UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-KSB/A

                                Amendment No. 1

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

                     For the year ended December 31, 2000.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required] For the transition period _________ to _________.

                         Commission file Number 0-9940

                              THE FINX GROUP, INC.
          (Name of small business issuer as specified in its charter)
                     (Formerly Known as Fingermatrix, Inc.)

            New York                                     13-2854686
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)

249 Saw Mill River Road, Elmsford, New York                      10523
(Address of principal executive offices)                       (Zip Code)

         Issuer's telephone number, including area code: (914) 592-5930

        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 0.01 per share
                                (Title of class)

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

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

         The issuer's revenues for the year ended December 31, 2000 were
$3,233,000.

         The aggregate market value of the common equity held by non-affiliates
of the Registrant as of December 10, 2001 was approximately $7 million computed
on the basis of the reported sale price per share ($0.43) of such stock on
the National Association of Securities Dealers, Inc.'s Over the Counter Bulletin
Board. Shares of Common Stock held by each officer and director and by each
person who owns 5% or more of the outstanding Common Stock have been excluded in
that such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.

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

DOCUMENTS INCORPORATED BY REFERENCE:  None

Transitional Small Business Disclosure Format (check one):  Yes ___  No X

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         ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT, INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-KSB, INCLUDING WITHOUT LIMITATION THE STATEMENTS
UNDER "RISK FACTORS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" ARE, OR MAY BE, FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT").

         WITHOUT LIMITING THE FOREGOING, (I) THE WORDS "BELIEVES,"
"ANTICIPATES," "PLANS," "EXPECTS," "INTENDS," "ESTIMATES" AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS AND (II)
FORWARD-LOOKING STATEMENTS INCLUDE ANY STATEMENTS WITH RESPECT TO THE POSSIBLE
FUTURE RESULTS OF THE COMPANY, INCLUDING ANY PROJECTIONS OR DESCRIPTIONS OF
ANTICIPATED REVENUE ENHANCEMENTS OR COST SAVINGS. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS,
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY,
OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS.

         SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: THE COMPANY'S
HISTORY OF LOSSES AND CASH FLOW DEFICITS; NEED FOR ADDITIONAL FINANCING TO FUND
OUR PRESENT AND PROPOSED BUSINESS ACTIVITIES; DEPENDENCE ON PRESENT EXECUTIVE
OFFICERS AND KEY PERSONNEL TO MANAGE OUR PRESENT AND PROPOSED BUSINESS
OPERATIONS AND OUR ABILITY TO INTEGRATE NEW OFFICERS AND KEY PERSONNEL;
DEPENDENCE UPON AN EXCLUSIVE DISTRIBUTION AGREEMENT FOR THE FUTURE OPERATIONS OF
SECURED PORTAL SYSTEMS, INC. ("SECURED PORTALS"); DEPENDENCE UPON PATENT
PROTECTION FOR THE PROPOSED ACTIVITIES OF FMX CORP. ("FMX"); THREAT THAT
TECHNOLOGICAL CHANGE COULD RENDER CERTAIN OF OUR PRODUCTS AND PROPOSED PRODUCTS
OBSOLETE OR NON-COMPETITIVE; INABILITY TO PREDICT MARKET ACCEPTANCE FOR OUR
PROPOSED PRODUCTS; INTENSE COMPETITION OF THE BUSINESS IN WHICH WE INTEND TO
ENGAGE; THREAT THAT E-COMMERCE PRODUCTS AND SERVICES MAY BECOME SUBJECT TO
GOVERNMENT REGULATION; THE THREAT THAT OUR E-COMMERCE WEBSITES ARE SUBJECT TO
COMPUTER SECURITY RISKS, THE RISKS RELATING TO LEGAL PROCEEDINGS AND OTHER
FACTORS BOTH REFERENCED AND NOT REFERENCED IN THIS ANNUAL REPORT ON FORM 10-KSB,
INCLUDING THOSE SET FORTH UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS
BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS
CONTAINED THROUGHOUT THIS ANNUAL REPORT ON FORM 10-KSB.

PART I

Item 1. Description of Business.

2000 Finx Group Merger

         The Board of Directors of Fingermatrix, Inc. ("Fingermatrix"), a New
York Corporation formed on May 12, 1976, determined that it would be in the best
interests of Fingermatrix to reincorporate Fingermatrix in Delaware and that
such reincorporation would be accomplished through the merger of Fingermatrix
with and into its wholly-owned subsidiary, The Finx Group, Inc. ("The Finx
Group", the "Company" or the "Registrant"), a Delaware Corporation formed on
June 6, 2000 ("The 2000 Finx Group Merger"). On June 23, 2000, the Fingermatrix
Board of Directors approved a merger agreement between Fingermatrix and The Finx
Group (the "2000 Finx Group Merger Agreement"), which became effective as of
July 14, 2000 upon the written consent of a majority of the Fingermatrix
shareholders consisting of The Trinity Group, Inc. ("Trinity"), a privately
owned Delaware corporation owned by The Trinity Group-I, Inc. ("Trinity-I") and
five other shareholders. Trinity-I is owned by Lewis S. Schiller (Mr. Lewis
Schiller), Fingermatrix's and The Finx Group's Chairman and Chief Executive
Officer.

         The Board of Directors fixed the close of business on June 30, 2000 as
the record date for purposes of consummating the terms of the 2000 Finx Group
Merger Agreement. Fingermatrix reported the 2000 Finx Group Merger in an
Information Statement under Section 14 of the Securities and Exchange Act of
1934 and on or about July 14, 2000, such Information Statement was sent to the
shareholders of record as of June 30, 2000.

         On June 30, 2000, Fingermatrix had 20,000,000 shares of Common Stock,
114,403 shares of Series A 2% Voting Convertible Preferred Stock (convertible
into 84,978,548 shares of Common stock) and 1,000 shares of Series B 4%
Preferred Stock issued and outstanding. On June 30, 2000, The Finx Group had
authorized capital stock consisting of 50,000,000 shares of Common Stock, par

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value $.01 per share, of which no shares were issued or outstanding and
1,000,000 shares of Series A 4% Preferred Stock, par value $.01 per share, of
which 1,000 shares were issued and outstanding and were owned by Trinity.

         Pursuant to the 2000 Finx Group Merger Agreement, each outstanding ten
shares of Fingermatrix Common Stock was automatically converted into the right
to receive one share of The Finx Group's fully paid and non-assessable common
stock. Each outstanding share of Fingermatrix Series A 2% Voting Convertible
Preferred Stock was automatically converted into 742.8 shares of Fingermatrix
Common Stock and then each outstanding ten shares of such Fingermatrix Common
Stock was automatically converted into the right to receive one share of The
Finx Group's fully paid and non-assessable common stock. Each outstanding share
of Fingermatrix Series B 4% Preferred Stock automatically converted into the
right to receive one share of The Finx Group's fully paid and non-assessable
Series A 4% Preferred Stock. Each outstanding option or warrant to purchase ten
shares of Fingermatrix Common Stock was converted into an option to purchase one
share of The Finx Group's Common Stock. The By-Laws of Fingermatrix continued in
force as the By-Laws of The Finx Group and the directors and officers of The
Finx Group are the same as those of Fingermatrix.

1999 SES Merger

         On April 28, 1999, Fingermatrix consummated an Agreement and Plan of
Reorganization (the "1999 SES Merger Agreement") with Trinity. Pursuant to the
1999 SES Merger agreement, Fingermatrix acquired from Trinity in a reverse
merger (the "1999 SES Merger") all of the issued and outstanding shares of
capital stock of SES Acquisition Corp. ("SES") (a then wholly owned subsidiary
of Trinity) in exchange for 85% of Fingermatrix's equity and voting power
consisting of 1,057,160 shares (10,571,607 shares prior to the July 14, 2000 1
for 10 reverse split) of Common Stock and 93,654 shares of Series A Preferred
Stock (convertible into 6,956,693 shares (69,566,934 shares prior to the July
14, 2000 1 for 10 reverse split) of Common Stock).

         Upon the conclusion of the 1999 SES Merger, by virtue of SES's
ownership of all of the issued and outstanding shares of capital stock of
Sequential Electronic Systems, Inc. ("Sequential"), and S-Tech, Inc. ("S-Tech")
and 39.1% of the issued and outstanding shares of capital stock of FMX Corp.
("FMX"), Fingermatrix succeeded to the ownership of these entities, which became
second tier subsidiaries of Fingermatrix. The former stockholders of
Fingermatrix retained a 10% ownership interest in Fingermatrix consisting of
942,839 shares (9,428,393 shares prior to the July 14, 2000 1 for 10 reverse
split) of Common Stock.

         The 1999 SES Merger is accounted for as a reverse acquisition, with SES
being the acquiring company for accounting purposes, whereby the equity of SES,
as the predecessor company, and Fingermatrix, as the acquired company, have been
recapitalized and the accompanying financial statements, and any financial data
included herein, reflect the results of operations of Fingermatrix and SES from
the date of the 1999 SES Merger forward and the results of operations and cash
flows of SES prior to the date of the 1999 SES Merger.

The Finx Group

         The Finx Group holds controlling investments in its subsidiaries that
operate, or intend to operate, in seven distinct business segments. The Finx
Group's business is conducted by Mr. Lewis Schiller, who is employed as the
Company's Chief Executive Officer and President, and Grazyna B. Wnuk ("Ms.
Wnuk"), who is employed as the Company's Vice-President. Both Mr. Schiller and
Ms. Wnuk are members of the Company's Board of Directors on which Mr. Schiller
serves as its Chairman and Ms. Wnuk serves as its Secretary.

         Mr. Schiller and Ms. Wnuk, along with strategically assigned
consultants, provide The Finx Group's subsidiaries with management, financial,
legal and administrative services. Commencing July 1, 2000, The Finx Group
charges its subsidiaries, a monthly consulting fee for the services provided to
them. During 2000, such intersegment consulting fees for the year ended December
31 2000 aggregated $450,000.

         The seven separately identified business segments that The Finx Group
manages are as follows:

                  -Electro-Mechanical and Electro-Optical Products
                  -Specialized Vending Machines and Avionics Equipment
                  -Fingerprint Identification Technologies
                  -Secured Entrance Systems (Ingress/Egress)
                  -Internet Marketing
                  -Web Based Development Solutions
                  -Application Service Provider

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Electro-Mechanical and Electro-Optical Products

         Electro-Mechanical and Electro-Optical Products reflects the activities
of Sequential Electronic Systems, Inc. ("Sequential"), a Delaware Company formed
in 1985. As a result of the 1999 SES Merger, The Finx Group owns all of
Sequential's issued and outstanding common stock. The Finx Group also owns all
of Sequential's issued and outstanding preferred stock, which gives The Finx
Group the right to elect a majority of Sequential's board of directors.

         During 2000 and 1999 the revenues of Sequential were $2.4 million and
$2.1 million, respectively. Sequential is engaged in the design, manufacture and
assembly of precision electro-mechanical and electro-optical products and
devices for sale to commercial and governmental customers throughout the United
States. Among such products and devices are optical encoders, encoded motors and
limit programmers. Optical encoders are utilized by manufacturers whose
manufacturing processes require highly accurate positioning of manufactured
components. Encoders are also used as position sensors on computer numerically
controlled machinery and equipment, in packaging machinery for industries such
as food packaging and paper products manufacturing and as measurement devices on
certain medical equipment. The encoders manufactured by Sequential are also sold
to the U.S. Government for a variety of military uses including position
transducers for the Multi-Launch Rocket System and the Patriot Missile Defense
System. Sequential's encoders are also utilized in the NEXRAD weather system as
position transducers on the system's radar antennas. Sequential's
high-resolution encoders provide azimuth and elevation data on the National
Aeronautics and Space Administration's telemetry tracking antennas that are
located around the world and used to track missiles, rockets and satellites.

         Sequential's optical encoders and encoded motors are sold to the U.S.
Government for military applications as well as to other industrial customers
for a variety of control applications. The encoded motors that are manufactured
by Sequential are used as a capstan drive in weather map recorders and state of
the art instrumentation tape recorders for the purpose of providing precise
speed control in order to reduce distortion in recording. These recorders have
many applications including use in anti-submarine warfare detection systems and
in seismic measurement recording systems purchased by the U.S. Government.
Sequential is a sole source for an instrumentation-encoded motor used by the
U.S. Navy. Commercial applications of encoders fall into the category of
designing units with unique form factors or operating characteristics. In
addition, Sequential markets a standard line of encoders for commercial
applications.

         Because both the government and commercial applications of the
technology in Sequential's products are highly specialized, there are a limited
number of competitors for Sequential's high-resolution encoders, which utilize a
highly specialized technology. However, many of the competitors of Sequential
have greater financial, technical, manufacturing, marketing and other resources.
Sequential faces competition from numerous companies engaged in the manufacture
and sale of encoders, including BEI Sensors and Systems Co., Computer Optical
Products, Inc., Danpher Controls, Dynamics Research Corp. and Encoder Products
Co.

Specialized Vending Machines and Avionics Equipment

         Specialized Vending Machines and Avionics Equipment reflects the
activities of S-Tech, Inc. ("S-Tech"), a Delaware Company formed in 1992. As a
result of the 1999 SES Merger, The Finx Group owns all of S-Tech's issued and
outstanding common stock. The Finx Group also owns all of S-Tech's issued and
outstanding preferred stock, which gives The Finx Group the right to elect a
majority of S-Tech's board of directors.

         During 2000 and 1999 the revenues of S-Tech were $401,000 and $567,000,
respectively. S-Tech designs and manufactures two specialized product lines
consisting of specialized vending machines and avionics equipment. "Specialized
Vending" is an industry term used to describe a vending product that utilizes
electronic circuitry and/or computer software. Among the vending machines
manufactured by S-Tech are prepaid telephone debit card machines, bill payment
kiosks, information kiosks, and stamp vending machines. S-Tech has supplied such
vending machines to a variety of customers, including Con Edison, Netsmart
Technologies, Inc. (as a sub-contractor for San Diego Gas & Electric Co.),
Objectsoft Corp. (as a subcontractor for New York City), NYNEX, Kuwait Telecard,
Pace Communications Corp., Cable and Wireless, and Kinko's.

         The avionics equipment designed and manufactured by S-Tech is marketed
principally to the U.S. Government. These products consist of synchro repeater
cockpit instruments and oil pressure transmitters. In addition, S-Tech bids from
time to time for the supply of products in connection with U.S. Department of
Defense contracts, which products are manufactured to the technical
specifications provided by the Department of Defense. The majority of the
avionics products manufactured by S-Tech require S-Tech to have a qualified
products list ("QPL") designation, which is a designation granted to government
suppliers who comply with the U.S. Government's system requirements. These
products must obtain a QPL designation before such products are eligible for
sale to the U.S. Government. S-Tech is currently attempting to expand the number
of its products, which are QPL designated.

         Many of S-Tech's competitors have far greater financial, technical,
manufacturing, marketing and other resources. While the majority of avionics
products sold by S-Tech require vendors to qualify and obtain a QPL designation
before they are eligible to bid and sell such products, S-Tech faces competition
from several companies engaged in this business, among which are Allied Signal
Corp., Amatek Corp. and Aircraft Instrumentation Corp. The vending products
manufactured and sold by S-Tech face competition

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from numerous competitors inasmuch as the vending machine industry is highly
competitive. Among such competitors are Opal Manufacturing Ltd., Advanced Games
& Engineering, Inc., Vendtek Industries, Inc., and Technik Manufacturing, Inc.
S-Tech seeks to diminish the impact of such competition by supplying products
that are custom designed to suit the needs of its customers.

Fingerprint Identification Technologies

         Fingerprint Identification Technologies reflects the activities of FMX,
Corp. ("FMX"), a Delaware Company formed in 1996. As a result of the 1999 SES
Merger, The Finx Group owns 39.1% of FMX's issued and outstanding common stock.
Michael Schiller, FMX's Chief Technical Officer and brother to Mr. Lewis
Schiller owns 49.9%, Mr. Lewis Schiller owns 4%. Ms. Wnuk owns 2% and members of
Mr. Lewis Schiller's family own the remaining 5%. The Finx Group also owns all
of FMX's issued and outstanding preferred stock, which gives The Finx Group the
right to elect a majority of FMX's board of directors.

         FMX is engaged in the design and development of state-of-the-art
fingerprint identification hardware and software systems with a threefold target
market of Internet access, law enforcement identification and commercial and
governmental access control. Potential applications for this technology include
access control systems for banks, airports and industrial and government
facilities, voter registration and electoral anti-fraud systems, welfare and
social program identification systems, immigration control, suspect booking,
prisoner and detainee movement and release control systems, and sensitive
employment authorization systems. In addition a miniaturized variation of the
fingerprint scanner is being developed which can be integrated with security
access systems for the Internet.

         The products and systems being developed by FMX consist of both
hardware and software components. Hardware components are comprised of a
scanner, computer, printer and controls. Some of these components are or will be
manufactured by FMX. FMX intends to acquire some of the hardware components to
be utilized in its systems from independent suppliers and manufacturers. FMX
intends to assemble these components in its facility at such time, if any, as it
develops commercially viable systems utilizing its fingerprint identification
technology. The software to be utilized in these systems includes proprietary
computer programs, which are designed to enhance recognition identification with
a greater degree of accuracy than existing technologies.

         FMX intends to complete the development of certain systems, which have
been partially engineered and tested. Among these systems are electronic
fingerprint identification systems known as "CHECK/ONE," "CHECK/TEN" and the
"Booking Station." The "CHECK/ONE" system is being developed as a single
fingerprint access system intended for use in access control and other
identification verification applications. This application is designed to allow
for the enrollment of the fingerprints of individuals, assignment of a PIN or
other identifying characteristic to enrollees and use of the combination of PIN
and fingerprints to gain access to certain areas or privileges. This system is
intended for commercial, industrial and governmental applications where secure
control of access is required. The "CHECK/TEN' system is being developed as a
live scanning "kiosk" system designed specifically for use by law enforcement
agencies. This system is designed to quickly scan, record and generate ten-print
cards for use with suspects and other subjects. This system is designed for
quick and easy integration into existing computer network operations and
utilizes industry-standard PC's, which are linked to a scanning module. FMX
intends to market the "CHECK/TEN" system to law enforcement agencies. The
"Booking Station" is also being developed for law enforcement agencies. This
system will be required to comply with applicable Federal Bureau of
Investigation ("FBI") specifications and standards relating to accuracy,
repeatability, grey scale analysis and speed of operation.

         To date, several prototypes of these systems have been produced. In the
event the Company is able to provide FMX with sufficient additional funding, FMX
intends to complete the development of these systems and "beta-test" these
systems with the FBI and other law enforcement agencies. While FMX anticipates
that it would complete the engineering, development and testing of these systems
within a few months after it receives sufficient funding, the Company cannot
provide any assurances as to whether FMX will be provided with a sufficient
amount of funding or, if so, whether or when such developmental, engineering and
testing activities would be completed, whether the test results would be
successful, or whether or when any revenues or profits from sales of such
products would be derived.

         To the extent that FMX develops commercially viable systems or products
utilizing such proprietary fingerprint identification technology, it intends to
market any such product or system initially for law enforcement and access
control applications. FMX intends to engage sales representatives and
distributors to assist with the marketing of any such product or system, to
participate in trade shows and to seek to market such products or systems in
partnership with major law enforcement system original equipment manufacturers.
Inasmuch as FMX has not developed any such product or system, which may be
marketed, the Company cannot provide any assurance as to the success of any such
marketing efforts or the degree of acceptability that any such product or system
may achieve in the marketplace.

         The fingerprint identification technology being developed by FMX is the
subject of several United States patents issued to the Company, including a
broad patent awarded in March 2001 covering significant advances in electronic
finger printing. While the Company believes that patent and other intellectual
property protection is important to the proposed activities of FMX, no assurance
is provided as to the scope or validity of any existing or future patents or
other intellectual property rights of FMX.

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         If and when FMX develops a commercially viable products or systems, it
will face competition from many companies with other types of biometric or other
fingerprint identification products or systems, most of whom have far greater
financial, technical, manufacturing, marketing and other resources than FMX. FMX
has developed a fingerprint identification system that could be used in
conjunction with the Georal Security System and FMX does not expect that it will
have meaningful revenues, if any, until the Georal Security System has completed
final certification testing at the U.S. State Department. Subsequent to December
31, 2000, a broad patent was issued to FMX covering three dimensional
fingerprint imaging.

Secured Entrance Systems (Ingress/Egress)

         Secured Entrance Systems reflects the activities of Secured Portal
Systems, Inc. ("Secured Portals"). Secured Portals is a Delaware Company formed
in August 1999 whereby The Finx Group owns 89% of Secured Portals' issued and
outstanding common stock, Mr. Lewis Schiller owns 4%, Ms. Wnuk owns 2% and
members of Mr. Lewis Schiller's family own the remaining 5%. The Finx Group also
owns all of Secured Portals' issued and outstanding preferred stock, which gives
The Finx Group the right to elect a majority of Secured Portals' board of
directors.

         Secured Portals was formed for the purpose of entering into an
agreement with a subsidiary of Georal, GIL Security Systems, Inc. ("GIL").
Georal designed, developed and has commenced the marketing of an unattended
secure entrance and egress system designed to prevent or restrict access to
buildings and facilities (the "Georal Security Systems"). The Georal Security
Systems are designed to operate with a variety of detection software to prevent
access to buildings and facilities by individuals who are in possession of
weapons, metals, bombs, or drugs or are not able to identify themselves
properly. The Georal Security Systems utilize a proprietary software system
designed and owned by Georal in conjunction with a specially designed secure
portal entry door or chamber. The Georal Security System does not require an
attendant to monitor or operate the system. To date, the Georal Security Systems
have been marketed to a limited number of customers. The Georal Security System
is currently installed at the American Airlines terminals located in Dallas-Ft.
Worth Airport, Chicago's O'Hare Airport and Newark International Airport, at a
CitiBank facility located in Englewood, New Jersey and in the visitor's facility
at the prison at Rikers Island, New York. Georal manufactures the Georal
Security Systems at its facility located in Whitestone, New York.

         On September 13, 1999, Secured Portals entered into an exclusive
licensing agreement with GIL pursuant to which Secured Portals was engaged as
the exclusive distributor for the Georal Security Systems for a term commencing
as of September 1, 1999 and expiring on August 31, 2009 (the "Georal Exclusive
Licensing Agreement"), to certain categories of customers specified in the
Georal Exclusive Licensing Agreement, including certain agencies of the federal
government, embassies, department stores and retail stores located in the United
States, the State of Israel, NCR Corp. and Sun Microsystems.

