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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB/A
(Mark One)

|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 1999

                                       OR

&        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                          Commission file No. 000-10576

                               PETPLANET.COM, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                  22-2298015
   ---------------------------------        ------------------------------------
     (State or other jurisdiction           (I.R.S. Employer Identification No.)
   of incorporation or organization)

    21 Stillman Street, Suite 600,
      San Francisco, California                            94107
----------------------------------------                 ----------
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code: (415) 243-9000

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.01 per share.

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

         Check if there is no disclosure of delinquent filings pursuant to Item
405 of Regulation S-K contained herein, 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].

         State the issuer's revenues for its most recent fiscal year: $9,000.

         The aggregate market value of the voting and non-voting common equity
of the registrant held by non-affiliates of the registrant at February 9, 2000
was approximately $18,964,825.00 upon the closing sale price of $6.25 for the
Registrant's Common Stock, $.01 par value, as reported by the National
Association of Securities Dealers OTC Bulletin Board on February 9, 2000.

         As of February 9, 2000 the Registrant had 9,396,177 shares of Common
Stock, $.01 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Certain information contained in the Proxy Statement for the Annual Meeting of
Stockholders of the Registrant to be held February 29, 2000 is incorporated by
reference into Part III hereof.


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                               PETPLANET.COM, INC.

                          Annual Report on Form 10-KSB
                   For the Fiscal Year Ended October 31, 1999

                                TABLE OF CONTENTS

                                                                            Page
                                     PART I

Item 1.   Business                                                             4
Item 2.   Properties                                                          16
Item 3.   Legal Proceedings                                                   16
Item 4.   Submission of Matters to a Vote of Security Holders                 17

                                     PART II

Item 5.   Market for the Registrant's Common Stock and Related Security
          Holder Matters                                                      17
Item 6.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                           18
Item 7.   Financial Statements                                                20
Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure                                            20

                                    PART III

Item 9.   Directors and Executive Officers of the Registrant                  20
Item 10.  Executive Compensation                                              20
Item 11.  Security Ownership of Certain Beneficial Owners and Management      20
Item 12.  Certain Relationships and Related Transactions                      21

                                     PART IV

Item 13.  Exhibit List and Reports on Form 8-K                                21


                              FINANCIAL STATEMENTS

          Report of Independent Auditors                                     F-2
          Balance Sheet                                                      F-3
          Statements of Operations                                           F-4
          Statements of Changes in Stockholders' Equity                      F-5
          Statements of Cash Flows                                           F-6
          Notes to Financial Statements                                      F-7


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                                     PART I

ITEM 1.  BUSINESS.

General

      PETPLANET.COM, INC., a Delaware corporation ("We", the "Company" or the
"Registrant"), is a leading developer, producer, and operator of the
Internet-based network known as PetPlanet.com (www.petplanet.com) which is
designed to cater to the needs and interests of pet owners. PetPlanet.com is an
emerging global Internet network servicing the needs of a focused target
audience for pet product and service providers. In addition to its consumer
brand, the Company recently announced the launching of the Local Pet Business
Network (the Network). The Network was established to service the needs of
manufacturers, distributors and the thousands of independent retailers and
service providers in the local pet community. When fully launched, the Network
will provide the tools for brick and mortar retailers as well as pet-related
service providers to establishment a dynamic e-commerce enabled web site powered
by PetPlanet.com technology.

      The Company plans to differentiate itself from its more well-funded
"Business to Consumer" competition with a unique "Business to Business to
Consumer" model. With the launch of LPBN, the Company intends to capitalize on
the most valuable e-commerce relationship between the local merchant/service
provider and its local customer. The Company plans to provide the infrastructure
and tools necessary to empower thousand of pet-related businesses to service
their loyal local customer base as well as grow their existing customer base.
The Company's principal business address is 21 Stillman Street, Suite 600, San
Francisco, California, 94107 and its telephone number is. (415) 243-9000.

Industry Overview

      International Data Corporation has estimated that the current Internet
user base of approximately 196 million people will grow to 503 million in 2003.
In addition, a rapidly growing number of businesses are using the Internet to
market and sell their products and streamline business operations. Forrester
Research predicts that by 2002, 50% of all United States businesses will have an
online presence.

      Revenues generated off of the Internet are also projected to skyrocket
in the next few years. Jupiter Communications has projected Internet advertising
will grow to $7.7 billion in 2002 from $1.9 billion in 1998. In addition,
Business to Consumer commerce revenues are projected by Forrester to grow to
$184 billion in 2004 from $20 billion in 1999. The significant growth is
attributable to the advances in the speed of personal computers and modems,
easier and cheaper bandwidth, and a broader range of online offerings coupled
with growing consumer awareness.

The PetPlanet.com Retail Market

      The traditional pet category in the United States is a $28 billion
industry in products and services and growing (estimated at $53 Billion
worldwide); yet it remains fragmented with the community needs of the pet owner
poorly served. Over the past five years, the pet business has evolved from one
dominated by small and independent retailers to one that includes Internet
retailers, nationwide superstores, medical organizations, insurance policies and
magazines and television shows dedicated to pets. About 60% of U.S. households
own one or more pets, with an estimated 256 million pets in the U.S. More than
ever, "Pet Families" (which PetPlanet.com defines as one or more persons caring
for one or more pets) need a means to aggregate information, share knowledge,
develop relationships, and make well-informed, cost-effective purchases.
Similarly, suppliers need an effective channel to reach an increasing diverse,
growing market and local service providers need a cost effective means to retain
and maximize their relationship with their loyal customer base. The
PetPlanet.com consumer brand along with the Local Pet Business Network are
designed to meet the needs of both consumers and retailers.

The Reorganization

      On May 13, 1999, the Company, then doing business under the name
Techscience Industries, Inc. and PetPlanet.com, Inc. ("PPI"), a California
corporation, and the individual holders of all of the outstanding capital

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stock of PPI (the "Holders") consummated a reverse acquisition (the
"Reorganization") pursuant to a certain Agreement and Plan of Reorganization
("Reorganization Agreement") of such date. Pursuant to the Reorganization
Agreement, the Holders tendered to the Company all issued and outstanding
(10,570,000) shares of common stock of PPI in exchange for 6,754,640 shares of
common stock of the Company, and therefore PPI became the wholly owed subsidiary
of the Company. The Company also issued options to purchase 570,360 shares of
the Company's common stock to holders of options to purchase PPI common stock.
The Reorganization was accounted for as a reverse acquisition. On May 20, 1999,
the Company amended its Certificate of Incorporation in order to change its name
from Techscience Industries, Inc. to PetPlanet.com, Inc.

      Simultaneous with the closing of the Reorganization, all of the then
officers and directors of the Company tendered their respective resignations in
accordance with the terms of the Reorganization Agreement. Shareholders
representing a majority of the outstanding common stock of the Company then
elected Steven E. Marder and Kim Marder to serve on the Board of Directors of
the Company (the "Board"). The Board subsequently appointed Steven E. Marder as
the President and Chief Executive Officer of the Company.

Recent Developments

Commencement of Trading

      On or about July 28, 1999, the Company changed its stock trading symbol
from "TSCID" to "EPET" and began trading its Common Stock under such symbol on
the National Association of Securities Dealers' Inc. Over-the-Counter Bulletin
Board.


Distribution Agreements

      On July 30, 1999 we entered into a one year e-commerce agreement with
America Online Inc. a leading interactive service, under which the Company
became an anchor tenant in the Pet Accessory area of the newShop@AOL, AOL.com,
CompuServe and Netscape online shopping destinations. Pursuant to this
agreement, the Company receives promotional impressions in areas on AOL, AOL.com
and CompuServe. See exhibit 10.7 for detailed contract and terms.

      In July of 1999, we entered into an exclusive five-year relationship with
American AGCO, a leading pet products distributor. We purchase the product
directly from American AGCO who in turn handles all pick, pack and ship
fulfillment activities for the Company. As part of the agreement, American AGCO
also received a specified amount of warrants in PetPlanet.com, Inc. See exhibit
10.9 for detailed contract and terms.

      In September of 1999, the Company entered into an exclusive one-year
agreement with Mapquest.com, Inc. (Mapquest) the online leader in destination
information solutions. The agreement encompasses both the licensing of the
Mapquest tool as well as run of site ads with PetPlanet.com serving as the
exclusive pet-site partner. The Company has also incorporated its extensive
database of service providers and merchants including pet shops, veterinarians,
and pet hospitals in to the Mapquest tool allowing users to quickly and easily
find pet-related service providers in their area of interest. See exhibit 10.8
for the contract and terms.

      In January of 2000, the Company inked an exclusive one year agreement
with Online Partners (Gay.com), the leading gay and lesbian affinity portal. The
combination fee and revenue share relationship will establish PetPlanet.com as
Gay.com's exclusive e-commerce, advertising and programming partner in the pet
channel. The relationship will allow the Company to gain access to the largest
number of gay and lesbian pet parents online.

Recent Financings

      To fund our need for additional working capital, from September 1999
through January 2000 we sold certain notes and equity linked securities to
members of our management and a small group of private investors in private
placement transactions. Capital raised from these transactions aggregated
approximately $3.0 million.

Forward Looking Statements

      When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project,"

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"intend" and similar expressions are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 regarding events, conditions
and financial trends that may affect the Company's future plans of operations,
business strategy, operating results and financial position. Current
stockholders and prospective investors are cautioned that any forward-looking
statements are not guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from those included
within the forward-looking statements as a result of various factors. Such
factors are described under the headings "Business-Certain Considerations",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and Notes thereto.


Business Strategy and Plan of Operation

      The Company's strategy is to develop and build the premier Internet pet
destination providing reliable content, dynamic community and comprehensive
products and services serving the needs of the pet industry and Pet Families
worldwide.

      In order to achieve its objectives, the Company will seek to expand the
user base and enhance user experience with new features, services and content
through the following initiatives:

      o Build our brand name and equity: We will continue to enter into online
        marketing and strategic relationships where we see valuable brand
        building opportunities. In addition, upon securing significant capital,
        we will launch a targeted off line marketing campaign including TV,
        radio and outdoor.

      o Build out the Local Pet Business Network: We are currently completing
        development on an exciting new web product for local pet merchants and
        service providers. The Local Pet Business Network is designed to provide
        turn-key tools and back-office infrastructure to empower pet businesses
        on the Internet through the hosting and servicing of e-commerce enabled
        web sites. The Local Pet Business Network was announced in late November
        of 1999 and will go live in March of 2000. We have signed up several
        charter retailers for the program and look to aggressively expand its
        offering throughout the country in the coming year.

      o Continue to expand product offerings: The Company has partnered with
        American AGCO, Inc. (AGCO) one of the largest independent pet
        distributors in the industry to provide the vast majority of product
        inventory for the Petplanet.com site as well supply all of the product
        fulfillment responsibilities. As we add product to the PetPlanet.com
        site, many of these same products will be available for our Local Pet
        Business Network partners. We currently offer several thousand products
        from AGCO's vast warehouse of pet-related merchandise. Over the coming
        year, we plan to add thousands of additional products to our online
        offerings as well as supplement this with higher-end specialty products
        not currently carried by AGCO.

      o Expand our existing content offerings: We will continue to add to our
        in-depth content sites in the pet space of the Internet. Our editorial
        team ads approximately 10 new articles to our Petplanet.com site each
        week. In the coming year, we will introduce several new advice experts
        to help pet families in caring for their pets. In addition, we will
        launch new community tools that will facilitate the exchanging of pet
        related stories and information.

      o Expand globally: We plan to expand our presence into overseas markets.
        The Company has targeted several opportunities in select foreign
        markets. We plan to leverage the tools and infrastructure supporting
        PetPlanet.com to aggressively pursue acquisitions and pet-related
        strategic partnerships in Asia and Europe.

      PetPlanet.com's business model is founded upon the concept of "community
driven e-commerce". We believe that in order to build a successful e-commerce
business that derives its sales from Pet Families, the experience must blend
elements focused on community, content and commerce. The network will also offer
elements such as its classified listings service, personalized e-mail, chat and
a personalized calendar with local and national events.

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Sales and Marketing

      We believe that a strong sales and marketing organization is essential
to effectively sell our services and to promote PetPlanet.com. Upcoming
marketing plans will include a blend of online and targeted offline advertising
as well as continued sponsorship of pet-related events with local humane
societies and animal shelters. The Company plans to use a combination of
internal resources as well as our outside ad agency Pickett Communications to
design, produce and distribute it FY 2000 campaign.

PetPlanet.com's web site

      The website offers users a variety of information and pet-related
products servicing all major animal categories: Dog, Cat, Bird, Fish, Small
Pets, Reptiles and Equine.

