SECURITIES AND EXCHANGE COMMISSION

                               WASHINGTON, D.C. 20549
                               ----------------------

                                   FORM 10-QSB


                    Quarterly Report Under Section 13 or 15 (d) of the
                      Securities Exchange Act of 1934.

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

For Quarter Ended MARCH 31, 2000                Commission file number 0-18410
                  --------------                                       -------

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

          Delaware                                           95-4233050
----------------------------------------------------------------------------
       (State or other                                    (I.R.S. Employer
       jurisdiction of                                   Identification No.)
       incorporation or
         organization)

     9720 Wilshire Blvd., Suite 700, Los Angeles, CA                90212
-------------------------------------------------------------------------------
         (Address of principal executive offices)                (Zip Code)
         Registrant's telephone number, including area code (310) 860-0200

  IAT RESOURCES CORPORATTION, 5757 Wilshire Blvd., Penthouse One, Los Angeles CA
                                      90036
(Former name,former address and former fiscal year,if changed since last report)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

                                    YES X NO

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

      COMMON STOCK, $.001 PAR VALUE--32,278,214 SHARES AS OF MAY 12, 2000



<PAGE>


                                Table Of Contents
                                Document Sections
Part 1. Financial Information ..........................................1
PART II - OTHER INFORMATION ............................................24
ITEM 1.  LEGAL PROCEEDINGS .............................................24
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS .....................24
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES ...............................24
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...........24
ITEM 5.  OTHER INFORMATION .............................................24
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A ...............24

                                  FULL CONTENTS
Part 1. Financial Information ..........................................1
PART II - OTHER INFORMATION ............................................24
ITEM 1.  LEGAL PROCEEDINGS .............................................24
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS .....................24
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES ...............................24
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...........24
ITEM 5.  OTHER INFORMATION .............................................24
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A ...............24



<PAGE>


Part 1. Financial Information
Item 1. Financial Statements

<TABLE>
<CAPTION>

                                                                 NETCURRENTS, INC.
                                              (FORMERLY IAT RESOURCES CORPORATION)
                                                                  AND SUBSIDIARIES
                                                       CONSOLIDATED BALANCE SHEETS
                                                    MARCH 31, 2000 (UNAUDITED) AND
                                                       DECEMBER 31, 1999 (AUDITED)
----------------------------------------------------------------------------------


                                     ASSETS

                                                         March 31,    December 31,
                                                           2000           1999
                                                       -----------   -------------
                                                       (UNAUDITED)      (AUDITED)
CURRENT ASSETS
<S>                                                    <C>           <C>
   Cash and cash equivalents                           $ 9,349,315   $     798,855
   Accounts receivable, net of allowance for doubtful
      accounts of nil and nil                              312,404         555,667
   Prepaid advertising expenses                                  -         583,392
   Prepaid assets                                           15,360          40,342
   Subscription receivable                                 250,000         200,000
                                                       -----------   -------------

         Total current assets                            9,927,079       2,178,256


FILM COSTS                                                 224,988         224,998
FIXED ASSETS, at cost, net                                 185,551         131,559
GOODWILL, less accumulated amortization of $166,782
   and $144,282                                            819,413         841,913
INVESTMENTS                                                680,160         725,050
OTHER ASSETS                                                34,811          38,043
                                                       -----------   -------------

            TOTAL ASSETS                               $ 11,872,002  $   4,139,809
                                                       ============  =============

</TABLE>


                                     Page 1
<PAGE>


<TABLE>
<CAPTION>
                                                                           NETCURRENTS, INC.
                                                        (FORMERLY IAT RESOURCES CORPORATION)
                                                                            AND SUBSIDIARIES
                                                                 CONSOLIDATED BALANCE SHEETS
                                                              MARCH 31, 2000 (UNAUDITED) AND
                                                                 DECEMBER 31, 1999 (AUDITED)
--------------------------------------------------------------------------------------------


                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                    March 31,   December 31,
                                                                      2000          1999
                                                                   -----------  ------------
                                                                   (UNAUDITED)    (AUDITED)
CURRENT LIABILITIES
<S>                                                                <C>          <C>
   Accounts payable and accrued expenses                           $ 1,017,973  $  1,202,141
   Dividends payable                                                   129,813       108,313
   Due to related parties                                                    -        44,046
   Capital lease obligation                                                  -         4,320
   Convertible debentures                                              167,824       619,824
   Deferred revenue                                                      1,995        63,025
                                                                   -----------  ------------

      Total current liabilities                                      1,317,605     2,041,669

         Total liabilities                                           1,317,605     2,041,669
                                                                   -----------  ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
   Preferred stock, Series A, C, D, E, and F, $0.001 par value
     5,400,000 shares authorized
     1,100,000 and 2,625,000 shares issued
           and outstanding                                               1,100         2,625
   Preferred stock, Series G, $1,000 par value
      4,000 shares authorized
      1,505 and 1,875 shares issued and outstanding                  1,505,000     1,875,000
   Common stock, $0.001 par value
      50,000,000 shares authorized
      30,596,005 and 23,070,869 shares issued
              and outstanding                                           30,596        23,071
   Treasury stock, at cost
      93,536 shares                                                 (1,010,192)   (1,010,192)
   Subscription receivable                                          (4,111,962)     (398,800)
   Additional paid-in capital                                       45,323,566    30,704,372
   Accumulated other comprehensive income                              395,160       225,050
   Accumulated deficit                                             (31,578,871)  (29,322,986)
                                                                   -----------  ------------