         As an inducement to obtain the Georal Exclusive Licensing Agreement,
the Company also entered into a stock purchase agreement with GIL on September
13, 1999 (the "GIL Stock Purchase Agreement") pursuant to which the Company
issued to GIL 14,134 shares of its Series A Preferred Stock (convertible into
1,049,873 shares (10,498,735 shares prior to the July 14, 2000 1 for 10 reverse
split) of Common Stock) of which 997,737 shares were in exchange for the
licensing rights and 52,136 shares were in exchange for 1,000,000 shares of the
outstanding common stock of GIL. The GIL Shares represented 1% of the
outstanding common stock of GIL at the time the Company entered into the GIL
Stock Purchase Agreement.

         Secured Portals proposed activities consist of the marketing and
distribution of the Georal Security Systems to both those customers for which it
has exclusive distribution rights and to others as to which it has non-exclusive
rights to distribute the Georal Security Systems. Many of the customers to whom
Secured Portals will seek to market the Georal Security Systems will be domestic
and foreign government purchasers as well as commercial users.

         The Company believes that the Georal Security System is unique in that
it operates without any requirement for the presence or supervision of an
attendant, is the only unattended secured entrance system approved by the
Federal Aviation Administration and the only such system with a Government
Security Access number for high security facilities. Nevertheless, the Georal
Security System will face competition from numerous companies that restrict or
control access to defined areas, including manufacturers of magnometer or
attended operated entrance portals or systems. In addition, because Secured
Portals intends to distribute the Georal Security Systems to government
agencies, it will be required to establish itself as a reliable vendor and
otherwise meet qualifications and standards established by the government with
respect to its vendors. Many of the entities with which Secured Portals will
compete for such government business have established products and reputation
and credibility with the government.

         The Georal Security System has completed all phases of U.S. State
Department forced entry and ballistics tests and is awaiting final certification
necessary for its possible procurement for use in U.S. embassies, consulates and
other governmental installations both in the U.S. an abroad. Secured Portals
does not expect that it will have meaningful revenues, if any, until the Georal
Security System receives final certification from the U.S. State Department and
as a result did not have any revenues or gross profits during 2000 or 1999.

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Internet Marketing

         Internet Marketing reflects the activities of Starnet365.com, Inc.
("Starnet365.com"). During 2000, Starnet365.com's revenues were $382,000.
Starnet365.com is a Delaware company that was originally organized as Cue
365.com, Inc. on April 20, 2000 by Trinity. On May 25, 2000, Trinity changed
Cue365.com, Inc.'s name to Starnet365.com, Inc. and effected a spin-off of
Starnet365.com as a result of which The Finx Group owns 69.5% of
Starnet365.com's issued and outstanding common stock, Starnet365.com's
executives and employees own 22.05% (including 6.11% and 4.28% owned
respectively by Mr. Lewis Schiller and Ms. Wnuk) and members of Mr. Lewis
Schiller's family own the remaining 8.45%. The Finx Group also owns all of
Starnet365.com's issued and outstanding preferred stock, which gives The Finx
Group the right to elect a majority of Starnet365.com's board of directors.

         Starnet365.com is an internet multi-level marketing company whose most
significant product is the Qode engine, a web based software component
comprising the largest UPC coded data base which enables its users to
comparative shop products related to the UPC codes. Starnet365.com also sells a
series of on-line training programs consisting of a series of integrated "Earn
While You Learn", on-line training programs that are intended to teach marketing
and recruiting techniques as well as certain tax and legal aspects of running a
home-based business. Starnet365.com also markets replicated web sites, which
Starnet365.com intends to load with non-branded merchandise, enabling
individuals quickly and inexpensively to own their own on-line E-Commerce
website. In addition, Starnet365.com generates revenues from web site enrollment
fees, monthly web hosting fees, and transaction processing fees related to the
sale of merchandise on the websites.

         Starnet365.com's primary competition is expected to come from two
sources: E-Commerce and network marketing. Starnet365.com believes that most
network marketing companies have an Internet presence. However, the majority of
such presence, exists in two forms: (1) advertising where ultimate marketing is
still face-to-face, and (2) the sale of link sites whereby blank sites are sold
and the purchaser must build the site and link other companies' products to the
site. Starnet365.com believes that it can differentiate Starnet365.com by
providing representatives with websites that directly sell actual products and
services. Starnet365.com can further differentiate itself from other network
marketing programs by offering unprecedented training and mentoring.

         Starnet365.com intends to provide its independent representatives with
an opportunity to own and operate an E-Commerce website offering a variety of
products and services. An individual attempting to establish an E-Commerce
business on his own could spend over $100,000 for web development, employees,
other technical costs and added overhead. In addition, such an individual would
incur ongoing costs for taking orders, processing transactions and maintaining
technical support for web hosting activities. Starnet365.com intends to offer a
completely integrated E-Commerce business for a fraction of the cost that an
individual would incur to establish an E-Commerce business on their own.

Application Service Provider

         On July 27, 2000, the Company concluded an agreement to acquire a
controlling interest in Shopclue.com, Inc. d/b/a Retail Drive ("Shopclue.com" or
"Retail Drive") in exchange for 1,000,030 shares of the Company's Common Stock.
Shopclue.com is a Delaware Company organized in July 1999. During 2000
Shopclue.com's revenues were $64,000 of which $44,000 were generated from the
date of acquisition through December 31, 2000. The Company purchased the
Shopclue.com common shares from family members of Lewis S. Schiller, the
Company's Chief Executive Officer and Vice Chairman of its Board of Directors.
As of the date of the acquisition, Shopclue.com had an excess of liabilities
over assets of $768,000 and the common shares issued to acquire Shopclue.com
were valued at $4 million, resulting in a purchase price that was in excess of
net assets by $4.8 million. This $4.8 million approximates the value assigned to
research and development projects of Shopclue.com that were commenced but not
yet completed at the date of the acquisition, and which, if unsuccessful, have
no alternative future use in research and development activities or otherwise..
Amounts assigned to purchased in-process research and development must be
charged to expense at the date of the acquisition. Accordingly, the Company
charged approximately $4.8 million to expense in 2000 for in-process research
and development. As of December 31, 2000, the Company owned 34.24% of
Shopclue.com's common stock and all of its issued and outstanding preferred
stock which gives the Company the right to elect a majority of the Shopclue.com
board of directors. Shopclue.com is included as a part of the Company's
consolidated statements of operations and consolidated statement of financial
position due to the effective control as evidenced by interlocking management
and The Finx Group's ownership of a series of Shopclue.com's preferred stock
that gives the Company the right to elect a majority of the Shopclue.com board
of directors.

         Shopclue.com is an Application Service Provider that enables small- and
medium-sized businesses to establish an advanced online presence rapidly and
inexpensively using Shopclue.com's software through its interactive Internet
mall known as Retail Drive. The software used by Shopclue.com allows its
customers to create, edit and maintain advanced, interactive websites without
having any prior knowledge of web-based programming languages. Shopclue.com's
Retail Drive interactive website is presently utilized by more than 350
merchants. Shopclue.com is headquartered in Armonk, New York. Blake Schiller,
the son of Lewis S. Schiller, The Finx Group's chief executive officer and
chairman, developed the Shopclue.com concept and remains a significant
shareholder of Shopclue.com and will continue to serve as an executive of
Shopclue.com.

                                       7
<PAGE>

Web Based Development Solutions

         On July 27, 2000, the Company acquired a 23.42% equity interest in Biz
Chase, Inc. ("Biz Chase") from Trinity. Biz Chase, a Delaware company organized
in July 2000, is included as a part of the Company's consolidated statements of
operations and consolidated statement of financial position due to the effective
control as evidenced by interlocking management and The Finx Group's ownership
of a series of Biz Chase's preferred stock that gives the Company the right to
elect a majority of the Biz Chase board of directors. Biz Chase's concept was
developed by Blake Schiller, the founder of Shopclue.com, and provides
Shopclue.com with its software under a licensing agreement. Effective September
30, 2000, Biz Chase received common stock shares of Shopclue.com representing
19% of Shopclue.com's outstanding common stock shares in exchange for the
assumption of $897,000 of notes payable that Shopclue.com owed to related
parties. Biz Chase has developed a wholesale web based development solution that
provides a simple, affordable and feature rich online solution for small
businesses. In March 2001, Bizchase granted a license to Starnet365.com giving
Starnet365.com the right to sell software developed by Bizchase to the
multi-level marketing industry. The Bizchase software was developed and also
licensed to Retail Drive. Revenues are anticipated to be generated through
activation and hosting fees.

Research and Development

         During 2000, the Company incurred $4.9 million of identified research
and development expense, all of which was charged to operations. Approximately
$4.8 million of such research and development expense was purchased, in-process
research and development costs resulting from the Shopclue.com acquisition.

Employees

         The Company currently employs approximately 50 persons, including the
executive officers of The Finx Group and its subsidiaries. None of the Company's
employees are represented by a union and management considers relations with its
employees to be good.

Acquisition of Granite Technologies, Inc.

         On September 19, 2001, the Company consummated its acquisition (the
"Acquisition") of Granite Technologies, Inc. ("Granite") through its newly
created and wholly owned subsidiary, Granite Technology Acquisition Corp.
pursuant to the terms of a Stock Purchase Agreement dated as of September 19,
2001, as amended, the Company purchased 95.87% of Granite's common stock from
such holders of the Granite's common stock (the "Selling Shareholders") upon the
issuance of 3,000,000 shares of its unregistered Common Stock (the "Acquisition
Shares"). Granite has two significant proprietary software packages which have
wide application in the retail and financial markets. Granite's principal
products are the SmartCAT application Framework and the SmartCAT IO Subsystem.
SmartCAT is a set of JAVA middleware that provides both the client (kiosk) and
server (central system mainframe) platform for rapid development of self-service
applications over the Internet. SmartCAT IO Subsystem, also a set of JAVA
applications, provides powerful but simple-to-use interfaces to serial devices
found in kiosks and in various retail delivery applications, such as
point-of-sale and bank branch automation. It may be used together with the
SmartCAT Application Framework or with other applications such as Eontec's
BankFrame to deliver complete client specific solutions.

         Of the Selling Shareholders, Grazyna B. Wnuk, the Company's Corporate
Secretary, a Director and Vice-President, received 124,031 Acquisition Shares
for her ownership interest in Granite; and immediate family members of Lewis S.
Schiller, the Company's Chairman of the Board, a Director and Chief Executive
Officer, received 397,934 Acquisition Shares for their ownership interest in
Granite. In accordance with the terms of the Stock Purchase Agreement, the
Selling Shareholders hold certain demand and "piggyback" registration rights
with respect to the Acquisition Shares received by them in connection with the
Acquisition on terms specified in the Stock Purchase Agreement

         On September 15, 2001 the Company and Granite Technology Acquisition
Corp. entered into a Settlement and Release Agreement with Rock Partners Ltd.,
SSMI Corp. and Bruno Kordich. Pursuant to the Settlement and Release Agreement
(i) the Company received 250,000 shares, or 4.13%, of Granite's common stock
then owned by Rock Partners Ltd. and SSMI Corp.; (ii) the Company and Granite
received a General Release and a Dismissal with Prejudice on any past disputes
by and among Granite and Rock Partners Ltd., SSMI Corp. and Bruno Kordich; (iii)
all past agreements between Granite and Rock Partners Ltd., SSMI Corp. and Bruno
Kordich became void and cancelled; (iv) Rock Partners Ltd., SSMI Corp. and Bruno
Kordich received 542,636 shares of the Company's Common Stock in consideration
for (i), (ii) and (iii); (v) the Company and Granite acknowledged outstanding
notes and liabilities in the aggregate of $77,000 for which payments will begin
in January of 2002 at $10,000 per month; and (vi) the Company issued 160,000
shares of the Company's Common Stock in consideration for all remaining claims
aggregating $80,000.

                                       8
<PAGE>

Related Party Debt Conversion

         On May 7, 2001, Trinity converted $1.5 million of related party debt
into 7,500,000 shares of Common Stock, representing $0.20 per share, the fair
market value of the Common Stock on May 7, 2001. On May 7, 2001, Trinity
converted an additional $2 million of related party debt into shares of a newly
created series of preferred stock, the "Series "B" Preferred Stock. The Series
"B" Preferred Stock is redeemable by the Company in whole or in part, at the
option of the board of directors with Lewis S. Schiller, Trinity's owner,
abstaining, and votes alongside of common stock. The Series "B" Preferred Stock
is convertible in whole or in part, at the option of the holder or its
designees, over a two year period beginning May 7, 2002, into common stock at a
rate representing the lowest price that the common stock has traded at over the
period for which the preferred stock has been outstanding. Such conversion may
require an increase in the number of authorized common shares. Dividends on the
Series "B" Preferred stock are payable semi-annually at a rate of 8%.

Letter of Intent to Acquisition of Trans Global Services, Inc.

         On November 11, 2001, the Company entered into a binding letter of
intent to acquire an equity interest in Trans Global Services, Inc. ("Trans
Global"). Pursuant to the letter of intent, the Company would receive 5,000,000
shares of Trans Global's common stock in exchange for 2,500,000 shares of the
Company's common stock. In addition, the Company would purchase preferred
equity, convertible into a maximum of 3,000,000 shares of Trans Global's common
stock, for $1 million.

         Further, the letter of intent requires immediate election of the
Company's appointees to the Trans Global board of directors including the
appointment of Lewis S. Schiller as Trans Global's Chairman of the Board, after
which, the Company's appointees would represent a majority of the Trans Global
board of directors. Lewis S. Schiller is the Chief Executive Officer and
Chairman of the Board of the Company.

2001 Employee Stock Option Plan

         The Company's Board of Directors approved the 2001 Employee Stock
Option Plan. The purpose of the 2001 Employee Stock Option Plan is to secure
long-term relationships for the Company and its stockholders, from the benefits
arising from capital stock ownership by the Company's Consultants, Advisors,
Employees and Directors, who can help in the company's growth and success and to
provide an effective means of compensation for such persons and entities
providing services to the Company in lieu of cash payments therefor. The 2001
Employee Stock Option Plan provides for the issuance of up to 12,000,000 shares
of the Company's Common Stock. On September 14, 2001, the Company registered all
12,000,000 shares of Common Stock which are the subject of the 2001 Employee
Stock Option Plan on Form S-8 and as of December 10, 2001 has issued options to
purchase an aggregate of 11,475,000 of common stock, all of which were exercised
at $0.15 per share.

RISK FACTORS

We Have a History of Losses and Cash Flow Deficit

         Operating losses have increased during the two years ended December
2000 and as of December 31, 2000 the Company has a stockholders deficiency of
$6.6 million. We expect to incur additional losses during the time period in
which the Company is developing products and markets for its subsidiaries and we
cannot be assured of when, if ever, our operations will become profitable or the
extent of any future profitability. We also cannot be assured that the current
trends of negative cash flow and increased losses and expenses (including
compensation expense charges that may result from the issuance of our securities
in the future) will not continue or, if so, for how long.

Limited Market for Our Common Stock

         Currently, our Common Stock trades on the National Association of
Securities Dealers Automated Quotation System Over-the-Counter Bulletin Board
(the "NASDAQ Bulletin Board"). By its nature, the NASDAQ Bulletin Board is a
limited market and investors may find it more difficult to dispose of our
securities, which are owned by them. Currently, we do not meet the financial and
other requirements for a NASDAQ SmallCap, listing. Apart from specific financial
criteria that we would have to comply with in order to obtain such listing,
there are other corporate governance criteria that must be satisfied in order to
obtain any such listing. Among such corporate governance requirements is the
requirement that there be no disparity in the voting rights of the holders of
the Common Stock. At the present time, Trinity owns all of the outstanding
shares of our Series B Preferred Stock. The holder of our Series B Preferred
Stock has the right to elect a majority of the Board of Directors. The NASDAQ
may consider the issuance of the Series B Preferred Stock as a violation of
their voting rights rules and policy. The failure to comply with NASDAQ's voting
rights rules or policy or any of its other applicable regulations relating to
transactions engaged in by us may result in sanctions. Any such actions by
NASDAQ could further limit the market for our Common Stock.

                                       9
<PAGE>

Trading in Our Securities May Be Restricted Due to Compliance with Applicable
Penny Stock Regulations

         Broker-dealer practices in connection with transactions in "penny
stocks" are regulated by certain penny stock rules and regulations adopted by
the SEC. Penny stocks generally are equity securities with a price of less than
$5.00 (other than securities registered on certain national securities exchanges
or quoted on NASDAQ provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. These rules also impose additional sales
practice requirements on broker-dealers which sell such securities to persons
other than established customers or institutional accredited investors. For
transactions covered by this rule, broker-dealers must also make a special
suitability determination for the purchaser and receive the purchaser's written
consent to the transaction prior to a sale. Consequently, the application of
this rule to the trading of our Common Stock may affect the ability or
willingness of broker-dealers to sell our securities and adversely affect market
liquidity for such securities.

Our Company is Subject to Control by a Principal Stockholder

         Trinity Group, Inc. ("Trinity") has advanced significant funds to the
Company and its subsidiaries and owns a controlling interest in the Company.
Trinity is solely owned by Trinity Group-I, Inc. ("Trinity-I"), which is solely
owned by Lewis S. Schiller, Chairman of the Board and Chief Executive Officer of
the Company. All of the shares of Trinity-I owned by Mr. Schiller are pledged to
an entity controlled by Carol Schiller, the wife of Lewis S. Schiller. In
addition, Carol Schiller, Douglas Schiller, Linda Schiller and Blake Schiller,
the adult children of Lewis S. and Carol Schiller, own a significant interest in
the Company's outstanding Common Stock. In addition, Trinity owns all of our
outstanding Series B Preferred Stock, which entitles it to elect a majority of
our Board of Directors. This concentration of ownership and voting rights could
delay or prevent a change of control. In addition, Lewis S. Schiller could elect
to sell all, or a substantial portion, of his equity interest in Trinity-I to a
third party. In the event of such a sale by Mr. Schiller, such third party may
be able to control the affairs of the Company in the same manner that Mr.
Schiller is able to do so by virtue of his ownership of Trinity-I. Any such sale
may adversely affect the market price of the Common Stock and could adversely
affect our business, financial condition or results of operations.

A Significant Portion of the Net Proceeds of Any Potential Financing May Be Used
for the Payment of Related Party and Other Indebtedness and for Salaries of
Executives and Key Personnel

         Trinity, Trinity-I and Carol Schiller have advanced significant funds
to the Company and its subsidiaries. A portion of the proceeds of any potential
financing may be used to repay some or all of the amounts owed to these related
parties. In addition, it is possible that a substantial portion of the proceeds
from any potential financing would be allocated for general corporate purposes,
including working capital, would be used to pay the salaries of certain of our
officers and other key personnel.

We Require Additional Financing for Our Business Activities

         We currently have limited operating capital and inability of the
Company to obtain a significant financing may adversely affect our business and
no assurances are made that any such financing will occur, or that if any
financing is completed that additional financing will not be required.

We May Use a Significant Portion of the Proceeds from Any Financing Offering to
Fund New Businesses

         A significant portion of the proceeds received from any financing would
be expended on companies which have little or no current operating history. We
cannot provide assurances that, despite the expenditure of a substantial portion
of the net proceeds of any potential financing for the future operations of
these entities, that their operations will prove successful.

We Have Granted Significant Benefits Under Certain Existing and Proposed
Employment Agreements

         Lewis S. Schiller, Chairman of the Board and Chief Executive Officer of
the Company, and the Company have entered into an employment agreement and
Grazyna B. Wnuk, Vice President, Secretary and a Director of the Company, and
the Company have substantially agreed to the terms of a proposed employment
agreements. These executed and proposed employment agreements provide
significant benefits to each of them. The terms of these agreements were
determined by the management of the Company, certain of whom are also parties to
these agreements.

The Proposed Activities of FMX Will Be Dependent Upon Patent Protection

         We believe that patent protection of the fingerprint identification
technology being developed by FMX will be essential to its planned future
business operations. The success of FMX's future operations will also depend, in
part, upon our ability to maintain its trade secrets, not infringing upon the
intellectual property or proprietary rights of others and preventing others from
infringing upon

                                       10
<PAGE>

FMX's intellectual property and proprietary rights. We will only
be able to protect FMX's intellectual property and proprietary rights from
unauthorized use by others to the extent that FMX's intellectual property and
proprietary rights are valid and enforceable under patents that FMX has or may
obtain in the future or are otherwise effectively maintained as trade secrets.

         Presently, such technology is the subject of six United States patents
including a broad patent awarded in March 2001 covering significant advances in
electronic finger printing. We have not filed for and do not have patent
protection for such technology in any foreign country. We cannot be assured that
others have not already obtained, or will not in the future obtain, patent
protection for fingerprint identification technologies which are the same as or
substantially similar to the fingerprint identification technology of FMX. We
also cannot be assured that the pending United States and foreign patent
applications, or any future United States or foreign patent applications which
we may file in connection with such technology, will result in issued patents or
that if any such patents issue, that the scope or validity of such patents, or
the existing United States patents referred to above, will not be challenged in
the future (or that the scope of any such patents will prevent third parties
from developing competing products).

         In addition, we cannot be assured that litigation which may be
commenced by others to challenge our existing or any future patents relating to
our fingerprint identification technology can be successfully defended by us.
The expenses involved in litigation regarding patent protection, and the length
of time that may be spent in attempting to resolve the claims in any such
litigation, can be significant and we cannot estimate any such future defense,
enforcement or licensing costs regarding patent infringement claims. Any such
costs could materially adversely affect FMX's planned operations. FMX will,
therefore, be subject to the risks of adverse claims in litigation alleging
infringement of the intellectual property rights of others by any patents
relating to its fingerprint identification technology. In addition, the costs of
prosecuting and maintaining FMX's current patents and patent applications, as
well as the costs of seeking to enforce any of such patents against third party
infringers, are substantial. If FMX is unsuccessful in obtaining patent
protection or if claims of infringement are made against it which it is unable
to successfully defend or obtain licenses for, or if FMX is not able to prevent
third parties from infringing its patent or other intellectual property rights,
our proposed business will be materially adversely affected. FMX will also rely
on maintaining the confidentiality of certain trade secrets and other
proprietary know-how relating to its fingerprint identification technology. FMX
will try to protect this information by entering into confidentiality agreements
with others who may be required to have access to such information. Any person
or entity that is a party to any such confidentiality agreement could breach
such agreement and improperly disclose such information to FMX's competitors or
our competitors could learn of such information independently. If any material
trade secret, know-how or other proprietary information relating to FMX's
fingerprint identification technology were to be improperly disclosed or
otherwise obtained by a competitor, FMX's planned business operations could be
materially adversely affected.

