SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark One)

|X|   Quarterly report under Section 13 or 15(d) of the Securities  Exchange Act
      of 1934

For the Quarterly period ended June 30, 2000.

|_|   Transition report under Section 13 or 15(d) of the Exchange Act

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

Commission File Number 0-25238

                             YOUNETWORK CORPORATION
--------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)

          Delaware                                           13-399035
--------------------------------------------------------------------------------
(State or Other Jurisdiction of                            (IRS Employer
Incorporation or Organization)                           Identification No.)

                 115 East 23rd Street, New York, New York 10010
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (212) 576-2030
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

--------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

      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
   -------    -------

      State the number of shares  outstanding of each of the issuer's classes of
common equity, as of the latest  practicable date: As of August 18, 2000, 8,980,
shares of Registrant's  Class A Common Stock, $.001 par value, were outstanding,
1,988  shares  of  Registrant's  Class B Common  Stock,  $.001 par  value,  were
outstanding and 223,827,132  shares of Registrant's  Class C Common Stock, $.001
par value, were outstanding.


<PAGE>

                             YOUNETWORK CORPORATION
               10-QSB FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                                      INDEX

                                                                        Page No.
                                                                        --------

Part I:  Financial Information

Item 1 - Financial Statements

         Balance Sheets as of December 31, 1999 and June 30, 2000
         (Unaudited).................................................     3

         Statements of Operations for the Three Months Ended
         June 30, 2000 and 1999, for the Six Months Ended
         June 30, 2000 and 1999 and for the Period from
         Inception (January 14, 1998) to June 30, 2000 (Unaudited)...     4

         Statements of Cash Flows for the Three Months Ended June 30,
         2000 and 1999, for the Six Months Ended June 30, 2000 and
         1999 and for the Period from Inception (January 14, 1998) to
         June 30, 2000 (Unaudited)...................................     5

         Notes to Financial Statements...............................     7

Item 2 - Management's Discussion and Analysis of Financial
         Condition and Results of Operations.........................    10


Part II - Other Information

Item 1 - Legal Proceedings...........................................    14

Item 2 - Changes in Securities and Use of Proceeds...................    14

Item 3 - Defaults Upon Senior Securities.............................    14

Item 4 - Submission of Matters to a Vote of Security Holders.........    14

Item 5 - Other Information...........................................    14

Item 6 - Exhibits and Reports on Form 8-K............................    14

Signatures...........................................................    15


                                       2
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1. Financial Statements.

                             YOUNETWORK CORPORATION
                          (A Development Stage Company)
                                 Balance Sheets
                       December 31, 1999 and June 30, 2000

<TABLE>
<CAPTION>

                                              ASSETS
                                              ------
                                                                     December 31,       June 30,
                                                                         1999             2000
                                                                     ------------     ------------
                                                                                      (Unaudited)
<S>                                                                  <C>              <C>
Current assets:
    Cash and cash equivalents                                        $    41,127      $     2,574
    Prepaid expenses                                                      59,308           25,993
                                                                     -----------      -----------
                Total current assets                                     100,435           28,567

Property and equipment, net                                              763,731          625,466
Other assets:
    Software development costs, net                                      508,334          415,978
    Software license, net                                                165,431           82,997
    Security deposits                                                    187,196          187,196
    Loan to stockholder                                                   12,201               --
    Other assets                                                          41,974           31,024
    Intangible assets, net                                                    --           23,613
                                                                     -----------      -----------
                Total other assets                                       915,136          740,808
                                                                     -----------      -----------
                                                                     $ 1,779,302      $ 1,394,841
                                                                     ===========      ===========

                              LIABILITIES AND STOCKHOLDERS' EQUITY
                              -------------------------------------
Current liabilities:
    Current portion of capital lease obligation                      $   242,627      $   242,627
    Notes payable - stockholders                                         200,000           70,000
    Due to related party                                                 200,000               --
    Deferred revenue                                                     175,000               --
    Accounts payable                                                     114,381          272,594
    Due to Compuces                                                           --          145,797
    Accrued rebate payable                                                 4,063            5,267
    Other current liabilities                                             73,710          113,848
                                                                     -----------      -----------
                Total current liabilities                              1,009,781          850,133