      Content: The site offers hundreds of useful and relevant articles for
Pet Parents written primarily by our network of accredited freelancers and
experts. Each writer brings a unique perspective drawn from their expertise in
specific animal categories. The Company offers animal care advice from various
experts and answers questions from users on a regular basis. We also offer an
extensive list of animal shelters and rescue centers with strong support and
sponsorship from the Human Society of the United States.

      The site also provides various database type products such as the
classified advertising are which offers users the ability to advertise their
pet-related products for sale. In addition, the Company has partnered with
Heather Walters and Eileen Barish, two top pet-related travel experts, to
provide an extensive directory of pet friendly hotels and other useful advise
when traveling with your pet.

      Community: The site provides a variety of community tools allowing
users to share information and anecdotes with others. Tools available on the
site include chat, message boards, postcards and pet polls. We also launched a
feature called matchmaking that allows users to find others that share a similar
affinity for pets.

      Commerce: Our site superstore offers customers a strong breadth and
depth of product selections across most popular pet types and product
categories. The Company plans to add thousands of additional products to the
site in the coming year and also incorporate an equine section for horse
enthusiasts.


Operating Infrastructure

      Fulfillment and Distribution: The Company sources the vast majority of
the inventory on the Petplanet.com site from its exclusive pet product
distributor, American AGCO, located in St. Paul, MN operating out of a 125,000
square foot facility. Most products are part of AGCO' s current product
offerings and are picked, packed, and shipped from their MN facility. Utilizing
an existing pet-products distributor allows the Company the freedom to invest a
much smaller percentage of its capital on infrastructure and inventory while
taking advantage of AGCO's expertise in product management and fulfillment.
While this model frees up resources for other essential uses, it does create
less control over inventory levels and warehouse practices than we would be
enjoy if the facility was wholly owned and operated by the Company.

      To-date, our volumes have been comfortably supported by American AGCO
from its existing facility. When and if volume levels increase significantly, it
may become more economically feasible for the Company to pursue bringing the
fulfillment process in-house. We currently have no timetable as to when or if
this event may occur.

      Customer Service: The Company's customer service function is operated
out of the American AGCO distribution facility in Minnesota. We use a
combination of internal staff and employees of American AGCO to service our
customer base. The Company firmly believes that exceptional customer service is
essential for our success. We anticipate expanding our customer service
offerings in the coming year and increasing the number of internal employees in
this area.

      Technology and Development: Outlook Technology, Inc. based in Chicago,
Illinois, has been our primary

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developer of site tools and technology since the Petplanet.com site was launched
in early 1999. Outlook also hosts our site out of their offices in Chicago and
provides virtually 100% of all maintenance and support. Most site functionality
has been developed with little use of licensed technology. The Company employs a
modest team of in-house designers to ensure the look and feel of the site is
consistent with the Company's overall message.

      The use of an external development team was deemed advantageous to more
quickly develop and integrate the many community tools and features needed on
the site versus hiring a team of in-house technologists. As the Company moves
into its next phase of development, it will look to supplement our external
development with more internal expertise.

Research and Development

      During the seven months ended October 31, 1999, the Company spent $1.6
million on product research including stock based compensation of over $200,000.
Only minimal dollars were spent on product development prior to this period.
Such figures include costs of outside developers and consultants. The majority
of the expenditures are attributable to Outlook Technologies, our primary
developer of tools and technology. During the seven month period ending October
31, 1999 period, Outlook made significant progress in designing and developing
an e-commerce component to the site as well as additional community features and
tools including our Travel and Adventure area and Adoption and Rescue.

Competition

      Competition in the Internet pet services market is intense. We expect
competition in our market to continue to intensify as a result of increasing
market size, greater visibility of the market opportunity for our services and
minimal barriers to entry. Competition may also increase as a result of industry
consolidation. We believe that our ability to compete depends on many factors
both within and beyond our control, including the following:

      o the success of the sales and marketing efforts of us and our
        competitors;

      o the ease of use, performance, price and stability of the product versus
        our competition

      o the timing and market acceptance of new services developed by us and our
        competitors.

      Our PetPlanet.com brands compete directly with several significantly
financed Internet sites in the Pet space including Pets.com, Petsmart.com,
Petopia.com and Petstore.com. We also compete with offline companies, large
Internet publishers, search engine and other portal companies, a variety of
Internet advertising networks and other companies that facilitate the marketing
of products and services on the Internet.

      Please see "Certain Considerations--We face significant competition,
and we may not be able to compete successfully" for a more detailed description
of the risks of our competition.

Proprietary Rights

      We protect our technology and proprietary rights through a combination
of copyright, trade secret and trademark law. The mark PETPLANET.COM is a
federally registered trademark in International Class 035 (disseminating,
preparing, and placing advertising for others via on-line computer communication
networks), Registration Number 2263382.

      Applications are currently pending for PETPLANET.COM in International
Class 041 (providing information via on-line computer communication networks
featuring animal training, 042 (providing access to an interactive computer
database in the field of pets, pet stories, pet products and activities with
pets) and 035 (providing retail store services available through on-line
computer communication networks featuring products and services for pets and pet
owners), Serial Numbers 75-129,837 and 75-129,836. An opposition to those
applications has been filed and stayed pending settlement negotiations. There is
a strong possibility that settlement will be reached. There is also a
possibility that the opposition will be defeated and the trademark granted if
the registration procedure is simply allowed to run its course. Finally, there
is always the possibility that the registrations may be denied altogether for
totally unforeseen reasons. Therefore, based on the unpredictable actions of the
participants and the uncertainties of the trademark litigation process and
despite any appearance of likely success, we cannot be certain of any potential
outcome.

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      We have also recently filed an application to federally register the
mark PETSTROLOGY. As that mark was recently filed, we have no further
information on the application at this time.

      We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our proprietary rights. We cannot be certain that the steps we have taken will
prevent misappropriation of our proprietary rights, particularly in foreign
countries where the laws or law enforcement may not protect our proprietary
rights as fully as in the United States.

Government Regulation

      Regulation Concerning Privacy

      Congress has passed the Children's Online Privacy Protection Act, and
the Federal Trade Commission has issued a Notice of Proposed Rulemaking
regarding the adoption of regulations regarding the collection and use of
personal identifying information obtained from individuals when accessing web
sites, with particular emphasis on access by minors. These regulations may
include requirements that companies establish certain procedures to, among other
things:

      o give adequate notice to consumers regarding information collection and
disclosure practices;

      o provide consumers with the ability to have personal identifying
information deleted from a company's database;

      o provide consumers with access to their personal  information and with
the ability to rectify  inaccurate information; and

      o obtain express parental consent prior to collecting and using personal
identifying information obtained from children under 13 years of age.

      These regulations may also include enforcement and redress provisions.
While we have a privacy policy designed to enhance the protection of the privacy
of our users, there can be no assurance that these programs will conform with
any regulations adopted by the FTC. Moreover, even in the absence of those
regulations, the FTC has begun investigations into the privacy practices of
companies that collect information on the Internet. One investigation resulted
in a consent decree pursuant to which an Internet company agreed to establish
programs to implement the principles noted above. We may become subject to a
similar investigation, or the FTC's regulatory and enforcement efforts may
adversely affect our ability to collect demographic and personal information
from users, which could have an adverse effect on our ability to provide
effective pet community and content provider s. Any of these developments would
have a material adverse effect on our business, results of operations and
financial condition.

      It is also possible that cookies, or information keyed to a specific
server, file pathway or directory location that is stored on a user's hard
drive, possibly without the user's knowledge, which are used to track
demographic information and to target advertising, may become subject to laws
limiting or prohibiting their use. A number of Internet commentators, advocates
and governmental bodies in the United States and other countries have urged the
passage of laws limiting or abolishing the use of cookies. Limitations on or
elimination of our use of cookies could limit the effectiveness of our pet
community and content provider s, which could have a material adverse effect on
our business, results of operations and financial condition.

      Regulation of the Internet

      We are currently subject to federal and state laws and regulations that
are applicable to specific activities on the Internet. Although there are
currently few laws or regulations directly governing access to or commerce on
the Internet, due to the increasing popularity and use of the Internet, a number
of laws and regulations may be adopted

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regarding user privacy, pricing, acceptable content, taxation and quality of
products and services. In addition, the government has been requested to
regulate and impose fees on Internet service providers and online service
providers in a manner similar to long distance telephone carriers. This
regulation may place our activities under increased regulation, increase our
cost of doing business, decrease the growth in Internet use or otherwise have a
material adverse effect on our business. See "Certain Considerations--Laws and
regulations pertaining to the Internet may adversely affect our business."

      We are not certain how our business may be affected by the application
of existing laws governing issues such as property ownership, copyrights,
encryption and other intellectual property issues, taxation, libel, obscenity,
qualifications to do business and export or import matters. The vast majority of
these laws were adopted prior to the Internet. As a result, they do not
contemplate or address the unique issues of the Internet and related
technologies. Changes in the laws intended to address these issues could reduce
demand for our services or increase the cost of doing business as a result of
litigation costs or increased service delivery costs.

      In addition to the regulations applicable to businesses generally, we
are regulated by federal, state or local governmental agencies with respect to
the shipment of pet food, pet products and advise related to animal care. We
currently seek to rely upon our suppliers to meet the various regulatory and
other legal requirements applicable to products and services supplied by them to
us. However, we are unable to verify that they have in the past, or will in the
future, always do so, or that their actions are adequate or sufficient to
satisfy all governmental requirements that may be applicable to these sales. We
could be fined or exposed to civil or criminal liability and we could receive
potential negative publicity, if these requirements have not been fully met by
our suppliers or by us directly.

Employees

      The Company currently has 18 employees. The Company plans to grow
aggressively as additional financing is secured. The Company intends to double
in the number of employees over the next 12 months to support its growth.
Management believes these resources will be necessary to execute on the business
initiatives scheduled for the following months and as a result of higher
business volumes

Certain Considerations

      This Form 10-KSB, other documents of the Company and statements made by
members of management of the Company, in each case, may contain forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in such forward-looking
statements. Factors that might cause such a difference include the following:

Considerations Relating to our Business

Overall Business Risk

There can be no assurance that the Company's business activities will result in
any profits in the future. The Company is currently not profitable and it is
anticipated that the Company will continue to incur losses for an indeterminate
period of time. The Company's future operating results will depend on many other
uncertainties and related risks, including, but not limited to:

o   The overall growth rate for the pet market in which we compete;
o   The level of market acceptance of, and demand for, the pet products and pet
    services we offer on our site;
o   The level of product and price competition we encounter in the market;
o   Our ability to establish strategic marketing relationships, develop and
    market new and enhanced products, and control costs;
o   Our ability to build a sales force and distribution channels;
o   Our ability to develop and maintain awareness of our brands;
o   Our ability to attract, train, and retain key personnel;
o   The lack of growth or decline in Internet  usage or the lack of acceptance
    of commerce  conducted via the Internet;
o   A decline in the confidence of retailers in sourcing products over the
    Internet because of inadequate development of the necessary infrastructure
    or as a result of fraud, or any other cause;

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o   Intense competition and increasing consolidation in the pet industry
    creating stronger competitors and harming or eliminating the need or demand
    for our products and services;
o   Our failure to develop or introduce new products, services and enhancements
    in a timely manner in response to changing market conditions, customer
    requirements or any other reasons;
o   Market price fluctuations based on the unpredictability of the Company's
    quarterly operating results or any other reason;
o   The development of international operations creating additional and
    unforeseen risks.

We may not be able to successfully address these and other unforeseen risks.
Many of the aforementioned risks are set forth in more detail below.

Limited Operating History.

      We launched our site in the first quarter of 1999 with e-commerce
introduced in September 1999. As such we are still in the early stages of
operation. The operations of the Company are subject to all the risks inherent
in an immature business enterprise, including the absence of an extensive
operating history.

Accumulated Deficit and Operating Losses; Anticipated Continuing Losses.

      The Company had an accumulated deficit at October 31, 1999 of
approximately $5.8 million. The Company incurred operating losses of $ $6.3
million for the seven months ended October 31, 1999 and the Company anticipates
that it will incur additional losses in the foreseeable future as it implements
its business strategy.

We Need Significant Additional Capital For Our Growth.

