                          -----------    -----------

              Net cash provided by financing activities       323,360      1,264,541
                                                          -----------    -----------

              Net decrease in cash                           (105,357)      (111,756)

Cash, beginning of period                                     117,667        229,423
                                                          -----------    -----------

Cash, end of period                                       $    12,310    $   117,667
                                                          ===========    ===========

Supplemental disclosures of cash flow information:
    Cash paid for interest                                $   155,396    $   134,872
                                                          ===========    ===========

    Income taxes paid during the year                     $        --    $        --
                                                          ===========    ===========

 Non-cash financing and investing activities:
    Accretion of preferred stock discount                 $   163,897    $    80,069
                                                          ===========    ===========
    Issuance of options and warrants for services         $     8,500    $    77,550
                                                          ===========    ===========
    Issuance of warrants for debt discount                $        --    $   567,000
                                                          ===========    ===========
    Debt converted to preferred stock                     $        --    $ 1,500,000
                                                          ===========    ===========
    Debt converted to common stock                        $        --    $    25,000
                                                          ===========    ===========
    Preferred stock dividends paid in common stock        $   284,764    $        --
                                                          ===========    ===========
</TABLE>






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

                                      F-7
<PAGE>


               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   THE COMPANY AND BASIS OF PRESENTATION

Electronic Business Services, Inc. and subsidiaries (the "Company"), was
incorporated under the laws of the State of Delaware in 1999. The Company was
formerly a Florida corporation, incorporated in 1984. A wholly owned Florida
Corporation, QuickCredit Corp. ("QCC"), was formed on February 27, 1998 for the
purpose of providing credit reports. QCC processes credit reports for the retail
residential mortgage industry. A separate subsidiary, Engineered Business
Systems, Inc. ("EBS") designs, develops and sells Windows-based software systems
for both the mortgage quality control and the credit reporting industries.

On September 1, 2000, (the "Filing Date"), EBS filed its voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy
Code"), in the United States Bankruptcy Court for the Southern District of
Florida (the "Bankruptcy Court"). Since the Filing Date, the Company has
continued to operate its business and manage its affairs as a debtor in
possession. QCC filed its own Chapter 11 petition on September 1, 2000. EBS
filed its voluntary petition under Chapter 11 on January 19, 2001. The United
States Bankruptcy Court confirmed the joint Plan of Reorganization on May 1,
2001 (the "Confirmation Date").

Plan funding and implementation

A related party company provided the Company an unsecured revolving credit line
in the amount of $450,000 for the immediate and necessary use for business
expenses, including payroll, administrative rent and recurring payables. This
funding was part of a total cash infusion of $700,000 (see Note 4). Included in
the terms of the agreement was a clause stipulating that, in the event of
default, the amount owed would be considered priority debt. As partial
consideration for the issuance of the new equity, the related party company
would waive repayment of its administrative expense claim for repayment of its
loan which would otherwise mature and be payable on the Confirmation Date.
Furthermore, the related party company would make additional cash contributions
upon the Confirmation Date for payment of allowed administrative expense claims,
allowed priority non-tax claims and payment of dividends on account of allowed
unsecured claims.

Treatment of claims and interests

The administrative expense claims and priority non-tax claims shall be fully
funded on the effective date by the related party company or as otherwise agreed
by the respective claimants.

The reorganized debtors shall restructure, reinstate and satisfy the allowed
secured claims, as determined by the Court in such amounts as may be outstanding
on the Confirmation Date.



                                      F-8
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                              DEBTOR-IN-POSSESSION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.   THE COMPANY AND BASIS OF PRESENTATION (continued)

Allowed unsecured claims that (i) are owed less that $500; or (ii) are owed
greater that $500 and choose to reduce their claim to $500 shall be paid thirty
percent (30%) of their allowed claim in three equal payments. The first payment
shall be made on the distribution date, May 15, 2001. The second and final
payments shall be made on the 60th and 180th day, respectively.

Allowed unsecured claimants over $1,000 shall receive a cash payment of five
percent (5%) of each respective allowed unsecured claim which shall be paid in
eight installments, with an initial payment of two percent (2%) of each
respective allowed unsecured claim on the distribution date and the balance in
equal monthly installments over the ensuing seven month period.

Further, the holders of allowed unsecured claims will receive a pro-rata stock
payment of free trading shares of the new equity from the creditor stock pool.
The creditor stock pool shall hold two percent (2%) of the new equity that will
be used for pro-rata distribution of the stock payment.

The existing shares of common and preferred stock issued by the Company prior to
the Filing Date shall be cancelled and the stockholders shall neither retain nor
receive any property or payment on account of their equity interest.

The related party company shall receive the balance of the newly issued common
stock of the reorganized Debtor in consideration for (i) the repayment waiver of
the related party company loan; and (ii) the infusion of an additional cash
contribution on the effective date for treatment of claims as provided in the
Plan.

The financial statements reflect the amounts of the claims subject to compromise
at the full value of the claims submitted to the Bankruptcy Court.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.