     Total shareholders' equity                                     10,554,397    2,098,140
                                                                   -----------  ------------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $ 11,872,002 $  4,139,809
                                                                   ===========  ============
</TABLE>


                                     Page 2


<PAGE>
<TABLE>
<CAPTION>
                                                            NETCURRENTS, INC.
                                         (FORMERLY IAT RESOURCES CORPORATION)
                                                             AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                   FOR THE THREE MONTHS ENDED MARCH 31, 2000,
                               AND FOR THE THREE MONTHS ENDED MARCH 31, 1999,
                                                                  (UNAUDITED)
--------------------------------------------------------------------------------
                                              For the         For the
                                            Three Months    Three Months
                                               Ended           Ended
                                             March 31,       March 31,
                                                2000           1999
                                            ------------    -------------
                                             (unaudited)     (unaudited)
<S>                                         <C>            <C>
REVENUES                                    $    267,417    $      12,000

GENERAL AND ADMINISTRATIVE EXPENSES            2,474,862          410,979
                                            ------------    -------------

LOSS FROM OPERATIONS                          (2,207,445)        (398,979)
                                            ------------    -------------
OTHER INCOME (EXPENSE)
  Interest and dividend income                    70,819              613
  Interest and financing expens e                 (6,661)               -
   Recovery of expenses                                -        1,042,310
  Write-off of notes receivable and
          other assets                           (55,405)               -
Amortization of goodwill                         (22,500)         (41,000)
  Amortization of acquisition costs                    -           (6,070)
  Settlement expense                             (71,400)               -
   Gain on sale of investment                    168,250                -
  Other income (expense)                           5,958             (312)
                                            ------------    -------------

     Total other income (expense)                 89,061          995,541
                                            ------------    -------------

LOSS BEFORE PROVISION FOR INCOME TAXES        (2,118,384)         596,562

PROVISION FOR INCOME TAXES                         9,750                -
                                            ------------    -------------

</TABLE>


                                     Page 3
<PAGE>


<TABLE>
<CAPTION>
                                                               NETCURRENTS, INC.
                                            (FORMERLY IAT RESOURCES CORPORATION)
                                                                AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                      FOR THE THREE MONTHS ENDED MARCH 31, 2000,
                                  AND FOR THE THREE MONTHS ENDED MARCH 31, 1999,
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

<S>                                               <C>            <C>
                                                      For the       For the
                                                   Three Months  Three Months
                                                      Ended          Ended
                                                     March 31,     March 31,
                                                       2000          1999
                                                   ------------  ------------
                                                    (unaudited)   (unaudited)


NET INCOME (LOSS)                                  $ (2,128,134) $    596,562

DIVIDEND REQUIREMENT OF SERIES A PREFERRED STOCK       (106,250)     (106,250)

BENEFICIAL CONVERSION ON SERIES G PREFERRED STOCK             -             -
DIVIDEND REQUIREMENT OF SERIES G PREFERRED STOCK        (22,250)            -
                                                   ------------  ------------
INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS      (2,256,634)      490,312
                                                   ------------  ------------

UNREALIZED GAIN ON INVESTMENT                           199,672             -
                                                   ------------  ------------

COMPREHENSIVE LOSS APPLICABLE TO COMMON
  SHAREHOLDERS                                     $ (2,056,962) $    490,312
                                                   ============  ============

BASIC LOSS PER COMMON SHARE                        $      (0.07) $       0.05
                                                   ============  ============


WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING
   BASIC                                             30,596,005    10,061,725
                                                   ============  ============

</TABLE>


                                     Page 4


<PAGE>



<TABLE>
<CAPTION>
                                                                                                     NETCURRENTS, INC.
                                                                                  (FORMERLY IAT RESOURCES CORPORATION)
                                                                                                      AND SUBSIDIARIES
                                                                       CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                                            FOR THE THREE MONTHS ENDED MARCH 31, 2000,
                                                                                                           (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------

                                   PREFERRED STOCK
                       ------------------------------------
                       SERIES A,C,D,E,AND F    SERIES G        COMMON STOCK                                  ADDITIONAL
                       ------------------  ----------------  --------------------   TREASURY   SUBSCRIPTION      PAID-IN
                         SHARES    AMOUNT  SHARES  AMOUNT     SHARES      AMOUNT     STOCK      RECEIVABLE       CAPITAL
                       ---------- -------- ------ ----------  ----------  ------- -----------  -----------   -----------
<S>                    <C>        <C>      <C>    <C>         <C>         <C>     <C>          <C>           <C>
BALANCE,
  DECEMBER 31, 1999    2,625,000  $2,625   1,875  $1,875,000  23,070,869  $23,071 $(1,010,192) $  (398,800)  $30,704,372
ISSUANCE OF COMMON
  SHARES IN PAYMENT
  OF DIVIDENDS ON
  SERIES A PREFERRED
  STOCK                                                           53,662       54                                106,196
ISSUANCE OF COMMON
  STOCK FOR THE
  EXERCISE OF OPTIONS                                            636,999      637                                753,260
ISSUANCE OF COMMON
  STOCK FOR THE
  EXERCISE OF WARRANTS                                           104,333      104                                150,523
ISSUANCE OF COMMON
  STOCK FOR PRIVATE
  PLACEMENT                                                    1,700,000    1,700                              7,648,300
ISSUANCE OF SERIES G
  PREFERRED STOCK                          1,090   1,090,000
ISSUANCE OF SERIES E
  PREFERRED STOCK
RETIREMENT OF
  COMMON STOCK
   Grosso-Jacobson                                              (328,286)    (328)                                   328
ADJUSTMENT IN COMMON
   STOCK                                                             161