      Significant capital will be required to develop the Company's site, secure
online distribution, generate brand identity and complete domestic and
international acquisitions. We expect to incur significant losses in the first
several years of operation as it invests heavily in acquisition of market share.
Spending will concentrate primarily in building the brand through aggressive
marketing, taking advantage of newer technologies to enhance the network, and
building an adequate level of infrastructure to sustain the growth in the
business. We will also stress the formation of strategic acquisitions. The
Company will require significant additional financing and/or strategic alliances
with a well-funded development partner or partners to complete its business
plan. The Company has no current arrangements with respect to, or sources of,
additional financing, and there can be no assurance that additional financing
will be available to the Company on acceptable terms, if at all. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

We Have Not Been Profitable And May Not Become Profitable, In Which Event Our
Business And Stock Price Would Be Adversely Affected.

      To date, we have not been profitable. We may never be profitable, or, if
we become profitable, we may be unable to sustain profitability. We expect to
continue to incur losses for the foreseeable future because we expect to
continue to spend significant resources to expand our business. Although we have
experienced minor revenue growth in the last quarter due to the launch of the
Pet Store, that growth rate may not be sustainable or indicative of future
growth and is otherwise insufficient to sustain further growth. For us to make a
profit, our revenues will need to increase sufficiently to cover our costs and
expenses.

Viability of Company as Going Concern.

      In event that we are unable to generate a sufficient amount of funds to
meet capital and operational requirements, we may be unable to continue as a
going concern.


Reliance on Third Parties

      One of our present strategies is to seek collaborative partners, mainly
retailers, for the purpose of developing the Local Pet Business Network and
other business-to-business collaborative relationships. Such collaborative
arrangements, if entered into, may provide us with additional revenues. There
can be no assurance, however, that

                                       11


<PAGE>

we will be successful in attracting, developing and maintaining relationships
with these third parties at a level or to a degree sufficient to create revenue
or make the relationships at all profitable for the Company.

Our Quarterly Operating Results May Fluctuate, Which May Cause The Price Of Our
Common Stock To Decrease.

      We expect our operating results to vary significantly from quarter to
quarter due to many factors discussed herein and many unforeseen factors, some
or all of which are beyond our control. It is possible that in future periods
our results of operations will be below the expectations of public market
analysts and investors. In this event, the price of our common stock would
likely decrease. You should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of future performance.

The rapidly evolving market in which we operate and potential seasonal
fluctuations in pet community spending, in particular, and Internet use, in
general, make it difficult to forecast our revenues accurately. Our operating
expenses are based on our expectations of future revenues and are relatively
fixed in the short term. Accordingly, we may not be able to adjust our spending
in a timely manner to compensate for any unexpected revenue shortfall. If we
have a shortfall in revenues in relation to our expenses, or if our expenses
precede expected revenues, then our results of operations and financial
condition would be materially adversely affected.

If We Are Unable To Attract Visitors To Petplanet.Com, Our Business, Results Of
Operations And Financial Condition Would Be Materially Adversely Affected.

Our future success depends upon our ability to continue to attract and retain
visitors interested in the community and content we offer. Although it is
unlikely that our visitors will lose interest in their pets, it is possible that
other avenues of expression of that interest will become available to businesses
and consumers in our target market.


If We Are Unsuccessful In Broadening Our Product Offerings, Our Revenue Growth
Will Be Limited.

To date, substantially all of our revenues have been derived from sales at our
Pet Store. Our growth is largely dependent upon our ability to leverage this
expertise to become a full-service Internet pet community and content provider
and significantly expand our revenue resources. In the event that we are unable
to successfully implement our growth strategy and to avail the company of
existing and potential revenue sources, our business, results of operations and
financial condition would be materially adversely affected.

We Face Significant Competition, And We May Not Be Able To Compete Successfully.

      The market for Internet pet community and content services is intensely
competitive. We expect competition in our market to continue to intensify as a
result of increasing market size, greater visibility of the market opportunity
for Internet pet community and content services and minimal barriers to entry.
Industry consolidation may also increase competition. We compete with many types
of companies, including both online and offline pet industry companies, large
Internet publishers, and search engine and other Internet portal companies. Many
of our existing competitors, as well as a number of potential new competitors,
have longer operating histories, greater name recognition, larger client bases
and significantly greater financial, technical and marketing resources than we
do. This may allow them to compete more effectively and be more responsive to
industry and technological change than us. In addition, no assurances can be
given that competition from a new source or entity could not choose to enter
this industry. Such entry could have a substantial impact on the future success
and viability of the Corporation. In addition, no assurances can be given that
competition from a new source or entity could not choose to enter this industry.
Such entry could have a substantial impact on the future success and viability
of the Corporation. In either case, we may not be able to compete successfully
and competitive pressures may reduce our revenues and result in increased losses
or reduced profits.

Volatility of Share Price.

      Although we intend to apply for listing on the NASDAQ National Market or
Small Cap Market once we raise additional equity capital, if the common stock is
listed, there can be no assurance as to the ability of any market to sustain the
offering price. Furthermore, the trading price of the common stock is likely to
be highly volatile and could be subject to wide fluctuations in response to
factors such as actual or anticipated variation in our quarterly

                                       12

<PAGE>

operation results, announcement of technological innovations, or new services or
our competitors, changes in financial estimates by securities analysts,
conditions or trends in the Internet and online commerce industries, changes in
the market valuations of other Internet or online service companies,
announcements by us our competitors of significant acquisitions, strategic
relationships, joint ventures or capital commitments, additions or departures of
key personnel, sales of common stock or other securities in the open market and
other events or factors, many of which are beyond our control. Further, the
stock markets in general, and the NASDAQ National Market and the market for
Internet-related companies in particular, have experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of such companies. The trading prices of many technology
companies' stocks are at or near historical highs and reflect valuations
substantially above historic levels. There can be no assurance that these
trading prices and valuations will be sustained. These broad market and industry
factors may materially and adversely affect the market price of our stock,
regardless of our operating performance. Market fluctuations, as well as general
political and economic conditions such as recession or interest rate or currency
rate fluctuations, may also adversely affect the market price of a company's
securities. Securities class-action litigation has often been instituted against
companies as a result of such market fluctuations. Such litigation, if
instituted, could result in substantial costs and a diversion of management's
attention to and resources, which would have a material adverse effect on our
business, results of operations and financial condition.

Our Brand May Not Achieve The Recognition Necessary To Increase Our Membership
Base And Attract Clients And Partners.

To be successful, we must continue to build our brand identity. We believe that
the importance of brand recognition will increase as more companies enter our
market. We may not be successful in our marketing efforts or in increasing our
brand awareness.


Our Failure To Manage Our Growth Effectively Could Adversely Affect Our
Business.

In order to be successful in implementation of our business plan, we must grow
significantly. Our anticipated future growth will likely place a significant
strain on our management resources and systems. To manage our growth
effectively, we will need to continue to improve our operational, financial and
managerial controls and reporting systems and procedures, and we will need to
continue to expand, train and manage our workforce. If we do not manage our
growth effectively, our business, results of operations and financial condition
would be materially adversely affected.

Our Business May Suffer If We Are Unable To Retain Key Personnel.

      The success of the Company is substantially dependent on the efforts and
abilities of its founder, Chairman and Chief Executive Officer, Steven E.
Marder, its co-founder, Executive Vice President of Marketing, Kim Marder, Vice
President of Operations, Jeff Harris, Vice President of Online Development, Phil
Schein, Vice President of Advertising and Promotion, Rick Ferber and Vice
President of Product Management, Mark Brown. Many of our executive officers have
only been employed by us for a short time. Decisions concerning the Company's
business and its management are and will continue to be made or significantly
influenced by these individuals. We do not currently have "key person" life
insurance policies on any of our employees. Competition for senior management is
intense, and we may not be successful in attracting and retaining key personnel.
Were any of these people to leave the employ of the Company, the loss or
interruption of their continued services would have a materially adverse effect
on the Company's business operations and prospects.

The Inability To Protect Our Intellectual Property Rights, And Any Infringement
On The Intellectual Property Rights Of Others, Could Adversely Affect Our
Business And Financial Condition.

Third parties may infringe or misappropriate our patents, trademarks or other
intellectual property rights, which could have a material adverse effect on our
business, results of operations or financial condition. The actions we take to
protect our trademarks and other proprietary rights may not be adequate. In
addition, the validity, enforceability and scope of protection of proprietary
rights in Internet-related industries are uncertain and still evolving.

There is currently an opposition pending to the federal registration of the
trademark "PETPLANET.COM," although

                                       13

<PAGE>

the parties have reached a tentative settlement agreement. See "PROPRIETARY
RIGHTS." Such litigation, whether successful or unsuccessful, could result in
substantial costs, diversions of resources, either of which could have a
material adverse effect on the Company's business, financial condition, and
operating results.

Third parties may assert infringement claims against us. Any claims and any
result litigation, should they occur, could subject us to significant liability
for damages. In addition, even if we prevail, litigation could be time-consuming
and expensive to defend, and could result in the diversion of our time and
attention. Any claims from third parties may also result in limitations on our
ability to use the intellectual property subject to these claims unless we are
able to enter into contractual arrangements with the third parties making these
claims, which arrangements may not be available on commercially reasonable
terms.

Management of Potential Growth.

      Our ability to manage our future growth, if any, will require us to
continue to implement and improve our operations, financial and management
information systems and control, hire and train new employees, including
management, marketing and technical personnel, and also to motivate and manage
new employees and to integrate them into our overall operations and culture.
There can be assurance that we will be able to perform such actions
successfully. Our failure to manage growth effectively will have a material
adverse effect on our operations and our ability to execute our business
strategy.

Any Acquisitions That We Make May Not Be Successful.

      We have no experience in making acquisitions. If we make an acquisition,
we could have difficulty in assimilating the acquired company's personnel and
operations. In addition, the key personnel of the acquired business may not
continue to work for us. These difficulties could disrupt our ongoing business,
distract our management and employees, increase our expenses and adversely
affect our results of operations. In addition, effecting acquisitions could
require use of a significant portion of our available cash or force us to incur
additional debt. Alternatively, we may have to issue equity or equity-linked
securities to pay for future acquisitions and any of these issuances could be
dilutive to existing and future stockholders. Any indebtedness incurred to pay
for acquisitions may contain covenants that limit our operations or our ability
to pay dividends.

We Are Controlled By Our Current Stockholders, Officers and Directors.

      Management and affiliates of the Company currently beneficially own
(including shares they have the right to acquire whether or not currently
vested) approximately sixy-nine percent (69%) of the outstanding Common Stock.
These persons are and will continue to be able to exercise control over the
election of the Company's directors and the appointment of officers, increase
the authorized capital, dissolve, merge or engage the Company in other
fundamental corporate transactions. Messrs. Steven Marder, Kim Marder and Jeff
Harris all have standard change of control provisions in the employment
agreements whereby all options held under the Company's 1999 Stock Option Plan
shall become immediately vested upon a the closing date of the applicable
transaction constituting a change in control. Such provisions may have the
effect of discouraging, delaying or preventing a change in control of the
Company.

There Is A Limited Public Market For Our Common Stock.

      There has been a limited public market for the Common Stock. Although the
Common Stock has been approved for inclusion on the OTC Bulletin Board, it has
been thinly traded, and there can be no assurance that a more fluid trading
market for the securities will develop or that, if developed, it will be
sustained. The OTC Bulletin Board is an unorganized, inter-dealer,
over-the-counter market which provides significantly less liquidity than the
NASDAQ Stock Market, and quotes for stocks included on the OTC Bulletin Board
are not listed in the financial sections of newspapers as are those for the
NASDAQ Stock Market. Therefore, prices for securities traded solely on the OTC
Bulletin Board may be difficult to obtain and purchasers of the Common Stock may
have difficulty reselling shares. See "Possible Adverse Effect of "Penny Stock"
Rules in Liquidity for the Company's Securities."

Outstanding Options And Warrants May Dilute Ownership.

      The Company has reserved up to 3,000,000 shares of its Common Stock for
issuance upon exercise of stock options and warrants. Of the reserved shares,
options to purchase a total of 2,709,300 shares have been issued, of which
approximately twenty percent (20%) are vested, at a weighted average exercise
price of $0.39.

                                       14



<PAGE>

      Exercise of these registration rights could involve a substantial expense
to the Company and could prove a hindrance to future financings. Exercise of the
outstanding warrants and stock options, and those which may be granted under the
Stock Option Plan (collectively, the "Convertible Securities"), will reduce the
percentage of Common Stock held by the public stockholders. Further, the terms
on which the Company could obtain additional capital during the life of the
Convertible Securities may be adversely affected, and it should be expected that
the holders of the Convertible Securities would exercise them at a time when the
Company would be able to obtain equity capital on terms more favorable than
those provided for by such Convertible Securities.