         We intend to enter into an employment agreement with Michael Schiller
which will, among other things, contain a non-compete covenant in our favor in
the event of the termination of Mr. Schiller's employment with us and a covenant
to assign to us all inventions and ideas which are conceived by Mr. Schiller
during his employment with us. We cannot provide any assurances as to whether or
when we will consummate any such agreement with Mr. Schiller.

Rapid Technological Change Could Render Certain of Our Products and Proposed
Products Obsolete or Non-Competitive

         Major technological changes can occur rapidly in the security,
fingerprint identification and E-commerce industries. It is entirely possible
that newer technologies, techniques or products will be developed with more
capabilities and better performance than our present and proposed products. The
development by competitors of new or improved technologies, techniques or
products may make our present or planned products obsolete or non-competitive.

We Cannot Predict Market Acceptance for Our Proposed Products

         Any products that we may develop in the future utilizing the security,
fingerprint identification and website marketing ideas, techniques or
technologies which are the subject of the proposed activities of Secured
Portals, FMX or Bizchase may not gain market acceptance. The degree of
acceptance of any such products that we may develop in the future will depend
upon numerous factors, including demonstration of the advantages, uniqueness and
reliability of such products, their cost effectiveness, the potential barriers
to market entry by alternative products, marketing and distribution support and
the financial ability and credibility of such entities.

The Business in Which We Intend to Engage in is Subject to Intense Competition

         We will face intense competition from numerous companies which are
developing, producing and marketing products for securing access to buildings
and facilities, products incorporating fingerprint identification technologies
for law enforcement and other secure access purposes and products for website
marketing which will directly compete with the proposed products of Secured
Portals, FMX and Shopclue.com. We currently face competition from other
companies engaged in the manufacture and sale of products similar to those
manufactured and sold by Sequential and S- Tech.

         We intend to distribute a security access or entrance system to
customers which include government and other institutional purchasers who have
been serviced by vendors, which have established and tested security products
and systems that have become

                                       11
<PAGE>

recognized and accepted in this industry. The type of security system that we
will offer to our customers is subject to technological change and compliance
with product specifications established by our intended customers. Likewise,
products utilizing biometrics or fingerprint technologies for identification,
access control and security face similar problems from law enforcement agencies
and other institutional customers to whom our proposed products utilizing our
fingerprint identification technology will be marketed. New entrants in this
industry must establish product reliability through testing and use in order to
gain widespread commercial acceptance of such products. Products and services
which are designed to be marketed through the use of the Internet will depend
upon the widespread acceptance and use of the Internet as an effective medium of
commerce by consumers. The rapid growth of commercial on-line business is a
recent phenomenon and the demand for new products and services offered over the
Internet is subject to a high level of uncertainty and a number of factors,
including concerns about transaction security, continued development of the
necessary technological infrastructure and the development of complimentary
services and products. Competitors in the area of website marketing will
include, among others, established Internet companies such as Amazon.com, E-Bay,
Imall.com, ShopNow and Yahoo.

         Most of our competitors have far greater financial, technical,
personnel and other resources than we do and that we expect to have in the
foreseeable future. We cannot provide any assurances that we will be able to
compete effectively with any of such competitors.

E-commerce Products and Services May Become Subject to Government Regulation

         On-line commerce is new and rapidly changing and Federal and state
regulations relating to the Internet and on-line commerce is evolving.
Currently, there are few laws or regulations directly applicable to the Internet
or on-line commerce on the Internet and the laws governing the Internet that
exist remain largely unsettled. The Federal Trade Commission and other
governmental authorities have proposed regulations to govern the collection and
use of personal information that may be obtained from customers or visitors to
websites. Inasmuch as the marketing of products and services over the Internet
is relatively new, we cannot be assured that any proposed product or service
offered by us to Internet users will comply with existing or future Federal or
state government regulations. In addition, the secure transmission of
confidential information over the Internet will be essential in maintaining
consumer confidence in certain of our proposed products and systems that will be
marketed to Internet users. Any breach of security or other misappropriation or
misuse of the personal information of the users of any of our proposed Internet
products or services could significantly harm our proposed business and subject
us to liability, including liability for claims based on unauthorized purchases,
impersonation or other similar fraud claims. It is possible that advances in
computer capabilities, new discoveries or other developments could result in a
compromise or breach of the technologies proposed to be utilized by us to
protect customer transaction data. We cannot provide any assurances that we will
be able to comply with any future governmental regulations which may apply to
our proposed Internet businesses.

The Board of Directors May Issue Additional Preferred Stock in the Future

         We are authorized to issue up to 1,000,000 shares of preferred stock,
$.01 par value (the "Preferred Stock"). The Preferred Stock may be issued in one
or more series, the terms of which may be determined at the discretion of our
Board of Directors, without further approval of the stockholders. Among the
rights of the holders of any additional Preferred Stock that may be authorized
by the Board of Directors are rates of dividends, voting rights, terms of
redemption, amounts payable upon liquidation, sinking fund provisions and
conversion rights. One of the effects of any such additional Preferred Stock
that may be issued in the future may be to enable the Board of Directors to
render more difficult or to discourage an attempt to obtain control of the
Company by means of a tender offer, proxy contest, merger or otherwise and
thereby protect the continuity of our current management. The terms of any such
additional Preferred Stock that may be issued in the future could adversely
affect the rights of the holders of Common Stock. Accordingly, the issuance of
any such shares of Preferred Stock may discourage bids for the Common Stock or
adversely affect the market price of the Common Stock.

A Substantial Number of Our Shares of Common Stock Will Be Available for Future
Sale in the Public Market

         As of December 10, 2001, 23,191,692 shares of our outstanding Common
Stock are "restricted securities" as that term is defined in Rule 144
promulgated under the Securities Act and in the future may be sold only pursuant
to an effective Registration Statement under the Securities Act, in compliance
with the exemption provisions of Rule 144 or pursuant to another exemption under
the Securities Act. Furthermore, any shares that are issued upon the exercise of
any outstanding warrants or options will be eligible for sale, without
registration under Rule 144 (subject to the aforementioned volume restrictions
of the Rule) following the expiration of two years from the date of issuance. We
have granted "piggy-back" registration rights with respect to 3,000,000 shares
of Common Stock issued acquire Granite Technologies, Inc. and "piggy-back"
registration rights with respect to the 1,000,032 shares of Common Stock issued
to Blake Schiller upon consummation of the acquisition of Shopclue.com. Upon
registration, all shares, which are registered will become fully tradable
without restriction.

                                       12
<PAGE>

We Do Not Intend to Pay Any Dividends on the Common Stock in the Foreseeable
Future

         We currently intend to retain all future earnings, if any, to finance
our current and proposed business operations and we do not anticipate paying any
cash dividends on our Common Stock in the foreseeable future. The holder of our
Series B Preferred Stock have rights senior to the holders of Common Stock with
respect to any dividends. We may also incur indebtedness in the future that may
prohibit or effectively restrict the payment of cash dividends on our Common
Stock.

Two of Our Subsidiaries Have Outstanding Significant Delinquent Payroll Taxes
Due

         Sequential and S-Tech have an aggregate of $525,000 of delinquent
payroll taxes. Such delinquencies could have an adverse impact on the Company's
ability to obtain additional financing.

The Liability of Our Officers and Directors to Us and Our Shareholders is
Limited

         The applicable provisions of the Delaware Business Corporation Law
("BCL") and our Certificate of Incorporation limit the liability of our officers
and directors to us or our shareholders for monetary damages for breaches of
their fiduciary duties to us, with certain exceptions, and for other specified
acts or omissions of such persons. In addition, the applicable provisions of the
BCL and of our Certificate of Incorporation and By-Laws provide for
indemnification of such persons under certain circumstances. As a result of
these provisions, shareholders may be unable to recover damages against our
officers and directors for actions taken by them which constitute negligence,
gross negligence or a violation of their fiduciary duties and may otherwise
discourage or deter our shareholders from suing our officers or directors even
though such actions, if successful, might otherwise benefit us and our
shareholders.

Dependence on Key Suppliers

         Should any of the Company's key suppliers experience difficulty in
providing product in a timely manner, this could adversely effect the Company's
revenues and reputation in the market. Additionally, the failure on the part of
these suppliers to develop and manufacture or supply new or enhanced products or
software that meet or anticipate technological changes on a timely and
cost-competitive basis could have a materially adverse effect on the Company's
financial condition and results of operations.

Reliance on Management

         While investors have voting rights, they will not be able to take a
direct role in the management of the Company. The success of the Company and the
business of the Company is contingent on the judgment and expertise of the
directors and officers of the Company and its subsidiaries and on the Company
being able to retain its senior management team, some of who are approaching
retirement age.

Dependence on Key Personnel

         The Company's success will also depend to a significant extent upon the
skills of certain key personnel. The Company's failure to attract replacement or
additional qualified employees or to retain the services of key personnel could
adversely affect the Company's business.

Limited Liquidity

         Each investor should be fully aware of the long-term nature of his
investment in the Units and the lack of liquidity of his investment. Because the
Common Stock are being sold in reliance upon an exemption from the 1933
Securities Act ("Act") and applicable state securities laws, the Units may not
be re-sold unless they are subsequently registered under the Act and applicable
state securities laws or an opinion of counsel satisfactory to the Company is
delivered to the Company to the effect that such registration is not required.
Although it may be possible under certain circumstances for an investor to
dispose of the Units owned by him, he would need to comply with the provisions
of Rule 144 which requires a minimum holding period of one year. Holders of the
Units may not be able to liquidate their investments in the event of an
emergency or for any other reason. In addition, the transfer of the Units Stock
may result in adverse tax consequences to the transferor.

Computer Viruses

         The growth of the Internet has also seen the unwelcome growth of
computer viruses. Whilst many of these viruses inflict nuisance value when
attacking there are a growing number of malicious viruses that can bring down
whole computer systems. There is no guarantee that the Company will not fall
victim to viruses or that its business will not be severely affected or prevent
the services from operating completely.

                                       13
<PAGE>

Starnet Will Be Subject to Regulatory Scrutiny of Network Marketing Systems

         Our proposed network marketing model is subject to a variety of
governmental laws and regulations generally directed at ensuring that product
sales are made to consumers of the products and that compensation and
advancement within a marketing organization is based on sales of products rather
than investment in the organization. These laws and Federal Trade Commission
("FTC") regulations include the federal securities laws, matters administered by
the FTC and various state anti-pyramid and business opportunity laws. Although
we believe that our proposed business has been designed to be in compliance with
all such laws and regulations, our proposed business will be subject to the risk
that, in one or more of our future markets, our marketing system or the conduct
of certain independent representatives could be found not to be in compliance
with applicable laws or regulations. Failure by our business or independent
representatives to comply with these laws and regulations could have a material
adverse effect on our business in a particular market or in general. The cost of
compliance, in any event, is likely to be significant and could impact adversely
on our profits, if any. As of the date of this Memorandum we have not received
an opinion of counsel affirming the legality of our network marketing model and
no assurance is given that we will receive such opinion in the future.

We Could Be Subject to Potential Uninsured Liability

         The network marketing business as well as electronic commerce involve
potentially significant risks of statutory, contractual and common law
liability. We intend to obtain liability, property and business interruption
insurance. We may not have sufficient funds with which to purchase and/or
maintain such insurance. We plan to operate in a professional and prudent manner
to reduce potential liability. Nevertheless, an uninsured claim against us, if
successful and of sufficient magnitude, could have a material adverse effect on
us. In addition, the lack of or the inability to obtain insurance of the type
and in the amounts required could impair our ability to enter into certain
contracts, which may be, in certain instances, conditioned upon the availability
of adequate insurance coverage.

Item 2. Description of Properties.

         Sequential manufactures its products in a 15,000 square foot facility
located in Elmsford, New York which is leased from an independent third party
pursuant to a month to month lease. Our principal executive offices are also
located at these premises. S-Tech manufactures its products in a 7,300 square
foot facility located in West Babylon, New York which is leased from an
independent third party pursuant to a month to month lease. We believe that the
manufacturing facilities of Sequential and S-Tech are adequate for their
activities in the foreseeable future. Both Sequential and S-Tech utilize
subcontractors in connection with certain of the design and production
activities associated with the manufacture of their products.

         FMX currently occupies approximately 2,000 square feet of Sequential's
Elmsford, New York facility. It utilizes this facility for purposes of its
current research and development activities. At such time, if any, as FMX
develops any commercially viable products or systems, FMX intends to subcontract
the manufacture of its products. Nonetheless, FMX may be required to expand
and/or relocate its facilities.

         Secured Portal Systems conducts its activities at Sequential's
Elmsford, New York facilities. SPS intends to lease offices in Boca Raton,
Florida from an independent third party.

         Shopclue.com and Bizchase, Inc. conduct their activities at 80 Business
Park Drive, Suite 308, Armonk, New York 10504 where it currently occupies
approximately 1,200 square foot office facility, which is leased from an
independent third party pursuant to a lease which expires on December 31, 2002.

         The Finx Group and Starnet365.com conduct their business in Boca Raton,
Florida in space provided by the Company's Chief Executive Officer at no cost to
the company.

Item 3. Legal Proceedings.

         We are not involved in any legal proceedings that management believes
would adversely affect our business, results of operations or financial
condition.

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

         No matter was submitted during the fourth quarter of 1999 to a vote of
security holders, through the solicitation of proxies or otherwise.

                                       14
<PAGE>

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

         The Company's Common Stock is traded on the National Association of
Securities Dealers, Inc.'s Over the Counter Bulletin Board ("OTC Bulletin
Board") under the symbol "FINX". The following table sets forth, for the periods
indicated, the quarterly range of the high and low closing bid prices per share
of our Common Stock as reported by the OTC Bulletin Board Trading and market
services. Such bid quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.

                                     Bid Prices
                                     ----------
Current period from             High            Low
                                ----            ---
 January 1, 2001 to
 December 10, 2001            $ 2.00           $0.15

Quarter ended

March 31, 2000                $10.00           $3.10
June 30, 2000                  $5.60           $1.88
September 30, 2000             $6.25           $2.25
December 31, 2000              $2.63           $0.63

March 31, 1999                 $0.75           $0.26
June 30, 1999                  $4.30           $0.50
September 30, 1999             $6.70           $1.80
December 31, 1999              $5.70           $2.50

         We have authorized 50,000,000 of our $0.01 par value common stock. As
of December 10, 2001, there were approximately 2,700 holders of record of the
Company's common stock. The Company has not paid dividends on common stock and
does not anticipate paying dividends in the foreseeable future. The Company
intends to retain future earnings, if any, to finance the expansion of its
operations and for general corporate purposes, including future acquisitions.

         During 1999, the Company issued to Trinity 1,000 shares of its Series A
Preferred Stock. The Series A Preferred Stockholders are entitled to annual
dividends of 4% per share, currently $40 per annum. The Series A Preferred Stock
has the right to vote upon all matters as the Common Stockholders and gives
Trinity the right to elect a majority of the Board of Directors of the
Registrant.

         On May 7, 2001, Trinity converted $2 million of related party debt into
shares of a newly created series of preferred stock, the "Series "B" Preferred
Stock. The Series "B" Preferred Stock is redeemable by the Company in whole or
in part, at the option of the board of directors with Lewis S. Schiller,
Trinity's owner, abstaining, and votes alongside of common stock. The Series "B"
Preferred Stock is convertible in whole or in part, at the option of the holder
or its designees, over a two year period beginning May 7, 2002, into common
stock at a rate representing the lowest price that the common stock has traded
at over the period for which the preferred stock has been outstanding. Such
conversion may require an increase in the number of authorized common shares.
Dividends on the Series "B" Preferred stock are payable semi-annually at a rate
of 8%.

         As of November 2, 2001, 20,691,692 shares of the Company's Common Stock
are eligible for sale under Rule 144 promulgated under the Securities Act of
1933, as amended, subject to certain limitations included in said Rule. In
general, under Rule 144, a person (or persons whose shares are aggregated), who
has satisfied a one-year holding period, under certain circumstances, may sell
within any three-month period, a number of shares which does not exceed the
greater of one percent of the then outstanding Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares without any
quantity limitation by a person who has satisfied a two-year holding period and
who is not, and has not been for the preceding three months, an affiliate of the
Company.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

         THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS MAY BE DEEMED TO INCLUDE FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT INVOLVE
RISK AND UNCERTAINTY. ALTHOUGH MANAGEMENT BELIEVES THAT ITS EXPECTATIONS ARE
BASED ON REASONABLE ASSUMPTIONS, IT CAN GIVE NO ASSURANCE THAT ITS EXPECTATIONS
WILL BE ACHIEVED.

                                       15
<PAGE>

         THE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM
THOSE IN THE FORWARD-LOOKING STATEMENTS HEREIN (THE "CAUTIONARY STATEMENTS")
INCLUDE, WITHOUT LIMITATION: THE COMPANY'S HISTORY OF LOSSES AND CASH FLOW
DEFICITS; POTENTIAL LACK OF CONTROL OVER THE OPERATIONS OF SPS AND FMX; NEED FOR
ADDITIONAL FINANCING TO FUND OUR PRESENT AND PROPOSED BUSINESS ACTIVITIES;
DEPENDENCE ON PRESENT EXECUTIVE OFFICERS AND KEY PERSONNEL TO MANAGE OUR PRESENT
AND PROPOSED BUSINESS OPERATIONS AND OUR ABILITY TO INTEGRATE NEW OFFICERS AND
KEY PERSONNEL; LACK OF MARKETING OR SALES EXPERIENCE; DEPENDENCE UPON AN
EXCLUSIVE DISTRIBUTION AGREEMENT FOR THE FUTURE OPERATIONS OF SPS; DEPENDENCE
UPON PATENT PROTECTION FOR THE PROPOSED ACTIVITIES OF FMX; THREAT THAT
TECHNOLOGICAL CHANGE COULD RENDER CERTAIN OF OUR PRODUCTS AND PROPOSED PRODUCTS
OBSOLETE OR NON-COMPETITIVE; INABILITY TO PREDICT MARKET ACCEPTANCE FOR OUR
PROPOSED PRODUCTS; INTENSE COMPETITION OF THE BUSINESS IN WHICH WE INTEND TO
ENGAGE; THREAT THAT E-COMMERCE PRODUCTS AND SERVICES MAY BECOME SUBJECT TO
GOVERNMENT REGULATION; THE RISKS RELATING TO LEGAL PROCEEDINGS, AS WELL AS OTHER
RISKS REFERENCED FORM TIME TO TIME IN THE COMPANY'S FILINGS WITH THE SEC. ALL
SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE
COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR
ENTIRETY BY THE CAUTIONARY STATEMENTS. THE COMPANY DOES NOT UNDERTAKE ANY
OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO SUCH FORWARD-LOOKING STATEMENTS
TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS.

Results of Operations

         As more fully disclosed in the footnotes to the financial statements,
Fingermatrix has seven identifiable business segments. The following table sets
forth the results of operations of these segments for 2000 and 1999.
The operations of each of the business segments is discussed separately as
follows:


For the years ended December 31,                    2000              1999
--------------------------------------------------------------------------
Revenues:
Electro-Mechanical and Electro-
 Optical Products                             $2,406,000        $2,056,000
Specialized Vending Machines
 and Avionics Equipment                          401,000           567,000
Fingerprint Identification Technologies                -                 -
Secured Entrance Systems                               -                 -
Internet Marketing                               382,000                 -
Web Based Development Solutions                        -                 -
Application Service Provider                      44,000                 -
Corporate                                        450,000                 -
Intersegment charges                            (450,000)                -
--------------------------------------------------------------------------
Total revenues                                $3,233,000        $2,623,000
==========================================================================


Operating loss:
Electro-Mechanical and Electro-
 Optical Products                               ($47,000)      ($1,427,000)
Specialized Vending Machines
 and Avionics Equipment                         (457,000)         (456,000)
Fingerprint Identification Technologies         (296,000)         (218,000)
Secured Entrance Systems (Ingress/Egress)       (201,000)          (78,000)
Internet Marketing                              (729,000)                -
Web Based Development Solutions                 (448,000)                -
Application Service Provider                    (312,000)                -
--------------------------------------------------------------------------
                                              (2,490,000)       (2,179,000)
Corporate costs and expenses                  (5,603,000)         (966,000)
--------------------------------------------------------------------------
Total operating loss                         ($8,093,000)      ($3,145,000)
==========================================================================

                                       16
<PAGE>

Electro-Mechanical and Electro-Optical Products

         The Electro-Mechanical and Electro-Optical Products segment comprises
the activities of Sequential, which is primarily engaged in the design,
manufacture and assembly of precision electro-mechanical and electro-optical
products and devices for sale to commercial and governmental customers
throughout the United States. Among such products and devices are optical
encoders, encoded motors and limit programmers.

         Sequential's revenues for 2000 increased $350,000, or 17%, from $2.056
million for 1999 to $2.406 million for 2000. Sequential's 2000 gross profit was
$733,000, or 30.5%. Sequential's 1999 gross profit was $546,000, or 26.5% of
sales. Sequential's gross profit improved by 4% because in 2000, Sequential
generated a greater portion of its revenues from government contracts which had
greater margins than the revenue sources in 1999. For 1999, Sequential's
operating loss includes a $971,000 charge for uninsured inventory losses, which
were the result of a flood. Sequential's other operating expenses decreased
$220,000, or 22% from $1 million for 1999 to $780,000 for 2000. The 2000
operating expense includes $90,000 of management fees charged by The Finx Group.
As a result of the above, Sequential's operations improved by $1.4 million, or
96.7%, from an operating loss of $1.427 million for 1999 to $47,000 for 2000.

Specialized Vending and Avionics Equipment

         The Specialized Vending and Avionics Equipment comprises the activities
of S-Tech, which designs and manufactures two specialized product lines
consisting of specialized vending machines and avionics equipment. "Specialized
Vending" is an industry term used to describe a vending product that utilizes
electronic circuitry and/or computer software. Among the vending machines
manufactured by S-Tech are prepaid telephone debit card machines, bill payment
kiosks, information kiosks, and stamp vending machines.