</TABLE>

<TABLE>
<CAPTION>
                       ACCUMULATED
                          OTHER
                         COMPRE-
                         HENSIVE      ACCUMULATED
                         INCOME         DEFICIT            TOTAL
                       -----------    ------------     ---------
<S>                    <C>            <C>              <C>
BALANCE,
  DECEMBER 31, 1999       $225,050    $(29,322,986)   $2,098,140
ISSUANCE OF COMMON
  SHARES IN PAYMENT
  OF DIVIDENDS ON
  SERIES A PREFERRED
  STOCK                                                  106,250
ISSUANCE OF COMMON
  STOCK FOR THE
  EXERCISE OF OPTIONS                                    753,897
ISSUANCE OF COMMON
  STOCK FOR THE
  EXERCISE OF WARRANTS                                   150,627
ISSUANCE OF COMMON
  STOCK FOR PRIVATE
  PLACEMENT                                            7,650,000
ISSUANCE OF SERIES G
  PREFERRED STOCK                                      1,090,000
ISSUANCE OF SERIES E
  PREFERRED STOCK
RETIREMENT OF
  COMMON STOCK
   Grosso-Jacobson                                             -
ADJUSTMENT IN COMMON
   STOCK                                                       -
</TABLE>


                                     Page 5
<PAGE>


<TABLE>
<CAPTION>
                                                                                                                  NETCURRENTS, INC.
                                                                                               (FORMERLY IAT RESOURCES CORPORATION)
                                                                                                                   AND SUBSIDIARIES
                                                                                    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                                                         FOR THE THREE MONTHS ENDED MARCH 31, 2000,
                                                                                                                        (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
                                      PREFERRED STOCK
                          ------------------------------------------
                          SERIES A,C,D,E,AND F       SERIES G                COMMON STOCK                                ADDITIONAL
                          --------------------  --------------------     -------------------   TREASURY   SUBSCRIPTION    PAID-IN
                            SHARES    AMOUNT     SHARES     AMOUNT        SHARES     AMOUNT    STOCK      RECEIVABLE     CAPITAL
                          ---------- --------   -------  -----------     ----------  ------- -----------  ------------   ----------
<S>                       <C>        <C>        <C>      <C>             <C>         <C>     <C>          <C>            <C>
ISSUANCE OF COMMON
  STOCK IN PAYMENT OF
  DIVIDENDS ON SERIES
  A PREFERRED STOCK                  $                   $                           $       $            $              $
ISSUANCE OF COMMON
  STOCK FOR EXERCISE
  OF OPTIONS                                                               775,000       775                (1,220,506)   1,210,725
ISSUANCE OF COMMON
  STOCK FROM THE
  PREFERRED SERIES F
  CONVERSION                (225,000)    (225)                             225,000       225                                311,525
ISSUANCE OF COMMON
  STOCK FROM THE
  PREFERRED SERIES G
  CONVERSION                                     (1,460)  (1,460,000)    1,162,184     1,162                              1,458,838
ISSUANCE OF COMMON
  STOCK FOR CONVERSION
  OF SERIES C PREFERRED
  STOCK FOR EXERCISE
  OF OPTIONS               (1,300,000) (1,300)                           2,800,000     2,800                (2,478,350)   2,448,500
ISSUANCE OF COMMON
  STOCK FOR
  SETTLEMENT                                                                30,000        30                                 71,370
ISSUANCE OF COMMON
  STOCK FOR CONVERSION
  DEBENTURES                                                               366,083       366                                459,634
DIVIDENDS PAID ON
  SERIES A PREFERRED
  STOCK

</TABLE>


<TABLE>
<CAPTION>
                                ACCUMULATED
                                   OTHER
                                  COMPRE-
                                  HENSIVE      ACCUMULATED
                                  INCOME         DEFICIT            TOTAL
                                -----------    ------------     ---------
<S>                             <C>            <C>              <C>
ISSUANCE OF COMMON
  STOCK IN PAYMENT OF
  DIVIDENDS ON SERIES
  A PREFERRED STOCK             $              $                $
ISSUANCE OF COMMON
  STOCK FOR EXERCISE
  OF OPTIONS                                                       (9,011)
ISSUANCE OF COMMON
  STOCK FROM THE
  PREFERRED SERIES F
  CONVERSION                                                      311,525
ISSUANCE OF COMMON
  STOCK FROM THE
  PREFERRED SERIES G
  CONVERSION                                                            -
ISSUANCE OF COMMON
  STOCK FOR CONVERSION
  OF SERIES C PREFERRED
  STOCK FOR EXERCISE
  OF OPTIONS                                                      (28,350)
ISSUANCE OF COMMON
  STOCK FOR
  SETTLEMENT                                                       71,400
ISSUANCE OF COMMON
  STOCK FOR CONVERSION
  DEBENTURES                                                      460,000
DIVIDENDS PAID ON
  SERIES A PREFERRED
  STOCK                                            (106,250)     (106,250)
</TABLE>