      A number of holders of convertible notes and warrants to purchase stock
have piggy-back registration rights compelling the Company to include their
restricted shares in any underwritten public offering of restricted shares of
the Company's common stock. A limited number of those holders have demand
registration rights as part of their convertible notes and warrants to purchase
stock providing those holder the option to force the Company to make such a
filing within a six (6) month period or upon a public offering, whichever event
occurs first.

Possible Resales Of Common Stock Under Rule 144 May Adversely Affect The Market
Price.

      Of the 9,396,177 shares of Common Stock held by the Company's present
stockholders, only 1,600,000 are unrestricted shares, trading on the
Over-the-Counter Bulletin Board market. The remainder of the 9,396,177 shares of
Common Stock have not been registered under the Securities Act of 1933, as
amended (the "Act"), were issued in a private placement and are subject to a
restrictive legend. Under certain circumstances, the unregistered shares may be
available for public sale by means of ordinary brokerage transactions in the
open market pursuant to Rule 144, promulgated under the Act, subject to certain
limitations.

"Penny Stock" Rules May Adversely Affect Liquidity for the Company's Securities.

      Commission regulations define a "penny stock" to be any equity security
that is not traded on a national securities exchange or NASDAQ and that has a
market price (as therein defined) of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require delivery prior to any transaction in a penny stock, of a
disclosure schedule prepared in accordance with Commission rules relating to the
penny stock market. Disclosure is also required to be made about commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements are required to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.

      If the Company's Common Stock trades on the OTC Bulletin Board at less
than $5.00 per share, the Company's securities may become subject to Rule 15g-9
under the Exchange Act that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally, such investors have assets in
excess of $1,000,000 or an individual annual income exceeding $200,000, or,
together with the investor's spouse, a joint income of $300,000). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require, among other things, the delivery, prior to the transaction, of a
risk disclosure document mandated by the Commission relating to the penny stock
market and the risks associated therewith. The broker-dealer must also disclose
the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently,
such rule may adversely affect the ability of broker-dealers to sell the
Company's securities and may adversely affect the ability of purchasers in this
offering to sell in the secondary market any of the securities acquired hereby.
There can be no assurance that the Company's securities will continue to qualify
for exemption from these restrictions. In such event, the regulations on penny
stocks could limit the ability of broker-dealers to sell the Company's
securities and thus the ability of purchasers of the Company's securities to
sell their securities in the secondary market.

Limitation on Directors' Liabilities under Delaware Law.

      Pursuant to the Company's Certificate of Incorporation and under
Delaware law, directors of the Company

                                       15


<PAGE>

are not liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty, except for liability in connection with a breach of
duty of loyalty, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for dividend payments or
stock repurchases illegal under Delaware law or any transaction in which a
director has derived an improper personal benefit.

Indemnification of Directors under Delaware Law.

      Pursuant to both the Company's Certificate of Incorporation and
Delaware law, the Company's officers and directors are indemnified by the
Company for monetary damages for breach of fiduciary duty, except for liability
which arises in connection with (i) a breach of duty or loyalty, (ii) acts or
omissions not made in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for dividend payments or stock repurchases
illegal under Delaware law, or (iv) any transaction in which the officer or
director derived an improper personal benefit. The Company's Certificate of
Incorporation does not have any effect on the availability of equitable remedies
(such as an injunction or rescissions) for breach of fiduciary duty. However, as
a practical matter, equitable remedies may not be available in particular
circumstances

Considerations Relating to the Internet

      In addition to business specific considerations, various risks to our
business exist because we are Internet based. These risks include, but are not
limited to the following:

      o  our growth will depend on the growth of Internet usage;

      o  we may be unable to respond to technological change effectively;

      o  the failure of our computer or communications systems may adversely
         affect our business;

      o  we depend on the continued viability of the Internet infrastructure;
         and

      o  laws and regulations pertaining to the Internet may adversely affect
         our business.



ITEM 2.  PROPERTIES

      The Company's executive offices are located at 21 Stillman Street,
Suite 600, San Francisco, California. The facility, constituting approximately
2,000 square feet and is occupied under a lease expiring May of 2000, providing
for monthly rent payments of under $4,000. The Company also operates a satellite
office in New York City at 26 Broadway in Manhattan. The office is approximately
1,500 square feet and occupied under a 3-year lease expiring in 2002, providing
escalating monthly payments over the three-year period. First year monthly are
slightly under $3,000. Upon securing additional funding, the Company anticipates
moving to larger space in the San Francisco area in the coming year to
accommodate growth in staff.

ITEM 3.  LEGAL PROCEEDINGS

      We currently have trademark applications pending for PETPLANET.COM in
International Class 041 (providing information via on-line computer
communication networks featuring animal training), 042 (providing access to an
interactive computer database in the field of pets, pet stories, pet products
and activities with pets) and 035 (providing retail store services available
through on-line computer communication networks featuring products and services
for pets and pet owners), Serial Numbers 75-129,837 and 75-129,836. An
opposition to those applications has been filed and stayed pending settlement
negotiations with the opposer. There is a strong possibility that settlement
will be reached. There is also a possibility that the opposition will be
defeated (as a result of the recently filed motion to dismiss or otherwise) and
the trademark granted if the registration procedure is simply allowed to run its
course. Finally, there is always the possibility that the registration may be
denied altogether for totally unforeseen reasons. Therefore, based on the
unpredictable actions of the participants and the uncertainties of the trademark
litigation process and despite any appearance of likely success, we cannot be
certain of any potential outcome.

                                       16

<PAGE>



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

      During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders, though the solicitation of
proxies or otherwise.


                                     PART II

ITEM 5.  MARKET FOR COMMON STOCK AND RELATED
         SECURITYHOLDER MATTERS

         (a) Market Information. Since July 1999 the Company's Common Stock has
traded in the over-the-counter market on the National Association of Securities
Dealers, Inc. OTC Bulletin Board System ("OTCBB") under the symbol "EPET". The
following table sets forth the range of high and low closing bid quotations of
the Common Stock as reported by the OTCBB for each fiscal quarter for the past
two fiscal years or such shorter period that there has been a public trading
market. High and low bid quotations represent prices between dealers without
adjustment for retail mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions.

      FISCAL QUARTER                                                Bid Prices
                                                                    ----------
                                                                   High    Low
                                                                   ----    ---

      FISCAL 1999

      Third Quarter (July 27, 1999 through July 31, 1999)          7.75    6.50

      Fourth Quarter (August 1, 1999 through October 31, 1999)     8.19    4.00

      FISCAL  2000

      First Quarter (November 1, 1999 through January 31, 2000)    6.69    3.94


      The closing bid price of the Company's Common Stock as reported by the
OTCBB was $6.25 on February 9, 2000.

      (b)  Holders.  As of the close of business on January 31, 2000, there were
approximately 531 record holders of our Common Stock.

      (c) Dividends. The Company has never declared or paid a dividend on its
Common Stock, and management expects that all or a substantial portion of the
Company's future earnings will be retained for expansion or development of the
Company's business. The decision to pay dividends, if any, in the future is
within the discretion of the Board of Directors and will depend upon the
Company's earnings, capital requirements, financial condition and other relevant
factors such as contractual obligations. Management does not anticipate that the
Company will pay dividends on the Common Stock in the foreseeable future.

                                       17
<PAGE>



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
Consolidated Financial Statements and the related Notes contained elsewhere in
this filing.

General

         PetPlanet.com is a leading online retailer of pet products, integrating
high quality products with a wealth of useful pet-related information for Pet
Parents geared to enrich the experience of both the pet and their parents. To
that end, the site contains hundreds of useful articles on caring for your pet
as well as thousands of products at reasonable prices that can be ordered online
through the site. In addition, the Company has established the Local Pet
Business Network to help local pet retailers and service providers to utilize
the power of the web to supplement their existing brick and mortar based
businesses.

         PetPlanet.com, a California corporation that was a party to the
Reorganization, and the predecessor to the "the Company" was founded in October
of1996 and started its initial shipment of product in September of 1999. As a
result, the Company has had a history of recurring losses from operations,
giving rise to an accumulated deficit at October 31, 1999 of approximately $6.3
million. The future growth and profitability of the Company will be principally
dependent upon its ability to successfully implement its growth strategy and
obtain additional financing.

         All of our orders are fulfilled from our distribution partner American
AGCO and billed to a customer supplied credit card. Generally, we collect cash
from credit cards in two to five days from the date ordered. If a customer is
not happy with a product, we will offer them to return the product within 30
days for a refund. To -date, our refunds have been minimal.

         The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.

         Net Sales. Net sales consist of product sales and charges to customers
for outbound shipping and handling and are net of allowance for product returns,
and certain promotional discounts. The Company recognizes product and shipping
revenues when the product is shipped.

         Cost of Sales and Gross Margin. Cost of sales consists primarily of the
costs of products sold to customers and outbound and inbound shipping costs. We
expect cost of sales to increase in absolute dollars to the extent that our
sales volume increases. The Company may continue to expand it existing
promotional offerings which could impact margins negatively in the future.

         Marketing and Sales Expenses. Marketing and sales expenses consist
primarily of advertising and promotional expenditures, supplies, payroll and
development costs. We intend to continue to pursue an aggressive branding and
marketing campaign and therefore expect marketing and sales to increase to the
extend our sales volume increases and our funding permits. We intend to continue
expanding our current online marketing program in addition to adding a limited
offline marketing plan. Marketing and sales expenses may also vary considerably
as a percentage of net revenue from quarter to quarter depending on the timing
of our advertising campaign.

         Product Development Expenses. Product development expenses consist
primarily of costs for outside developers and consultants for our web site
development including the pet store. Over the coming year, the Company plans to
increase the absolute dollar spending on product development while moving more
of the costs to internal resources versus third party developers. We believe
that continued investment in product development is critical to attaining our
strategic objectives. However, these charges will fluctuate quarter to quarter
based on the timing of the initiatives.

         General and Administrative Expenses. General and administrative
expenses consist of payroll and related expenses for administration of all back
office personal including sales and marketing, internal development, operations,
finance, and executive related staff. We expect general and administrative costs
to increase in absolute dollars as we expand the staff and incur additional
costs related to the anticipated growth of the Company.

                                       18

<PAGE>

         Amortization of Stock-based Compensation. We have recorded total
stock-based compensation of 1.8 million for the period from April 1, 1999 to
October 31, 1999 in connection with stock options granted to employees,
consultants and others. The stock-based compensation amounts represent the
difference between the exercise price of stock option grants and the deemed fair
value of our common stock at the time of such grants. In the case of restricted
stock grants, the stock-based compensation represents the difference between the
purchase price of the restricted stock and the deemed fair value of our common
stock on the date of purchase. Such amounts are amortized as an expense over the
vesting periods of the applicable agreements, resulting in amortization of
stock-based compensation totaling 497,000 for the period from April, 1999 to
October 31, 1999. The amortization expense relates to options awarded to
employees in all operating expense categories. Stock-based compensation for
stock options and restricted stock issued through October 31, 1999 that will be
subsequently recognized as expense for each of the next four years is estimated
to be as follows:

                  YEAR                            AMOUNT
                                                  (000's)
                  2000                            1,191
                  2001                            1,162
                  2002                            1,162
                  2003                            1,162
                  2004                              114

The amount of stock compensation expense to be recorded in future periods could
decrease if options for which accrued but unvested compensation has been
recorded are forfeited.

         Income Taxes. There was no provision or benefit for income taxes for
any period since inception due to our operating losses. As of October 31, 1999,
we had 3,650,000 million of net operating loss carryforwards for federal income
tax purposes, which expire beginning in 2019. We have not recognized any benefit
from the future use of loss carryforwards for these periods or for any other
period since inception because of uncertainty surrounding their realization.

Results of Operations

         The Company was initially launched in the first half of 1999 and
started selling products on the site in September. We therefore have a limited
operating history on which to evaluate the business. Much of the success of the
business will be depend upon the Company's ability to execute on its business
strategies going forward which are outlined in Item 1 of this document.

Fiscal Year 1999 Compared to Fiscal Year 1998

         The Company started actively developing and marketing its website
business in fiscal year 1999. As such, comparisons from the prior fiscal year
are not considered meaningful.

Liquidity and Capital Resources

         From its inception, the Company's principal sources of capital have
been provided by operations, private placements of its securities, as well as
loans and capital contributions from the Company's principal stockholders. At
October 31, 1999 the Company had a working capital deficit of approximately
$(2.9 million) as compared to a working capital deficit of $(87,000) at March
31, 1999 representing a net decrease in working capital of approximately $2.9
million.