Cash and cash equivalents - The Company considers all unrestricted deposits and
highly liquid investments, readily convertible to known amounts, with an
original maturity of three months or less, to be cash equivalents.








                                      F-9
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and equipment - Property and equipment are stated at cost. Major
renewals and improvements are capitalized, while maintenance and repairs are
expensed when incurred. The cost and accumulated depreciation for equipment
sold, retired, or otherwise disposed of are relieved from the accounts, and
resulting gains or losses are reflected in income. Depreciation is provided over
the estimated useful lives of the respective assets using the straight-line
method. During the year ended December 31, 2000, the Company recognized an
impairment expense (see Note 6) and Subsequent Events (Note 16).

Software development costs - The Company capitalized internally developed
software costs included in Software, which totaled $437,695 and $740,000 for the
years ended December 31, 2000 and 1999, respectively. The capitalization of
these costs is in accordance with SFAS No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed" and SOP 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." Amortization is computed on an individual product basis ranging
from 36 to 60 months. During the year ended December 31, 2000, the Company
recognized an impairment expense for capitalized software (see Note 6).

Goodwill - Goodwill resulting from acquisitions represents the excess of the
purchase price plus the acquisition costs over the fair value of the net assets
of the acquired companies. Goodwill is amortized on a straight line basis over a
period of 20 years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through projected undiscounted future cash flows
of the acquired companies. During the year ended December 31, 2000, the Company
recognized an impairment expense (see Note 6).

Impairment of long-lived assets - The Company evaluates the recoverability of
its property and equipment, and other assets in accordance with Statement of
Financial Accounting Standards Board ("FASB") No.121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of" which requires recognition of
impairment of long-lived assets in the event the net book value of such assets
exceeds the estimated future undiscounted cash flows attributable to such assets
or the business to which such intangible assets relate.

Revenue recognition - Revenue is recognized when the product is shipped, title
and risk transfers to the customer and collection of the resulting receivable is
reasonably assured. Revenue from software sales is generally recognized upon
execution of a sales contract, the delivery of the software and completion of
the major portion of the contract requirement. Revenue from maintenance
contracts is amortized over the term of the agreements.

Advertising costs - Advertising costs are charged to operations as incurred.
There was no advertising expense for the years ended December 31, 2000 and 1999.

Product development expenses - Product development expenses are charged to
expense as incurred. These costs primarily consist of fees paid for the
development of the Company's software. Product development costs for the year
ended December 31, 2000 and 1999 were $364,134 and $848,208, respectively.



                                      F-10
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes - The Company accounts for income taxes on an asset and liability
approach to financial accounting. Deferred income tax assets and liabilities are
computed for the difference between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible amounts in the
future, based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. A valuation allowance is
recognized if, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred asset will not be recognized.
Income tax expense is the tax payable or refundable for the period, plus or
minus the change during the period in deferred tax assets and liabilities.

Income (loss) per share - The Company accounts for earnings per share according
to Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128")
which requires presentation of basic and diluted earnings or loss per share.
Since the Company experienced losses, no diluted earnings per share are
presented. Earnings or loss per share is computed by dividing net income or loss
by the weighted average number of shares outstanding during the period.

Use of estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amount of
revenue and expenses during the reporting period. Actual results could differ
from those estimated.

Fair value of financial instruments - The carrying amounts reported in the
balance sheet for cash and accounts receivables approximate fair value based on
the short-term maturity of these instruments. Debt and accounts payable subject
to compromise are recorded at the actual amounts of the claims submitted to the
Bankruptcy Court. Once the plan has been accepted by the Bankruptcy Court, these
amounts will be adjusted accordingly.

Stock based compensation - The Company accounts for stock option transactions in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees"
and adopted the disclosure-only option under SFAS No. 123, as of December 31,
1995.

Concentration of credit risks - Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of trade
accounts receivable. Concentrations of credit risk with respect to trade
receivables include concentrations of trade accounts from software product
users.





                                      F-11
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Recent accounting pronouncements - In June 1999, FASB issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. SFAS 133, as amended by SFAS 137, is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000, with earlier application encouraged. The Company does not currently use
derivative instruments and, therefore, does not expect that the adoption of SFAS
133 will have any impact on its financial position or results of operations.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements and requires adoption during the year ended December 31,
2001. The Company is currently evaluating the impact of SAB 101 to determine
what effect, if any, it may have on the Company's consolidated financial
position and results of operations.

Reclassifications - The Company has reclassified certain expenses in the prior
year financial statements to conform to the current year presentation.

3.   UNCERTAINTY - GOING CONCERN

The Company's continued existence is dependent upon its ability to implement its
Bankruptcy reorganization plan and resolve its liquidity problems, principally
by obtaining equity, increasing sales and achieving profitable operations. While
undertaking the above, the Company must continue to operate on cash flow
generated from operations and, if necessary, financings. The Company experienced
a loss of $4,426,445 and $2,104,246 during 2000 and 1999, respectively, and has
a net deficiency in equity of $6,738,467 and a net working capital deficiency of
$4,537,106 as of December 31, 2000. These factors raise substantial doubt about
the Company's ability to continue as a going concern.