Capital lease obligations, less current portion                          254,439          161,649
Due to related party                                                          --          194,966
Note payable - stockholder                                                    --           30,000
Commitments
Stockholders' equity:
    Common stock:
        Class A - par value $.0001 per share:
           Authorized - 1,500,000 shares
           Issued and outstanding - 7,052 shares at December 31,
              1999 and 8,980 shares at June 30, 2000                           1                1
        Class B - par value $.0001 per share:
           Authorized - 1,500,000 shares
           Issued and outstanding - 1,058 shares at December
              31, 1999 and 1,988 shares at June 30, 2000                      --               --
        Class C - par value $.0001 per share:
           Authorized - 247,000,000 shares
           Issued and outstanding - 41,852,352 shares
              at December 31, 1999 and 223,827,132
              at June 30, 2000                                             4,185            4,415
    Additional paid-in capital                                         2,395,242        3,143,513
    Deficit accumulated during the development stage                  (1,884,346)      (2,989,836)
                                                                     -----------      -----------
                Total stockholders' equity                               515,082          158,093
                                                                     -----------      -----------
                                                                     $ 1,779,302      $ 1,394,841
                                                                     ===========      ===========
</TABLE>

                                       3
<PAGE>

                             YOUNETWORK CORPORATION
                          (A Development Stage Company)
                            Statements of Operations
                For the Three Months Ended June 30, 2000 and 1999
               and for the Six Months Ended June 30, 2000 and 1999
      and for the Period from Inception (January 14, 1998) to June 30, 2000
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                 For the
                                                                                                               Period From
                                                                                                                Inception
                                             Three Months Ended                   Six Months Ended             (January 14,
                                                  June 30,                            June 30,                     1998)
                                      ------------------------------       -----------------------------       to June 30,
                                           2000              1999              2000              1999              2000
                                      ------------------------------       -----------------------------       -----------
<S>                                   <C>                <C>               <C>               <C>               <C>
Revenue                               $     (1,255)      $       540       $    20,940       $       540       $    70,640

Cost of goods sold                          12,029                --            33,199                --            81,777
                                      ------------       -----------       -----------       -----------       -----------

Gross profit                               (13,284)              540           (12,259)              540           (11,137)

Expenses:
    Compensation                           171,104            66,620           331,870            91,474           796,097
    Development costs                       47,772                --           187,467                --           524,838
    General and administrative             506,027           172,748           720,143           237,520         1,779,256
                                      ------------       -----------       -----------       -----------       -----------
                Total expenses             724,903           239,368         1,239,480           328,994         3,100,191
                                      ------------       -----------       -----------       -----------       -----------

Operating loss                            (738,187)         (238,828)       (1,251,955)         (328,454)       (3,111,328)

Other income (expense):
    Other                                       --                --           175,000                --           175,000
    Interest expense                       (10,017)               --           (29,004)               --           (64,996)
    Interest income                             11             6,086               252             5,023            11,487
                                      ------------       -----------       -----------       -----------       -----------
                Net other income
                   (expense)               (10,006)            6,086           146,248             5,023           121,491
                                      ------------       -----------       -----------       -----------       -----------

Net loss                              $   (748,193)      $  (232,742)      $(1,104,490)      $  (323,431)      $(2,989,836)
                                      ============       ===========       ===========       ===========       ===========

Net loss per common share,
    basic and diluted                 $       (.01)      $      (.01)      $      (.01)      $      (.01)
                                      ============       ===========       ===========       ===========

Weighted average of common
    shares outstanding - basic
    and diluted                        130,885,988        40,753,957        85,895,683        37,889,839
                                      ============       ===========       ===========       ===========
</TABLE>


                                       4
<PAGE>

                             YOUNETWORK CORPORATION
                          (A Development Stage Company)
                            Statements of Cash Flows
                   For the Six Months Ended June 30, 2000 and
               1999 and for the Period from Inception (January 14,
                             1998) to June 30, 2000
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                        For the
                                                                                      Period From
                                                         Six Months Ended              Inception
                                                             June 30,              January 14, 1998)
                                                    --------------------------        to June 30,
                                                       2000            1999              2000
                                                    ---------       ----------       -----------
<S>                                                 <C>             <C>              <C>
Net cash used in operating activities               $(177,838)      $ (325,057)      $(1,220,654)
                                                    ---------       ----------       -----------