         Trademark Application - We currently have trademark applications
pending for our name "PetPlanet.com". An opposition to those applications has
been filed and stayed pending settlement negotiations with the opposer.
Management believes there is a strong possibility that settlement will be
reached which we allow the Company to continue using our existing name. There is
also a possibility that the opposition will be defeated (as a result of the
recently filed motion to dismiss or otherwise) and the trademark granted if the
registration procedure is simply allowed to run its course. Finally, there is
always the possibility that the registration may be denied altogether for
totally unforeseen reasons. Therefore, based on the unpredictable actions of the
participants and the uncertainties of the trademark litigation process and
despite any appearance of likely success, we cannot be certain of any potential
outcome.

         The Company believes that its current cash levels together with
revenues from operations, will be sufficient to satisfy its cash requirements
for the next two months and has substantial doubt about its ability to continue

                                       19

<PAGE>

operations beyond such period without obtaining additional financing and/or
consummating a strategic alliance with a well-funded business partner. No
assurance can be given that future unforeseen events will not adversely affect
the Company's ability to continue operations or to successfully obtain
additional financing, which may not be available on terms acceptable to the
Company, if at all.

Inflation

         The Company does not believe that inflation has had a material effect
on its results of operations during the past three fiscal years. There can be no
assurance that the Company's business will not be affected by inflation in the
future.

New Accounting Pronouncements

         See Note 1 to the Financial Statements for a discussion of New
Accounting Pronouncements affecting the Company.

ITEM 7.  FINANCIAL STATEMENTS

         The response to this item is included as a separate section of this
report commencing on page F-1.

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

         Not Applicable.

                                       20
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

(a)      (1)-(3)  Identify Directors and Executive Officers.

         The following table sets forth: (1) names and ages of all persons who
         presently are and who have been selected as directors of the Company;
         (2) all positions and offices with the Company held by each such
         person; (3) the term or office of each person named as a director; and
         (4) any period during which he or she has served as such:


---------------------------- -------------------------- ------------------------
Name                         Position & Office with     Age and Director Since
                             the Company
---------------------------- -------------------------- ------------------------
Steven E. Marder             President, Chief           38, October 3, 1996 (1)
                             Executive Officer
---------------------------- -------------------------- ------------------------
Kim Marder                   Vice President of          36, August 7, 1997 (1)
                             Marketing
---------------------------- -------------------------- ------------------------
Jeffrey P. Harris            Vice President of          36, May 15, 1999
                             Operations and Finance
---------------------------- -------------------------- ------------------------

         The terms 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.

         There is one family relationship among the Directors and Officers.
Steven and Kim Marder are husband and wife.

         There is no understanding or arrangement between any directors or any
other person or persons pursuant to which such individual was or is to be
selected as a director or nominee of the Company.


                                       21
<PAGE>

         The following is certain biographical information concerning the
directors and executive officers of the Company:

         Steven Marder is a co-founder of PetPlanet.com, Inc. Mr. Marder is also
an attorney admitted in the States of New York and California. He specializes in
Entertainment and Intellectual Property laws. Prior to joining the Company, Mr.
Marder, was the President and CEO of Marder Media Group, Inc. a privately held
media consulting company and a principal of Double Impact, Inc., a privately
held development company, positions he held since 1996. From 1994 to 1996, Mr.
Marder was director of business development and licensing for Compton's NewMedia
(Tribune Company). Mr. Marder is on the Board of Directors of the New Zealand
based privately held Internet company, Globalbrain.net. He holds a B.A. degree
from Columbia College/Columbia University in New York and a J.D. from St. John's
University School of Law.

         Kim Marder is a co-founder of PetPlanet.com, Inc. From 1997 until she
joined the Company, Ms. Marder served as Vice President of Marketing for
WorldPlay Entertainment, a division of America Online (AOL). From 1996 until
1997 Ms. Marder was Vice President of Marketing, for Theatrix Interactive, Inc.,
a privately held  software publishing and distribution company. Prior to her
position at Theatrix Interactive, Inc., Ms. Marder was the Executive Director of
Marketing, for Compton's NewMedia (Tribune Company).

         Jeffrey P. Harris, a certified public accountant, joined the Company in
1999. From 1996 until he joined the Company, Mr. Harris was employed by Disney
Consumer Products, Inc., first as Sr. Mgr. Business Operations and later as
Director of Finance for Walt Disney Art Classics, a division of Disney Consumer
Products, Inc. Prior to Disney Consumer Products, Mr. Harris was the Director of
Finance, Compton's NewMedia.





                                       22


<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries for the fiscal year ending 1999 of those persons who were, at
October 31, 1999, (i) the chief executive officer and (ii) the certain other
most highly compensated executive officers (the "named executive officers") of
the Company for the fiscal year ended October 31, 1999.



<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                               STOCK COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------
                                                                   Long Term Compensation
-------------------------------------------------------------------------------------------------------------
                               Annual Compensation
                              Paid 5/15/99-10/31/99              Awards                Payouts
-------------------------------------------------------------------------------------------------------------
Name and                                                Restricted      Securities
Principle                  Salary                       Stock           Underlying     LTIP       All Other
Position           Year    (000's)         Other        Award(s)      Options/SAR's    Payouts    Comp.
-------------------------------------------------------------------------------------------------------------
<S>                <C>      <C>            <C>          <C>                 <C>        <C>        <C>
Steven
Marder, CEO        1999     $70,788(1)     Stock        N/A          700,000 shares    N/A        N/A
                                       -   option                    of Common
                                           grant of                  Stock
                                           700,000
                                           shares of
                                           common
                                           stock*
-------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes $13,400 paid to Mr. Marder as an officer of the Company's
    subsidiary prior to the Reorganization. See "Item 1 -- Business."


                                       23

<PAGE>

         (b) Options/SAR Grants Table. No SARs have been granted.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                         Option Grants in Last Fiscal Year
-------------------------------------------------------------------------------------------------------------
       (a)                (b)               (c)               (d)               (e)               (f)
-------------------------------------------------------------------------------------------------------------
Name                Number of         % of Total        Exercise or       Expiration Date   Material Term
                    Securities        Options Granted   Base Price
                    Underlying        to Employees in   ($/Sh)
                    Options Granted   Fiscal Year
                    (#)
-------------------------------------------------------------------------------------------------------------
<S>                     <C>                 <C>            <C>               <C>              <C>
Steven E. Marder    700,000           29%               $4.00             5/15/09           Fully vests
CEO                                                                                         5/15/03
-------------------------------------------------------------------------------------------------------------



-------------------------------------------------------------------------------------------------------------
                  Aggregate Option Exercises in Last Fiscal Year and FY-End Option Values
-------------------------------------------------------------------------------------------------------------
         (a)                    (b)                   (c)                  (d)                   (e)
-------------------------------------------------------------------------------------------------------------
Name                    Shares Acquired on    Value Realized       Number of             Value of
                        Exercise (#)                               Securities            Unexercised
                                                                   Underlying            In-the-Money
                                                                   Unexercised Options   Options at FY-E
                                                                   at FY-End (#)         ($) (FY-E FMV of
                                                                                         stock = $6.31)
-------------------------------------------------------------------------------------------------------------
Steven E. Marder                                                    0/700,000              0/$1,617,000
-------------------------------------------------------------------------------------------------------------
</TABLE>


                                       24
<PAGE>


         Steven E. Marder entered into an employment agreement with the Company
dated as of April 1, 1999 and providing for an annual base salary of $125,000
for serving as Chairman of the Board and Chief Executive Officer of the Company
on a full-time basis. In addition, Mr. Marder is entitled to receive an annual
bonus of two percent (2%) of the Company's net revenues for the fiscal year as
determined in accordance with the terms of his agreement. The obligation of the
Company to pay the bonus to Mr. Marder for the fiscal year ended March 31, 2000
and 2001 shall be in the discretion of the Board of Directors if the annual net
income of the Company is less than $1,300,000 and $11,000,000, respectively. Mr.
Marder is also entitled to receive an annual dollar bonus equal to five percent
(5%) of the average monthly unique visitor or unique user level for the
Company's network of internet sites during the last six months of each fiscal
year, as determined by an independent internet traffic audit bureau ("Visitor
Average"). The obligation of the Company to pay this bonus to Mr. Marder shall
be in the discretion of the Board of Directors if the Visitor Average is less
than 1,000,000.

         Also, in the event that shareholder value ("Shareholder Value" defined
for purposes of this paragraph as the closing stock price on the last day of
each fiscal year) reflects an annual increase in excess of twenty percent (20%)
from the prior fiscal year, Mr. Marder will be entitled to a Shareholder Value
bonus equaling an option to purchase 50,000 shares of the Company's common stock
for each incremental increase of twenty percent (20%) attained, granted at an
exercise price equal to the Shareholder Value) up to a maximum of 500,000 per
year. In the event that the Shareholder Value does not reflect an increase of
twenty percent (20%) or more for the applicable fisal year, Mr. Marder shall not
be entitled to any bonus, otherwise subject to the discretion of the Board of
Directors.

         Under the terms of his employment agreement, Mr. Marder was granted
options to purchase 700,000 shares of the Company's common stock with a grant
date of May 15, 1999, in accordance with the terms of the Company's stock option
plan. 175,000 of these options vest on the first annual anniversary of the
agreement and the remaining options vest in equal quarterly installments over
the next following 12 fiscal quarters. In the event of a Change of Control, as
that term is defined in Mr. Marder's employment agreement, the options will vest
immediately. If Mr. Marder's employment is terminated following a Change in
Control, the options will continue to be exercisable for the duration of their
term notwithstanding the termination. Subject to certain limitations, Mr. Marder
will be entitled to a credit of up to three times his aggregate annual
compensation for the calendar year preceding the Change of Controls against the
exercise price of the options.

         The agreement has an initial term of two years unless sooner terminated
upon the death, disability or termination for cause of Mr. Marder. The agreement
further provides for severance payments equal to one year's base salary if the
Company and Mr. Marder fail to renew the term of the agreement following the end
of the initial term. The Company has agreed to permit Mr. Marder to participate
in any employee benefit plans established for senior management employees of the
Company and to make payments not in excess of $600 per month on an automobile
for his use.

         The Company maintains a broad-based stock option plan. There are
currently 3,000,000 shares authorized for issuance, subject to shareholder
approval. See Notes to Financial Statements for further information.


                                       25

<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


--------------------------------------------------------------------------------
         (1)                    (2)                   (3)
 Name and Address of         Amount and           Percent of
   Beneficial Owner           Nature of           Outstanding
                        Beneficial Ownership      Common Stock
--------------------------------------------------------------------------------
Steven E. Marder,           5,730,313(1)             60.99%
President and CEO
(address above)
--------------------------------------------------------------------------------
Kim Marder,                   214,718(2)              2.23%
VP Advertising
438 Boynton Ave.
Berkeley, CA  94707
--------------------------------------------------------------------------------
Saul Kassin,                  550,000                 5.67%
30 Waterview
Long Branch, NJ
07740
--------------------------------------------------------------------------------
All Officers,               5,934,805                64.26%
Directors and
Beneficial Owners as
a group (6 persons)
--------------------------------------------------------------------------------

  * Comprises less than one percent of outstanding Common Stock of the Company.

(1) Does not include 214,718 shares beneficially owned by Kim Marder, Mr.
    Marder's wife. Includes 280,000 shares beneficially owned by Mr. Marder
    which underly options granted by Mr. Marder to third parties.

(2) Does not include 5,730,313 shares beneficially owned by Steven E. Marder,
    Ms. Marder's husband.




                                       26



<PAGE>

         (b) Changes in Control

         As of the date of this Report, the Company has not entered into any
agreements, the operation of which may at a subsequent date result in a change
of control of the Company.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Steven E. Marder has granted options to acquire an aggregate of 280,000
shares of common stock held by him to third parties. The options were granted by
Mr. Marder [to individual lenders in connection with a loan transaction pursuant
to which the Company borrowed $700,000. The options constitute additional
consideration to the lenders on behalf of the Company. The options bear an
exercise price of $0.10 per share and are exercisable in the following
increments: 100,000 shares in whole or part from and after September 2, 1999,
100,000 shares from and after September 9, 1999 and 80,000 shares from and after
October 27, 1999.

         In addition, in connection with the loan transaction, Mr. Marder
obtained an option to acquire 25,000 shares of the Company's common stock from a
third party. Except as set forth in this paragraph, from October 31, 1998 until
February 1, 2000, and except as otherwise enumerated in this Report, no officer,
director or relative or spouse of the foregoing persons or any relative of such
person who has the same home as such person, or is a director or other officer
of any parent or subsidiary of the Registrant or any shareholder known by the
Regisrant to own of record or beneficially more than five percent (5%) of the
Registrant's Common Stock, had a direct or indirect material interest in any
transaction or presently proposed transaction to which the Registrant or any of
its parents or subsidiaries was or is a party.