         S-Tech's revenues for 2000 decreased $166,000,or 29.3%, from $567,000
for 1999 to $401,000 for 2000. S-Tech's gross profit was a negative $278,000, or
69.3% of sales for 2000 and $101,000, or 17.7% of sales, for 1999. S-Tech's cost
of sales included reserves for slow moving inventory of $359,000, or 89.5% of
sales, for 2000 and $258,000, or 45.5% of sales, for 1999. Excluding the effects
of the reserves for slow moving inventory, S-Tech's gross profit decreased by
7.7% as a result of unfavorable labor and overhead production variances related
to under utilized capacity. S-Tech's operating expense decreased $177,000, or
49.7% from $356,000 for 1999 to $179,000 for 2000. S-Tech's operating expense
included $3,000 of research and development costs. As a result of the above,
S-Tech's operating loss increased by $1,000 from $456,000 for 1999 to $457,000
for 2000.

Fingerprint Identification Technologies

         The Fingerprint Identification Technologies segment comprises the
activities of FMX, which was formed in 1996 to continue with the development of
products and systems utilizing a proprietary and patented electronic fingerprint
identification technology originally conceived by Fingermatrix. The fingerprint
identification technology being developed and utilized by FMX is a fingerprint
identification scanning technology utilized for a variety of access control and
law enforcement purposes. Applications for this technology include access
control systems for banks, airports and industrial and government facilities,
voter registration and electoral anti-fraud systems, welfare and social program
identification systems, immigration control, suspect booking, prisoner and
detainee movement and release control systems, and sensitive employment
authorization systems.

         FMX has developed a fingerprint identification system that could be
used in conjunction with the Georal Security System and FMX does not expect that
it will have meaningful revenues, if any, until the Georal Security System has
completed final certification testing at the U.S. State Department. As a result,
FMX did not have any revenues or gross profits for 2000 and 1999. FMX's
operating expenses, and therefore its operating losses, increased $78,000, or
38.8%, from $218,000 for 1999 to $296,000 for 2000. During 2000 the expenses
include $90,000 of management fees charged by The Finx Group. The remaining
costs consist primarily of salaries to FMX's president and consulting fees to
engineers.

Secured Entrance Systems (Ingress/Egress)

         The Secured Entrance Systems segment comprises the activities of
Secured Portals. Secured Portal's proposed activities consist of the marketing
and distribution of the Georal Security Systems to both those customers for
which it has exclusive distribution rights and to others as to which it has
non-exclusive rights to distribute the Georal Security Systems. Many of the
customers to whom Secured Portals will seek to market the Georal Security
Systems will be domestic and foreign government purchasers as well as commercial
users. The Georal Security System has completed all phases of U.S. State
Department forced entry and ballistics tests and is awaiting final certification
necessary for its possible procurement for use in U.S. embassies, consulates and
other governmental installations both in the U.S. an abroad.

         Secured Portals does not expect that it will have meaningful revenues,
if any, until the Georal Security System receives final certification from the
U.S. State Department and as a result did not have any revenues or gross profits
during 2000 or 1999. Secured

                                       17
<PAGE>

Portals operating expense, and therefore its net operating loss increased
$123,000, or 157.6%, from $78,000 for 1999 to $201,000 for 2000. During 2000,
Secured Portal's operating expense included $90,000 of management fees charged
by The Finx Group.

Internet Marketing

         Internet Marketing reflects the activities of Starnet365.com.
Starnet365.com is an Internet multi-level marketing company whose most
significant product is the Qode engine, a web based software component
comprising the largest UPC coded data base, which pays commissions and which
enables its users to comparative shop in excess of 7 million products related to
the UPC codes. Starnet365.com also sells a series of on-line training programs
consisting of a series of integrated "Earn While You Learn", on-line training
programs that are intended to teach marketing and recruiting techniques as well
as certain tax and legal aspects of running a home-based business.
Starnet365.com also markets replicated web sites, which Starnet365.com intends
to load with non-branded merchandise, enabling individuals quickly and
inexpensively to own their own on-line E-Commerce website. In addition,
Starnet365.com generates revenues from web site enrollment fees, monthly web
hosting fees, and transaction processing fees related to the sale of merchandise
on the websites.

         During 2000, Starnet365.com generated revenues of $383,000 resulting in
gross profits of $277,000, or 72.3%. A significant portion of Starnet365.com's
revenues in 2000 were sales of tutorials which have a low cost of sales
component. Other revenues were from the sale of logo items. Operating expenses
of Starnet 365.com for 2000 were $1.006 million which included $82,000 of
research and development related to web design and development, $303,000 of
selling expense, primarily commissions on product sales, $90,000 of management
fees charged by The Finx Group and $523,000 of other general and administrative
costs, which were primarily legal and consulting fees required to establish the
marketing plan. As a result of the above, Starnet365.com incurred an operating
loss of $729,000 for 2000.

Application Service Provider

         Application Service Provider reflects the activities of Shopclue.com.
Shopclue.com is an Application Service Provider that enables small- and
medium-sized businesses to establish an advanced online presence rapidly and
inexpensively using Shopclue.com's software through its interactive Internet
mall known as Retail Drive. The software used by Shopclue.com allows its
customers to create, edit and maintain advanced, interactive websites without
having any prior knowledge of web-based programming languages.

         The consolidated statement of operations for 2000 only includes
Shopclue.com's operating activities from the date of acquisition through
December 31, 2000. During 2000, Shopclue.com's total revenues were $64,000 of
which $44,000 is included in the consolidated results resulting in $32,000 of
gross profit. Shopclue.com's total operating expense for 2000 was $933,000 of
which $538,000 is included in the consolidated results. Shopclue.com's operating
expense includes $72,000 of research and development costs and a significant
amount of salaries paid to software developers and marketers. Shopclue.com's
total operating loss for 2000 amounted to $901,000 of which $312,000 is included
in the consolidated results.

Web Based Development Solutions

         Web Based Development Solutions reflects the activities of Biz Chase.
Biz Chase has developed a wholesale web based development solution that provides
a simple, affordable and feature rich online solution for small businesses. In
March 2001, Bizchase granted a license to Starnet365.com giving Starnet365.com
the right to sell software developed by Bizchase to the multi-level marketing
industry. The Bizchase software was developed and also licensed to Retail Drive.
Revenues are anticipated to be generated through activation and hosting fees.

         Biz Chase was organized and acquired in July 2000 and did not have any
revenues or gross profits during 2000. Biz Chase's operating expense, and
therefore its net operating loss for 2000 was $448,000. Operating expense
included $90,000 of management fees charged by The Finx Group, $52,000 of
depreciation and amortization related to computer equipment and software
development costs and $306,000 of other general administrative costs, a
significant portions of which is the cost of software developers.

Corporate costs and expenses

         Corporate costs and expenses comprise the expenses of The Finx Group,
the holding company. During 2000, The Finx Group recorded $450,000 of management
fees charged to its subsidiaries. All of such management fees are eliminated in
the consolidated results of operations. The Finx Group's 2000 operating expense
amounted to $6.053 million. In 2000, the Company purchased Shopclue.com from
family members of Lewis S. Schiller, The Finx Group's Chief Executive Officer
and Chairman of its Board of Directors. As of the date of the acquisition,
Shopclue.com had an excess of liabilities over assets of $768,000 and the common
shares issued to acquire Shopclue.com were valued at $4 million, resulting in a
purchase price that was in excess of net assets by $4.8 million. This $4.8
million approximates the value assigned to research and development projects of
Shopclue.com that were commenced but not yet completed at the date of the
acquisition, and which, if unsuccessful, have no alternative future use in
research and development activities or otherwise.. Amounts assigned to purchased
in-process research and development must be charged to

                                       18
<PAGE>

expense at the date of the acquisition. Accordingly, the Company charged
approximately $4.8 million to expense in 2000 for in-process research and
development. Other significant operating expense items included $148,000 from
the write-off of deferred offering costs related to an unconsummated private
placement offering of The Finx Group's preferred stock, $400,000 in accrued and
unpaid salaries owed to Lewis Schiller and Grazyna Wnuk, The Finx Group's
officers, $124,000 of legal fees, $150,000 of accounting and auditing fees,
$114,000 of consulting fees and $66,000 of public relations costs.

         As a result of the 1999 SES Merger and its treatment as a reverse
acquisition, all of the activities of Fingermatrix, the predecessor company,
prior to the April 28, 1999 SES Merger were recapitalized into equity and are
not reflected in the results of operations. As a result, the 1999 operating
expense, and therefore the operating loss, of the holding company, of $967,000
reflects only the expense and costs incurred from April 28, 1999 through
December 31, 1999. Significant operating expense for 1999 includes accrued and
unpaid salaries of $200,000 owed to Lewis Schiller and Grazyna B. Wnuk, $188,000
of legal fees and $181,000 of consulting fees

Significant Non-Operating Components of Net Loss

Interest Expense and Financing Fees

         Interest expense and financing fees for 2000 includes $163,000 related
to Sequential's revolving line of credit and $45,000 related to Sequential's
delinquent payroll taxes. Interest expense and financing fees for 1999 is
$205,000 related to Sequential's revolving line of credit.

         On July 28, 1997, Sequential entered into a revolving line of credit
from FINOVA Capital Corporation, formerly United Credit Corporation (the "FINOVA
Line of Credit"). The FINOVA Line of Credit provides for a borrowing base equal
to the lesser of 80% of eligible accounts receivable or $400,000, required
payment of a 1% annual facility fee, a 1% monthly commitment fee, against which
monthly interest, exclusive of interest on any over advances, is applied. The
annual monthly interest rate on the FINOVA Line of Credit is the greater of
18.5% or the prime rate in effect in New York City plus 10%, and is payable
monthly. The FINOVA Line of Credit is collateralized by all of the assets of
Sequential. Subsequent to December 31, 2000, the Company determined that FINOVA
declared bankruptcy and the Company is attempting to establish a replacement
line of credit. The Company was notified that the FINOVA line-of-credit will not
be extended beyond November 30, 2001.

Interest Expense and Factoring Fees, Related Parties

         Interest expense and financing fees on related party notes increased
$253,000 from $84,000 for 1999 to $337,000 for 2000. The Company and its
subsidiaries incur interest expense on advances from Trinity, advances from
Universal International, Inc., a company owned by Grazyna Wnuk, an officer of
the Company, a loan from E. Gerald Kay, a former director, and advances from
Blake Schiller and Carol Schiller, both immediate family members of Lewis
Schiller, an officer of the company. In addition S-Tech incurs interest expense
and factoring fees pursuant to a factoring agreement with Trinity Factoring
Corp., a financing company owned by Lewis Schiller. Total outstanding advances
from such related parties as of December 31, 2000 and 1999, aggregated $4
million and $1.5 million, respectively. Interest accrued on such notes are
generally calculated at 9% and as of December 31, 2000 $332,000 of such interest
remains unpaid.

Minority Interest in Loss of Consolidated Subsidiaries

         The minority interest represents the losses of its subsidiaries that
have been apportioned to the minority interest holders. The amount of loss
apportioned to the minority interest holders is limited to the amount of
investment that such minority holders have made into the subsidiaries. For 2000
and 1999, the minority interest portion of such losses was $113,000 and
$116,000, respectively, and as of December 31, 2000, cumulative amounts of
minority interest in the losses of consolidated subsidiaries in excess of
minority equity interests was $967,000.

Extraordinary Loss on Debt Extinguishments

         The Company extinguished certain obligations with no cash flow impact.
On April 28, 1999 certain creditors of the Company accepted 6,346 shares of
Series A Preferred Stock in exchange for their aggregate debt of $648,000. Using
the Black-Scholes option valuation formula, the 6,346 Series A Preferred shares
were valued at $1.077 million, resulting in $429,000 of compensation expense. On
July 20, 1999, the Company settled amounts owed to the former landlord of the
Company by making cash payments of $70,000, issuing a note payable for $45,000
and issuing 268 Series A Preferred shares. Using the Black-Scholes option
valuation formula, the 268 Series A Preferred shares were valued at $46,000. The
total consideration given to the landlord, including the calculated value of the
Series A Preferred shares exceeded the amounts owed to the former landlord by
approximately $26,000. All of such excess is attributed to the valuation of the
Series A Preferred shares and was recorded as compensation expense from the
issuance of stock, and presented in the financial statements as an extraordinary
item. As of December 31, 2000, all of such Series A Preferred Shares were
converted into common stock.

                                       19
<PAGE>

Net Loss

         As a result of the above, the Company incurred a consolidated net loss
of $8.5 million, or $1.26 per common share, for 2000 and $3.8 million, or $2.28
per common share for 1999.

Financial Condition - Liquidity and Capital Resources

         As of December 31, 2000 the Company had a working capital deficiency of
$7 million. Approximately $4.9 million of such deficiency relates to amounts
owed to related parties, including accrued and unpaid salaries of $600,000 owed
to Lewis Schiller and Grazyna Wnuk, $4.3 million owed in the aggregate to
Trinity, its controlling stockholder, Universal International, Inc., a company
owned by Grazyna Wnuk, E. Gerald Kay, a former director, and members of Lewis
Schiller's family, for advances and loans made to fund the operations of the
Company.

         During 2000, the Company used $1.4 million for operating activities and
$302,000 for investing activities and generated $1.6 million from financing
activities. Two of the Company's subsidiaries, Sequential and S-Tech have an
aggregate of $525,000 of delinquent payroll taxes. Such delinquencies could have
an adverse impact on the Company's ability to obtain financing. The Company has
issued its stock in order to make its recent acquisitions and is pursuing
various financing sources with which to fund future operating activities.

         The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the liquidation
of liabilities in the normal course of business. However, the Company has a
history of net losses for the two years ended December 31, 2000 and as of
December 31, 2000 has a working capital deficiency of $7 million and a capital
deficiency of $6.6 million. During 2000 and 1999 the Company has relied on
financial support from its controlling stockholder, Trinity and other related
parties. On September 14, 2001, the Company registered 12,000,000 shares of
Common Stock which are the subject of the 2001 Employee Stock Option Plan on
Form S-8 and as of December 10, 2001 has issued options to purchase an aggregate
of 11,475,000 of common stock, all of which were exercised at $0.15 per share.
Management is currently seeking additional financing; however no assurances can
be made that such financing will be consummated. The continuation of the Company
as a going concern is dependent upon its ability to obtain financing, and to use
the proceeds from any such financing to increase its business to achieve
profitable operations. The accompanying financial statements do not include any
adjustments that would result should the Company be unable to continue as a
going concern.

Item 7. Financial Statements and Supplementary Data.

The information required by Item 7. is included as Exhibit 99.2 to this Form
10-KSB/A.

Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.

         Effective for its fiscal year commencing January 1, 2000, the Company
has changed its independent auditors from Cornick, Garber & Sandler, LLP (the
"Former Accountant") to Moore Stephens, PC (the "New Accountant").

         The Former Accountant was dismissed. The report of the Former
Accountant for the consolidated balance sheet of The Finx Group, Inc. (formerly
known as Fingermatrix, Inc.) and its subsidiaries as of December 31, 1999, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the two years in the period ended December
31, 1999 did not contain an adverse opinion or a disclaimer of an opinion, nor
was it modified as to audit scope or accounting principles. The opinion was,
however, qualified by the assumption that the Company will continue as a going
concern on the basis that; (1) the Company has a history of declining revenues
and of net losses for the two years ended December 31, 1999, (2) as of December
31, 1999 the Company has a working capital deficiency of $2.241 million and a
capital deficiency of $2.117 million and (3) the Company has relied on
continuing financial support from its controlling stockholder. The opinion of
the Former Accountant as of December 31, 1999 states that these conditions raise
substantial doubt about the Company's ability to continue as a going concern.

         The decision to change accountants was approved by the Company's Board
of Directors. The Company has no audit committee.

         During each of the two years in the period ended December 31, 1999 and
the subsequent interim period since December 31, 1999, there were no
disagreements with the Former Accountant on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure.
None of the events described in Item 304 (a)(i)(v) of Regulation S-K promulgated
under the Securities Act of 1933, as amended, occurred during the Company's two
most recent fiscal years and the subsequent interim period since December 31,
1999.

         The New Accountant was engaged on July 19, 2000 to audit the Company's
financial statements for its year ended December 31, 2000.

                                       20
<PAGE>

PART III

Item 9. Directors and Executive Officers of the Registrant

Directors and Management

Officers are elected by, and serve at the pleasure of, the board of directors.
Set forth below is information concerning the directors and executive officers
of the registrant as of the date hereof.

Name                   Age               Position with the Company
------------------------------------------------------------------
Lewis S. Schiller       70               Chief Executive Officer,
                                          President and Chairman of the Board
Grazyna B. Wnuk         37               Secretary, Vice-President and Director


         Lewis S. Schiller was appointed Chairman of the Board, Chief Executive
Officer and President of the Company on April 28, 1999. Mr. Schiller is also
Chairman of the Board and a director of Sequential, S-Tech, FMX, Secured
Portals, Starnet, Shopclue and Bizchase and is Chief Executive Officer of
Secured Portals, Starnet, Shopclue and Bizchase. Mr. Schiller also serves as
Chairman of the Board and Chief Executive Officer of Trinity-I. For more than
five years prior to his resignation on April 2, 1998, Mr. Schiller served as
Chairman of the Board, Chief Executive Officer and a director of The Sagemark
Companies, Ltd., formerly Consolidated Technology Group Ltd., a public company,
and as Chairman of the Board, Chief Executive Officer and a director of
Sagemark's public and privately held subsidiaries. In April 1995, Mr. Schiller
was appointed a director of Fingermatrix pursuant to Fingermatrix's Bankruptcy
Plan of Reorganization, which was approved by the Federal Bankruptcy Court at
such time. In March 1996, the Federal Bankruptcy Court confirmed a Plan of
Reorganization for Fingermatrix and Mr. Schiller resigned as a director of
Fingermatrix in October 1996.

         Grazyna B. Wnuk ("Ms. Wnuk") was appointed Vice-President and
Secretary of the Company on April 28, 1999. Ms. Wnuk was appointed a Director of
the Company on November 19, 1999. Ms. Wnuk also serves as an officer and/or
director of FMX, Secured Portals, Shopclue.com, Bizchase, Trinity and Trinity-I.
For more than five years prior to her resignation on April 2, 1998, Ms. Wnuk
served as Secretary and a director of Sagemark and all of its public and
privately held subsidiaries.

         Lewis S. Schiller, Ms. Wnuk and E, Gerald Kay received appointments to
the board upon the resignations of Thomas T. Harding, Gordon R. Molesworth, Seth
M. Lukash and Fred I. Sonnenfeld on April 28, 1999. During the 4th Quarter of
2000, Jay Miller and Sy Flug were appointed to the Board of Directors. In the
1st Quarter of 2001, Messrs. Kay, Miller and Flug resigned from the Company's
board of directors. The Company was informed by Messrs. Kay, Miller and Flug
that they would not be able to provide attention to the Company's affairs due to
other business requirements.

<TABLE>
<CAPTION>

                            Annual Compensation          Awards           Payouts
                            ------ ------------          ------           -------

   Name and                                                                               Underlying
   Principal                                              Other Annual     Restricted    Options/SARs       LTIP         All Other
   Position         Year        Salary         Bonus      Compensation    Stock Awards        (#)        Payouts ($)   Compensation
---------------- ----------- -------------- ------------ ---------------- ------------- ---------------- ------------ --------------
<S>              <C>         <C>            <C>          <C>              <C>           <C>              <C>          <C>

Lewis S. Schiller,
 Chief Executive
 Officer and
 President
 since April 28,      2000    $250,000(1)           --               --            --               --           --            --
 1999                 1999    $125,000(1)           --               --            --               --           --            --

Grazyna B. Wnuk,
 Secretary since      2000    $150,000(2)           --               --            --               --           --            --
 April 28, 1999       1999     $75,000(2)           --               --            --               --           --            --

</TABLE>

                                       21
<PAGE>

(1) Mr. Lewis S. Schiller's annual salary of $250,000 was approved by the Board
of Directors effective July 1, 1999. The compensation listed for 2000 represents
a full years salary and the compensation listed for 1999, represents such salary
from July 1, 1999 through December 31, 1999. None of Lewis S. Schiller's salary
was paid to him during 2000 or 1999 and all such unpaid amounts were accrued as
an expense of 2000 in the Company's financial statements.

(2) Ms. Wnuk's annual salary of $150,000 was approved by the Board of Directors
effective July 1, 1999. The compensation listed for 2000 represents a full years
salary and the compensation listed for 1999, represents such salary from July 1,
1999 through December 31, 1999. None of Ms. Wnuk's salary was paid to her during
2000 or 1999 and all such unpaid amounts were accrued as an expense of 2000 in
the Company's financial statements.

Employment Agreements

         The Company and Lewis S. Schiller have entered into an employment
agreement whereby he is employed as the Company's Chief Executive Officer. Mr.
Schiller's contract is for an initial term commencing April 29, 1999 through
April 28, 2009 and provides annual compensation of $500,000. Mr. Schiller's
contract may be extended an additional five years and commencing 2002 his annual
compensation shall be increased by the greater of 5% or the increase in the cost
of living index. Mr. Schiller's contract provides him with a bonus for each year
of the term equal to 10% of the amount by which the greater of consolidated net
income before income taxes or consolidated net cash flow exceeds $600,000. Mr.
Schiller's contract entitles him to 20% of the gross profit on the sale of any
of the Company's, or its subsidiaries, investments securities. Mr. Schiller's
contract provides him the opportunity to participate in the future expansion of
the Company whereby he is entitled, at his option, to purchase up to 25% of the
authorized securities of any subsidiary which is organized for any purpose. Mr.
Schiller's contract provides him with certain fringe benefits including a
vehicle, health insurance and life insurance. In the event of a change of
control, Mr. Schiller's contract provides him with severance equal to all
amounts owed to for the full term of the employment agreement.

         As of December 31, 2000, the Company has not entered into an employment
agreement with Grazyna B. Wnuk. The Company anticipates that it will negotiate
terms and conditions for a contract with Ms. Wnuk at a future date.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth certain information regarding the
beneficial ownership of our Common Stock as of December 31, 2000 by: (i) each of
our executive officers and directors; (ii) each person whom we know to be the
beneficial owner of more than 5% of our outstanding Common Stock; and (iii) all
of our officers and directors as a group.