Cash flows from investing activities:
    Purchase of property and equipment                (13,925)         (63,630)         (279,608)
    Software development costs                                        (340,585)         (516,545)
    Loan to stockholder                                    --               --           (12,201)
    Purchase of software license                           --               --          (270,276)
    Payment of security deposits                                      (135,331)         (187,196)
                                                    ---------       ----------       -----------
                Cash used in investing
                   Activities                         (13,925)        (539,546)       (1,265,826)
                                                    ---------       ----------       -----------
Cash flows from financing activities:
    Proceeds from issuance of common
        stock                                         246,000        1,488,000         2,512,170
    Proceeds from notes payable -
        Stockholders                                       --               --           200,000
    Deferred registration costs                            --         (175,740)               --
    Payments of capital lease obligations             (92,790)          (6,808)         (223,116)
                                                    ---------       ----------       -----------
                Net cash provided by financing
                   Activities                         153,210        1,305,452         2,489,054
                                                    ---------       ----------       -----------

Net increase (decrease) in cash                       (38,553)         440,849             2,574

Cash, beginning of period                              41,127          178,068                --
                                                    ---------       ----------       -----------

Cash, end of period                                 $   2,574       $  618,917       $     2,574
                                                    =========       ==========       ===========
</TABLE>


                                       5
<PAGE>


                             YOUNETWORK CORPORATION
                          (A Development Stage Company)
                            Statements of Cash Flows
                 For the Six Months Ended June 30, 2000 and 1999
      and for the Period from Inception (January 14, 1998) to June 30, 2000
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                  For the
                                                                                Period From
                                                                                 Inception
                                                          Six Months Ended     (January 14,
                                                              June 30,             1998)
                                                        -------------------     to June 30,
                                                          2000        1999         2000
                                                        -------      ------      --------

                   Supplemental Disclosure of Cash Flow Information
<S>                                                     <C>          <C>         <C>
Cash paid during the period for:
    Interest                                            $32,220      $2,021      $ 54,172
                                                        =======      ======      ========

          Supplemental Schedule of Non-Cash Investing and Financing Activities

Capital lease obligation incurred for the
    acquisition of equipment                            $    --      $   --      $627,392
                                                        =======      ======      ========
Issuance of Class A common stock for
    services                                            $    --      $   --      $ 21,400
                                                        =======      ======      ========
Issuance of Class C common stock for
    servicemark                                         $25,000      $   --      $ 25,000
                                                        =======      ======      ========
Issuance of warrants for acquisition
    of software development costs                       $    --      $   --      $ 38,000
                                                        =======      ======      ========
Issuance of warrants for portion of
    computer equipment lease                            $    --      $   --      $ 54,748
                                                        =======      ======      ========
</TABLE>

In March 1999,  common stock  purchase  warrants were  exercised and the Company
issued  1,479,452  shares of Class C common stock for no cash  proceeds.  In May
2000, 2,000,000 shares were issued for no cash proceeds.

During the period  from  inception  (January  14,  1998) to June 30,  2000,  the
Company  issued 8,980 shares of Class A common stock and 1,988 shares of Class B
common stock for no cash proceeds.


                                       6
<PAGE>

                             YOUNETWORK CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS

Note 1 - The accompanying unaudited financial statements are for interim periods
and do not include all disclosures provided in the annual financial  statements.
These  unaudited  financial  statements  should be read in conjunction  with the
financial statements and the footnotes thereto contained in the Annual Report on
Form 10-KSB for the year ended December 31, 1999, of YouNetwork Corporation (the
"Company"),  as filed with the Securities and Exchange Commission.  The December
31, 1999 balance sheet was derived from these audited financial statements,  but
does not  include all  disclosures  required by  generally  accepted  accounting
principles.

In the opinion of the Company,  the accompanying  unaudited financial statements
contain all adjustments (which are of a normal recurring nature) necessary for a
fair presentation of the financial statements. The results of operations for the
six months ended June 30, 2000 are not necessarily  indicative of the results to
be expected for the full year.

The  financial  statements  have been  prepared  in  conformity  with  generally
accepted accounting principles and as such, include estimates and assumptions of
management that affect the amounts reported in the financial statements.  Actual
results could differ from these estimates.