                                     Page 6
<PAGE>


<TABLE>
<CAPTION>
                                                                                                                  NETCURRENTS, INC.
                                                                                               (FORMERLY IAT RESOURCES CORPORATION)
                                                                                                                   AND SUBSIDIARIES
                                                                                    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                                                         FOR THE THREE MONTHS ENDED MARCH 31, 2000,
         -                                                                                                              (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
                                      PREFERRED STOCK
                          ------------------------------------------
                          SERIES A,C,D,E,AND F       SERIES G                COMMON STOCK                                ADDITIONAL
                          --------------------  --------------------     -------------------   TREASURY    SUBSCRIPTION    PAID-IN
                            SHARES    AMOUNT     SHARES     AMOUNT        SHARES     AMOUNT    STOCK       RECEIVABLE     CAPITAL
                          ---------- ---------  -------- -----------     ----------  -------  -----------  ------------   ----------
<S>                       <C>        <C>        <C>      <C>             <C>         <C>      <C>          <C>            <C>
DIVIDENDS PAID ON
  SERIES G PREFERRED
  STOCK                              $                   $                           $        $            $              $
UNREALIZED GAIN ON
  INVESTMENT
REALIZED GAIN ON
  INVESTMENT
INTEREST ON SUBSCRIPTION
    RECEIVABLE                                                                                                 (14,306)
NET LOSS
                          ---------- ---------  -------- -----------     ----------  ------- -----------  ------------   ----------
BALANCE, MARCH 31,
  2000                     1,100,000 $   1,100     1,505  $1,505,000     30,596,005  $30,596 $ (1,010,192) $ (4,111,962) $45,323,560
                          ========== =========  ======== ===========     ==========  ======= ============  ============  ===========
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                          ACCUMULATED
                            OTHER
                            COMPRE-
                           HENSIVE      ACCUMULATED
                           INCOME         DEFICIT           TOTAL
                         -----------    ------------     -----------
<S>                      <C>            <C>              <C>

DIVIDENDS PAID ON
  SERIES G PREFERRED
  STOCK                  $              $   (21,500)     $   (21,500)
UNREALIZED GAIN ON
  INVESTMENT                 199,673                         199,673
REALIZED GAIN ON
  INVESTMENT                 (29,563)                        (29,563)
INTEREST ON SUBSCRIPTION
    RECEIVABLE                                               (14,306)
NET LOSS                                  (2,128,135)     (2,128,135)
                         -----------    ------------     -----------

BALANCE, MARCH 31,
  2000                   $   395,160    $(31,578,871)    $10,554,397
                         ===========    ============     ===========

</TABLE>


                                    Page 7
<PAGE>


<TABLE>
<CAPTION>

                                                              NETCURRENTS, INC.
                                           (FORMERLY IAT RESOURCES CORPORATION)
                                                               AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     FOR THE THREE MONTHS ENDED MARCH 31, 2000,
                                 AND FOR THE THREE MONTHS ENDED MARCH 31, 1999,
                                                                    (UNAUDITED)
-------------------------------------------------------------------------------
                                                        For the       For the
                                                      Three Months  Three Months
                                                         Ended         Ended
                                                        March 31,    March  31,
                                                         2000          1999
                                                      ------------  -----------
                                                       (unaudited)  (unaudited)
    CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                   <C>           <C>
  Net income (loss)                                   $ (2,128,134)     596,562
  Adjustments to reconcile net loss to net cash
   used in operating activities
     Depreciation and amortization of fixed assets          24,976          172
     Amortization of goodwill                               22,500       41,000
     Amortization of acquisition costs                           -        6,071
     Write-off of notes receivable and other assets         55,405            -
     Issuance of common stock for services rendered         71,400            -
     Interest from subscription receivables                (53,662)           -
     Gain on sale of investments                          (168,250)           -
  (Increase) decrease in
   Accounts receivable                                     243,263      352,033
   Other assets and prepaid expenses                        28,212      118,106
   Prepaid advertising expenses                            583,392            -
  Increase (decrease) in
   Accounts payable and accrued expenses                  (184,168)  (1,178,204)
   Deferred revenue                                        (61,030)           -
                                                       -----------   ----------

Net cash used in operating activities                   (1,566,096)     (64,260)
                                                       -----------   ----------

</TABLE>


                                    Page 8
<PAGE>


<TABLE>
<CAPTION>
                                                            NETCURRENTS, INC.
                                         (FORMERLY IAT RESOURCES CORPORATION)
                                                             AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   FOR THE THREE MONTHS ENDED MARCH 31, 2000,
                               AND FOR THE THREE MONTHS ENDED MARCH 31, 1999,
                                                                  (UNAUDITED)
-----------------------------------------------------------------------------
                                              For the        For the
                                            Three Months   Three Months
                                               Ended          Ended
                                             March 31,      March 31,
                                               2000           1999
                                            ------------  -------------
                                            (unaudited)    (unaudited)
    CASH FLOWS FROM INVESTING ACTIVITIES

<S>                                         <C>            <C>
  Capital expenditures on fixed assets      $   (78,969)  $      (2,149)
  (Increase) decrease in receivables
     from related parties                             -         (20,000)
  Cash from purchase of business                      -         100,606
  Company acquisitions                                -        (800,000)
  Increase in subscriptions receivable           (50,00)              -
  Proceeds from sale of investments              383,125              -
                                            ------------  -------------

Net cash provided by (used in)                   254,156       (721,543)
  in investing activities                   ------------  -------------


    CASH FLOWS FROM FINANCING ACTIVITIES

  Payments on notes payable                      (44,046)      (349,260)
  Payments on capital lease obligation            (4,320)       (14,184)
  Proceeds from issuance of preferred stock      311,525      1,618,750
  Proceeds from issuance of common stock       8,501,241         26,663
  Proceeds from convertible debentures,
    net of offering costs                      1,098,000              -
                                            ------------  -------------

Net cash provided by financing activities      9,862,400      1,281,969
                                            ------------  -------------

Net increase in cash and cash equivalents      8,550,460        496,166

CASH AND CASH EQUIVALENTS, BEGINNING OF          798,855       (442,645)
  PERIOD                                    ------------  -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD    $  9,349,315  $      53,521
                                            ============  =============
</TABLE>


                                    Page 9
<PAGE>


(1)   BASIS OF PRESENTATION

      The accompanying unaudited condensed consolidated financial statements of
NetCurrents, Inc. ( the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all material adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2000. The information contained in this Form 10-QSB should be read in
conjunction with the audited financial statements filed as part of the Company's
Form 10-KSB for the six month period ending December 31, 1999.