Management's plans in regards to this matter are to implement the reorganization
plan, execute their new business plan, increase marketing efforts and increase
sales in an effort to generate positive cash flow. Additionally, the Company
must raise equity, and must continue to rely on financings and cost reductions
to improve liquidity and sustain operations. A related party company loaned the
Company approximately $700,000 for operating expenses. At confirmation of the
reorganization plan, the loan was converted to equity. In 2001, the Company sold
common stock totaling $685,000 before expenses. See Subsequent Events note 16
for more detail.

The financial statements do not include any adjustment that might result from
the outcome of this uncertainty.







                                      F-12
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.   LOAN FROM RELATED PARTY

A company in which an officer has a beneficial interest loaned the Company
$78,500 as of December 31, 2000. According to the plan of reorganization, this
amount was converted to equity at the effective date of the reorganization.

5.   PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2000:

                                                                 Estimated
                                                                Useful lives
                                                                ------------

Computer hardware                         $  884,140            5 - 7 years
Office furniture                              70,960                7 years
Office equipment                             124,307            5 - 7 years
                                          ----------

                                           1,079,407
   Less:  accumulated depreciation         1,060,923
                                          ----------
                                          $   18,484
                                          ==========

During the years ended December 31, 2000 and 1999, the Company recorded
depreciation expense of $123,679 and $150,708, respectively.

6.   IMPAIRMENT EXPENSE

In December 2000, as a result of continued and increasing operating losses and
the bankruptcy filing, the Company determined that goodwill was impaired.
Therefore, the Company recorded an impairment charge of $1,742,791.

During the year ending December 31, 2000, the Company reviewed its capitalized
software to determine if the net book value exceeded the estimated future
discounted cash flows attributable to these assets. The Company's evaluation
resulted in the determination that the recoverability of the software costs was
uncertain and, therefore, an impairment expense of $977,268 was recognized.

The Company also evaluated the recoverability of its leasehold improvements and
deposits and, because the Company was planning to move its offices, recorded an
impairment charge of $181,692.

Additionally, after evaluation of the expected future cash flows for other fixed
assets, an impairment charge of $132,092 was recorded.




                                      F-13
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7.   DEFERRED REVENUE

At December 31, 2000, deferred revenue of $185,624 represents the unearned
portion of sales related to software maintenance agreements. Deferred revenue is
recognized as income on a straight-line basis over the service contract terms
that are generally for renewable twelve-month periods.

8.   NOTES PAYABLE SUBJECT TO COMPROMISE

The following liabilities are listed at the amount of the claim presented to the
Bankruptcy Court:

Due to commercial factor, secured                                     $   33,000

Loan payable, three years, secured                                       425,000

Line of credit, secured
                                                                          25,101
                                                                      ----------
          Subtotal of secured notes payable                              483,101
                                                                      ----------

Due to stockholder                                                       307,700

QCC puts payable                                                       1,276,750

Notes payable related parties                                            392,057

Related party note
                                                                          54,898
                                                                      ----------
            Total notes payable                                       $2,514,506
                                                                      ==========

A description of the above notes is as follows:

Due to commercial factor, secured

In December 1999, the Company entered into a Purchase and Sale Agreement ("PSA")
with a commercial factor that advanced the Company 75% of QCC's receivables, as
defined. The factor maintained a security interest in the Company's accounts
receivable and advanced monies on a non-recourse basis. Interest rates ranged
from two percent (2%) for invoices outstanding fifteen days to fourteen percent
(14%) for those outstanding over ninety days. Under the PSA, the factor reserved
the right to charge-back purchased accounts pursuant to certain terms of
defaults within the PSA agreement, at the receivable amount net of unearned
interest. The terms of the factoring agreement do not allow the Company to
maintain effective control over the receivables and, therefore, the agreement
was recorded as a sale of the receivables for the amount advanced in accordance
with Statement of Financial Standards Board No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".




                                      F-14
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.   NOTES PAYABLE SUBJECT TO COMPROMISE (continued)

Due to commercial factor, secured (continued)

The total amounts of advances outstanding under the agreement at December 31,
2000 and 1999 were $33,000 and $59,532 respectively. Discounts on the factoring
of receivables which was recorded as interest expense amounted to $43,217 and
$19,409 for the years ended December 31, 2000 and 1999, respectively.

The plan of reorganization calls for the $33,000 to be paid over thirty months
with interest at eight percent (8%) per annum. Subsequently, the Company and the
factor agreed to a settlement of $10,000 to be paid in 18 monthly installments.