         Unless otherwise indicated, to our knowledge, all persons listed below
have sole voting and investment power with respect to their shares of Common
Stock, except to the extent applicable law gives spouses shared authority. Any
shares of Common Stock that an individual or group has the right to acquire
within sixty (60) days after December 31, 2000 pursuant to the exercise of
warrants or options are deemed to be outstanding for the purpose of computing
the percentage ownership of such person or group, but are not deemed outstanding
for the purpose of calculating the percentage owned by any other person listed
below.
<TABLE>
<CAPTION>

                                                                                              Amount and Nature of    Common Stock
Name and address of Beneficial Owner                                                          Beneficial Ownership   Outstanding(1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>                    <C>

Officers and Directors
  Lewis S. Schiller, 21346 St. Andrews Blvd., Suite 137, Boca Raton, FL 33433                      5,269,480              45.8%(2)
  Grazyna B. Wnuk, 21634 Club Villa Terrace, Boca Raton, FL 33433                                  1,209,535              10.5%(3)
  Officer and directors as a group (2 persons)                                                     6,479,015                56.3%

Other Beneficial Owners
  The Trinity Group I, Inc., 21346 St. Andrews Blvd., Suite 137, Boca Raton, FL 33433              5,269,480                45.8%
  Allan Risi GIL Security Systems, Inc., 150-38 12th Avenue, Whitestone, NY 11357                  1,049,874                9.1%
  Blake Schiller, 84 Business Park #202, Armonk, NY 10504                                          1,040,455                9.0%
  Gordon Molesworth, 1091 W. Calle Excesio, Green Valley, AZ 85614                                 1,069,071               8.3%(4)
  Carol Schiller, One Butler Road, Scarsdale, NY 10583                                              981,569                 8.5%
</TABLE>

(1) The "Percent of Common Stock Outstanding" is based on the 11,507,885 shares
of Common Stock outstanding as of December 31, 2000 and the assumption that the
related beneficial owner had converted or exercised all potential Common Stock
related to that beneficial owner.

(2) Lewis S. Schiller, by virtue of his ownership of all of the outstanding
shares of capital stock of Trinity-I, may be deemed the beneficial owner of the
shares of Common Stock owned by Trinity-I.

                                       22
<PAGE>

(3) Grazyna B. Wnuk's percentage of beneficial common stock owned does not
include shares of Common Stock owned by Trinity-I, of which Ms. Wnuk is an
officer and director, as to which she disclaims beneficial ownership.

(4) Includes 39,071 directly owned and 1,030,000 related to options and warrants
exercised subsequent to December 31, 2000.

Item 12. Certain Relationships and Related Transactions.

         The Company and its subsidiaries incur interest expense on advances
from Trinity, advances from Universal International, Inc., a company owned by
Grazyna Wnuk, an officer of the Company, a loan from E. Gerald Kay, a former
director, and advances from Blake Schiller and Carol Schiller, both immediate
family members of Lewis Schiller, an officer of the company. In addition S-Tech
incurs interest expense and factoring fees pursuant to a factoring agreement
with Trinity Factoring Corp., a financing company owned by Lewis Schiller. Total
outstanding advances from such related parties as of December 31, 2000 and 1999,
aggregated $4.208 million and $1.532 million. Interest accrued on such notes are
generally calculated at 9% and as of December 31, 2000 $332,000 of such interest
remains unpaid. Interest expense and financing fees on related party notes was
$337,000 and $84,000 for 2000 and 1999, respectively.

         On April 28, 1999, Fingermatrix consummated an Agreement and Plan of
Reorganization (the "1999 SES Merger Agreement") with Trinity. Pursuant to the
1999 SES Merger agreement, Fingermatrix acquired from Trinity in a reverse
merger (the "1999 SES Merger") all of the issued and outstanding shares of
capital stock of SES Acquisition Corp. ("SES") (a then wholly owned subsidiary
of Trinity) in exchange for 85% of Fingermatrix's equity and voting power
consisting of 1,057,160 shares (10,571,607 shares prior to the July 14, 2000 1
for 10 reverse split) of Common Stock and 93,654 shares of Series A Preferred
Stock (convertible into 6,956,693 shares (69,566,934 shares prior to the July
14, 2000 1 for 10 reverse split) of Common Stock). Subsequent to the 1999 SES
Merger, Trinity transferred an aggregate of 370,046 shares (3,700,457 shares
prior to the July 14, 2000 1 for 10 reverse split) of the Common Stock and
32,780 shares of Series A Preferred Stock (convertible into an aggregate of
2,434,898 shares 984 (24,348,984 shares prior to the July 14, 2000 1 for 10
reverse split) shares of Common Stock) owned by it to the following individuals
and amounts: Carol Schiller (116,281 shares (1,162,811 shares prior to the July
14, 2000 1 for 10 reverse split) of Common Stock and 10,302 shares of Series A
Preferred Stock); Douglas Schiller (31,733 shares (317,332 shares prior to the
July 14, 2000 1 for 10 reverse split) of Common Stock and 2,810 shares of Series
A Preferred Stock); Linda Schiller (31,733 shares (317,332 shares prior to the
July 14, 2000 1 for 10 reverse split) of Common Stock and 2,810 shares of Series
A Preferred Stock); (31,733 shares (317,332 shares prior to the July 14, 2000 1
for 10 reverse split) of Common Stock and 2,810 shares of Series A Preferred
Stock); and Grazyna B. Wnuk (158,565 shares (1,585,650 shares prior to the July
14, 2000 1 for 10 reverse split) of Common Stock and 14,048 shares of Series A
Preferred Stock), in exchange for the equity interests of such individuals in
Trinity. Carol Schiller is the wife of Lewis S. Schiller, Chairman of the Board
and Chief Executive Officer of the Company, Douglas Schiller, Linda Schiller and
Blake Schiller are Mr. Schiller's adult children and Grazyna B. Wnuk is a
director of the Company. Trinity is wholly owned by Trinity-I, which, in turn,
is wholly owned by Lewis S. Schiller. Mr. Schiller disclaims the beneficial
ownership of the shares of Common Stock and Series A Preferred Stock owned by
Carol Schiller, Douglas Schiller, Linda Schiller and Blake Schiller. Mr.
Schiller and Ms. Wnuk are the sole officers and directors of Trinity and
Trinity-I. Mr. Schiller has pledged all of the shares of Trinity-I to SES
Holdings Corp. ("SESH") as collateral security for a prior debt to SESH. SESH is
controlled by Carol Schiller. Carol Schiller, Douglas Schiller, Linda Schiller,
Blake Schiller and Grazyna B. Wnuk each have "piggy-back" registration rights
with respect to the aforementioned shares of Common Stock owned and to be issued
to them upon the conversion of the aforementioned shares of Series A Preferred
Stock.

         In July 1999, the Company issued to Trinity all 1,000 of the shares of
its Series A Preferred Stock pursuant to which Trinity has the right to elect
the majority of the Board of Directors. As of the date hereof, Lewis S.
Schiller, Grazyna B. Wnuk and E. Gerald Kay are Trinity's designees to the Board
of Directors.

         In connection with the 1999 SES Merger, the Company exchanged shares of
the Series A Preferred Stock for indebtedness aggregating $648,000. P.T. Dolak
Permei ("Permei"), an Indonesian company, was one of the Company's then
creditors and exchanged an aggregate of $230,833 of such indebtedness for 2,259
shares of Series A Preferred Stock (convertible into an aggregate of 1,677,985
(167,799 post split) shares of Common Stock).

         In July 1999, the Company settled amounts due for unpaid rent owed to
the Company's former landlord. Included in this settlement was the issuance by
the Company of a series of notes payable to the landlord in the principal amount
of $45,000, which notes are payable in nine installments, the last of which is
due in April 2000. Lewis S. Schiller, Chief Executive Officer and Chairman of
the Board, personally guaranteed these notes. The remaining balance of $25,000
due on such notes is currently in default.

         On September 13, 1999, Secured Portals entered into an exclusive
licensing agreement with GIL pursuant to which Secured Portals was engaged as
the exclusive distributor for the Georal Security Systems for a term commencing
as of September 1, 1999 and expiring on August 31, 2009 (the "Georal Exclusive
Licensing Agreement"), to certain categories of customers specified in the
Georal Exclusive Licensing Agreement, including certain agencies of the federal
government, embassies, department stores and retail stores

                                       23
<PAGE>

located in the United States, the State of Israel, NCR Corp. and Sun
Microsystems. As an inducement to obtain the Georal Exclusive Licensing
Agreement, the Company also entered into a stock purchase agreement with GIL on
September 13, 1999 (the "GIL Stock Purchase Agreement") pursuant to which the
Company issued to GIL 14,134 shares of its Series A Preferred Stock (convertible
into 1,049,873 shares (10,498,735 shares prior to the July 14, 2000 1 for 10
reverse split) of Common Stock) of which 997,737 were in exchange for the
licensing rights and 52,136 were in exchange for 1,000,000 shares of the
outstanding common stock of GIL. Under these agreements, Trinity, Carol
Schiller, the wife of Lewis S. Schiller, and Grazyna B. Wnuk, an officer and
director of the Company, agreed not to publicly sell any of the shares of Common
Stock owned by them unless and to the extent that GIL publicly sells any of the
shares of Common Stock acquired by it upon the conversion of the shares of
Series A Preferred Stock owned by it unless 50% or more of the shares issued for
the license are registered under the Securities Act or such shares become
eligible for public sale under Rule 144(k) under the Securities Act.

         On July 27, 2000, the Company concluded an agreement to acquire a
controlling interest in Shopclue.com, Inc. d/b/a Retail Drive ("Shopclue.com" or
"Retail Drive") in exchange for 1,000,030 shares of the Company's Common Stock.
The Company purchased the Shopclue.com common shares from family members of
Lewis S. Schiller, the Company's Chief Executive Officer and Vice Chairman of
its Board of Directors. As of the date of the acquisition, Shopclue.com had an
excess of liabilities over assets of $768,000 and the common shares issued to
acquire Shopclue.com were valued at $4 million, resulting in a purchase price
that was in excess of net assets by $4.8 million.

         On September 19, 2001, the Company consummated its acquisition Granite
through its newly created and wholly owned subsidiary, Granite Technology
Acquisition Corp. pursuant to the terms of a Stock Purchase Agreement dated as
of September 19, 2001, as amended, the Company purchased 95.87% of Granite's
common stock from such holders of the Granite's common stock (the "Selling
Shareholders") upon the issuance of 3,000,000 shares of its unregistered Common
Stock (the "Acquisition Shares"). Granite has two significant proprietary
software packages which have wide application in the retail and financial
markets. Granite's principal products are the SmartCAT application Framework and
the SmartCAT IO Subsystem. SmartCAT is a set of JAVA middleware that provides
both the client (kiosk) and server (central system mainframe) platform for rapid
development of self-service applications over the Internet. SmartCAT IO
Subsystem, also a set of JAVA applications, provides powerful but simple-to-use
interfaces to serial devices found in kiosks and in various retail delivery
applications, such as point-of-sale and bank branch automation. It may be used
together with the SmartCAT Application Framework or with other applications such
as Eontec's BankFrame to deliver complete client specific solutions. Of the
Selling Shareholders, Grazyna B. Wnuk, the Company's Corporate Secretary, a
Director and Vice-President, received 124,031 Acquisition Shares for her
ownership interest in Granite; and immediate family members of Lewis S.
Schiller, the Company's Chairman of the Board, a Director and Chief Executive
Officer, received 397,934 Acquisition Shares for their ownership interest in
Granite. In accordance with the terms of the Stock Purchase Agreement, the
Selling Shareholders hold certain demand and "piggyback" registration rights
with respect to the Acquisition Shares received by them in connection with the
Acquisition on terms specified in the Stock Purchase Agreement

         On May 7, 2001, Trinity converted $1.5 million of related party debt
into 7,500,000 shares of Common Stock, representing $0.20 per share, the fair
market value of the Common Stock on May 7, 2001. On May 7, 2001, Trinity
converted an additional $2 million of related party debt into shares of a newly
created series of preferred stock, the "Series "B" Preferred Stock. The Series
"B" Preferred Stock is redeemable by the Company in whole or in part, at the
option of the board of directors with Lewis S. Schiller, Trinity's owner,
abstaining, and votes alongside of common stock. The Series "B" Preferred Stock
is convertible in whole or in part, at the option of the holder or its
designees, over a two year period beginning May 7, 2002, into common stock at a
rate representing the lowest price that the common stock has traded at over the
period for which the preferred stock has been outstanding. Such conversion may
require an increase in the number of authorized common shares. Dividends on the
Series "B" Preferred stock are payable semi-annually at a rate of 8%.

Item 13. Exhibits and Reports on Form 8-K.

(a) Exhibits - See Exhibit Index for the Exhibits filed as part of or
incorporated by reference into this Report.

(b) Reports on Form 8-K

    (i) None.

                                       24
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

THE FINX GROUP, INC.

/s/ Lewis S. Schiller
---------------------
Chief Executive Officer
December 10, 2001

In accordance with the Exchange Act, this report has been signed below by the
following person on behalf of the registrant and in the capacities and on the
dates indicated.

/S/ Lewis S. Schiller
---------------------
Chief Executive Officer,
  Chairman of the Board,
  President,
  Director and
  Chief Accounting Officer

December 10, 2001


/S/ Grazyna B. Wnuk
-------------------
Secretary, Vice-President and Director

December 10, 2001


                                       25
<PAGE>

Index to Exhibits

Exhibit No.      Description of Document
----------       -----------------------
(3)(i)           Amended and Restated Certificate of Incorporation.(1)
(3)(ii)          By-laws.(1)
(10.1)           Stock Purchase Agreement to acquire Shopclue.com, Inc.(2)
(10.2)           Stock Purchase Agreement to acquire Bizchase, Inc.(2)
(21)             Subsidiaries of the registrant.
(99.1)           Employment Agreement between Registrant and Lewis S. Schiller
(99.2)           Financial Statements

(1) Incorporated by reference to Form 8-K dated April 28, 1999.
(2) Incorporated by reference to Form 10QSB for the quarter ended June 30, 2000.



                                       26
<PAGE>

Exhibit (21)
Subsidiaries of the Registrant

1.    Sequential Electronic Systems, Inc., a Delaware company organized in 1985.
2.    S-Tech, Inc., a Delaware company organized in 1992.
3.    FMX Corp., a Delaware company organized in 1996.
4.    Secured Portal Systems, Inc., a Delaware company organized in 1999.
5.    Starnet365.com, Inc., a Delaware company organized in 2000.
6.    Shopclue.com, Inc., a Delaware company organized in 1999.
7.    Bizchase, Inc., a Delaware company organized in 2000.



                                       27
<PAGE>

Exhibit (99.1)
Employment Agreement Between the Registrant and Lewis S. Schiller

The following exhibit comprises the form of the employment agreement between the
Registrant and Lewis S. Schiller.



                                       28
<PAGE>

Exhibit (99.2)
Financial Statements and Supplementary Data

The following exhibit comprises the Financial Statements and Supplementary Data
as specified by Item 7 of Part II of Form 10-KSB.


                                       29
<PAGE>





                      The Finx Group, Inc. and Subsidiaries
                        Consolidated Financial Statements
                                December 31, 2000





                                      F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------


To the Board of Directors and Stockholders of
The Finx Group, Inc.
New York, New York


         We have audited the accompanying consolidated balance sheet of The Finx
Group, Inc. and its subsidiaries as of December 31, 2000, and the related
consolidated statements of operations, changes in capital deficiency, and cash
flows for the year ended December 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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

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

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements; (1) the Company has a history of net losses for the two
years ended December 31, 2000, (2) as of December 31, 2000 the Company has a
working capital deficiency of $7 million and a capital deficiency of $6.6
million and (3) the Company has relied on continuing financial support from its
controlling stockholder. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans regarding
these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Moore Stephens, PC
Certified Public Accountants


Cranford, New Jersey
December 10, 2001



                                      F-2
<PAGE>

INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------


To the Board of Directors and Stockholders of
Fingermatrix, Inc.
New York, New York


         We have audited the accompanying consolidated statements of operations,
changes in stockholders' equity, and cash flows of Fingermatrix, Inc. and its
subsidiaries for the year ended December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated results of their
operations and cash flows of Fingermatrix, Inc. and its subsidiaries for the
year ended December 31, 1999, in conformity with generally accepted accounting
principles in the United States.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements; (1) the Company has a history of declining revenues and of
net losses for the two years ended December 31, 1999, (2) as of December 31,
1999 the Company has a working capital deficiency of $2.241 million and a
capital deficiency of $2.117 million and (3) the Company has relied on
continuing financial support from its controlling stockholder. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding these matters are also described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

Cornick, Garber & Sandler, LLP
Certified Public Accountants


New York, New York
May 4, 2000



                                      F-3
<PAGE>

The Finx Group, Inc. and Subsidiaries
Consolidated Balance Sheet
As of December 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                                           <C>
Current Assets:
  Cash                                                                        $    3,000
  Accounts receivable, net                                                       263,000
  Inventory, net                                                               1,120,000
  Prepaid expense and other current assets                                        22,000
----------------------------------------------------------------------------------------
Total current assets                                                           1,408,000
----------------------------------------------------------------------------------------
Property, plant and equipment and software costs:
  Property, plant and equipment                                                2,537,000
  Software costs                                                                 285,000
  Less accumulated depreciation and amortization                              (2,464,000)
----------------------------------------------------------------------------------------
Net property, plant and equipment and software costs                             358,000
----------------------------------------------------------------------------------------
Other assets:
  Security deposits                                                               29,000
  Patents                                                                         10,000
----------------------------------------------------------------------------------------
Total other assets                                                                39,000
----------------------------------------------------------------------------------------
Total assets                                                                  $1,805,000
========================================================================================


Current Liabilities:
  Notes payable and accrued interest, related parties                         $4,344,000
  Accounts payable                                                             1,521,000
  Accrued payroll                                                                996,000
  Revolving line of credit                                                       677,000
  Accrued payroll taxes                                                          546,000
  Other                                                                          295,000
----------------------------------------------------------------------------------------
Total current liabilities                                                      8,379,000
----------------------------------------------------------------------------------------
Commitments and contingencies (see footnote 12)
----------------------------------------------------------------------------------------
Capital Deficiency:
  Series A Preferred stock, $.01 par value; 1,000,000 shares authorized;
   1,000 shares issued and outstanding
  Common stock, $.01 par value; 50,000,000 shares authorized;
   11,507,885 shares issued and outstanding                                      115,000
  Additional paid in capital, common stock                                    12,360,000
  Accumulated earnings (deficit)                                             (19,049,000)
----------------------------------------------------------------------------------------
Capital deficiency                                                            (6,574,000)
----------------------------------------------------------------------------------------
Total Liabilities and Capital Deficiency                                      $1,805,000
========================================================================================
</TABLE>
See notes to consolidated financial statements.


                                      F-4
<PAGE>

The Finx Group, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
<S>                                                            <C>            <C>
For the Year Ended December 31,                                      2000           1999
----------------------------------------------------------------------------------------
Sales                                                          $3,233,000     $2,623,000
Cost of goods sold                                              2,058,000      1,920,000
----------------------------------------------------------------------------------------
                                                                1,175,000        703,000
Changes in reserve for obsolete and slow moving inventory        (359,000)      (258,000)
----------------------------------------------------------------------------------------
Gross profit                                                      816,000        445,000
----------------------------------------------------------------------------------------
Research and development                                        4,924,000              -
Other general and administrative expenses                       3,000,000      2,295,000
Selling expense                                                   695,000        282,000
Write-off deferred offering costs                                 148,000              -
Depreciation and amortization                                      90,000         39,000
Bad debt expense                                                   52,000          3,000
Inventory damaged in flood                                              -        972,000
----------------------------------------------------------------------------------------
Operating expenses                                              8,909,000      3,591,000
----------------------------------------------------------------------------------------
Operating loss                                                 (8,093,000)    (3,146,000)
Other income                                                       47,000              -
Interest expense and financing fees, related parties             (337,000)       (84,000)
Interest expense and financing fees                              (208,000)      (205,000)
Minority interest in loss of consolidated subsidiaries            113,000        116,000
----------------------------------------------------------------------------------------
Loss before extraordinary item                                 (8,478,000)    (3,319,000)
Extraordinary loss on debt extinguishment                               -       (455,000)
----------------------------------------------------------------------------------------
Net loss                                                      $(8,478,000)   $(3,774,000)
========================================================================================

Weighted average shares outstanding                             6,745,089      1,661,129
========================================================================================

Net loss per common share - Basic and diluted:
 Loss before extraordinary items                                   $(1.26)        $(2.00)
 Extraordinary loss on debt extinguishment                              -          (0.28)
----------------------------------------------------------------------------------------
 Net loss per common share                                         $(1.26)        $(2.28)
========================================================================================
</TABLE>
See notes to consolidated financial statements.


                                      F-5
<PAGE>

The Finx Group, Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
<S>                                                           <C>            <C>
For the Year Ended December 31,                                      2000           1999
----------------------------------------------------------------------------------------
Net loss                                                      $(8,478,000)   $(3,774,000)
Adjustments to reconcile net loss to net cash used in
 operating activities:
  Acquired in-process research and development costs            4,768,000              -
  Changes in the reserve for obsolete and slow moving
   inventory                                                      359,000        258,000
  Write-off deferred offering costs                               148,000              -
  Depreciation and amortization                                    98,000         83,000
  Provision for bad debts                                          52,000          3,000
  Other                                                            42,000         87,000
  Minority interest in loss of subsidiaries                      (113,000)      (116,000)
  Inventory damaged in flood                                            -        972,000
  Extraordinary loss on debt extinguishment                             -        455,000
  Changes in assets and liabilities:
    Accounts receivable, net                                      167,000       (177,000)
    Inventories                                                  (203,000)      (270,000)
    Prepaid expense and other current assets                        7,000          6,000
    Other assets                                                   14,000          8,000
    Accounts payable                                              597,000        319,000
    Accrued payroll                                               441,000        298,000
    Accrued payroll taxes                                         290,000        175,000
    Other current liabilities                                     117,000        244,000
    Accrued interest expense, related parties                     292,000         22,000
----------------------------------------------------------------------------------------
      Cash used in operating activities                        (1,402,000)    (1,407,000)
----------------------------------------------------------------------------------------

Investing activities:
  Software development costs                                     (285,000)        (3,000)
  Capital expenditures                                            (15,000)        (5,000)
  Patent costs                                                    (10,000)        (2,000)
  Other                                                             8,000         (2,000)
----------------------------------------------------------------------------------------
    Cash used in investing activities                            (302,000)       (12,000)
----------------------------------------------------------------------------------------
Financing activities:
  Advances from related parties                                 2,211,000      1,172,000
  Repayments to related parties                                  (400,000)             -
  Deferred offering costs                                        (148,000)             -
  Net proceeds from subsidiaries private placement offering       112,000              -
  Net advances (repayments) on revolving line of credit          (103,000)       313,000
  Other                                                           (36,000)         9,000
----------------------------------------------------------------------------------------
    Cash provided by financing activities                       1,636,000      1,476,000
----------------------------------------------------------------------------------------

  Increase (decrease) in cash                                     (68,000)        57,000
Cash at beginning of period                                        71,000         14,000
----------------------------------------------------------------------------------------
Cash at end of period                                              $3,000        $71,000
========================================================================================
                                                                              (Continued)
</TABLE>
See notes to consolidated financial statements.