         (c) Parents. Inapplicable.

         (d) Transactions with Promoters. Inapplicable.

         (e) Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. During the Company's last fiscal year,
Steven and Kim Marder each failed to timely file a report on Form 3 on one
occasion. Each of Mr. & Mrs. Marder failed to timely file reports on Form 4 on
two occasions during the fiscal year, representing a failure to timely file
reports in respect of an aggregate of six transactions.


                                       27




<PAGE>


                                     PART IV

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

         List of Exhibits

         The exhibits that are filed with this report or that are incorporated
herein by reference are set forth in the Exhibit Index appearing on page E-1
hereof.

         (b)  Reports on Form 8-K

              No reports on Form 8-K were filed during the last quarter of
fiscal 1999



                                       28


<PAGE>

                                  SIGNATURES

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

                                            PETPLANET.COM, INC.


Date:  February 12, 2000                    By: /s/  Steven E. Marder
                                                -----------------------------
                                                     Steven E. Marder, President


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report is signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.


MUST BE SIGNED BY EACH MEMBER OF THE BOARD AND ITS PRINCIPAL EXEC OFFICER, ITS
CONTROLLER OR PRINCIPAL ACCOUNTING OFFICER IF ANY AND ITS PRINCIPAL FINANCIAL
OFFICER



   Signatures                         Title                          Date

/s/ Steven E. Marder         Chairman, President and           February 12, 2000
------------------------       Chief Executive Officer
Steven E. Marder             (Principal Executive Officer)


/s/ Jeffrey P. Harris        Chief Financial Officer           February 12, 2000
------------------------       (Principal Financial Officer)
Jeffrey P. Harris


/s/ Kim Marder               Executive Vice President of       February 12, 2000
------------------------     Marketing and Director
Kim Marder





<PAGE>


<TABLE>
<CAPTION>
                   Incorporated Documents                            SEC Exhibit Reference
                   ----------------------                            ---------------------
<S>          <C>                                            <C>
 2.1         Agreement of Reorganization dated May 12,     As filed with the Registrant's Current Report on
             1999                                          Form 8-K on June 3, 1999, File No. 000-10576

 3.1         Certificate of Incorporation of the           As filed with the Registrant's Form 8-K, on May
             Registrant, as amended                        13, 1999, File No. 2-68701

             Filed herewith

 3.2         Bylaws of the Registrant

 4.1         Standard Form #1 of Convertible Note and
             Warrant used for private financing

 4.2         Standard Form #2 of Convertible Note and
             Warrant used for private financing

 4.3         Standard Form Subscription Agreement used
             for private financing

 4.4         Standard Form Warrant

10.1         Form Employment Agreement

10.2         Shopping Channel Promotional Agreement with
             American Online, Inc., dated June 28, 1999

10.3         License Agreement with MapQuest.com, Inc.,
             dated August 17, 1999

10.4         Exclusive Distribution and Fulfillment
             Agreement with American AGCO, Inc., dated
             September 10, 1999

10.5         Representation Agreement with Adsmart
             Network, dated December 14, 1999

10.6         Registrant's 1999 Stock Option Plan

10.7         Form of Option Agreement under the 1999
             Stock Option Plan

11.1         Computation of earnings per share

27.1         Financial Data Schedule for fiscal year
             ended October 31, 1999
</TABLE>


<PAGE>






                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                                FINANCIAL REPORT
                                OCTOBER 31, 1999






<PAGE>

                               PETPLANET.COM, INC.
                          (A Development Stage Company)


                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>



                                                                                                    Page 2
                                                                                                    ------
<S>                                                                                                   <C>
Independent Auditors' Report                                                                           F-2

Financial Statements:

   Balance Sheets at October 31, 1999 and March 31, 1999                                               F-3

   Statements of Operations for the seven months ended October 31, 1999 and for
     years ended March 31, 1999 and 1998 and for the period October 3, 1996,
     (Date of Inception), to October 31, 1999
                                                                                                       F-4

   Statements of Changes in Stockholders' Equity (Deficiency) for the periods from  October 3,
     1996, (Date of Inception) to October 31, 1999                                                     F-5

   Statements of Cash Flows for the seven months ended October 31, 1999 and for
     years ended March 31, 1999 and 1998 and for the period October 3, 1996,
     (Date of Inception), to October 31, 1999
                                                                                                       F-6

Notes to Financial Statements                                                                          F-7 to 17


</TABLE>


                                      F-1

<PAGE>
                              PETPLANET.COM, INC.
                         (A Development Stage Company)



                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
 Petplanet.com, Inc.
(A Development Stage Company)

We have audited the balance sheets of PetPlanet.com, Inc., a California
Corporation (A Development Stage Company) as of October 31, 1999 and March 31,
1999 and the related statements of operations, changes in stockholders' equity
(deficiency) and cash flows for the seven months ended October 31, 1999, the
years ended March 31, 1999 and 1998 and the period October 3, 1996, (Date of
Inception) to October 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PetPlanet.com, Inc. at October
31, 1999 and March 31, 1999, and the results of its operations and its cash
flows for the seven months ended October 31, 1999, the years ended March 31,
1999 and 1998 and the period October 3, 1996 (Date of Inception) through October
31, 1999 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 of the
financial statements, the Company is a development stage company, has suffered
recurring losses from operations and needs significant additional financing to
continue the development of its product. Resulting operating losses and negative
cash flows from operations are likely to occur until, if ever, profitability can
be achieved through successful marketing of its newly developed media. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

                                                             WISS & COMPANY, LLP

Livington, New Jersey
February 8, 2000




                See accompanying notes to financial statements.


                                      F-2


<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                 See accompanying notes to financial statements.


                                 BALANCE SHEETS
                                   (In 000's)
<TABLE>
<CAPTION>

                                                                                               October 31,         March 31,
                                                                                                   1999               1999
                                                                                               -----------         ----------
<S>                                                                                                 <C>                 <C>
    CURRENT ASSETS -
         Cash                                                                                     $       -          $     105
          Accounts Receivable                                                                             1                  -
          Inventory                                                                                       3                  -
          Prepaid Expenses                                                                                -                  -
                                                                                                  ---------          ---------
                Total Current Assets                                                                      4                105

    PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION OF
      $17,000 AT OCTOBER 31, 1999 AND $1,000 AT MARCH 31, 1999                                          179                  5

    Other Assets                                                                                         17                  -
                                                                                                   --------          ---------

    TOTAL ASSETS                                                                                  $     200          $     110
                                                                                                  =========          =========

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
    CURRENT LIABILITIES:
         Accrued Liabilities                                                                      $   1,853          $      23
         Loans/Notes Payable                                                                          1,032                174
         Current portion of Capital Lease Liability                                                      17                  -
                                                                                                  ---------          ---------
             Total Current Liabilities                                                               $2,902               $197

    NONCURRENT LIABILITIES -
         Loans/Notes Payable - Long Term                                                                  -                 53
         Capital Lease Liability                                                                         31                  -
                                                                                                  ---------          ---------
    TOTAL LIABILITIES                                                                                 2,933                250

    COMMITMENTS & CONTINGENCY

    STOCKHOLDERS' EQUITY (DEFICIENCY):
         Preferred stock, no par:
             Authorized -2,000,000 shares at October 31, 1999 - 2,000,00 shares
                at March 31, 1999
             Issued and outstanding - -0- shares Common stock, no par, $.01 par
                value:
             Authorized - 20,000,000 shares
             Issued and outstanding - 9,104,000 at October 31, 1999,
                 6,550,000 at March 31, 1999                                                             91                 66
         Additional paid-in capital                                                                   3,628                382
         Deficit Accumulated During Development Stage                                                (6,303)              (473)
         Loans Receivable - Option Exercise                                                             (64)                 -
         Deferred Consulting Fees                                                                       (85)              (115)
                                                                                                   --------           --------
                      Total Stockholders' Equity (Deficiency)                                        (2,733)              (140)
                                                                                                   --------           --------

    TOTAL LIABILITIES & STOCKHOLDERS EQUITY (DEFICIENCY)                                           $    200            $   110
                                                                                                   ========            =======
</TABLE>

                See accompanying notes to financial statements.

                                      F-3
<PAGE>


                            STATEMENTS OF OPERATIONS
                                   (in 000's)

<TABLE>
<CAPTION>

                                                                                                                October 3,
                                               Seven Months                                                   1996 (Date of
                                                  Ended             Year Ended           Year Ended            Inception) to
                                                October 31,          March 31,            March 31,            October 31,
                                                    1999                1999                 1998                  1999
                                               --------------      --------------       --------------          -----------
<S>                                                  <C>                  <C>                  <C>              <C>

OPERATING REVENUES                                  $        9           $      -            $       -           $        9

COST OF GOODS                                               12                  -                    -                   12
                                                    ----------     --------------       --------------           ----------

GROSS LOSS                                                  (3)                  -                   -                   (3)

COSTS AND EXPENSES:
    Product Development                                  1,553                  11                   -                1,564
    Sales and Marketing                                  1,235                   -                   -                1,235
    General and Administrative                           1,176                 284                  144               1,628
    Depreciation/Amortization                               16                   1                    -                  17
    Interest                                             1,847                   7                    2               1,856
                                                    ----------           ---------            ---------          ----------
                                                         5,827                 303                  146               6,300
                                                    ----------           ---------            ---------          ----------

NET LOSS                                            $   (5,830)          $    (303)           $    (146)         $   (6,303)
                                                    ==========           ==========           ==========         ==========

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                                   8,739               6,425                1,278               4,360
                                                    ==========           =========            =========          ==========

BASIC AND DILUTED LOSS PER COMMON SHARE             $     (.67)          $    (.05)           $    (.11)         $    (1.45)
                                                    ==========           =========            ==========         ===========
</TABLE>

                See accompanying notes to financial statements.

                                      F-4

<PAGE>



           STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                                   (In 000's)

<TABLE>
<CAPTION>


                                                                         Common Stock            Additional     Deficit Accumulated
                                                                                  No Par $.01      Paid-in      During Development
                                                                     Shares      Stated Value      Capital             Stage
                                                                   ----------    ------------   -------------    ----------------
<S>                                                                     <C>            <C>          <C>             <C>

OCTOBER 3, 1996 (DATE OF INCEPTION) TO MARCH 31, 1997
     Common stock issued in October 1996                               1,278      $     13      $       -           $      -
     Stockholder services contributed                                      -             -             12                  -
     Net loss                                                              -             -              -                (24)
                                                                   ---------     ----------     ----------         ----------
                                                                                                        -

BALANCE, MARCH 31, 1997                                                1,278            13             12                (24)

YEAR ENDED MARCH 31, 1998 -
     Stockholder services contributed                                   -                -            100                  -
     Net loss                                                           -                -              -               (146)
                                                                   ---------     ----------     ----------         ----------

BALANCE, MARCH 31, 1998                                                1,278            13            112               (170)

YEAR ENDED MARCH 31, 1999 -
     Common stock issued in April 1998                                 5,112            51            (47)                 -
     Stockholder services contributed                                    -               -            100                  -
     Common stock issued for services in January 1999                    160             2            115                  -
     Options issued for services                                         -               -            102                  -
     Net loss                                                            -               -              -               (303)
                                                                   ---------     ----------     ----------         ----------

BALANCE, MARCH 31, 1999                                                6,550     $      66      $     382         $     (473)
                                                                   =========     ==========     ==========        ===========

PERIOD ENDED October 31, 1999
     Effect of merger as described in Note 8 along with                2,250             22           961                  -
        underlying equity financing in May 1999
     Conversion of bridge financing into equity in May 1999              100              1            49                  -
     Exercise of options by employee in May 1999 at $.29 per             204              2            62                  -
        share
Issuance of Company options for:
     Interest                                                            -                -         1,763                  -
     Consulting Services                                                 -                -           287                  -
     Vendors                                                             -                -            53                  -
Discount on issuance of convertible debt                                 -                -            71                  -
Net Loss for period                                                      -                -             -             (5,830)
                                                                   ---------     ----------     ----------         ----------

BALANCE OCTOBER 31, 1999                                               9,104     $       91     $   3,628          $  (6,303)
                                                                   =========     ==========     ==========         ==========
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>


                                                                                 Deferred       Stockholders'
                                                                    Note        Consulting         Equity
                                                                                   Fees         (Deficiency)
                                                                 -----------  --------------   -------------
<S>                                                               <C>           <C>             <C>

OCTOBER 3, 1996 (DATE OF INCEPTION) TO MARCH 31, 1997
     Common stock issued in October 1996                         $      -     $      -            13
     Stockholder services contributed                                   -            -            12
     Net loss                                                           -            -           (24)
                                                                 --------     --------     ---------


BALANCE, MARCH 31, 1997                                                 -            -             1

YEAR ENDED MARCH 31, 1998 -
     Stockholder services contributed                                   -            -           100
     Net loss                                                           -            -          (146)
                                                                 --------     --------     ---------

BALANCE, MARCH 31, 1998                                                 -            -           (45)

YEAR ENDED MARCH 31, 1999 -
     Common stock issued in April 1998                                  -            -             4
     Stockholder services contributed                                   -            -           100
     Common stock issued for services in January 1999                   -         (115)            2
     Options issued for services                                        -            -           102
     Net loss                                                           -            -          (303)
                                                                 --------     --------     ---------

BALANCE, MARCH 31, 1999                                          $      -     $   (115)    $    (140)
                                                                 ========     ========     =========

PERIOD ENDED October 31, 1999
     Effect of merger as described in Note 8 along with                 -            -           983
underlying equity financing in May 1999
     Conversion of bridge financing into equity in May 1999             -            -            50
     Exercise of options by employee in May 1999 at $.29 per         (64)            -             -
share
Issuance of Company options for:
     Interest                                                           -            -         1,763
     Consulting Services                                                -            -           287
     Vendors                                                            -            -            53
Discount on issuance of convertible debt                                -            -            71
Net Loss for period                                                     -           30        (5,800)
                                                                 --------     --------     ---------

BALANCE OCTOBER 31, 1999                                         $    (64)    $    (85)    $  (2,733)
                                                                 ========     ========     =========
</TABLE>








                 See accompanying notes to financial statements.