Loan payable, three years, secured

On December 2, 1996, in connection with the acquisition of EBS, the Company
entered into a $1,600,000 promissory note with the former stockholders of EBS.
The note carried interest at a rate of eight percent (8%) per annum with the
interest rate determined annually, at a rate per annum equal to the prime rate
less one quarter percent, with a minimum and maximum rate of eight percent (8%)
and nine percent (9%) per annum, respectively. Payments of interest only were
due and payable on the first day of January, February, March and April 1997,
thereafter, principal was payable in equal installments of $25,000 each,
together with interest, commencing in May 1997 through January 2000 when all
outstanding principal and interest were due.

In January 2000, the Company renegotiated the payment of the balance with a new
promissory note of $400,000, bearing interest at twenty-one percent (21%) per
annum, payable $50,000 per month commencing February 1, 2000, including interest
until September 1, 2000, at which date all accrued and unpaid interest was due
and payable and 200,000 warrants to purchase common stock at $40 per share for a
period of 5 years. The warrants, valued at $40,480, were to be amortized over
the nine months as interest expense. The Company was in default of this
agreement at December 31, 2000.

The note is secured by a Stock Pledge Agreement and a Security Agreement. Under
the Stock Pledge Agreement, the Company agreed to pledge all of its stock of EBS
as security for the note. Additionally, under the Security Agreement, the note
is collateralized by all assets of the Company. The Company covenants and agrees
to use not less than twenty-five (25%) percent of the net proceeds from the sale
by the Company of the Company's common stock or other securities in any private
placement or public offering occurring after the date of the note agreement to
pay the indebtedness evidenced by the Note. Pursuant to this agreement, the
Company paid $275,000 during the year ended December 31, 1999.

During the year ended December 31, 2000, the Company paid $85,000 against the
principal leaving a balance at December 31, 2000 of $340,000. The claim
presented to the Bankruptcy Court was in the amount of $425,000 and the Company
adjusted the loan balance accordingly. The plan of reorganization calls for
payment in full of this claim by payments of principal and interest of nine
percent (9%) per annum for three years.



                                      F-15
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.   NOTES PAYABLE SUBJECT TO COMPROMISE (continued)

Line of Credit, secured

In January of 2000, the Company entered into a line of credit transaction with a
venture capitalist, evidenced by a promissory note providing that the Company
request advances under the note up to an aggregate maximum of $500,000. The
Company did not have the right to re-borrow funds that were previously advanced
and repaid under the note. The unpaid principal balance bears interest at the
annual rate of twelve and one-half percent (12.5%). During 2000, the Company
borrowed the full amount of $500,000. Other terms of the note included that the
outstanding balance of the note may be converted into shares of common stock at
any time after April 28, 2000 and prior to the payment of the outstanding
balance of the note. In addition, the venture capitalist and the Company agreed
to cancel the 1,500 share of Series C preferred stock and the 700 shares of
Series D preferred stock and to issue the venture capitalist in exchange 2,200
shares of a new class of preferred stock designated Series E convertible
preferred stock. In August of 2000, the Company settled outstanding litigation
and received $475,000, which amount was paid to the venture capitalist against
the outstanding balance of the note.

The amount of the claim for this item submitted to the Bankruptcy Court was
$25,101 and the Company adjusted the amount accordingly. The plan of
reorganization calls for payment in full of this claim over thirty months with
interest at eight percent (8%) per annum.

Due to stockholder

Amounts due to stockholder, who is now the president, are non-interest bearing
payments in the amount of $13,000 per month until June 2002. These amounts are
due to a settlement agreement dated April 29, 1999, which required the former
officer and two individuals to return 900,000 shares of common stock to the
Company and cancellation of 2,200,000 options to purchase common stock at prices
ranging from $.05 to $1.875. The Company recorded a $182,000 gain on the
settlement of such litigation between the equity received and the amounts
recorded as a payable to the former officer and two individuals.

The plan of reorganization calls for the $307,700 claim to be settled for five
percent (5%) of the total, two percent (2%) to be paid at distribution date and
the balance in seven monthly payments. Additionally, the claimants will receive
their pro-rata stock payment of free trading shares of the new equity (see Note
1).














                                      F-16
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.   NOTES PAYABLE SUBJECT TO COMPROMISE (continued)

QCC Puts Payable

In connection with the 1998 acquisitions of Credit Bureau Services, Inc.
("CBS"), EJG Services, Inc. ("EJG") and Florida Credit Bureau, Inc. ("FCB"),
495,000 shares of common stock were issued subject to the seller's ability to
require the Company to repurchase such shares for a one to three year period for
$1,485,000. The common stock subject to the puts allows the holder of these puts
to require the Company to purchase their common stock during the following
periods of time; (a) 50,000 shares of common stock for $150,000 during the
period of May 1999 to May 2000 relating to the sale of FCB, (b) 245,000 shares
of common stock for $735,000 during the period May 2000 to May 2001 relating to
the sale of CBS and (c) 200,000 shares of common stock for $600,000 during the
period of January 1, 2001 to January 1, 2002 relating to the sale of EJG.