As of June 28,  2000,  the Company  suspended  its Web site and  related  online
business  operations.  On a going forward basis, the Company will seek to derive
revenue from  licensing  the use of the  YouNetwork  system  components to third
parties.  Additionally,  the Company will seek to derive  hosting and management
revenue from its existing infrastructure.

The  computation  of loss per  share of  common  stock is based on the  weighted
average  number of shares and common share  equivalents  outstanding  during the
periods  presented.  All stock  options and warrants have been excluded from the
computation of diluted loss per share as their effect would be antidilutive  and
accordingly, there is no reconciliation between basic and diluted loss per share
for each of the periods presented.

During the three months  ended June 30, 2000,  rebates of $4,839 were issued and
sales were $3,854 resulting in ($1,255) of net revenue.

Note 2 - The Company's  financial  statements  have been  presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction  of liabilities  in the normal course of business.  As noted in the
Company's audited financial statements for the year ended December 31, 1999, the
Company has incurred significant net losses. This factor,  among others,  raises
substantial doubt as to the Company's ability to obtain debt or equity financing
and achieve profitable operations.  The Company's ability to continue as a going
concern is  dependent  upon its  ability to  generate  positive  cash flows from
operations.   These  accompanying   financial  statements  do  not  include  any
adjustments  related to the  recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should  the  Company  be  unable  to  continue  its  existence.  Since May 2000,
Compuces,  Inc.,  the  holder of  approximately  80.9% of the  Company's  voting
securities,  has


                                       7
<PAGE>

advanced funds to the Company to satisfy its working capital requirements. As of
June 30, 2000, these advances totaled $56,797.

Note 3 - During  1999,  the Company  filed a  registration  statement  under the
Securities Act of 1933 to register  1,000,000 shares each of Class A and Class B
common  stock.  The  first  250,000  shares  of Class A Common  Stock  ("Class A
Shares") or part thereof were offered at no cost to each consumer who registered
to become a member of the Company's  consumer  network.  The  remaining  750,000
shares of Class A Common Stock or part thereof were to be distributed to members
based upon  referring  new members to the  consumer  network.  Class B shares of
Common Stock ("Class B Shares") were offered to the consumer  network members at
$1.00 per share,  which  shares were to be paid with  rebates  earned by members
making purchases on the consumer network.

Upon the issuance of Class A Shares, the Company recorded a charge to operations
for  promotions  costs for the value of the shares  issued  based on the current
fair market  value of the  Company's  securities.  Upon the  issuance of Class B
Shares,  the Company  recorded a reduction in the  liability  for rebates due to
members of the consumer  network.  A liability  for rebates due to members and a
corresponding  charge to cost of goods  sold were  recorded  when  members  make
purchases on the consumer  network.  Since  inception,  the Company issued 8,980
Class A Shares and 1,988 Class B Shares.

The aforementioned registration statement became effective in July 1999
In June 2000, the Company  terminated the issuance of any additional  Class A or
Class B Shares thereunder.

Note 4 - The Company entered into an agreement in March 1998 with a company that
provides long-distance telephone service. During 1998, the Company received from
this company advances of $175,000.  In March 2000, the Company was released from
all  obligations  pursuant to this agreement and was not required to perform its
obligation  under the agreement or repay the advance.  As a result,  the Company
recorded $175,000 as other income in the quarter ended March 31, 2000.

Note 5 - On May 19, 2000, the Company and Compuces, Inc., a Delaware corporation
("Compuces"),  entered into a Stock  Purchase  Agreement.  The Company agreed to
sell to Compuces shares of the Company's Class C common stock,  par value $.0001
per share (the "Class C Shares") in an amount  constituting  after giving effect
to such sale, 80% of the Company's outstanding shares of Class C Common Stock on
a fully diluted basis.  Accordingly,  Compuces is now the  beneficial  holder of
approximately  80.9%  of the  Class C  Shares  and  approximately  80.9%  of the
Company's  outstanding  voting securities (which include the Class A and Class B
Shares), which effected a "change in control" of the Company.

Compuces  is  a  wholly-owned  subsidiary  of  International  Commerce  Exchange
Systems, Inc., a Delaware corporation ("ICES"). ICES is a privately held company
which develops, invests in and operates Internet technology related companies.