                                      F-6
<PAGE>

The Finx Group, Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
<S>                                                           <C>            <C>
For the Year Ended December 31,                                      2000           1999
----------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest                                                         $253,000       $243,000
Income taxes                                                            -              -
----------------------------------------------------------------------------------------
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

For the year ended December 31, 2000
------------------------------------

         The Company consummated the Shopclue.com, Inc. ("Shopclue.com")
acquisition whereby certain assets and liabilities, for which there was no cash
flow impact, were consolidated into the balance sheet, including $18,000 of
accounts receivable, $2,000 of prepaid expenses, $14,000 of net property, plant
and equipment, $13,000 of security deposits, $27,000 of accounts payable,
$167,000 of accrued expenses, $585,000 of notes payable, related party and
$44,000 of other current liabilities.

         The Company issued 1,000,030 shares of common stock valued at $4
million to acquire Shopclue.com and as of the date of the acquisition,
Shopclue.com had an excess of liabilities over assets of $768,000, resulting in
a purchase price that was in excess of net assets by $4.8 million. This $4.8
million approximates the value assigned to research and development projects of
Shopclue.com that were commenced but not yet completed at the date of the
acquisition, and which, if unsuccessful, have no alternative future use in
research and development activities or otherwise. Amounts assigned to purchased
in-process research and development must be charged to expense at the date of
the acquisition. Accordingly, the Company charged approximately $4.8 million to
expense in 2000 for in-process research and development.

         The Company issued 10,000 shares of common stock in order to settle an
obligation of Sequential Electronic Systems, Inc., its wholly owned subsidiary.
Such shares, using the Black-Scholes option valuation formula, had a value of
$28,000.

         The Company converted 114,403 shares of Series A 2% Voting Convertible
Preferred Stock into 8,497,855 shares of Common stock.

For the year ended December 31, 1999
------------------------------------

         On April 28, 1999, the Company consummated the 1999 SES Merger, through
a share exchange accounted for as a reverse acquisition, with SES being the
acquiring company for accounting purposes. In accounting for the 1999 SES
Merger, the equity of SES, as the acquiring company, and Fingermatrix, as the
acquired company, was re-capitalized and the consolidated financial statements
reflect the results of operations and cash flows of the Company and SES from the
date of the reverse acquisition forward. The consolidated financial statements
prior to the date of the 1999 SES Merger reflect the results of operations and
cash flows of SES. As a result of the transaction, as of April 28, 1999 the
predecessor company's assets and liabilities for which there is no cash flow
impact were consolidated into the balance sheet, including $90,000 of property,
plant and equipment, $98,000 of patent costs, $344,000 of accounts payable,
$109,000 of accrued expenses and $425,000 of subordinated debt.

         During 1999, the Company extinguished certain obligations with no cash
flow impact. On April 28, 1999 certain creditors of the Company accepted 6,346
shares of Series A Preferred Stock in exchange for their aggregate debt of
$648,000. The 6,346 Series A Preferred shares are convertible into 4,713,809
common shares of the Company and using the Black-Scholes option valuation
formula, such shares were valued at $1.077 million, resulting in $429,000 of
compensation expense from issuance of the stock. On July 20, 1999, the Company
settled amounts owed to the former landlord of the Company by making cash
payments of $70,000, issuing a note payable for $45,000 and issuing 268 Series A
Preferred shares. The 268 Series A Preferred shares are convertible into 199,070
common shares of the Company's common stock and using the Black-Scholes option
valuation formula, such shares were valued at $46,000. The total consideration
given to the landlord, including the calculated value of the Series A Preferred
shares, exceeded the amounts owed to the former landlord by approximately
$26,000. All of such excess is attributed to the valuation of the Series A
Preferred shares and was recorded as compensation expense from the issuance of
stock, and presented in the consolidated financial statements as an
extraordinary item.

         On September 13, 1999, the Company issued to GIL Security Systems, Inc.
14,134 shares of its Series A Preferred Stock in payment of the purchase price
for the licensing agreement and 1,000,000 shares of the common stock of GIL,
representing 1% of GIL's outstanding common stock, pursuant to a stock purchase
agreement between the Company and GIL.

See notes to consolidated financial statements.


                                      F-7
<PAGE>

The Finx Group, Inc. and Consolidated Subsidiaries
Consolidated Statement of Changes in Capital Deficiency
For the Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>         <C>          <C>            <C>         <C>         <C>           <C>
                                                                    Preferred                Additional
                          Preferred      Common      Preferred       Stock in      Common     Paid-in    Accumulated
                             Shares      Shares            Par    Excess of Par       Par     Capital      Deficit          Total
------------------------------------------------------------------------------------------------------------------------------------
Balance at December
 31, 1998                         -     942,840              -                -     $94,000  $7,913,000  ($6,779,000)  $1,228,000
  Issuance of Common and
   Series A Preferred
   Shares for Reverse
   acquisition               93,654   1,057,160         $1,000                -     106,000    (797,000)           -     (690,000)
  Series B Preferred
   shares issued to The
   Trinity Group-I, Inc.      1,000           -              -*               -           -           -            -            -
  Series A Preferred
   shares issued for
   payment of
   subordinated debt          6,346           -              -*       1,084,000           -           -            -    1,084,000
  Series A Preferred
   shares issued for
   payment to a trade
   creditor                     268           -              -*          46,000           -           -            -       46,000
  Series A Preferred
   shares issued to
   acquire exlcusive
   distribution rights       14,134           -              -*               -           -           -            -            -
  Accrued dividends
   on preferred stock             -           -              -*               -           -           -      (11,000)     (11,000)
  Net loss for the
   year ended
   December 31, 1999              -           -              -                -           -           -   (3,774,000)  (3,774,000)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December
 31, 1999                   115,402   2,000,000          1,000        1,130,000     200,000   7,116,000  (10,564,000)  (2,117,000)
  Convert Series A
   Preferred Stock
   to Common               (114,402)  8,497,855         (1,000)      (1,130,000)    850,000     281,000            -            -
  Share exchange upon
   reorganization                 -           -              -                -    (945,000)    945,000            -            -
------------------------------------------------------------------------------------------------------------------------------------
                              1,000  10,497,855              -*               -     105,000   8,342,000  (10,564,000)  (2,117,000)
  Stock issued for
   payment of a
   subsidiaries
   obligations                    -      10,000              -                -           -*     28,000            -       28,000
  Stock issued
   to acquire
   Shopclue.com, Inc.             -   1,000,030              -                -      10,000   3,990,000            -    4,000,000
  Accrued dividends
   on preferred stock             -           -              -                -           -           -       (7,000)      (7,000)
  Net loss for the
   year ended
   December 31, 2000              -           -              -                -           -           -   (8,478,000)  (8,478,000)
------------------------------------------------------------------------------------------------------------------------------------
Balance at
 December 31, 2000            1,000  11,507,885     $        -*      $        -   $ 115,000 $12,360,000 ($19,049,000) $(6,574,000)
====================================================================================================================================
</TABLE>

*-amount is less than $1,000.

See notes to consolidated financial statements.


                                      F-8
<PAGE>

--------------------------------------------------------------------------------
The Finx Group, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
December 31, 2000 and 1999
--------------------------------------------------------------------------------

1. Summary of Significant Accounting Policies

2000 Finx Group Merger

         The Board of Directors of Fingermatrix, Inc. ("Fingermatrix"), a New
York Corporation formed on May 12, 1976, determined that it would be in the best
interests of Fingermatrix to reincorporate Fingermatrix in Delaware and that
such reincorporation would be accomplished through the merger of Fingermatrix
with and into its wholly-owned subsidiary, The Finx Group, Inc. ("The Finx
Group", the "Company" or the "Registrant"), a Delaware Corporation formed on
June 6, 2000 ("The 2000 Finx Group Merger"). On June 23, 2000, the Fingermatrix
Board of Directors approved a merger agreement between Fingermatrix and The Finx
Group (the "2000 Finx Group Merger Agreement"), which became effective as of
July 14, 2000 upon the written consent of a majority of the Fingermatrix
shareholders consisting of The Trinity Group, Inc. ("Trinity"), a privately
owned Delaware corporation owned by The Trinity Group-I, Inc. ("Trinity-I") and
five other shareholders. Trinity-I is owned by Lewis S. Schiller (Mr. Lewis
Schiller), Fingermatrix's and The Finx Group's Chairman and Chief Executive
Officer.

         The Board of Directors fixed the close of business on June 30, 2000 as
the record date for purposes of consummating the terms of the 2000 Finx Group
Merger Agreement. Fingermatrix reported the 2000 Finx Group Merger in an
Information Statement under Section 14 of the Securities and Exchange Act of
1934 and on or about July 14, 2000, such Information Statement was sent to the
shareholders of record as of June 30, 2000.

         On June 30, 2000, Fingermatrix had 20,000,000 shares of Common Stock,
114,403 shares of Series A 2% Voting Convertible Preferred Stock (convertible
into 84,978,548 shares of Common stock) and 1,000 shares of Series B 4%
Preferred Stock issued and outstanding. On June 30, 2000, The Finx Group had
authorized capital stock consisting of 50,000,000 shares of Common Stock, par
value $.01 per share, of which no shares were issued or outstanding and
1,000,000 shares of Series A 4% Preferred Stock, par value $.01 per share, of
which 1,000 shares were issued and outstanding and were owned by Trinity.

         Pursuant to the 2000 Finx Group Merger Agreement, each outstanding ten
shares of Fingermatrix Common Stock was automatically converted into the right
to receive one share of The Finx Group's fully paid and non-assessable common
stock. Each outstanding share of Fingermatrix Series A 2% Voting Convertible
Preferred Stock was automatically converted into 742.8 shares of Fingermatrix
Common Stock and then each outstanding ten shares of such Fingermatrix Common
Stock was automatically converted into the right to receive one share of The
Finx Group's fully paid and non-assessable common stock. Each outstanding share
of Fingermatrix Series B 4% Preferred Stock automatically converted into the
right to receive one share of The Finx Group's fully paid and non-assessable
Series A 4% Preferred Stock. Each outstanding option or warrant to purchase ten
shares of Fingermatrix Common Stock was converted into an option to purchase one
share of The Finx Group's Common Stock. The By-Laws of Fingermatrix continued in
force as the By-Laws of The Finx Group and the directors and officers of The
Finx Group are the same as those of Fingermatrix.

         Trinity holds 1,000 shares of a newly created series of Preferred Stock
which gives Trinity the right to elect a majority of The Finx Group Board of
Directors and gives Trinity effective control of the Company.

1999 SES Merger

         On April 28, 1999, Fingermatrix consummated an Agreement and Plan of
Reorganization (the "1999 SES Merger Agreement") with Trinity. Pursuant to the
1999 SES Merger agreement, Fingermatrix acquired from Trinity in a reverse
merger (the "1999 SES Merger") all of the issued and outstanding shares of
capital stock of SES Acquisition Corp. ("SES") (a then wholly owned subsidiary
of Trinity) in exchange for 85% of Fingermatrix's equity and voting power
consisting of 1,057,160 shares (10,571,607 shares prior to the July 14, 2000 1
for 10 reverse split) of Common Stock and 93,654 shares of Series A Preferred
Stock (convertible into 6,956,693 shares of Common Stock).

         Upon the conclusion of the 1999 SES Merger, by virtue of SES's
ownership of all of the issued and outstanding shares of capital stock of
Sequential Electronic Systems, Inc. ("Sequential"), and S-Tech, Inc. ("S-Tech")
and 39.1% of the issued and outstanding shares of capital stock of FMX Corp.
("FMX"), Fingermatrix succeeded to the ownership of these entities, which became
second tier subsidiaries of Fingermatrix. The former stockholders of
Fingermatrix retained a 10% ownership interest in Fingermatrix consisting of
942,839 shares of Common Stock.

         The 1999 SES Merger is accounted for as a reverse acquisition, with SES
being the acquiring company for accounting purposes, whereby the equity of SES,
as the predecessor company, and Fingermatrix, as the acquired company, have been
recapitalized and the accompanying financial statements, and any financial data
included herein, reflect the results of operations and


                                      F-9
<PAGE>

cash flows of Fingermatrix and SES from the date of the 1999 SES Merger forward
and the results of operations and cash flows of SES prior to the date of the
1999 SES Merger.

Debt Exchange

         Simultaneously with the 1999 SES Merger, certain creditors of the
Company exchanged $648,000 of indebtedness held by them for an aggregate of
6,436 Shares of Series A Preferred Stock (convertible into 4,713,809 shares of
Common Stock) pursuant to an agreement entered into between Fingermatrix and the
creditors on April 28, 1999 (the "Debt Exchange Agreement").

Change of Control of Fingermatrix

         As a consequence of the 1999 SES Merger, Trinity became Fingermatrix's
controlling stockholder. Simultaneously with the 1999 SES Merger, the then
members of the Fingermatrix Board of Directors resigned and Lewis S. Schiller,
E. Gerald Kaye and Joel Brown were appointed to the Board of Directors.

         Further, the then Fingermatrix officers resigned and Lewis S. Schiller
became Chairman of the Board and Chief Executive Officer of Fingermatrix and
Grazyna B. Wnuk became the Vice-President and Secretary of Fingermatrix.
Subsequently, Grazyna B. Wnuk replaced Joel Brown on the Board of Directors
following his resignation on November 19, 1999.

         Subsequent to the 1999 SES Merger, Fingermatrix issued 1,000 shares of
a newly created series of Preferred Stock (the "Series B Preferred Stock") to
Trinity. The Series B Preferred Stock gives Trinity the right to elect a
majority of the Fingermatrix Board of Directors.

The Finx Group

         The Finx Group holds controlling investments in its subsidiaries that
operate, or intend to operate, in seven distinct business segments. The Finx
Group's business is conducted by Mr. Lewis Schiller, who is employed as the
Company's Chief Executive Officer and President, and Grazyna B. Wnuk ("Ms.
Wnuk"), who is employed as the Company's Vice-President. Both Mr. Schiller and
Ms. Wnuk are members of the Company's Board of Directors on which Mr. Schiller
serves as its Chairman and Ms. Wnuk serves as its Secretary. In addition, Mr.
Schiller and Ms. Wnuk serve as executive officers and or as directors for the
subsidiaries of The Finx Group.

         Mr. Schiller and Ms. Wnuk, along with strategically assigned
consultants, provide The Finx Group's subsidiaries with management, financial,
legal and administrative services. Commencing July 1, 2000, The Finx Group
charges its subsidiaries, a monthly consulting fee for the services provided to
them. During 2000, such intersegment consulting fees for the year ended December
31 2000 aggregated $450,000.

The seven separately identified business segments that The Finx Group manages
are as follows:

      -Electro-Mechanical and Electro-Optical Products
      -Specialized Vending Machines and Avionics Equipment
      -Fingerprint Identification Technologies
      -Secured Entrance Systems (Ingress/Egress)
      -Internet  Marketing
      -Web Based Development Solutions
      -Application Service Provider

Electro-Mechanical and Electro-Optical Products

         Electro-Mechanical and Electro-Optical Products reflects the activities
of Sequential Electronic Systems, Inc. ("Sequential"), a Delaware Company formed
in 1985. As a result of the 1999 SES Merger, The Finx Group owns all of
Sequential's issued and outstanding common stock. The Finx Group also owns all
of Sequential's issued and outstanding preferred stock, which gives The Finx
Group the right to elect a majority of Sequential's board of directors.
Sequential is engaged in the design, manufacture and assembly of precision
electro-mechanical and electro-optical products and devices for sale to
commercial and governmental customers throughout the United States. Among such
products and devices are optical encoders, encoded motors and limit programmers.

Specialized Vending Machines and Avionics Equipment

         Specialized Vending Machines and Avionics Equipment reflects the
activities of S-Tech, Inc. ("S-Tech"), a Delaware Company formed in 1992. As a
result of the 1999 SES Merger, The Finx Group owns all of S-Tech's issued and
outstanding common stock. The Finx Group also owns all of S-Tech's issued and
outstanding preferred stock, which gives The Finx Group the right to elect a
majority of S-Tech's board of directors. S-Tech designs and manufactures two
specialized product lines consisting of specialized


                                      F-10
<PAGE>

vending machines and avionics equipment. "Specialized Vending" is an industry
term used to describe a vending product that utilizes electronic circuitry
and/or computer software. Among the vending machines manufactured by S-Tech are
prepaid telephone debit card machines, bill payment kiosks, information kiosks,
and stamp vending machines.

Fingerprint Identification Technologies

         Fingerprint Identification Technologies reflects the activities of FMX,
Corp. ("FMX"), a Delaware Company formed in 1996. As a result of the 1999 SES
Merger, The Finx Group owns 39.1% of FMX's issued and outstanding common stock.
Michael Schiller, FMX's Chief Technical Officer and brother to Mr. Lewis
Schiller owns 49.9%. Mr. Lewis Schiller owns 4%. Ms. Wnuk owns 2% and members of
Mr. Lewis Schiller's family own the remaining 5%. The Finx Group also owns all
of FMX's issued and outstanding preferred stock, which gives The Finx Group the
right to elect a majority of FMX's board of directors. FMX is engaged in the
design and development of state-of-the-art fingerprint identification hardware
and software systems with a threefold target market of Internet access, law
enforcement identification and commercial and governmental access control. FMX
has developed a fingerprint identification system that could be used in
conjunction with the Georal Security System and FMX does not expect that it will
have meaningful revenues, if any, until the Georal Security System has completed
final certification testing at the U.S. State Department. As a result, FMX did
not have any revenues or gross profits for 2000 and 1999.

Secured Entrance Systems (Ingress/Egress)

         Secured Entrance Systems (Ingress/Egress) reflects the activities of
Secured Portal Systems, Inc. ("Secured Portals"). Secured Portals is a Delaware
Company formed in August 1999 whereby The Finx Group owns 89% of Secured
Portals' issued and outstanding common stock, Mr. Lewis Schiller owns 4%, Ms.
Wnuk owns 2% and members of Mr. Lewis Schiller's family own the remaining 5%.
The Finx Group also owns all of Secured Portals' issued and outstanding
preferred stock, which gives The Finx Group the right to elect a majority of
Secured Portals' board of directors. Secured Portals was formed for the purpose
of entering into an agreement with a subsidiary of Georal, GIL Security Systems,
Inc. ("GIL"). Georal designed, developed and has commenced the marketing of an
unattended secure entrance and egress system designed to prevent or restrict
access to buildings and facilities (the "Georal Security Systems"). On September
13, 1999, Secured Portals entered into an exclusive licensing agreement with
Georal pursuant to which Secured Portals was engaged as the exclusive
distributor for the Georal Security Systems for a term commencing as of
September 1, 1999 and expiring on August 31, 2009 (the "Georal Exclusive
Licensing Agreement"), to certain categories of customers specified in the
Georal Exclusive Licensing Agreement, including certain agencies of the federal
government, embassies, department stores and retail stores located in the United
States, the State of Israel, NCR Corp. and Sun Microsystems. As an inducement to
obtain the Georal Exclusive Licensing Agreement, the Company also entered into a
stock purchase agreement with GIL on September 13, 1999 (the "GIL Stock Purchase
Agreement") pursuant to which the Company issued to GIL 14,134 shares of its
Series A Preferred Stock (convertible into 1,049,873 shares of Common Stock) of
which 997,737 shares were in exchange for the licensing rights and 52,136 shares
were in exchange for 1,000,000 shares of the outstanding common stock of GIL.
The GIL Shares represented 1% of the outstanding common stock of GIL at the time
the Company entered into the GIL Stock Purchase Agreement. Secured Portals
proposed activities consist of the marketing and distribution of the Georal
Security Systems to both those customers for which it has exclusive distribution
rights and to others as to which it has non-exclusive rights to distribute the
Georal Security Systems. Many of the customers to whom Secured Portals will seek
to market the Georal Security Systems will be domestic and foreign government
purchasers as well as commercial users. The Georal Security System has completed
all phases of U.S. State Department forced entry and ballistics tests and is
awaiting final certification necessary for its possible procurement for use in
U.S. embassies, consulates and other governmental installations both in the U.S.
an abroad. Secured Portals does not expect that it will have meaningful
revenues, if any, until the Georal Security System receives final certification
from the U.S. State Department and as a result did not have any revenues or
gross profits during 2000 or 1999.

Internet Marketing

         Internet Marketing reflects the activities of Starnet365.com, Inc.
("Starnet365.com"). Starnet365.com is a Delaware company that was originally
organized as Cue 365.com, Inc. on April 20, 2000 by Trinity. On May 25, 2000,
Trinity changed Cue365.com, Inc.'s name to Starnet365.com, Inc. and effected a
spin-off of Starnet365.com as a result of which The Finx Group owns 53.14% of
Starnet365.com's issued and outstanding common stock, Starnet365.com's
executives and employees own 35.26% (including 12.26% and 6.13% owned
respectively by Mr. Lewis Schiller and Ms. Wnuk), members of Mr. Lewis
Schiller's family own the remaining 10.22% and the remaining 1.38% is owned by
outside shareholders. The Finx Group also owns all of Starnet365.com's issued
and outstanding preferred stock, which gives The Finx Group the right to elect a
majority of Starnet365.com's board of directors. Starnet365.com is an internet
multi-level marketing company whose most significant product is the Qode engine,
a web based software component comprising the largest UPC coded data base which
enables its users to comparative shop products related to the UPC codes.
Starnet365.com also sells a series of on-line training programs consisting of a
series of integrated "Earn While You Learn", on-line training programs that are
intended to teach marketing and recruiting techniques as well as certain tax and
legal aspects of running a home-based business. Starnet365.com also markets
replicated web sites, which Starnet365.com intends to load with non-branded
merchandise, enabling individuals quickly and inexpensively to own their own
on-line E-Commerce website. In addition, Starnet365.com generates revenues from
web site enrollment fees, monthly web hosting fees, and transaction processing
fees related to the sale of merchandise on the websites.