The sellers of FCB exercised their right to put the common stock to the Company.
The Company paid $51,000 for 10,000 shares of the common stock and negotiated a
$100,000 note payable plus interest payable $17,275 in six installments through
February 2001 for 20,000 of the remaining 40,000 shares put to the Company. The
seller of FCB will be entitled to retain up to 20,000 or 30,000 shares of common
stock depending on whether the Company repays the note payable timely. The
Company is in default under the terms of the note payable and has paid only
three of the required installments. The sellers of FCB initiated a lawsuit
against the Company to be paid the remaining amounts due.

The Company paid to the sellers of CBS $105,000 for 35,000 shares of common
stock put to the Company during 1999. At December 31, 1999, the Company was in
default of the terms of the put arrangement with the sellers of CBS.

Subsequent to year-end and in accordance with the confirmation by the Bankruptcy
Court of the Joint Plan of Reorganization, all of the existing common stock of
the Company was cancelled. Therefore, management believes the put option
provisions of the merger agreement between the Company and CBS are not longer in
effect. However, the bankruptcy trustee for CBS is disputing management's
conclusions. The Bankruptcy Court is to resolve this matter in August, 2001.
















                                      F-17
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.   NOTES PAYABLE SUBJECT TO COMPROMISE (continued)

Notes payable related parties

During 1999, stockholders loaned the Company $50,000 and $100,000, due on
demand, bearing interest at eight percent (8%) and twelve percent (12%) per
annum, respectively.

During 2000, the Company borrowed $200,000, in the form of bridge loans from its
former president and his children. Promissory notes were issued bearing interest
at ten percent (10%) per annum. The entire unpaid principal balances, all
accrued and unpaid interest and any other sums due under the note were due and
payable on the earlier to occur of September 14, 2000, or any event that
triggered repayment of default of the terms of the notes. Among the events of
default that triggered repayment was the removal of the president from his
position or as a director of the Company. The loans were in default at December
31, 2000.

The plan of reorganization calls for the $392,057 claims to be settled for five
percent (5%) of the total, two percent (2%) to be paid at distribution date and
the balance in seven monthly payments. Additionally, the claimants will receive
their pro-rata stock payment of free trading shares of the new equity (see Note
1).

Related party note

On July 22, 1999, in connection with an acquisition, the Company agreed to
repurchase 50,000 shares of the Company's common stock for $51,000 evidenced by
an unsecured promissory note bearing eight percent (8%) interest payable in six
equal monthly installments beginning September 1, 1999. At December 31, 2000 the
Company was in default of the terms of the note.

The plan of reorganization calls for the $54,899 claim to be settled for five
percent (5%) of the total, two percent (2%) to be paid at distribution date and
the balance in seven monthly payments. Additionally, the claimant will receive
its pro-rata stock payment of free trading shares of the new equity (see Note
1).










                                      F-18
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8.   NOTES PAYABLE SUBJECT TO COMPROMISE (continued)

Notes payable related parties (continued)

Maturities of secured notes payable at December 31, 2000 were as follows:

                        2001                 $     118,567
                        2002                       191,493
                        2003                       173,041
                                             -------------

                                             $     483,101
                                             =============


9.   PREFERRED STOCK

Series C preferred stock

In October 1998, the Company entered into a financing and investment agreement
(the "Agreement") with an investor ("Investor"). Under the Agreement the
Investor agreed to purchase, for $1,500,000, 1,500 shares of a new class of
preferred stock of the Company to be classified as Series C redeemable preferred
stock "Series C Preferred Stock".

The terms of the Series C Preferred Stock were as follows: (i) total number of
Series C Preferred Stock issuable will be 1,500 with a liquidation value of
$1,000 per share, (ii) such Series C Preferred Stock will be cumulative and bear
dividends at a rate of $125 per share or 12.5% accruing quarterly, (iii) unpaid
dividends will accrue interest at 12.5% compounded annually, (iv) certain
capital transactions of the Company will require consent of at least 66 2/3% of
the Series C Preferred Stockholders and (v) the Series C Preferred Stockholders
have the right to elect one board member at all times.

At any time after the earlier of a change in control (as defined) or the date
which is five years after the issuance of the preferred stock, the Investor has
the right to require the Company to redeem all of the shares of preferred stock
at a redemption price of $ 1,000 per share.

In connection with the Agreement, as amended pursuant to a lawsuit by the
Investor, the Investor and the Company agreed to amend the exercise price of a
warrant to purchase 500,000 shares of the outstanding common stock on the date
of exercise on a fully diluted basis, which was exercised in June 1999. The
exercise price was $.05 per share as amended. These warrants were valued at
$475,000 and have been recorded as a discount to the preferred stock. The total
discount recorded will be accreted over the remaining 51 months of the term of
the put to the Company of the Series C Preferred Stock.