Company's financial statements.

      On September 23, 1999, NetCurrents, Inc. entered into a merger agreement
with Infolocity, Inc., a privately held Internet company located in Burlingame,
California and incorporated in January 1999. As of December 27, 1999, the
effective date of the merger, Infolocity, Inc. changed its name to NetCurrents
Services Corporation and became a wholly-owned subsidiary of NetCurrents, Inc.

      The terms of the merger included a tax-free exchange of NetCurrents, Inc.
common stock for 100% of the issued and outstanding stock of Infolocity, Inc.
The acquisition was accounted for as a pooling of interests and, consequently,
the accompanying historical financial information for the six-month period
ending December 31, 1999 has been restated to reflect the effects of the
combination. In connection with the merger, the Company issued 7,375,001 shares
of common stock..

      On March 3, 2000, NetCurrents, Inc. entered into an equity securities
purchase agreement with the Brown Simpson Strategic Growth Fund Ltd and the
Brown Simpson Strategic Growth Fund L.P. to purchase up to $34,000,000 of common
stock directly and through warrants. Upon completion of the financing, Brown
Simpson would receive 5,698,000 shares in the Company. In March 2000, the
Company received $8,500,000 of this financing for the purchase of the initial
1.7 million shares of common stock. The balance is due through the exercise of
3,998,000 callable warrants at exercise prices ranging from $6 to $9 per share
for the Company's common stock.

      On July 15, 1998, the Company acquired 100% of the outstanding capital
stock of MWI Distribution, Inc., a California corporation ("MWI"), which is
engaged in the international co-production and licensing of television and video
programming, as well as merchandising. The acquisition was accomplished by
merger. The consideration paid by the Company to the sole shareholders of MWI
pursuant to the merger was paid through the issuance of 763,889 shares of the
Company's Common Stock valued at an issue price of $1.75 per share. Pursuant to
an agreement reached between Mr. Sussman and the Company, IATR retired
approximately 90,000 shares owned by Mr. Sussman.

      Certain figures for the three months ended September 30, 1999 have been
restated to conform with the current presentation.


                                    Page 10
<PAGE>


(2)       GOODWILL
      Goodwill related to the acquisition of MWI is being amortized over a
period of ten years.

(3)      DIVIDEND ON SERIES A PREFERRED STOCK

      For the three months ended March 31, 2000, the Company issued shares of
its Common Stock at a market value equivalent to $106,250 and $22,250,
representing the $106,250 quarterly dividend required to be paid on the Series A
Preferred Stock and $22,250 quarterly dividend required to be paid on the Series
G Preferred Stock for the quarter ended March 31, 2000.

(4)      LOSS PER SHARE

      Loss per share for the three month period ended March 31, 2000 has been
computed after deducting the dividend requirements of the Series A Preferred
Stock. It is based on the weighted average number of common and common
equivalent shares reported outstanding during the entire period ending on
September 30, 1999.

(5)   STOCK OPTIONS AND WARRANTS

      The Company uses APB Opinion No. 25 "Accounting for Stock Issued to
Employees" to calculate the compensation expense related to the grant of options
to purchase Common Stock under the intrinsic value method. Accordingly, the
Company makes no adjustments to its compensation expense or equity accounts for
the grant of options. The Company has granted options for the period ended March
31, 2000. At March 31, 2000 there were options to acquire 287,028 shares
outstanding at exercise prices ranging from $3.36 per share to $39.00 per share
of Common Stock.

      In addition to the Redeemable Warrants to purchase an aggregate of
1,700,000 shares of Common Stock at $5.25 per share issued in connection with
the September 1996 public offering, the Company has other existing warrants
outstanding to purchase an aggregate of 142,518 shares of Common Stock at prices
ranging from $23.10 to $43.20 per share. There were a total of approximately
1,842,518 warrants outstanding as of December 31, 1999.



FORWARD AND LOOKING STATEMENTS.

This report contains statements that constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933 with respect to the Company and its
operations that are subject to certain risks and factors which could cause the
Company's future actual results of operations and future financial condition to
differ materially from those described herein. The words "expect," "estimate,"
"anticipate," "predict, "believe" and similar expressions and variations thereof
are intended to identify forward-looking statements. These statements appear in
a number of places in this filing and include statements regarding the intent,
belief or current expectations of the Company with respect to, among other
things, the integration of the acquisition of MWI, trends affecting


                                    Page 11
<PAGE>


the Company's financial condition and the Company's business and strategies. The
stockholders of NetCurrents are cautioned not to put undue reliance on such
forward-looking statements. With respect to the entertainment relating
activities, such forward-looking statements involve risks and uncertainties,
including the intensity of competition from other television distributors and
the status of the Company's liquidity in future fiscal periods. The readers of
this filing are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in this filing,
including, without limitation, those risks and uncertainties discussed under the
headings "Factors That Could Impact Future Results" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report on Form 10-K for the six months ending December 31, 1999 as well
as the information set forth below. The Company does not ordinarily make
projections of its future operating results and undertakes no obligation to
publicly update or revise any forward looking statements, whether as a result of
new information, future events or otherwise.