                                       8
<PAGE>

The  consideration  for the  issuance of the Class C Shares to Compuces  was the
agreement by Compuces to advance funds to the Company in an amount sufficient to
pay certain  specified debts of the Company in an amount not to exceed $300,000.
As of June 30, 2000, Compuces has advanced the Company approximately $89,000 for
the repayment of such debts.

Note 6 - There is a note payable to George Santacroce,  a former chief executive
officer and director of the Company, in the amount of $60,000. The Company shall
pay the aggregate amount in twelve equal and consecutive monthly installments of
$5,000 each commencing January 1, 2001.

The  Company  has  borrowed   money  from  Compuces  to  fund  working   capital
requirements.  These borrowings are non-interest  bearing and due on demand. The
amount payable under this arrangement as of June 30, 2000 is $56,797.

The Company is indebted  to Don  Senerath,  the  Company's  chairperson,  in the
amount of $40,000.  This amount is payable upon demand by Don Senerath,  without
interest or fees,  to the extent that the Company has funds  available  for such
purpose.

The  Company  owes  International  Computing,  LLC  ("IC"),  a New York  limited
liability company, $194,966 for software development costs. Until July 21, 2000,
IC was 100% owned by  Steadfast  Ventures,  LLC, a  Delaware  limited  liability
company, of which Don Senerath, the Company's chairperson,  is a member. On July
21, 2000,  Steadfast  Ventures,  LLC sold 70% of its  membership  units in IC to
ICES.


                                       9
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION  AND RESULTS OF OPERATIONS

The matters discussed in this section contain forward-looking  statements within
the meaning of Section 21E of the  Securities  Exchange Act of 1934, as amended,
and Section 27A of the  Securities  Act of 1933, as amended,  that involve risks
and   uncertainties.   All  statements   other  than  statements  of  historical
information  provided  herein  maybe  deemed to be  forward-looking  statements.
Without  limiting the foregoing,  the words "may",  "will",  "could",  "should",
"intends", "thinks", "believes", "anticipates", "estimates", "plans", "expects",
or the negative of such terms and similar  expressions  are intended to identify
forward-looking  statements.  Accordingly,  these statements  involve estimates,
assumptions  and  uncertainties  which  could  cause  actual  results  to differ
materially  from those  expressed in them.  Any  forward-looking  statements are
qualified in their  entirety by reference  to the factors  discussed  throughout
this Report and the Company's  Annual Report on Form 10-KSB,  for the year ended
December  31, 1999.  The  following  cautionary  statements  identify  important
factors that could cause the Company's actual results to differ  materially from
those projected in the forward-looking statements made in this Report. Among the
key factors that have a direct  bearing on the  Company's  results of operations
are:

o     General economic and business conditions; the existence or absence of
      adverse publicity; changes in, or failure to comply with, government
      regulations; changes in marketing and technology; changes in political,
      social and economic conditions;

o     Increased competition in the Internet; Internet capacity; general risks of
      the Internet;

o     Success of acquisitions and operating initiatives; changes in business
      strategy or development plans; management of growth;

o     Availability, terms and deployment of capital;

o     Costs and other effects of legal and administrative proceedings;

o     Dependence on senior management; business abilities and judgement of
      personnel; availability of qualified personnel; labor and employee benefit
      costs;

o     Development risks; risks relating to the availability of financing; and

o     Other factors referenced in this Report and the Form 10-KSB.

Because  the risk  factors  referred  to above  could  cause  actual  results or
outcomes  to differ  materially  from  those  expressed  in any  forward-looking
statements made by the Company,  you should not place undue reliance on any such
forward-looking statements.  Other factors may be described from time to time in
the Company's  other filings with the Securities and Exchange  Commission,  news
releases and other communications. Further, any forward-looking statement speaks
only as of the date on which it is made and the Company undertakes no obligation
to update any  forward-looking  statement  or  statements  to reflect  events or
circumstances  after the date on which such  statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time, and it
is not possible for the Company to predict  which will


                                       10
<PAGE>

arise.  In addition,  the Company cannot assess the impact of each factor on the
Company's business or the extent to which any factor, or combination of factors,
may cause  actual  results  to differ  materially  from those  contained  in any
forward-looking statements.