                                      F-19
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


9.   PREFERRED STOCK (continued)

Series D preferred stock

In June 1999, the Company sold 700 shares of Series D Convertible Redeemable
Preferred Stock "Series D Preferred Stock", with a per share $1,000 stated
value, accruing dividends at twelve and one-half percent (12.5%), payable
quarterly for $700,000. In connection with the sale of such Series D Preferred
Stock, the Company issued 80,000 warrants to purchase common stock at $.01, as
amended. These warrants vest over 3 years and were valued at $92,000 and
recorded as a discount to the Series D Preferred Stock to be accreted over a
period of five years. The redemption and general terms of the Series D Preferred
Stock are similar to the Series C Preferred Stock . In addition the Series D
Preferred Stock is convertible at the option of the holder for a period of ten
years into common stock at a rate of one share of Series D Preferred Stock for
870 shares of common stock and could be put to the President personally should
the Company have insufficient funds to repay the Series D Preferred Stock.

In January 2000, the Company obtained a $500,000 line of credit accruing
interest at twelve and one-half percent (12.5%), payable beginning August 1,
2000 and monthly thereafter. Principal is due on demand with the line of credit
expiring on December 31, 2005. The line of credit has cross default provisions
relating to default arising from the Series C and D Preferred Stock. Amounts
outstanding on the line of credit after April 28, 2000 are convertible into
common stock at a rate of $.20 per share for amounts outstanding under the line
of credit. There were 30,000 warrants issued in connection with the line of
credit, exercisable at $.20 per share, for a period of ten years. These warrants
were valued at $8,500 using the Black-Scholes option-pricing model.

Series E preferred stock

Under the terms of the line of credit, if there is a default pursuant to the
terms of the Series C Preferred Stock, Series D Preferred Stock or the line of
credit, the holders are provided the option to convert the stated value of their
Series C and D Preferred Stock holdings and the line of credit to a Series E
Convertible Redeemable Preferred Stock "Series E Preferred Stock" under certain
terms and conditions, which is basically the raising of new equity funds of
$3,500,000 by June 26, 2000. The stated value of the Series E Preferred Stock
and accrued dividends are convertible into common stock at a rate of $.20 per
share of common stock for the total stated value of the Series E Preferred Stock
and accrued dividends. Based on the stated value of the Series C and D Preferred
Stock and the full line of credit outstanding of $2,700,000, the Series E
Preferred Stock is convertible into 13,500,000 shares of common stock of the
Company.

In connection with an agreement to establish a line of credit entered into on
January 27, 2000, a preferred stockholder and the Company agreed to (i) cancel
the 1,500 shares of Series C preferred stock and the 700 shares of Series D
preferred stock of the company owned by the preferred stockholder, constituting
all outstanding shares of each such class, and (ii) to issue to the preferred
stockholder in exchange 2,200 Shares of a Series E convertible redeemable
preferred stock.





                                      F-20
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


9.   PREFERRED STOCK (continued)

Series E preferred stock

The Series E preferred stock issued to the venture capitalist accrued dividends
at the rate of twelve and one-half percent (12.5%) per year payable quarterly.
The Company issued 1,423,821 shares of common stock in 2000 in partial payment
of the dividends.

Preferred stock issued by the Company prior to the Filing Date was cancelled at
the Confirmation Date. The court has approved an unsecured claim of $750,000 and
issuance of 413,816 of newly issued shares of common stock.

10.  COMMON STOCK

In January 1997, the Company issued 500,000 shares of common stock for
consulting services. The stock was valued at $69,000 and was amortized over five
years resulting in an annual non-cash charge to operations of $13,800 each year.
The remaining unamortized portion of deferred compensation as of December 31,
2000 of $13,800 was written off.

During 1999, the Company issued 45,000 shares of common stock for the conversion
of $25,000 of indebtedness.

During 1999, the Company issued 500,000 and 80,000 warrants to purchase common
stock at $.05 and $.01 a share pursuant to the amended agreements for the sale
of Series C and D Preferred Stock, respectively. The 500,000 warrants issued in
connection with the Series C Preferred Stock, as amended, were exercised in June
1999.

Pursuant to a litigation settlement agreement involving a former officer of the
Company and certain other stockholders, the Company reclaimed 900,000 shares of
common stock and cancelled 2,200,000 options to purchase common stock having
exercise prices ranging from $.05 to $1.875 per share.

Pursuant to the put agreements in Note 7 above, the Company repurchased 85,000
shares of common stock for $255,000 during 1999.

In 1999, the Company issued 45,000 shares of common stock to employees for
services.

During 1999 the Company sold 1,386,813 shares of common stock for a total value
of $1,386,813. In addition, the Company issued 500,000 options to purchase
common stock for a period of five years at $1.00 per share, to financial
consultants for their assistance in raising such capital for 1999. These options
were valued at $253,000 and were expensed as a cost of raising capital.






                                      F-21
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


10.  COMMON STOCK (continued)

During 2000, the Company issued 45,000 share of common stock to an employee as
payment for commissions.

During 2000, the Company issued 1,423,821 shares of common stock as payment of
preferred stock dividends.

The common stock issued by the Company prior to the Filing Date was cancelled at
the Confirmation Date.