                                      F-11
<PAGE>

Application Service Provider

         On July 27, 2000, the Company concluded an agreement to acquire a
controlling interest in Shopclue.com, Inc. d/b/a Retail Drive ("Shopclue.com" or
"Retail Drive") in exchange for 1,000,030 shares of the Company's Common Stock.
Shopclue.com is a Delaware Company organized in July 1999. During 2000
Shopclue.com's revenues were $64,000 of which $44,000 were generated from the
date of acquisition through December 31, 2000. The Company purchased the
Shopclue.com common shares from family members of Lewis S. Schiller, the
Company's Chief Executive Officer and Chairman of its Board of Directors.
As of the date of the acquisition, Shopclue.com had an excess of liabilities
over assets of $768,000 and the common shares issued to acquire Shopclue.com
were valued at $4 million, resulting in a purchase price that was in excess of
net assets by $4.8 million. This $4.8 million approximates the value assigned to
research and development projects of Shopclue.com that were commenced but not
yet completed at the date of the acquisition, and which, if unsuccessful, have
no alternative future use in research and development activities or otherwise.
Amounts assigned to purchased in-process research and development must be
charged to expense at the date of the acquisition. Accordingly, the Company
charged approximately $4.8 million to expense in 2000 for in-process research
and development. As of December 31, 2000, the Company owned 34.24% of
Shopclue.com's common stock and all of its issued and outstanding preferred
stock which gives the Company the right to elect a majority of the Shopclue.com
board of directors. Shopclue.com is included as a part of the Company's
consolidated statements of operations and consolidated statement of financial
position due to the effective control as evidenced by interlocking management
and The Finx Group's ownership of a series of Shopclue.com's preferred stock
that gives the Company the right to elect a majority of the Shopclue.com board
of directors. Shopclue.com is an Application Service Provider that enables
small- and medium-sized businesses to establish an advanced online presence
rapidly and inexpensively using Shopclue.com's software through its interactive
Internet mall known as Retail Drive. The software used by Shopclue.com allows
its customers to create, edit and maintain advanced, interactive websites
without having any prior knowledge of web-based programming languages Blake
Schiller, the son of Lewis S. Schiller, The Finx Group's chief executive officer
and chairman, developed the Shopclue.com concept and remains a significant
shareholder of Shopclue.com and will continue to serve as an executive of
Shopclue.com.  The consolidated financial statements include only the operations
of Shopclue.com from the date of acquisition.  Shopclue.com's operating
activities prior to the acquisition were not significant.

Web Based Development Solutions

         On July 27, 2000, the Company acquired a 23.42% equity interest in Biz
Chase, Inc. ("Biz Chase") from Trinity. Biz Chase, a Delaware company organized
in July 2000, is included as a part of the Company's consolidated statements of
operations and consolidated statement of financial position due to the effective
control as evidenced by interlocking management and The Finx Group's ownership
of a series of Biz Chase's preferred stock that gives the Company the right to
elect a majority of the Biz Chase board of directors. Biz Chase's concept was
developed by Blake Schiller, the founder of Shopclue.com, and provides
Shopclue.com with its software under a licensing agreement. Effective September
30, 2000, Biz Chase received common stock shares of Shopclue.com representing
19% of Shopclue.com's outstanding common stock shares in exchange for the
assumption of $897,000 of notes payable that Shopclue.com owed to related
parties. Biz Chase has developed a wholesale web based development solution that
provides a simple, affordable and feature rich online solution for small
businesses. In March 2001, Bizchase granted a license to Starnet365.com giving
Starnet365.com the right to sell software developed by Bizchase to the
multi-level marketing industry. The Bizchase software was developed and also
licensed to Retail Drive. Revenues are anticipated to be generated through
activation and hosting fees, however, no revenues were generated during 2000 or
1999.

Basis of Presentation

         The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the liquidation
of liabilities in the normal course of business. However, the Company has a
history of net losses for the two years ended December 31, 2000 and as of
December 31, 2000 has a working capital deficiency approximating $7 million and
a capital deficiency approximating $6.6 million. During 2000 and 1999 the
Company has relied on financial support from its controlling stockholder,
Trinity and other related parties. Management is currently seeking additional
financing; however no assurances can be made that such financing will be
consummated. The continuation of the Company as a going concern is dependent
upon its ability to obtain financing, and to use the proceeds from any such
financing to increase its business to achieve profitable operations. The
accompanying financial statements do not include any adjustments that would
result should the Company be unable to continue as a going concern.

Principles of Consolidation

         The consolidated financial statements include the accounts of The FINX
Group, Inc. and its subsidiaries for which it has direct voting control or
effective control. Intercompany balances and transactions are eliminated in
consolidation.


                                      F-12
<PAGE>

Use of Estimates

         In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amount of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Some of the
more significant estimates include the inventory valuation reserve, the
allowance for doubtful accounts and depreciation and amortization of long-lived
assets.

Cash

         The Company considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents. The Company
has no such investment at December 31, 2000.

Inventories

         Inventories are stated at the lower of cost or estimated net realizable
value.

Property, Plant and Equipment and Software Costs

         Property, plant and equipment are recorded at cost. Expenditures for
maintenance and repairs are charged against income. Depreciation is provided on
the straight-line basis over the useful lives of the assets, which range from
three to seven years. Improvements that extend the useful of the assets are
capitalized while costs of repairs and maintenance are charged to expense as
incurred.

         Software costs are recorded at cost and include expenses incurred by
the Company to maintain, monitor and manage the Company's website. The Company
recognizes website development costs in accordance with Statement of Position
("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." As such, the Company expenses all costs incurred
that relate to the planning and post implementation phases of development. Costs
incurred in the development phase are capitalized and recognized over the
product's estimated useful life if the product is expected to have a useful life
beyond one year. Costs associated with repair or maintenance of the existing
site or the development of website content are included in product development
expense in the statement of operations. The software development costs will be
amortized using the straight-line method over two years. Amortization of
software development costs was $55,000 and nil for 2000 and 1999, respectively.

Patents

         Patents are carried at cost less accumulated amortization, which is
calculated on a straight-line basis over the assets estimated useful life of 17
years. Amortization expense related to patents was $11,000 for 1999. During a
review of possible impairment of long-lived assets, it was determined that the
recoverability of the costs associated with the patents acquired as a part of
the 1999 SES Merger was unlikely and $87,000 of such costs were written-off in
1999 and the remaining $5,000 was written-off in 2000. The existing patent costs
are related to a new broad patent, issued subsequent to December 31, 2000 and as
such no amortization was recorded on this new patent for 2000.

Long-Lived Assets

         Certain long-term assets of the Company are reviewed when changes in
circumstances require as to whether their carrying value has become impaired,
pursuant to guidance established in Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." Management considers assets to be impaired
if the carrying value exceeds the future projected cash flows from related
operations [undiscounted and without interest charges]. If impairment is deemed
to exist, the asset will be written down to fair value. Management also
reevaluates the period of amortization to determine whether subsequent events
and circumstances warrant revised estimates of useful lives. As of December 31,
2000, management expects those assets to be fully recoverable.

Revenue Recognition

         The Company recognizes revenues when a product is shipped, and from
services when performed.

Advertising Costs

         Advertising costs are charged to operations when incurred. Advertising
costs amounted to approximately $215,000 and $38,000 for 2000 and 1999,
respectively, and are included as part of selling expenses in the consolidated
statement of operations.


                                      F-13
<PAGE>

Purchased In-Process Research and Development

         Purchased in-process research and development ("IPR&D") represents the
value assigned in a purchase business combination to research and development
projects of the acquired business that were commenced but not yet completed at
the date of the acquisition, and which, if unsuccessful, have no alternative
future use in research and development activities or otherwise. Amounts assigned
to purchased IPR&D must be charged to expense at the date of consummation of the
purchase business combination. Accordingly, the Company charged approximately
$4.8 million to expense during 2000 for IPR&D related to the Shopclue.com
acquisition. The IPR&D projects were principally the development of web based
software that enables small- and medium-sized businesses to establish an
advanced online presence rapidly and inexpensively through its interactive
Internet mall known as Retail Drive.

Income Taxes

         The Company accounts for income taxes using the asset and liability
approach. The measurement of deferred tax assets is reduced, if necessary, by
the amount of any tax benefits that, based on available evidence, management
does not expect to be realized.

Minority Interest

         Minority interest represents the losses of its subsidiaries that have
been apportioned to the minority interest holders. The amount of loss
apportioned to the minority interest holders is limited to the amount of
investment that such minority shareholders have made into the subsidiaries. For
2000 and 1999, the minority interest portion of such losses was $113,000 and
$116,000, respectively, and as of December 31, 2000, cumulative amounts of
minority interest in the losses of consolidated subsidiaries in excess of
minority equity interests was $967,000.

Basic and Diluted Loss Per Share

         Basic loss per share reflects the amount of loss for the period
attributable to each share of common stock outstanding during the reporting
period. Diluted loss per share reflects basic loss per share, while giving
effect to all dilutive potential common shares that were outstanding during the
period, such as common shares that could result from the potential exercise or
conversion of securities into common stock. The computation of diluted loss per
share does not assume conversion, exercise, or contingent issuance of securities
that would have an anti-dilutive effect on loss per share (i.e. reducing loss
per share). The dilutive effect of outstanding options and warrants and their
equivalents are reflected in dilutive earnings per share by the application of
the treasury stock method which recognizes the use of proceeds that could be
obtained upon the exercise of options and warrants in computing diluted earnings
per share. It assumes that any proceeds would be used to purchase common stock
at the average market price of the common stock during the period. For all of
2000 and 1999, the company has had outstanding 590,000 warrants to purchase
shares of common stock at prices ranging from $0.01 to $10. For 2000 and 1999,
all of the Company's potential common shares were anti-dilutive and a dual
presentation of loss per share is not presented. Such warrants may dilute
earnings per share in the future.

Fair Value of Financial Instruments

         SFAS No. 107, "Disclosure About Fair value of Financial Instruments,"
requires certain disclosures regarding the fair value of financial instruments.
In assessing the fair value of these financial instruments, the Company has used
a variety of methods and assumptions, which were based on estimates of market
considerations and risks existing at the time. All instruments, including cash,
accounts receivable, accounts payable and accrued liabilities and amounts due to
related parties are reflected at fair value in the financial statements because
of the short term maturity of these instruments.

Concentrations of Credit Risk

         Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of cash and
accounts receivable. The Company places its cash with high quality financial
institutions and as of December 2000 does not have any deposits with financial
institutions in excess of federally insured limits. The Company does not require
collateral or other security to support financial instruments subject to credit
risk. The Company's sales to the U.S. Department of Defense approximated
$1,279,000, or 40% of total sales for 2000 and $913,000, or 46% of total sales
for 1999. Defense Department sales generated by the Electro-Mechanical and
Electro-Optical Products for 2000 and 1999 were $996,000 and $738,000,
respectively, and by the Specialized Vending Machines and Avionics Equipment
segment for 2000 and 1999 were $283,000 and $175,000, respectively. Accounts
receivable on such sales as of December 31, 2000 approximated $120,000, or 46%
of total net accounts receivable, all of which were related to the
Electro-Mechanical and Electro-Optical Products segment.


                                      F-14
<PAGE>

2. Inventories

A summary of inventories as of December 31, 2000 is as follows:

Raw materials                 $1,416,000
Work-in-process                  543,000
Finished goods                   589,000
----------------------------------------
Cost                           2,548,000
Reserve for obsolete
 and slow moving inventory    (1,428,000)
----------------------------------------
Net                           $1,120,000
========================================

         A portion of the raw material inventory is being held for the
manufacture of certain products not produced by the Company in recent years. The
inventory is recorded at net realizable value, which is less than its cost.
Management is seeking contracts for these products as the Company re-enters
these markets. However, since the outcome of these efforts is not certain, it is
at least reasonably possible that the Company's estimates could change in the
future and additional inventory reductions would be required. The Company's
charge to income for the write-down of inventory for 2000 and 1999 was $359,000
and $258,000, respectively. Additionally, during 1999, the Company incurred
uninsured inventory losses of $972,000 resulting from flood damages caused by a
hurricane.

3. Accounts Receivable

A summary of trade accounts receivable as of December 31, 2000 is as follows:

U.S. Government                           $120,000
Other                                      194,000
--------------------------------------------------
Gross receivables                          314,000
Allowance for doubtful accounts            (51,000)
--------------------------------------------------
Net                                       $263,000
==================================================

Changes in the allowance for doubtful accounts for 2000 are as follows:

Balance at beginning of year               $10,000
Current year provision                      52,000
Write-offs                                  (8,000)
Recoveries                                  (3,000)
--------------------------------------------------
Balance at end of year                     $51,000
==================================================

4. Property, Plant and Equipment

A summary of property, plant and equipment as of December 31, 2000 is as
follows:

Machinery and equipment                     $2,168,000
Furniture and fixtures                        2378,000
Tools and dies1                                 37,000
Leasehold improvements                          14,000
Computer equipment                              81,000
------------------------------------------------------
Total cost for property plant and            2,537,000
 equipment
Software costs                                 285,000
------------------------------------------------------
                                             2,822,000
Accumulated depreciation and
 amortization                               (2,464,000)
------------------------------------------------------
Net                                           $358,000
======================================================

Depreciation and amortization on property, plant and equipment for 2000 and 1999
was $98,000 and $83,000, respectively.


                                      F-15
<PAGE>

5. Notes Payable, Related Party

         The Company and its subsidiaries incur interest expense on advances
from Trinity, advances from Universal International, Inc., a company owned by
Grazyna Wnuk, an officer of the Company, a loan from E. Gerald Kay, a former
director, and advances from Blake Schiller and Carol Schiller, both immediate
family members of Lewis Schiller, an officer of the company. In addition S-Tech
incurs interest expense and factoring fees pursuant to a factoring agreement
with Trinity Factoring Corp., a financing company owned by Lewis Schiller. Total
outstanding advances from such related parties as of December 31, 2000
aggregated approximately $4 million. Interest accrued on such notes are
generally calculated at 9% (which is the weighted average interest rate at the
balance sheet date) and as of December 31, 2000 $332,000 of such interest
remains unpaid. Interest expense and financing fees on related party notes was
$337,000 and $84,000 for 2000 and 1999, respectively.

6. Revolving Line of Credit

         On July 28, 1997, Sequential entered into a revolving line of credit
from FINOVA Capital Corporation, formerly United Credit Corporation (the "FINOVA
Line of Credit"). The FINOVA Line of Credit provides for a borrowing base equal
to the lesser of 80% of eligible accounts receivable or $400,000, required
payment of a 1% annual facility fee, a 1% monthly commitment fee, against which
monthly interest, exclusive of interest on any over advances, is applied. The
annual monthly interest rate on the FINOVA Line of Credit is the greater of
18.5% or the prime rate in effect in New York City plus 10%, and is payable
monthly. The FINOVA Line of Credit is collateralized by all of the assets of
Sequential. Subsequent to December 31, 2000, the Company determined that FINOVA
declared bankruptcy and the Company is attempting to establish a replacement
line of credit. The Company has been notified that the FINOVA line-of-credit
will not be extended beyond November 30, 2001. Subsequent to November 30, 2001,
the Company utilized a cash collateral deposit provided by Trinity to satisfy
the balance owed under line-of-credit and such funds are now owed by the Company
to Trinity. Interest expense and factoring fees on the line of credit for 2000
and 1999 were $163,000 and $205,000.

7. Capital Stock

         The Company has authorized 50,000,000 shares of $.01 par value Common
Stock. As of December 31, 2000, the Company has 11,507,885 shares issued and
outstanding. The Company has not declared dividends on its Common Stock.

         The Company has authorized 1,000,000 of preferred stock. As of December
31, 2000, the company has designated and issued 1,000 as the Series A Preferred
Stock. All of the Series A Preferred Stock is owned by Trinity and such shares
give Trinity the right to elect a majority of the Company's Board of Directors.
Each share of the Series A Preferred Stock entitles the holder to annual
dividends at the rate of 4%. Accrued dividends on the issued and outstanding
shares of the Series A Preferred Stock as and for the year ended December 31,
2000 were less than $1,000.

         Prior to June 30, 2000, the Company had designated a separate Series A
Convertible Preferred Stock. As of December 31, 2000, all of such convertible
preferred stock has been converted. Accrued dividends on such preferred stock is
$17,000 as of December 31, 2000.

8. Stock Warrants

Stock Purchase Warrants

         The Company has had outstanding for all of 2000 and 1999 warrants to
purchase 135,000 shares of the Company's Common Stock for $10 per share with an
expiration date of July 2001, warrants to purchase 455,000 shares of the
Company's Common Stock for $0.01 per share with an expiration date of July 2001.
Such warrants were accounted for at fair value when issued. No warrants were
issued or exercised during 2000 and 1999.

9. Related Party Transactions

         The Company and its subsidiaries incur interest expense on advances
from Trinity, advances from Universal International, Inc., a company owned by
Grazyna Wnuk, an officer of the Company, a loan from E. Gerald Kay, a former
director, and advances from Blake Schiller and Carol Schiller, both immediate
family members of Lewis Schiller, an officer of the company. In addition S-Tech
incurs interest expense and factoring fees pursuant to a factoring agreement
with Trinity Factoring Corp., a financing company owned by Lewis Schiller. Total
outstanding advances from such related parties as of December 31, 2000,
aggregated approximately $4 million. Interest accrued on such notes are
generally calculated at 9% and as of December 31, 2000 $332,000 of such interest
remains unpaid. Interest expense and financing fees on related party notes was
$337,000 and $84,000 for 2000 and 1999, respectively.

         On April 28, 1999, Fingermatrix consummated an Agreement and Plan of
Reorganization (the "1999 SES Merger Agreement") with Trinity. Pursuant to the
1999 SES Merger Agreement, Fingermatrix acquired from Trinity in a reverse
merger (the


                                      F-16
<PAGE>

"1999 SES Merger") all of the issued and outstanding shares of capital stock of
SES Acquisition Corp. ("SES") (a then wholly owned subsidiary of Trinity) in
exchange for 85% of Fingermatrix's equity and voting power consisting of
1,057,160 shares of Common Stock and 93,654 shares of Series A Preferred Stock
convertible into 6,956,693 shares of Common Stock. Subsequent to the 1999 SES
Merger, Trinity transferred an aggregate of 370,046 shares of the Common Stock
and 32,780 shares of Series A Preferred Stock owned by it to the following
individuals in exchange for their interests in Trinity. Carol Schiller (116,281
shares of Common Stock and 10,302 shares of Series A Preferred Stock); Douglas
Schiller (31,733 shares of Common Stock and 2,810 shares of Series A Preferred
Stock); Linda Schiller (31,733 shares of Common Stock and 2,810 shares of Series
A Preferred Stock); Blake Schiller (31,733 shares of Common Stock and 2,810
shares of Series A Preferred Stock); and Grazyna B. Wnuk (158,565 shares of
Common Stock and 14,048 shares of Series A Preferred Stock). Carol Schiller is
the wife of Lewis S. Schiller, Chairman of the Board and Chief Executive Officer
of the Company, Douglas Schiller, Linda Schiller and Blake Schiller are Mr.
Schiller's adult children and Grazyna B. Wnuk is a director of the Company.
Trinity is wholly owned by Trinity-I, which, in turn, is wholly owned by Lewis
S. Schiller. Mr. Schiller disclaims the beneficial ownership of the shares of
Common Stock and Series A Preferred Stock owned by Carol Schiller, Douglas
Schiller, Linda Schiller and Blake Schiller. Mr. Schiller and Ms. Wnuk are the
sole officers and directors of and Trinity-I.

         In July 1999, the Company issued to Trinity-I all 1,000 of the shares
of its Series A Preferred Stock pursuant to which Trinity-I has the right to
elect the majority of the Board of Directors. As of the date hereof, Lewis S.
Schiller, Grazyna B. Wnuk and E. Gerald Kay are Trinity's designees to the Board
of Directors.  Subsequently, Mr. Kay resigned from the Company's board of
directors.

         In connection with the 1999 SES Merger, the Company exchanged shares of
the Series A Preferred Stock for indebtedness aggregating $648,000. P.T. Dolak
Permei ("Permei"), an Indonesian company, was one of the Company's then
creditors and exchanged an aggregate of $230,833 of such indebtedness for 2,259
shares of Series A Preferred Stock (convertible into an aggregate of 1,677,985
(167,799 post split) shares of Common Stock).

         In July 1999, the Company settled amounts due for unpaid rent owed to
the Company's former landlord. Included in this settlement was the issuance by
the Company of a series of notes payable to the landlord in the principal amount
of $45,000, which notes are payable in nine installments, the last of which is
due in April 2000. Lewis S. Schiller, Chief Executive Officer and Chairman of
the Board, personally guaranteed these notes. The remaining balance of $25,000
due on such notes is currently in default.

         On September 13, 1999, Secured Portals entered into an exclusive
licensing agreement with GIL pursuant to which Secured Portals was engaged as
the exclusive distributor for the Georal Security Systems for a term commencing
as of September 1, 1999 and expiring on August 31, 2009 (the "Georal Exclusive
Licensing Agreement"), to certain categories of customers specified in the
Georal Exclusive Licensing Agreement, including certain agencies of the federal
government, embassies, department stores and retail stores located in the United
States, the State of Israel, NCR Corp. and Sun Microsystems. As an inducement to
obtain the Georal Exclusive Licensing Agreement, the Company also entered into a
stock purchase agreement with GIL on September 13, 1999 (the "GIL Stock Purchase
Agreement") pursuant to which the Company issued to GIL 14,134 shares of its
Series A Preferred Stock (convertible into 1,049,873 shares (10,498,735 shares
prior to the July 14, 2000 1 for 10 reverse split) of Common Stock) in exchange
for 1,000,000 shares of the outstanding common stock of GIL. Under these
agreements, Trinity, Carol Schiller, the wife of Lewis S. Schiller, and Grazyna
B. Wnuk, an officer and director of the Company, agreed not to publicly sell any
of the shares of Common Stock owned by them unless and to the extent that GIL
publicly sells any of the shares of Common Stock acquired by it upon the
conversion of the shares of Series A Preferred Stock owned by it unless 50% or
more of GIL's shares of Common Stock are registered under the Securities Act or
such shares become eligible for public sale under Rule 144(k) under the
Securities Act.