                                       F-5
<PAGE>

                            STATEMENTS OF CASH FLOWS
                                   (In 000's)
<TABLE>
<CAPTION>

                                                                                                                        October 3,
                                                           Seven Months                                                1996 (Date of
                                                               Ended           Year Ended         Year Ended           Inception) to
                                                            October 31,         March 31,          March 31,            October 31,
                                                                1999               1999              1998                  1999
                                                           -------------      -------------     --------------          -----------
<S>                                                               <C>                 <C>              <C>                   <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                     $   (5,830)        $     (303)        $     (146)       $    (6,303)
   Adjustments to reconcile net income (loss) to net
     cash flows from operating activities:
       Depreciation                                                     16                  1                  -                 17
       Deferred Consulting Fees                                         30                  -                  -                 30
       Stockholders services contributed                                 -                100                100                224
       Common stock issued for services                                  -                  2                  -                  2
       Discount on issuance of convertible debt                         71                  -                  -                 71
       Options issued for interest and services                      2,103                102                  -              2,205
       Changes in operating assets and liabilities
              Accounts Receivable                                       (1)                 -                  -                 (1)
              Inventory                                                 (3)                 -                  -                 (3)
              Deposits                                                 (17)                 -                  -                (17)
          Accrued liabilities                                        1,829                 27                  2              1,858
                                                                ----------         ----------          ---------         ----------
              Net cash flows - operating activities                 (1,802)               (71)               (44)            (1,917)
                                                                ----------         ----------          ---------         ----------

CASH FLOW FROM INVESTING ACTIVITIES -
   Purchase of property and equipment                                 (138)                (6)                 -               (144)
                                                                ----------         ----------          ---------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES -
   Proceeds from issuance of common stock                              984                  4                  -                988
   Proceeds of loans payable                                           855                150                  -              1,005
   Proceeds of notes from affiliated company                             -                 27                 44                 71
   Capital Lease Liability                                              (4)                 -                  -                 (4)
                                                                 ----------       -----------          ---------       -------------

              Net cash flows - financing activities                  1,835                181                 44              2,060
                                                                ----------         ----------          ---------         ----------

NET CHANGE IN CASH                                                    (105)               104                  -                  -

CASH, BEGINNING OF PERIOD                                       $      105                  1                  1                  -
                                                                ----------         ----------          ---------         ----------

CASH, END OF PERIOD                                             $        -         $      105         $        1         $        -
                                                                ==========         ==========         ==========         ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
   Interest paid                                                $       15         $        -         $        -         $       15
                                                                ==========         ==========         ==========         ===========

   Income taxes paid                                            $        -         $        -         $        -         $        -
                                                                ==========         ==========         ==========         ==========

   Property acquired through capital leases                     $       52         $        -         $        -         $       52
                                                                ==========         ==========         ==========         ==========

   Payment of notes payable with stock                          $       50         $        -         $        -         $       50
                                                                ==========         ==========         ==========         ==========

   Stock issued for deferred consulting fees                    $        -         $      115         $        -         $      115
                                                                ==========         ==========         ==========         ==========
</TABLE>


                 See accompanying notes to financial statements.

                                       F-6


<PAGE>


                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS



NOTE 1 - NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         Nature of the Business - PetPlanet.Com, Inc. (the "Company" or "PPI")
is a development stage company, located in San Francisco, California and was
incorporated under the laws of the State of California in October 1996 (Date of
Inception) (Note 8). On May 15, 1999, the Company consummated a reverse merger
with Techscience Industries., a Delaware Corporation ("TSCI"). As part of this
transaction, TSCI changed its name to PetPlanet.com, Inc.

         The Company's core product and brand intends to feature personalized,
national and local information, community driven content, entertainment and
unique products and services. Company revenues are expected to come from
electronic commerce associated with the sale of pet foods and related products,
advertising and sponsorships and other sources.

         Fiscal Year - As part of the reverse merger with TSCI, PPI changed its
fiscal year-end from March 31 to October 31.

         Financial Instruments - Financial instruments include cash, account's
receivable, and loans and notes payable and accrued expenses. The amounts
reported for financial instruments are considered to be reasonable
approximations of their fair values, based on market and other information
available to management.

         Revenue Recognition - Revenues from product sales, net of product
discounts, are recognized upon shipment of the related goods. Outbound shipping
and handling charges fees are included in product sales upon shipment.

         Advertising - Advertising costs are expensed as incurred. Advertising
expense was $1.2 million for the seven month period ended October 31, 1999.

         Inventory - Inventories are stated at the lower of cost (using the
first-in, first-out method) or market.

         Property and Equipment - Property and equipment includes office
furniture, equipment and computer equipment and are stated at cost and are
depreciated using the straight-line method over their estimated useful lives of
3 to 7 years. The Company also has several capital leases that are stated at
their net present value of the underlying lease payments.

         Income Taxes - Deferred income taxes result primarily from net
operating losses, and use the cash method for Income Tax Reporting purposes.


                                      F-7

<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                Risk Concentrations:

(a)      Dependence on the Internet - The success of the Company's operations is
         contingent upon its ability to attract a market on the Internet. There
         can be no assurance that the Company may not be adversely affected by
         the matters affecting the Internet.

(b)      Cash - The Company maintains its cash balances in financial
         institutions which are insured by the Federal Deposit Insurance
         Corporation up to $100,000 and are subject to the risk associated with
         maintaining cash balances in excess of insured amounts.

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

         Product Development - Product development expenses consist primarily of
consultant fees for website development, independent contractors and other
website related costs. As the company believes that its website is subject to
continual and substantial change, expenditures relating to product development
are expensed as incurred.

         Earnings (Loss) Per Share - Basic earnings per share excludes any
dilutive effects of options, warrants, and convertible securities. Basic
earnings per share is computed using the weighted-average number of common
shares outstanding during the period. Diluted earnings per share is computed
using the weighted-average number of common and common stock equivalent shares
outstanding during the period. Common equivalent shares are excluded from the
computation if their effect is antidilutive.

         Stock compensation - Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation", requires companies
to measure employee stock compensation plans based on the fair value method of
accounting. However, the statement allows the alternative of continued use of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, " with pro forma disclosure of net income and earnings per share
determined as if the fair value based method had been applied in measuring
compensation. The Company has determined it will continue to apply APB Opinion
No. 25 in accounting for its stock options plans.

         Reorganization - As a result of the TSCI transaction (Note 8), the
Company's common stockholders received .639 shares of TSCI common stock for each
share of the Company's common stock held. All share and per-share amounts in the
accompanying financial statements have been restated to give effect to this
transaction.



                                      F-8
<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS


NOTE 2 - GOING CONCERN:

         The Company's financial statements have been presented on the basis
that it is a going concern which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company is a
development stage company and has had a history of losses since its inception in
October 1996.

         The Company's continued existence is dependent upon its ability to
achieve profitable operations and obtain additional financing. The following
represents the Company's principal operating and liquidity problems and
management's plans to overcome them.

         Operating Trends and Future Prospects - The Company is a development
stage company and has had minimal revenues since its inception. The Company is
currently attempting to develop an Internet market for individuals with an
interest in pets. The future growth and profitability of the Company will be
principally dependent upon its ability to successfully develop and market its
services on the Internet. The Company has not enhanced its identity in this
media to the point where it has been able to generate meaningful revenues. The
Company anticipates that it will incur substantial operating expenses in
connection with this effort and expects these expenses to result in continuing
and significant operating losses until such time, if ever, the Company is able
to achieve adequate revenue levels.

                                      F-9
<PAGE>

                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS



         Recent Financing Activities - The Company's capital requirements have
been and will continue to be significant. In the past, the Company has financed
its working capital requirements through a private placement consummated on May
15, 1999 and cash flow generated from loans from officers of the Company and
high net-worth individuals. The Company is dependent on obtaining additional
financing to fund its future operations and working capital requirements and
continues to seek to raise additional capital through the sale of common stock
and issuance of loans and other convertible debt. The Company is aggressively
seeking arrangements with respect to, or sources of, additional financing (Note
10). However, there can be no assurance that additional financing will be
available to the Company on acceptable terms, or at all. In view of the
Company's limited resources, its anticipated expenses and the competitive
environment in which the Company operates, any inability to obtain additional
financing would severely limit the Company's ability to enhance its identity on
the Internet.

         NOTE 3 - ACCRUED LIABILITIES

         Accrued liabilities consist of the following:

                                               Stated in 000's
                                      October 31,                March 31,
                                      -----------                ---------
                                          1999                      1999
                                          ----                      ----
Accrued Advertising                    $  432                      $  -
Accrued Consulting                         63                         -
Accrued Development Costs                 656                         -
Accrued Promotional Costs                 133                         -
Accrued Other                             568                        23
                                       ------                      ----

Total Accrued Liabilities              $1,852                      $ 23
                                       ======                      ====


NOTE 4 - LOAN PAYABLE:

         During October 1999, the Company borrowed $100,000 in the form of a
convertible note bearing interest at 10% per annum through May 2000. The Company
has recorded a finance charge of $21,000 representing the discount on
conversion.

NOTE 5 - RELATED PARTY TRANSACTIONS:

         Notes Payable- Officers - During the seven month period ended October
31, 1999, various officers of the company contributed cash to the Company in the
form of convertible notes. The notes were short-term in duration (less than one
year) and carried a 10% per annum interest rate. The total of these notes is
$230,000. The Company has recorded a charge to interest of approximately $49,000
in connection with a conversion discount offered to the officers on the
aforementioned debt.

                                      F-10
<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS


         Notes Payable - Stockholders - During September and October, 1999, the
Company borrowed $625,000 from stockholders. The notes were short-term in
duration (less than one year) and carried a 10% per annum interest rate. In
connection with these notes, the President of the Company issued personal stock
options to the creditors for the purchase of his common stock of the Company at
a discounted amount. The Company has recorded a charge to interest of
approximately $1,365,000 in connection with the issuance of these options.

         Notes Payable - Affiliated Company - At October 31, 1999 and March 31,
1999, the Company had outstanding notes payable to a company affiliated with the
Company's President. The notes, which approximate $77,000 at both periods, bear
interest at 8% per annum and are due during the year ended October 31, 2000.

         Employment Agreement - Vice President, Marketing - In March 1999, the
Company formalized a consulting agreement with a Director, for marketing
services rendered from April 1998. The terms of the agreement called for
compensation of $8,000 per month commencing March 1999 and a ten year option for
255,600 shares issued in March 1999 for services rendered as a consultant for
the period April 1998 to May 1999. Through October 31, 1999, the Company has
recorded compensation of approximately $88,000 for options issued in connection
with services rendered.

         Upon completion of the merger with TSCI, this consultant became an
employee earning an annual salary of $110,000 per annum, plus a discretionary
bonus of at least 20% of the base salary per annum. The employment agreement can
be terminated by either party at any time with notice.