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 set forth above and contained elsewhere in
this Quarterly Report on Form 10-QSB.

Overview

The Company was  incorporated  on January 14,  1998,  under the name  YouNetwork
Corp., a New York corporation.  Pursuant to a merger effective February 3, 1999,
the New York  corporation  merged into the Company,  YouNetwork  Corporation,  a
Delaware corporation.

The  Company  was formed to  develop an online  consumer  network.  Revenue  was
intended to be derived from the sale of competitively  priced consumer  products
and services  through the Company's Web site,  www.YouNetwork.com,  ranging from
housewares,  electronics and toys to music and video, with more than 1.3 million
individual product offerings.

However,  due to the limited  availability  of capital,  the Company's sales and
marketing  programs were curtailed and the  anticipated  membership base was not
realized.  As a result,  on June 28, 2000,  the Company's Web site was suspended
and any related online business ceased operations.

During 1999, the Company filed a registration statement under the Securities Act
of 1933 to register  1,000,000  shares each of Class A and Class B common stock.
The first  250,000  shares of Class A Common  Stock  ("Class A Shares")  or part
thereof were  offered at no cost to each  consumer  who  registered  to become a
member of the Company's consumer network.  The remaining 750,000 shares of Class
A Common  Stock or part  thereof were to be  distributed  to members  based upon
referring  new members to the consumer  network.  Class B shares of Common Stock
were offered to the consumer  network  members at $1.00 per share,  which shares
were to be paid with rebates earned by members making  purchases on the consumer
network.

In July 1999, the  aforementioned  registration  statement became effective.  In
June, 2000, the Company terminated any additional issuances of Class A and Class
B Shares thereunder.

On May 19,  2000,  the  Company  and  Compuces,  Inc.,  a  Delaware  corporation
("Compuces"),  entered into a Stock  Purchase  Agreement.  The Company agreed to
sell to Compuces shares of the Company's Class C common stock,  par value $.0001
per share (the "Class C Shares") in an amount  constituting  after giving effect
to such sale, 80% of the Company's outstanding shares of Class C Common Stock on
a fully diluted basis.  Accordingly,  Compuces is now the  beneficial  holder of
approximately  80.9%  of the  Class C  Shares  and  approximately  80.9%  of the
Company's  outstanding  voting securities (which include the Class A and Class B
Shares), which effected a "change in control" of the Company.

Compuces  is  a  wholly-owned  subsidiary  of  International  Commerce  Exchange
Systems, Inc., a Delaware corporation ("ICES"). ICES is a privately held company
which develops, invests in and operates Internet technology related companies.


                                       11
<PAGE>

The  consideration  for the  issuance of the Class C Shares to Compuces  was the
agreement by Compuces to advance funds to the Company in an amount sufficient to
pay certain  specified debts of the Company in an amount not to exceed $300,000.
As of June 30, 2000, Compuces has advanced to the Company  approximately $89,000
for the repayment of such debts. The Company filed its Form 8-K relating to this
transaction on June 6, 2000.

The Company has ceased the  operations of its online  business and has suspended
access to its Web site.  Nothing  contained in the  Company's Web site should be
construed as part of this filing.

It is the intent of the  Company  to  utilize  the  existing  investment  in its
infrastructure  and  reformulate  its  business.  Management  believes  that the
existing  infrastructure can be leveraged, in conjunction with certain strategic
partners, to provide Web development, hosting and support services to e-commerce
business to business and business to consumer  merchants.  During this period of
restructuring,  the Company  intends to keep its  operating  overhead at minimal
levels.

The Company has  historically  financed its operations  through  working capital
provided  by  operations,  related  party  loans and  advances  and the  private
placement of equity securities. The Company's ability to continue its operations
in any form is currently dependent on financing from external sources. There can
be no assurance that additional  capital will be available on terms favorable to
the Company or at all, or that the Company  will be able to generate  sufficient
cash flow in order to sustain operations.  To the extent that additional capital
is raised  through the sale of equity or debt  securities,  the issuance of such
securities could result in additional dilution to the Company's stockholders. In
the event that the Company experiences the need for additional  capital,  and is
not able to generate capital from financing  sources or from future  operations,
management may be required to modify,  suspend or discontinue  the operations of
the Company indefinitely.