OVERVIEW

         For approximately eight years, we operated under the name The Producers
Entertainment Group Ltd. Historically, we acquired, developed, produced and
distributed dramatic, comedy, documentary and instructional television series
and movies and theatrical motion pictures. We distributed our projects in the
United States and in international markets for exhibition on standard broadcast
television (network and syndication), basic cable and pay cable and for video
distribution. We also provided producer and executive producer services in
exchange for fees and participations in future profits from these projects.
Although we continue to engage in certain entertainment related distribution
activities, during the past eight months we have reduced our network and cable
television production activities and have redirected our core business toward
the Internet.

        While operating as The Producers Entertainment Group Ltd., in July 1998,
we acquired MWI Distribution, Inc., which does business under the name
MediaWorks International. MediaWorks International continues to distribute
television and video programming in the international market.

         As part of our expansion into the Internet and on-line commerce
industries, we identified and made investments in two early and expansion stage
companies. In February 1999, we purchased 150,000 shares of common stock of
flowersandgifts.com, a portal on the Internet for the sale of flowers and other
gifts, and 100,000 shares of common stock of Pacific Softworks, Inc., a licensor
of Internet-related software and related software development tools, that
completed an initial public offering in June 1998. We also have warrants to
purchase up to an additional 100,000 shares of Pacific Softworks' common stock.

On September 23, 1999, NetCurrents, Inc. entered into a merger agreement with
Infolocity, Inc., a privately-held Internet company located in Burlingame,
California and incorporated in January 1999. As of December 27, 1999, the
effective date of the merger, Infolocity, Inc. changed its name to NetCurrents
Services Corporation ("NC Services") and became a wholly-owned subsidiary of
NetCurrents, Inc.

The terms of the merger included a tax-free exchange of NetCurrents, Inc. common
stock for 100% of the issued and outstanding stock of Infolocity, Inc. The
acquisition was accounted for as a pooling of interests and, consequently, the
accompanying historical financial information for


                                    Page 12
<PAGE>


the six-month period ending December 31, 1999 has been restated to reflect the
effects of the combination. In connection with the merger, the Company issued
7,375,001 shares of common stock.

 RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000, COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999

      Revenues for the three months ended March 31, 2000 increased $255,417
compared to the three months ended March 31, 1999. Revenues for the three months
ended March 31, 2000 consist of sales of $191,669 from our NC Services
subsidiary and $75,000 from MediaWorks.

         General and administrative expenses increased to $2,474,862 in the
three months ended March 31, 2000 from $410,979 in the three months ended March
31, 1999 or an increase of $2,063,883. The increase was primarily attributable
to the change in business operations and the merger with Infolocity. The general
and administrative expenses include such items as $671,000 in marketing
expenditures, $694,000 of salaries $147,000 of professional fees and $41,900 in
occupancy costs. During the three months ended March 31, 1999 the Company had
significantly reduced its staff and operating expenses as it transitioned out of
certain operations in the entertainment industry. The lower general and
administrative costs were primarily due to elimination of certain staff and
costs related to the entertainment business.

      The recovery of expenses for the period ended March 31, 1999 is a result
of the forgiveness of certain obligations owing to executives in the Company's
entertainment business.

         Interest income during the three months ended March 31, 2000 was
$70,819 and primarily consisted of the amortization of the imputed interest
discount on notes received from the issuance of common stock to related parties.
Interest income for the three months ended March 31, 1999 was $613.


      The gain on sale of investment of $168,000 is a result of the sale of a
portion of the stock owned by the Company.

         The net (loss) applicable to common shareholders was ($2,056,962) for
the three months ended March 31, 2000 as compared to a net income of $490,312
for the three months ended March 31, 1999. Of this amount for the three months
ended March 31, 2000, approximately $200,000, represents non-recurring expenses
and $128,500 represents the dividend paid in Common Stock to the holders of the
Series A Preferred Stock and Series G Preferred Stock.


LIQUIDITY AND CAPITAL RESOURCES

      During the six month period ended March 31, 2000, as set out below, the
Company received at total of $8,500,000 to fund the execution of its business
plan.

      Our cash commitments for the year ending December 31, 2000, include
payment of our current liabilities of $1,317,605, compensation to officers and
key independent contractors of approximately $1,500,000 and office rent of $
289,884, aggregating approximately $2,860,000.


                                    Page 13
<PAGE>


      Net cash provided by (used in) operating activities of our company in the
three months ended March 31, 2000 was ($1,566,096) as compared to ($64,260) in
the three months ended March 31, 1999. Net cash provided by (used in) investing
activities during the three months ended March 31, 2000, was $254,156 and net
cash used in investing activities during the three months ended March 31, 1999,
was ($721,543). Net cash provided by financing activities of our company during
the three months ended March 31, 2000, was $9,862,400 and net cash provided by
financing activities of our company during the three months ended March 31,
1999, was $1,281,969.

      Our total cash and cash equivalents balance as of March 31, 2000 was
$9,349,315 as compared to our total cash and cash equivalent balance of $798,855
as of December 31, 1999.