         On July 27, 2000, the Company concluded an agreement to acquire a
controlling interest in Shopclue.com, Inc. d/b/a Retail Drive ("Shopclue.com" or
"Retail Drive") in exchange for 1,000,030 shares of the Company's Common Stock.
Shopclue.com is a Delaware Company organized in July 1999. During 2000
Shopclue.com's revenues were $64,000 of which $44,000 were generated from the
date of acquisition through December 31, 2000. The Company purchased the
Shopclue.com common shares from family members of Lewis S. Schiller, the
Company's Chief Executive Officer and Chairman of its Board of Directors. As of
the date of the acquisition, Shopclue.com had an excess of liabilities over
assets of $768,000 and the common shares issued to acquire Shopclue.com were
valued at $4 million, resulting in a purchase price that was in excess of net
assets by $4.8 million. This $4.8 million approximates the value assigned to
research and development projects of Shopclue.com that were commenced but not
yet completed at the date of the acquisition, and which, if unsuccessful, have
no alternative future use in research and development activities or otherwise..
Amounts assigned to purchased in-process research and development must be
charged to expense at the date of the acquisition. Accordingly, the Company
charged approximately $4.8 million to expense in 2000 for in-process research
and development.

10. Income Taxes

         The Company, as of December 31, 2000, has available approximately
$48.555 million of net operating loss carry forwards to reduce future Federal
and state income taxes, representing a net deferred tax asset of approximately
$19.4 million. Based upon the


                                      F-17
<PAGE>

level of historical tax losses, the Company has established a valuation
allowance against the entire net deferred tax asset. This represents an increase
in the valuation allowance of approximately $3.3 million from December 31, 1999.
In addition, the Company has available investment tax credit and research tax
credit carry forwards in excess of $500,000. However, it is not currently
probable that the related deferred tax assets will be realized by reducing
future taxable income during the carry forward period and as such, a valuation
allowance has been computed to offset in its entirety the deferred tax asset
attributable to the net operating loss and tax credits. The net operating loss
carry forwards expire as follows:

   -----------------------------------------------------------------------
   Year of expiration                     Net operating loss carry forward
   -----------------------------------------------------------------------
     2001                                                       $4,048,000
     2002                                                        5,384,000
     2003                                                        5,163,000
     2004                                                        5,616,000
     2005                                                        2,207,000
     2006                                                        3,144,000
     2007                                                        3,023,000
     2008                                                        2,044,000
     2009                                                        1,851,000
     2010                                                        2,050,000
     2011                                                        3,171,000
     2012                                                          194,000
     2013                                                        1,080,000
     2014                                                        1,319,000
     2015                                                        8,261,000
   ------------------------------------------------------------------------
                                                               $48,555,000
   ------------------------------------------------------------------------

Pursuant to section 382 of the Internal Revenue Code, the annual utilization of
these loss carry forwards is limited as a result of the changes in stock
ownership, which have occurred during 2000 and 1999, and may be further limited
if substantial changes in the Company ownership were to occur.

11. Extraordinary Loss on Debt Extinguishment

On April 28, 1999 certain creditors of the Company accepted 6,346 shares of
Series A Preferred Stock in exchange for their aggregate debt of $648,000. The
6,346 Series A Preferred shares were convertible into 471,381 common shares
(4,713,809 common shares prior to the July 14, 2000 1 for 10 reverse split) of
the Company and using the Black-Scholes option valuation formula, such shares
were valued at $1.1 million, resulting in $429,000 of expense from issuance of
the stock. On July 20, 1999, the Company settled amounts owed to the former
landlord of the Company by making cash payments of $70,000, issuing a note
payable for $45,000 and issuing 268 Series A Preferred shares. The 268 Series A
Preferred shares were convertible into 19,907 common shares (199,070 common
shares prior to the July 14, 2000 1 for 10 reverse split) of the Company's
Common Stock and using the Black-Scholes option valuation formula, such shares
were valued at $46,000. The total consideration given to the landlord, including
the calculated value of the Series A Preferred Shares, exceeded the amounts owed
to the former landlord by approximately $26,000. All of such excess is
attributed to the valuation of the Series A Preferred shares and was recorded as
expense from the issuance of stock, and is presented in the financial statements
as an extraordinary item.

12. Commitments and Contingencies

Operating Leases

         As of December 31, 2000, the Company does not have any operating leases
with firm commitments extending beyond one year. All of its current premises are
leased on a month to month basis and as of December 31, 2000 such monthly leases
payments approximated $15,000 per month.

Employment Agreements

         The Company and Lewis S. Schiller have entered into an employment
agreement whereby he is employed as the Company's Chief Executive Officer. Mr.
Schiller's contract is for an initial term commencing April 29, 1999 through
April 28, 2009 and provides annual compensation of $500,000. Mr. Schiller's
contract may be extended an additional five years and commencing 2002 his annual
compensation shall be increased by the greater of 5% or the increase in the cost
of living index. Mr. Schiller's contract provides him with a bonus for each year
of the term equal to 10% of the amount by which the greater of consolidated net
income before income taxes or consolidated net cash flow exceeds $600,000. Mr.
Schiller's contract entitles him to 20% of the gross profit on the sale of any
of the Company's, or its subsidiaries, investments securities. Mr. Schiller's
contract provides him the opportunity to participate in the future expansion of
the Company whereby he is entitled, at his option, to purchase up to 25% of the
authorized securities of any subsidiary which is organized for any purpose. Mr.
Schiller's contract provides him with certain fringe benefits including a
vehicle,


                                      F-18
<PAGE>

health insurance and life insurance. In the event of a change of control, Mr.
Schiller's contract provides him with severance equal to all amounts owed to him
for the full term of the employment agreement.

         As of December 31, 2000, the Company has not entered into an employment
agreement with Grazyna B. Wnuk. The Company anticipates that it will negotiate
terms and conditions for a contract with Ms. Wnuk at a future date.

13. Segment Information

Statement of Financial accounting standards No. 131, "Disclosure about Segments
of an Enterprise and Related Information" established standards for the
reporting of information about operating segments and defines operating segments
as components of an enterprise for which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. The Company's
chief operating decision maker is Lewis S. Schiller, the Company's Chief
Executive Officer, who evaluates the Company's businesses based upon the
separate financial statements and information of the underlying subsidiaries of
the Company. Based on the above evaluation, the Company has identified seven
separate reportable business segments as follows:

   (1)      Electro-Mechanical and Electro-Optical Products
   (2)      Specialized Vending Machines and Avionics Equipment
   (3)      Fingerprint Identification Technologies
   (4)      Secured Entrance Systems
   (5)      Internet Marketing
   (6)      Web Based Development Solutions
   (7)      Application Service Provider

The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies. There are no
intersegment sales but there are intersegment advances and related interest
charges, and management fees charged by The Finx Group, all of which are
eliminated in the consolidated financial statements. All of the Company's
segments are beyond their development stages and have developed commercially
viable products and or services. However, as of December 31, 2000, only the
Electro-mechanical and Electro-Optical Products segments have generated
meaningful revenues. The remaining segments require additional funding to enable
them to either produce their products or provide their services and to market
such products and services to their target consumers. Until such funding is
obtained, if ever, no assurances can be given that the Company's segments will
ever produce meaningful revenues.

<TABLE>
<CAPTION>
<S>                                                      <C>               <C>
For the years ended December 31,                               2000              1999
---------------------------------------------------------------------------------------
Revenues:
   Electro-Mechanical and Electro- Optical Products      $2,406,000        $2,056,000
   Specialized Vending Machines and Avionics Equipment      401,000           567,000
   Fingerprint Identification Technologies                        -                 -
   Secured Entrance Systems                                       -                 -
   Internet Marketing                                       382,000                 -
   Web Based Development Solutions                                -                 -
   Application Service Provider                              44,000                 -
   Corporate                                                450,000                 -
   Intersegment charges                                    (450,000)                -
---------------------------------------------------------------------------------------
      Total revenues                                     $3,233,000        $2,623,000
=======================================================================================
</TABLE>


                                      F-19
<PAGE>

<TABLE>
<CAPTION>
<S>                                                      <C>               <C>
For the years ended December 31,                               2000              1999
---------------------------------------------------------------------------------------
Operating loss:
   Electro-Mechanical and Electro- Optical Products        ($47,000)      ($1,427,000)
   Specialized Vending Machines and Avionics Equipment     (457,000)         (456,000)
   Fingerprint Identification Technologies                 (296,000)         (218,000)
   Secured Entrance Systems                                (201,000)          (78,000)
   Internet Marketing                                      (729,000)                -
   Web Based Development Solutions                         (448,000)                -
   Application Service Provider                            (312,000)                -
---------------------------------------------------------------------------------------
                                                         (2,490,000)       (2,179,000)
   Corporate costs and expenses                          (5,603,000)         (967,000)
   Intersegment charges                                           -                 -
---------------------------------------------------------------------------------------
      Total operating loss                              ($8,093,000)      ($3,146,000)
=======================================================================================

For the years ended December 31,                                2000              1999
---------------------------------------------------------------------------------------
Interest expense:
   Electro-Mechanical and Electro- Optical Products         $335,000          $254,000
   Specialized Vending Machines and Avionics Equipment        84,000            23,000
   Fingerprint Identification Technologies                    28,000             7,000
   Secured Entrance Systems                                   12,000                 -
   Internet Marketing                                         20,000                 -
   Web Based Development Solutions                            57,000                 -
   Application Service Provider                                    -                 -
---------------------------------------------------------------------------------------
                                                             536,000           284,000
   Corporate costs and expenses                               67,000            15,000
   Intersegment charges                                      (58,000)          (10,000)
---------------------------------------------------------------------------------------
      Total interest expense                                $545,000          $289,000
=======================================================================================

For the years ended December 31,                                2000              1999
---------------------------------------------------------------------------------------
Net loss:
   Electro-Mechanical and Electro- Optical Products        ($331,000)      ($1,671,000)
   Specialized Vending Machines and Avionics Equipment      (530,000)         (479,000)
   Fingerprint Identification Technologies                  (323,000)         (225,000)
   Secured Entrance Systems                                 (213,000)          (79,000)
   Internet Marketing                                       (749,000)                -
   Web Based Development Solutions                          (505,000)                -
   Application Service Provider                             (292,000)                -
---------------------------------------------------------------------------------------
                                                          (2,943,000)       (2,454,000)
   Corporate costs and expenses                           (5,648,000)         (981,000)
   Minority interest in loss of subsidiaries                 113,000           116,000
   Extraordinary loss on debt extinguishment                       -          (455,000)
   Intersegment charges                                            -                 -
---------------------------------------------------------------------------------------
      Total net loss                                     ($8,478,000)      ($3,774,000)
=======================================================================================
</TABLE>


                                      F-20
<PAGE>

<TABLE>
<CAPTION>
<S>                                                      <C>               <C>

For the years ended December 31,                                2000              1999
---------------------------------------------------------------------------------------
Depreciation and amortization:
   Electro-Mechanical and Electro- Optical Products           $8,000           $17,000
   Specialized Vending Machines and Avionics Equipment             -            34,000
   Fingerprint Identification Technologies                         -            11,000
   Secured Entrance Systems                                        -                 -
   Internet Marketing                                          9,000                 -
   Web Based Development Solutions                            52,000                 -
   Application Service Provider                                6,000                 -
---------------------------------------------------------------------------------------
                                                              75,000            62,000
   Corporate                                                  23,000            21,000
---------------------------------------------------------------------------------------
      Total depreciation and amortization                    $98,000           $83,000
=======================================================================================


As of December 31,                                              2000              1999
---------------------------------------------------------------------------------------
Assets:
   Electro-Mechanical and Electro- Optical Products       $1,827,000        $1,702,000
   Specialized Vending Machines and Avionics Equipment       372,000           591,000
   Fingerprint Identification Technologies                    10,000             5,000
   Secured Entrance Systems                                        -             1,000
   Internet Marketing                                        274,000                 -
   Web Based Development Solutions                         1,080,000                 -
   Application Service Provider                              207,000                 -
---------------------------------------------------------------------------------------
                                                           3,770,000         2,299,000
   Corporate                                              12,505,000         8,077,000
   Intersegment investments                              (12,906,000)       (8,007,000)
   Intersegment receivables                               (1,564,000)         (397,000)
---------------------------------------------------------------------------------------
      Total assets                                        $1,805,000        $1,972,000
=======================================================================================
</TABLE>

14. Subsequent Events

Acquisition of Granite Technologies, Inc.

         On September 19, 2001, the Company consummated its acquisition (the
"Acquisition") of Granite Technologies, Inc. ("Granite") through its newly
created and wholly owned subsidiary, Granite Technology Acquisition Corp.
pursuant to the terms of a Stock Purchase Agreement dated as of September 19,
2001, as amended, the Company purchased 95.87% of Granite's common stock from
such holders of the Granite's common stock (the "Selling Shareholders") upon the
issuance of 3,000,000 shares of its unregistered Common Stock (the "Acquisition
Shares"). Granite has two significant proprietary software packages which have
wide application in the retail and financial markets. Granite's principal
products are the SmartCAT application Framework and the SmartCAT IO Subsystem.
SmartCAT is a set of JAVA middleware that provides both the client (kiosk) and
server (central system mainframe) platform for rapid development of self-service
applications over the Internet. SmartCAT IO Subsystem, also a set of JAVA
applications, provides powerful but simple-to-use interfaces to serial devices
found in kiosks and in various retail delivery applications, such as
point-of-sale and bank branch automation. It may be used together with the
SmartCAT Application Framework or with other applications such as Eontec's
BankFrame to deliver complete client specific solutions.

         Of the Selling Shareholders, Grazyna B. Wnuk, the Company's Corporate
Secretary, a Director and Vice-President, received 124,031 Acquisition Shares
for her ownership interest in Granite; and immediate family members of Lewis S.
Schiller, the Company's Chairman of the Board, a Director and Chief Executive
Officer, received 397,934 Acquisition Shares for their ownership interest in
Granite. In accordance with the terms of the Stock Purchase Agreement, the
Selling Shareholders hold certain demand and


                                      F-21
<PAGE>

"piggyback" registration rights with respect to the Acquisition Shares received
by them in connection with the Acquisition on terms specified in the Stock
Purchase Agreement

         On September 15, 2001 the Company and Granite Technology Acquisition
Corp. entered into a Settlement and Release Agreement with Rock Partners Ltd.,
SSMI Corp. and Bruno Kordich. Pursuant to the Settlement and Release Agreement
(i) the Company received 250,000 shares, or 4.13%, of Granite's common stock
then owned by Rock Partners Ltd. and SSMI Corp.; (ii) the Company and Granite
received a General Release and a Dismissal with Prejudice on any past disputes
by and among Granite and Rock Partners Ltd., SSMI Corp. and Bruno Kordich; (iii)
all past agreements between Granite and Rock Partners Ltd., SSMI Corp. and Bruno
Kordich became void and cancelled; (iv) Rock Partners Ltd., SSMI Corp. and Bruno
Kordich received 542,636 shares of the Company's Common Stock in consideration
for (i), (ii) and (iii); (v) the Company and Granite acknowledged outstanding
notes and liabilities in the aggregate of $77,000 for which payments will begin
in January of 2002 at $10,000 per month; and (vi) the Company issued 160,000
shares of the Company's Common Stock in consideration for all remaining claims
aggregating $80,000.

The following pro forma unaudited results assume the Granite acquisition had
occurred at the beginning of 1999.

For the years ended December 31,                 2000                    1999
--------------------------------------------------------------------------------


Net revenues                               $3,338,000              $2,623,000
Net loss                                  ($9,148,000)            ($4,663,000)
Net loss per share                             ($1.36)                 ($1.00)

The pro forma information is not necessarily indicative of either the results of
operations that would have occurred had the acquisition been effective at the
beginning of the indicated periods or of the future results of operations.

Related Party Debt Conversion

         On May 7, 2001, Trinity converted $1.5 million of related party debt
into 7,500,000 shares of Common Stock, representing $0.20 per share, the fair
market value of the Common Stock on May 7, 2001. On May 7, 2001, Trinity
converted an additional $2 million of related party debt into shares of a newly
created series of preferred stock, the "Series "B" Preferred Stock. The Series
"B" Preferred Stock is redeemable by the Company in whole or in part, at the
option of the board of directors with Lewis S. Schiller, Trinity's owner,
abstaining, and votes alongside of common stock. The Series "B" Preferred Stock
is convertible in whole or in part, at the option of the holder or its
designees, over a two year period beginning May 7, 2002, into common stock at a
rate representing the lowest price that the common stock has traded at over the
period for which the preferred stock has been outstanding. Such conversion may
require an increase in the number of authorized common shares. Dividends on the
Series "B" Preferred stock are payable semi-annually at a rate of 8%.

2001 Employee Stock Option Plan

         The Company's Board of Directors approved the 2001 Employee Stock
Option Plan. The purpose of the 2001 Employee Stock Option Plan is to secure
long-term relationships for the Company and its stockholders, from the benefits
arising from capital stock ownership by the Company's Consultants, Advisors,
Employees and Directors, who can help in the company's growth and success and to
provide an effective means of compensation for such persons and entities
providing services to the Company in lieu of cash payments therefor. The 2001
Employee Stock Option Plan, as amended, provides for the issuance of up to
17,000,000 shares of the Company's Common Stock. During 2001, the Company
registered all 17,000,000 shares of Common Stock which are the subject of the
2001 Employee Stock Option Plan on Form S-8's. The Company has received
approximately $1.5 million of proceeds from the exercise of such options and
holds notes receivable on approximately $268,000 for exercise proceeds owed to
the Company. Such funds have been used primarily to fund the Trans Global
Acquisition.

Letter of Intent to Acquisition of Trans Global Services, Inc.

         On November 11, 2001, the Company entered into a binding letter of
intent to acquire an equity interest in Trans Global Services, Inc. ("Trans
Global"). Pursuant to the letter of intent, the Company would receive 5,000,000
shares of Trans Global's common stock in exchange for 2,500,000 shares of the
Company's common stock. In addition, the Company would purchase preferred
equity, convertible into a maximum of 3,000,000 shares of Trans Global's common
stock, for $1 million. Further, the letter of intent requires immediate election
of the Company's appointees to the Trans Global board of directors including the
appointment of Lewis S. Schiller as Trans Global's Chairman of the Board, after
which, the Company's appointees would represent a majority of the Trans Global
board of directors. Lewis S. Schiller is the Chief Executive Officer and
Chairman of the Board of the Company.


                                      F-22
<PAGE>

15. Legal Proceedings

         We are not involved in any legal proceedings that management believes
would adversely affect our business, results of operations or financial
condition.

16. New Authoritative Pronouncements

         The Financial Accounting Standards Board ("FASB") has issued Statement
No. 141, "Business Combinations" and Statement No. 142, "Goodwill and Other
Intangible Assets" in June 2001. Those statements will change the accounting for
business combinations and goodwill in two significant ways. First, Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Use of the pooling-of-interest
method will be prohibited. Second, Statement 142 changes the accounting for
goodwill from an amortization method to an impairment only approach. Thus
amortization of goodwill, including goodwill recorded in past business
combinations, will cease upon adoption of that Statement, which for companies
with calendar year ends, will be January 1, 2002.

         The FASB has issued Statement No. 143, "Accounting for Asset Retirement
Obligations" in June 2001. Statement No. 143 will change the accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs in four significant ways.
First, Statement 143 requires that the amount initially recognized for an asset
retirement obligation be measured at fair value and not under the current
practice of using a cost-accumulation measurement approach. Second, Statement
143 requires that the retirement obligation liability is discounted and
accretion expense is recognized using the credit-adjusted risk-free interest
rate in effect when the liability was initially recognized. Prior practice did
not require discounting of the retirement obligation liability and therefore no
accretion was recorded in periods subsequent to the initial recognition period.
Third, under prior practice, dismantlement and restoration costs were taken into
account in determining amortization and depreciation rates and often the
recognized asset retirement obligation was recorded as a contra-asset. Under
Statement 143, recognized asset retirement obligations are recognized as a
liability. Fourth, under prior practice, the asset retirement obligation was
recognized over the useful life of the related asset and under Statement 143 the
obligation is recognized when the liability is incurred. The effective date for
Statement No. 143 is for fiscal years beginning after June 15, 2002.

         The FASB has issued Statement No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets" in August 2001. Statement No. 144 changes the
accounting for long-lived assets to be held and used by eliminating the
requirement to allocate goodwill to long-lived assets to be tested for
impairment, by providing a probability-weighted cash flow estimation approach to
deal with situations in which alternative courses of action to recover the
carrying amount of possible future cash flows and by establishing a
"primary-asset" approach to determine the cash flow estimation period for a
group of assets and liabilities that represents the unit of accounting for a
long-lived asset to be held and used. Statement No. 144 changes the accounting
for long-lived assets to be disposed of other than by sale by requiring that the
depreciable life of a long-lived asset to be abandoned be revised to reflect a
shortened useful life and by requiring that an impairment loss be recognized at
the date a long-lived asset is exchanged for a similar productive asset or
distributed to owners in a spin-off if the carrying amount of the asset exceeds
its fair value. Statement No. 144 changes the accounting for long-lived assets
to be disposed of by sale by requiring that discontinued operations no longer be
measured on a net realizable value basis (but at the lower of carrying amount or
fair value less costs to sell), by eliminating the recognition of future
operating losses of discontinued components before they occur and by broadening
the presentation of discontinued operations in the income statement to include a
component of an entity rather than a segment of a business. A component of an
entity comprises operations and cash flows that can be clearly distinguished,
operationally, and for financial reporting purposes, from the rest of the
entity. The effective date for Statement No. 144 is for fiscal years beginning
after December 15, 2001.

         The Company expects that the adoption of the new statements will not
have a significant impact on its financial statements. It is not possible to
quantify the impact until the newly issued statement has been studied.


                                      F-23