11.  STOCK OPTIONS

In September 1997, the Company adopted two stock option plans authorizing the
issuance of options covering 900,000 share of the Company's common stock.
Officers and Directors are eligible to participate in the Officers and Directors
Stock Option Plan covering 600,000 share while key employees are eligible to
participate in the Employee Stock Option Plan covering 300,000 shares. During
1998, the Company amended such Plans to increase the number of options issuable
under each plan to be 350,000 for the Employee Stock Options Plan and 2,100,000
for the Officers and Directors Stock Option Plan. Participants receive incentive
stock options pursuant to the Plan. Options granted under the Employee Stock
Option Plan are exercisable for a period of not more than ten years from the
inception of the Plan. Options granted under the Officers and Directors Stock
Option Plan are exercisable for a period of not more than five years from the
inception of the Plan. Selection of participants, allotment of shares,
determination of exercise price and other conditions of the granting of options
will be determined by the Company. Additionally, the Plan provides that no
options may be issued at an exercise price that is less than the fair market
value of the Company's common stock on the date of grant.

The following table summarizes stock option activity for the years ended
December 31, 2000 and 1999:

Plan options
                                             2000                        1999
                                             ----                        ----

                                           Weighted                    Weighted
                                            average                    average
                                           exercise                    exercise
                               Shares       price        Shares         Price
                               ------       -----        ------         -----
Outstanding at the
   beginning of the year      2,562,000   $     .638    2,736,750    $     .751
Granted                              --           --    2,771,000         1.248
Exercised                            --           --         (353)         .875
Canceled                             --           --   (2,738,397)         .751
Expired                              --           --     (207,000)        1.099
                             ----------                ----------

Outstanding at the end of
   the year                   2,562,000   $     .638    2,562,000    $     .638
                             ==========                ==========




                                      F-22
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


11.  STOCK OPTIONS (continued)

Non-plan options

                                            2000                      1999
                                            ----                      ----

                                          Weighted                   Weighted
                                          average                    average
                                         exercise                   exercise
                              Shares       price        Shares        price
                              ------       -----        ------        -----
Outstanding at the
   beginning of the year       807,000   $    1.162      912,000    $     .984
Granted                             --           --      805,000           .99
Exercised                           --           --           --            --
Canceled                            --           --     (850,000)        1.574
Expired                             --           --      (60,000)         .875
                            ----------                ----------
Outstanding at the end of
   the year                    807,000   $    1.162      807,000    $    1.162
                            ==========                ==========

At December 31, 2000 all of the 807,000 Non-plan options and 2,562,000 Plan
options were immediately exercisable.

The Company adopted SFAS No. 123, "Accounting for Stock Based Compensation." In
accordance with SFAS No. 123, the Company expensed $120,514 as compensation for
options granted to consultants during the fiscal year ended December 31, 1999.
As permitted by SFAS No. 123, the Company chose to apply APB Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations for stock
options issued to employees.

On March 10, 1999, the Board of Directors of the Company adopted a 1999
Incentive Stock Plan, ("the 1999 Plan"), whereby 4,000,000 shares of common
stock have been reserved for issuance under the 1999 Plan. Stock options issued
under the 1999 Plan are also expected to have limited stock appreciation rights,
"LSAR ". An LSAR entitles the holder to receive within 60 days following a
change in control an amount equal to the difference between the exercise price
of the stock option and the market value of the common stock on the effective
date of the change in control.









                                      F-23
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


11.  STOCK OPTIONS (continued)

As required by SFAS 123, pro forma disclosures regarding net income and earnings
per share must be computed as if the Company had accounted for its employee
stock options under the fair value method. The fair value for these options was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions used for grants in 1999. No options were granted
during the year ended December 31, 2000.

For the year ended December 31, 1999:

            Risk free interest rate                   7%
            Expected lives                            5
            Expected volatility                      50%
            Expected dividend yield                  --

For the year ended December 31, 2000:

            Risk free interest rate                   6%
            Expected lives                            4
            Expected volatility                      50%
            Expected dividend yield                  --

The Company's pro forma information under SFAS 123 for the years ended December
31, 2000 and 1999 were as follows:


<TABLE>
<CAPTION>
                                                   2000                           1999
                                                   ----                           ----

                                      As            Pro             As            Pro
                                   reported        Forma          reported        Forma
                                  -----------    -----------    -----------    -----------
<S>                               <C>            <C>            <C>            <C>
Net loss to common stockholders   $ 4,862,342    $ 5,606,971    $ 2,368,930    $ 3,408,659
                                  ===========    ===========    ===========    ===========

Net loss per share - basic
   and diluted                    $      (.34)   $      (.39)   $      (.17)   $      (.25)
                                  ===========    ===========    ===========    ===========
</TABLE>

All stock options issued by the Company for shares prior to the Filing Date
shall be cancelled at the Confirmation Date.