      In July 1998, we secured access to a $5,500,000 equity-based line of
credit with an institutional investor, subject to certain minimum trading
qualifications. To date, we have sold $2,500,000 of convertible preferred stock
to the investor.

      In August 1999, the Company issued and sold 6% Convertible Debentures.
During the period from August 1999 to March 31, 2000, we completed this private
placement and received $4,000,000. During the three months ended March 31, 2000,
the Company issued and sold convertible debentures and received $1,098,000 net
of costs. As of March 31, 2000, all but $167,000 of the convertible debentures
had been converted to common stock.


      On March 3, 2000, NetCurrents, Inc. entered into an equity securities
purchase agreement with the Brown Simpson Strategic Growth Fund Ltd and the
Brown Simpson Strategic Growth Fund L.P. to purchase up to $34,000,000 of common
stock directly and through warrants. Upon completion of the financing, Brown
Simpson would receive 5,698,000 shares in the Company. In March 2000, we
received $8,500,000 of this financing for the purchase of the initial 1.7
million shares of common stock. The balance is due through the exercise of
3,998,000 warrants at exercise prices ranging from $6 to $9 per share and are
callable by the Company when at such time as the common stock reaches certain
prices.

      We believe that cash flow from operations, cash on hand and availability
under our current funding agreement with Brown Simpson Funds, as well as other
available financing sources, should be sufficient to fund our operations and
service its debt in the foreseeable future. However, there are a number of
factors that could change our anticipated needs, and could require that we try
to raise additional financing.


IMPACT OF YEAR 2000

      The Year 2000 issue is the result of computer programs being written using
two digits instead of four to define the applicable year. Any of our computer
programs that have time-sensitive software or facilities or equipment containing
embedded micro-controllers may recognize a date using "00" as the year 1900
rather than the year 2000. This could cause a system failure or miscalculations
resulting in potential disruptions of operations, including, among other things,
a temporary inability to process transactions, send invoices or engage in
similar normal business activities. The Company did not experience any problems
as a result of the advent of the Year 2000.


                                    Page 14
<PAGE>


FACTORS THAT COULD IMPACT FUTURE RESULTS

          FACTORS AFFECTING THE COMPANY'S LIQUIDITY AND CAPITAL RESOURCES

RISKS RELATED TO OUR BUSINESS

WE ACQUIRED NC SERVICES IN DECEMBER 1999. IF WE FAIL TO GROW THE NC SERVICES
BUSINESS OR IF WE CANNOT SUCCESSFULLY INTEGRATE NC SERVICES' BUSINESS INTO OURS,
OUR BUSINESS AND FINANCIAL CONDITION COULD SUFFER.

      On December 27, 1999, we completed the acquisition of NC Services
(previously known as Infolocity, Inc.), a privately held Internet company which,
through its proprietary search technology, helps publicly traded companies
minimize the impact of negative information posted on the Internet. This merger
will necessarily involve the integration of two businesses that have previously
operated independently. We merged with NC Services with the expectation that
this merger would help us execute our plan to expand our core business into the
Internet industry and provide us with further opportunities to promote
synergistic business relationships among other Internet companies. However, we
cannot be certain that our acquisition of NC Services will enable our business
to realize a higher rate of growth. In addition, there can be no assurance that
we will be able to successfully integrate the operations of NC Services into our
existing operations or that we will realize all of the benefits expected from
this integration. In order to achieve these anticipated benefits, we must
efficiently, effectively and timely integrate NC Services' operations into ours.
The combination of these businesses requires, among other things:

      ?     integration of management staffs and necessary support staffing to
meet the combined entity's business growth opportunities;

      ?     coordination of operations and marketing efforts; and

      ?     location of adequate sources of additional funding.

      Full integration of these businesses requires considerable effort on the
part of our management, who will need to dedicate considerable time toward
integrating the financial and information systems, management staffs and
organizational cultures of the separate businesses. We could experience problems
associated with the integration, and the integration itself may not proceed
efficiently or be successful. Any delay in completing the integration may
negatively impact the combined entity's ability to provide ongoing quality
products and services, which in turn may negatively impact the future revenues,
net income and earnings per share of the combined entity. Additionally,
unexpected costs incurred in connection with the integration could decrease
operating margins and negatively impact net income and earnings per share of the
combined entity. In addition, there can be no assurance that the operations,
management and personnel of the businesses will be compatible or that NC
Services will not experience the loss of key personnel, notwithstanding the fact
that we have employment agreements with a number of these key employees.
Furthermore, even if we successfully integrate NC Services' operations into
ours, the combination may nevertheless adversely affect our business and results
of operations by interrupting or interfering with our pre-existing business
operations, diverting management's attention and resulting in additional
management expenses.


                                    Page 15
<PAGE>


ALTHOUGH WE CONTINUE TO OPERATE IN THE ENTERTAINMENT BUSINESS ON A SIGNIFICANTLY
REDUCED SCALE, OUR PROSPECTS IN THE INTERNET SECTOR ARE DIFFICULT TO FORECAST
BECAUSE WE HAVE ONLY TRANSITIONED INTO THE INTERNET AND ONLINE COMMERCE
INDUSTRIES SINCE FEBRUARY 1999 AND ACQUIRED NC SERVICES AS OF DECEMBER 1999.