NOTE 6 - COMMITMENTS:

         Facility Leases - The Company rents office space in San Francisco and
in New York. The office facility agreement in San Francisco is one year in
duration while the New York space is a three year lease. Total rent expense for
the Company's current and prior facilities approximated $33,000, $6,000, $7,000
and $51,000 for the seven months ended October 31, 1999, the year ended March
31, 1999 and 1998 and for the period October 3, 1996, (Date of Inception)
through October 31, 1999, ("the 1999 Cumulative Period"), respectively.


         Capital Leases - The Company leases its two facilities under operating
leases expiring in April of 2000 and May of 2002. It also leases office
equipment under capital leases. At October 31, 1999, office equipment under
capital leases approximated $52,000 with accumulated depreciation of $5,000.

         The following is a schedule of future minimum rental payments required
for all non-cancelable leases that have initial or remaining lease terms in
excess of one year at October 31, 1999.


                                      F-11
<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                 Year Ending October 31, 1999         Capital Leases Included in      Operating Leases
                                                        Property and Equipment
<S>                                                              <C>                        <C>

                             2000                              $ 26,000                   $ 60,000
                             2001                                24,000                     44,000
                             2002                                12,000                     31,000
                                                               --------                   --------
                                                                 62,000                   $135,000
                                                                                          ========

  Less: Amount representing interest                             14,000
                                                               --------
                                                               $ 48,000
Present value of minimum lease payments (Note 4)

  Less: Current maturities                                       17,000
                                                               --------

Non-current                                                    $ 31,000
                                                               ========

</TABLE>

         Trademark Application - We currently have trademark applications
pending for our name "PetPlanet.com". An opposition to those applications has
been filed and stayed pending settlement negotiations with the opposer.
Management believes there is a strong possibility that settlement will be
reached which we allow the Company to continue using our existing name. There is
also a possibility that the opposition will be defeated (as a result of the
recently filed motion to dismiss or otherwise) and the trademark granted if the
registration procedure is simply allowed to run its course. Finally, there is
always the possibility that the registration may be denied altogether for
totally unforeseen reasons. Therefore, based on the unpredictable actions of the
participants and the uncertainties of the trademark litigation process and
despite any appearance of likely success, we cannot be certain of any potential
outcome.


NOTE 7 - INCOME TAXES:

         Deferred income taxes reflect the net effects of temporary differences
between the amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The principal temporary difference
arises from net operating loss carryforwards and the differences resulting from
reporting on the cash basis of accounting for tax reporting purposes. At October
31, 1999, federal and state net operating loss carryforwards approximated
$3,650,000. These carryforwards can be used to offset current and future taxable
income through the year 2019. A valuation allowance is provided when it is more
likely than not that some portion of the deferred tax asset will not be
realized. The Company has determined, based on the Company's prior history of
recurring losses, that a full valuation allowance is appropriate at October 31,
1999.

NOTE 8 - STOCKHOLDERS' EQUITY:

         Acquisition Agreement - On May 13, 1999, the Company and the individual
holders of all of the Company's outstanding common stock consummated a reverse
acquisition (the "Reorganization"), with TSCI. Reorganization provided for an
exchange of stock whereby the holders of all of the Company's outstanding common
stock and common stock equivalents exchanged the stock in exchange for 6,754,640
shares of TSCI's common stock, $.01 par value per share and 570,360 TSCI
options, respectively. As part of the Reorganization, TSCI changed its name to
PetPlanet.Com, Inc.

         In addition, as part of this agreement, TSCI made a $150,000 bridge
loan to the Company, with interest at 10% per annum, collateralized by 51% of
the Company's common stock. The loan was repaid at the closing by payment of
$100,000 in cash and $50,000 in common stock.

                                      F-12
<PAGE>

                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS


         Web Site Development Agreement - In April 1999, the Company entered
into an agreement with a technology company, (the "Development Company"), to
design, develop and enhance the computer software and information technology
associated with the Company's commercial web site. In accordance with the
agreement, the Company issued options to the Development Company
for the right to purchase 134,535 shares of the Company's common stock. In
addition, the Company has agreed to make payments based on a series of
milestones for the project, which are expected to approximate $200,000. In
accordance with this agreement, the Company has recorded a charge of
approximately $239,000.

         1999 Stock Option Agreement - On March 1, 1999 the Board of Directors
consented to the adoption of the 1999 Stock Option Plan (the "Plan"). The Plan
has reserved 2,000,000 shares of common stock for the issuance of options
("Options") to employees, officers and, under certain circumstances, directors
of and consultants to the Company ("Eligible Participants"). Options granted
under the Plans may be either "incentive stock options" ("ISOs") as defined in
Section 422 of the Internal Revenue Code of 1986, which are eligible to
employees only as amended (the "Code"), or "nonqualified stock options"
("NQSOs") which are eligible for grant to any of the aforementioned parties. The
Plan does not provide for the issuance of stock appreciation rights, restricted
stock awards or deferred stock awards. The Board of Directors has sole
discretion and authority, consistent with the provisions of the Plans, to select
the Eligible Participants to whom Options will be granted under the Plans, the
number of shares which will be covered by each Option and the form and terms of
the agreement to be used. All employees and officers of the Company (except for
members of the Committee) are eligible to participate in the Plans. Directors
are eligible to participate only if they have been declared to be "eligible
directors" by resolution of the Board of Directors.

         The Board of Directors is empowered to determine the exercise price of
Options granted under the Plan in accordance with the following:

<TABLE>
<CAPTION>
                     Type of Grant                                    Exercise or Purchase Price
                     -------------                                    --------------------------
              <S>                                                      <C>

         ISO's or NQSO's issued to 10% or                            At least 110% of the fair market value per
           more shareholder of common stock                          share on the date of grant.
           in the Company

         ISO's issued to a less than 10% shareholder of common       At least the fair market value per share on the
           stock in the Company                                      date of grant.

         NQSO's issued to a less than 10% shareholder of common      At least 85% of the fair market value on the
           stock in the Company                                      date of grant.

</TABLE>

                                      F-13
<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                    Type of Grant                                    Exercise or Purchase Price
                    -------------                                    ---------------------------
           <S>                                                        <C>
        Shares issued to 10% or more shareholder of common stock     At least the fair market value per share on the
        in the Company                                               date of grant.

        Shares issued to a less than 10%                             At least 85% of the fair market value
        on the Shareholder of common stock in the Company            date of grant.

        Other awards                                                 To be determined by the Board of Directors or
                                                                     other administrator
</TABLE>

         The Board of Directors has the authority to determine the time or times
at which Options granted under the Plans become exercisable, but Options expire
no later than ten years from the date of grant (five years with respect to
Optionees who own at least 10% of the outstanding common stock of the Company).
Options are nontransferable, other than by will and the laws of descent, and
generally may be exercised only by an employee while employed by the Company or
within 90 days after termination of employment (one year from termination
resulting from death or disability).

         No incentive stock option may be granted to an Employee if, as the
result of such grant, the aggregate fair market value (determined at the time
each option was granted) of the shares with respect to which incentive stock
options are exercisable for the first time by such Employee during any calendar
year (under all such plans of the Company and any parent and subsidiary) exceeds
$100,000. The Plan does not confer upon any Employee any right with respect to
the continuation of employment by the Company, nor do the Plans interfere in any
way with the Employee's right or the Company's right to terminate the Employee's
employment at any time.

                                      F-14

<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS



         Information on option activity for the seven months ended October 31,
1999 and the year is as follows:
<TABLE>
<CAPTION>

                                                       October 31, 1999                   March 31, 1999
                                                       ----------------                   --------------
                                                                    Weighted                         Weighted
                                                Shares Under         Average       Shares Under      Average
                                                   Option        Exercise Price       Option      Exercise Price
                                                ------------     --------------    ------------   --------------
          <S>                                        <C>               <C>              <C>             <C>

         BALANCE - BEGINNING OF PERIOD                624,300          $   .39              -          $    -

         Options granted:
         To officers/directors(c)                (c)1,693,000             4.14     (a)255,600             .31
         To others(d)                            (d)  452,000             3.20     (b)368,700             .44
                                                   ----------          -------       --------          ------

                  Total grants                      2,145,000             3.94        624,300             .39
                                                   ----------          -------       --------          ------

         BALANCE - END OF PERIOD                    2,769,300         $   3.14        624,300          $  .39
                                                   ==========         ========       ========          ======
</TABLE>

(a)  Consists of nonqualified options issued to VP of Marketing for 255,600
     shares of the Company's stock at a weighted average fair value of $.43 per
     option.

(b)  Consists of nonqualified options having a weighted Average fair value per
     option was $.25.

(c)  Weighted Average fair value per option was $2.42.

(d)  Weighted Average fair value per option was $2.58.

         The Company utilized the value of services provided by the grantees as
a benchmark for valuing the options granted during the year end March 31, 1999.

         The Company uses the intrinsic value method of accounting to measure
compensation expense for options issued to employees. If the fair value method
had been used to measure compensation expense, net loss would have increased by
approximately $4,990,000 or $.57 per share for the period ended October 31, 1999
to $11,369,000. For the seven months ended October 31, 1999, the fair value of
options granted were estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted average assumptions, respectively:
risk free interest rate of 6%, dividend yield of 0.0%, volatility factors of
the expected market price of the Company's common stock of 67% and a weighted
average life of the options ranging up to four years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of trade options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require stock is not traded
publicly, the employee stock options have characteristics significantly
different from those of normal publicly traded options, and because changes in
the subjective input assumptions can materially affect the fair value estimate,
in management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.


                                      F-15
<PAGE>

         Consulting Agreement - Financing Facilitator - In January 1999, the
Company entered into a one-year agreement with a consultant to facilitate and
evaluate potential financing opportunities for the Company. The consultant's
responsibilities included securing $600,000 to $1,000,000 bridge financing for
the Company and securing at least an additional $3,000,000 in financing through
a private placement.

         The consultant shall be entitled to a 2% cash commission based on the
value of the financing obtained, 20,000 shares of common stock vesting over the
first 90 days of the agreement, the lesser of 60,000 shares or one share for
each $10 of bridge financing obtained for the Company and additional shares
based on private placement proceeds, other than bridge financing, ranging from
30,000 shares for $500,000 of private placement proceeds to 170,000 shares for
proceeds in excess of $4,000,000.

         The agreement can be terminated by either party at any time with
notice.

         Warrant Note - During the period ended October 31, 1999, the Company
issued 436,488 warrants to various entities for services rendered. Accordingly,
the Company has recorded a charge to operations of $497,000 in connection with
these warrants.

NOTE 9 - PROFORMA COMPARISON

         The following unaudited information represents the unaudited operations
of PetPlanet.com (A California Corporation) for the seven months ended October
31, 1998 and been presented for comparative purposes:
                                                        Dollars in Thousands
                                                         Except Loss per Share

Operating Revenues                                          $          -
Costs and Expenses                                                    20
                                                            -------------

Net Loss                                                              20
                                                            ------------

Basic and Diluted Loss Per Share                            $       (.01)
                                                            ------------

NOTE 10 - SUBSEQUENT EVENTS:

         Funding Activities - In November, December and January, the Company
borrowed $1,635,000 under various 10% and 12% interest bearing non-negotiable
convertible notes. The due dates for these notes range from May 1, 2000 to
January 24, 2001. The holders of these notes have the right to purchase shares
of the Company's common stock from $2.00 to $5.00 of each principle amount
outstanding. Under certain circumstances, the holders of these notes could be
required to convert the notes into common shares of the Company.

         In December, 1999, the Company issued 250,000 shares of its common
stock for a purchase price of $500,000 to an unrelated investor.

         In November, 1999, the Company borrowed under a 10% interest bearing
note payable $125,000 due in six months. In conjunction with this note, the
Company's chief executive officer sold to the note holder, at a price
significantly discounted to the market price at that time, 50,000 shares of the
Company's common stock. The note holder gave the chief executive officer an
option to purchase 25,000 shares of the Company's common stock at $5.00 per
share.


                                      F-16

<PAGE>
                               PETPLANET.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

NOTE 11 - NEW ACCOUNTING PRONOUNCEMENTS - NEW ACCOUNTING PRONOUNCEMENTS:

         In April 1998, the American Institute of Certified Public Accountants
issued SOP 98-5, Reporting on The Costs of Start-Up Activities. SOP 98-5 is
effective for the Company's fiscal year ending March 31, 2000. SOP 98-5 requires
costs of start-up activities and organization costs to be expensed as incurred.

         In addition to the aforementioned pronouncements, SFAS 133, Accounting
for Derivative Instruments and Hedging Activities was issued in June 1998 for
years ending after June 15, 1998.

         The Company does not expect that any of the aforementioned
pronouncements will have a significant effect on its financial statements.













                                      F-17