                                      F-24
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12.  INCOME TAXES

The Company had available at December 31, 2000, net operating loss carryforwards
for federal and state tax purposes of approximately $13,600,000 that could be
applied against taxable income in subsequent years from 2005 to 2020. The tax
effect of the net operating loss is approximately $5,100,000 and a full
valuation allowance has been recorded, since realization is uncertain.

There were no significant temporary differences for book and tax reporting
purposes during the years ended December 31, 2000 and 1999. Components of the
Company's deferred income taxes are as follows at December 31:

                                                 2000             1999
                                             ------------     ------------

     Net operating loss carryforwards        $ 13,600,000     $  7,000,000
                                             ============     ============

     Net deferred tax asset                     5,100,000        2,600,000
     Less valuation allowance                  (5,100,000)      (2,600,000)
                                             ------------     ------------

     Net deferred tax asset                  $         --     $         --
                                             ============     ============

The net change in the valuation allowance for the years ended December 31, 2000
and 1999 was an increase of $2,500,000 and $800,000, respectively.

Due to the bankruptcy, all of the carryforwards are subject to limitations on
annual utilization because there will be an "equity structure shifts" or "owner
shifts" involving 5% stockholders (as these terms are defined in Section 382 of
the Internal Revenue Code), which will result in a more that 50% change in
ownership. The annual limitation is based on the value of EBS as of the date of
the ownership change multiplied by the applicable Federal Long Term Tax Exempt
Bond Rate.

Reconciliation of the differences between income taxes computed at the federal
and state statutory tax rates and the provision for income taxes for the years
ended December 31, 2000 and 1999 is as follows:

                                                 2000             1999
                                             ------------     ------------

     Income tax loss at federal statutory tax      (34.00)%         (34.00)%
     State taxes, net of federal benefit            (3.63)%          (3.63)%
     Change in valuation allowance                  37.63%           37.63%
                                             ------------     ------------

     Provision for income taxes                        -%               -%
                                             ============     ============




                                      F-25
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


13.  COMMITMENTS AND CONTINGENCIES

The Company had lease commitments as of December 31, 2000 and, subsequent to
year-end, rejected its lease agreements in accordance with the United States
Bankruptcy Code.

Rent expense was $268,802 for the year ended December 31, 2000 and $173,395 for
the year ended December 31, 1999.

14.  SEGMENT INFORMATION

The Company's two reportable segments are principally recorded by each
subsidiary's records (credit reporting "QCC" and software sales and maintenance
"EBS"). The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. Segment information for the
years ended December 31, 2000 and 1999 was as follows:

                                       EBS        QCC       Other      Total
                                     -------    -------    -------    -------

                                                2000 (in thousands)

     Sales                           $ 1,848    $ 1,575    $    --    $ 3,423
     Gross margin                        638        574         --      1,212
     Operating loss                   (1,045)      (324)    (3,057)    (4,426)
     Depreciation and amortization       132         52        139        323
     Total assets                        112         54         (7)       159
     Capital expenditures            $    --    $    18    $     7    $    25


                                                 1999 (in thousands)

     Sales                           $ 5,170    $ 1,317    $    --    $ 6,487
     Gross margin                      3,068        288         --      3,356
     Operating loss                     (701)      (567)      (836)    (2,104)
     Depreciation and amortization       113         18        143        274
     Total assets                        953      2,270        917      4,140
     Capital expenditures            $   174    $   805    $   128    $ 1,107




                                      F-26
<PAGE>

               ELECTRONIC BUSINESS SERVICES, INC. AND SUBSIDIARIES
                             (DEBTOR-IN-POSSESSION)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


15.  LEGAL PROCEEDINGS

On March 23, 1999, QCC and a financial services company entered into a joint
product sales and marketing agreement under which QCC was to provide two new
consumer products, a credit monitoring product and a card registration product,
and the financial services company was to market and sell such products.

On November 24, 1999, QCC terminated its agreement with the financial services
company due to the alleged failure of the financial services company to perform
its material obligations under such contract despite full and timely performance
by QCC. Particularly, the financial services company was obligated under the
agreement to, among other things, design and prepare certain marketing and sales
materials, to establish a telemarketing sales effort, to undertake general
marketing of the products and to introduce and market the products to financial
services company's institutional clients.

On August 11, 2000 the agreement was settled for $475,000.

During 2000 various creditors filed lawsuits pertaining to non-payment of
obligations. All such claims have been settled as part of the bankruptcy
proceedings and payments will be in accordance with the plan of reorganization.
The only remaining litigation relates to the QCC put option provisions of the
merger agreement between the Company and CBS, which is being disputed by the
bankruptcy trustee for CBS. This matter is scheduled to be resolved in August
2001.

16.  SUBSEQUENT EVENTS

At the effective date of the plan of reorganization, May 1, 2001, the Company
adopted "Fresh Start Accounting, according to SOP 90-5 issued by the American
Institute of Certified Public Accountants. In Fresh Start accounting, the
Company is required to revalue its assets and liabilities similar to purchase
accounting.


















                                      F-27