The Company's accompanying financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction  of liabilities  in the normal course of business.  As noted in the
Company's audited financial statements for the year ended December 31, 1999, the
Company has incurred significant net losses. This factor,  among others,  raises
substantial doubt as to the Company's ability to obtain long-term debt or equity
financing and achieve profitable  operations.  The Company's ability to continue
as a going concern is dependent upon its ability to generate positive cash flows
from  operations.  These  accompanying  financial  statements do not include any
adjustments  related to the  recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.

Results of Operations for the three months ended June 30, 2000 and 1999

Since inception, the Company has been in the early stages of development and has
had nominal amount of revenues to date.

The Company incurred  operating expenses of $724, 903 and $239,368 for the three
months  ended June 30, 2000 and 1999,  respectively.  The  increase in operating
expenses  reflects  the  costs  associated  with the  buildup  of the  corporate
infrastructure of the Company.  These costs consist  principally of compensation
expense,   systems  development  costs  and  other  general  and  administrative
expenses.


                                       12
<PAGE>

Compensation  expenses relate to establishing  strategic  relationships  through
license  arrangements  and  vendor  affiliations  to  market  the  business.  In
addition,  the Company  incurred  costs in developing its  proprietary  tracking
system as well as other general and administrative expenses since inception.

Other expenses  increased during the three months ended June 30, 2000 by $16,092
primarily due to interest expense on capital lease  obligations of $10,017 and a
decrease in interest income of $6,075.

Results of Operations for the six months ended June 30, 2000 and 1999

Since inception, the Company has been in the early stages of development and has
had nominal amount of revenues to date.

The Company incurred  operating  expenses of $1,239,480 and $328,994 for the six
months  ended June 30, 2000 and 1999,  respectively.  The  increase in operating
expenses  reflects  the  costs  associated  with the  buildup  of the  corporate
infrastructure of the Company.  These costs consist  principally of compensation
expense,   systems  development  costs  and  other  general  and  administrative
expenses.

Compensation  expenses relate to establishing  strategic  relationships  through
license  arrangements  and  vendor  affiliations  to  market  the  business.  In
addition,  the Company  incurred  costs in developing its  proprietary  tracking
system as well as other general and administrative expenses since inception.

Other income  increased  during the six months ended June 30, 2000,  by $141,225
primarily due to a contract  settlement  in March 2000 of $175,000  offset by an
increase  in  interest  expense on capital  lease  obligations  of $29,004 and a
decrease in interest income of $4,771.


                                       13
<PAGE>

                                     PART II

                                OTHER INFORMATION

Item 1. Legal Proceedings.

        None.

Item 2. Changes in Securities and Use of Proceeds.

      On May 19, 2000, the Company entered into a Stock Purchase  Agreement with
Compuces,   Inc.,  a  Delaware   corporation  and  wholly-owned   subsidiary  of
International Commerce Exchange Systems, Inc., a Delaware corporation. Under the
terms of this  agreement,  the  Company  sold to  Compuces,  Inc.  in a  private
placement,  shares of the Company's  Class C common stock,  par value $.0001 per
share, constituting, after giving effect to such sale 80% of the Company's class
C Common Stock and approximately  80.9% of the Company's voting securities.  The
consideration  for the  issuance  of the Class C Shares of the  Company  was the
agreement  by  Compuces,  Inc.  to  advance  funds to the  Company  in an amount
sufficient  to pay  certain  specified  debts of the Company in an amount not to
exceed $300,000.

Item 3. Defaults Upon Senior Securities.

      None.

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

      Not applicable.

Item 5. Other Information.

      None.

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

      (a) Exhibits.

      None.

      (b)  Reports on Form 8-K. On June 6, 2000 the  Registrant  filed a Current
Report on Form 8-K to report the change in control  that  resulted  from sale of
Class C Common Stock to Compuces, Inc.


                                       14
<PAGE>

                                   SIGNATURES

      In accordance  with the  requirements  of the  Securities  Exchange Act of
1934,  the  registrant  has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                           YOUNETWORK CORPORATION

Dated: August 23, 2000                     By: /s/ Don Senerath
                                               ----------------
                                               Name:  Don Senerath
                                               Title: Chief Executive Officer
                                                      & Chief Financial Officer


                                       15