      We announced our intention to expand our business in the Internet and
electronic commerce industries in February 1999, and we have changed our core
television production business to Internet technology services, primarily
through our acquisition of NC Services. These industries are new, highly
speculative and involve a substantial degree of risk. Since we are in an early
stage of development in these rapidly evolving industries, our prospects are
difficult to predict and could change rapidly and without warning. You must
consider our prospects in light of the risks, expenses and difficulties
frequently encountered by companies in the early stages of developing and
expanding their business, particularly companies in the new and rapidly evolving
Internet technology and online commerce markets. These risks include, but are
not limited to, the inability to attract key personnel knowledgeable in the
Internet markets, the inability to respond promptly to changes in a rapidly
evolving and unpredictable business environment and the inability to manage
potential growth. To address these risks, we must, among other things:

      ?     successfully implement new business and marketing strategies;

      ?     respond to competitive developments;

      ?     expand our funding of early and expansion-stage companies; and

      ?     attract and retain qualified personnel.

WE MAY NOT BE SUCCESSFUL IN ENTERING THE INTERNET AND ONLINE COMMERCE FIELDS
SINCE WE HISTORICALLY NEVER HAVE OPERATED IN THESE BUSINESSES. OPERATING IN
THESE BUSINESSES WILL ALSO REQUIRE SUBSTANTIAL WORKING CAPITAL.

      The Internet market segments are relatively new business ventures for us,
and are businesses in which we have not historically operated. As of December
31,1999, only a limited number of officers have experience operating
Internet-related companies

      In addition, our new business strategy, investment and acquisition
activities will require substantial working capital. We spent substantial funds
to acquire NC Services and will continue to spend substantial funds to market
and expand our new business and to expand our existing management team with
additional experienced Internet personnel. We cannot assure you that we will be
successful in any of these areas.

FUTURE ACQUISITIONS INVOLVE RISKS FOR US.

      We intend to evaluate future acquisitions of complementary product lines
and businesses as part of our business strategy. Any future acquisitions may
result in potentially dilutive issuances of equity securities, the use of our
cash resources, the incurrence of additional debt and increased goodwill,
intangible assets and amortization expense, which could negatively impact our
profitability. In addition, acquisitions involve numerous risks, including
difficulties in the assimilation of the operations and products of the acquired
companies, the diversion of


                                    Page 16
<PAGE>


management's attention from other business concerns,
risks of entering markets in which we have no or limited direct prior
experience, and the potential loss of key employees of the acquired company.

OUR GROWTH AND OPERATING RESULTS COULD BE IMPAIRED IF WE ARE UNABLE TO MEET OUR
CURRENT LIQUIDITY AND CAPITAL RESOURCES REQUIREMENTS.

      We estimate that, as of December 31, 1999, taking into account our
acquisition of NC Services, our cash commitments for the next twelve months will
be approximately $4,500,000; a significant portion of this amount is allocated
for requirements associated with the business of NC Services.

      We incur expenses associated with other general and administrative costs
such as:

      o     staff salaries;

      o     employee benefits;

      o     employer taxes;

      o     premiums on insurance policies;

      o     advertising and marketing costs;

      o     office expenses;

      o     professional fees;

      o     consulting fees; and

      o     other expenses.

      With the acquisition of NC Services, we expect our expenses to increase
significantly. In addition to general and administrative expenses, the required
dividends on the shares of Series A Preferred Stock are $425,000 annually. The
dividends on the Series A Preferred Stock may be paid either in shares of our
common stock or in cash.

      In addition, while we believe the cash generated from operations will be
sufficient to fund our business for the next 12 months, we cannot anticipate all
of our future requirements. We may need to raise additional funding for the
expansion of our business and marketing efforts, for example. However, if we
must raise additional funds by issuing equity or convertible debt securities,
the percentage ownership of our stockholders will be diluted. Any new securities
could have rights, preferences and privileges senior to those of our common
stock. Furthermore, we cannot be certain that additional financing will be
available when and to the extent required or that, if available, it will be on
acceptable terms. If adequate funds are not available on acceptable terms, we
may not be able to fund our expansion of our business into the Internet and
online commerce sectors.

WE HAVE A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE.

      The Company has a history of revenues and losses as follows:


                                    Page 17
<PAGE>


                                             Revenues      Losses

      Year ended June 30, 1997              $5,521,441  $4,592,145

      Year ended June 30, 1998             $22,369,511  $1,411,916

      Year ended June 30,1999               $2,991,953  $2,722,239

      Six months ended December 31,1999       $342,985  $4,724,582

      Three months ended March 31, 2000       $267,417  $2,056,962

      (without giving effect to the payment in 1997, 1998, 1999 and 2000 of
dividends of $425,000 annually, on the Series A Preferred Stock and payment in
1999 of dividends of $66,250 on the Series E Preferred Stock and payment in the
three months ended March 31, 2000 of dividends of $22,250 on the Series G
Preferred Stock). As of March 31, 2000, we had an accumulated deficit of
($31,588,877). If the cash we generate from our operations cannot sufficiently
fund possible future operating losses, we may need to raise additional funds.
Additional financing may not be available in amounts or on terms acceptable to
us, if at all.

OUR FUTURE OPERATING RESULTS MAY FLUCTUATE AND ARE UNPREDICTABLE. IF WE FAIL TO
MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE MARKET PRICE
OF OUR COMMON STOCK AND REDEEMABLE WARRANTS MAY DECLINE SIGNIFICANTLY.

      Our limited operating history in the Internet and online commerce
industries makes it difficult to forecast accurately our revenues, operating
expenses and operating results. As a result, we may be unable to adjust our
spending in these areas in a timely manner to compensate for any unexpected
revenue shortfall.

BECAUSE OF THE LIMITED BARRIERS TO ENTRY IN THE INTERNET COMPETITION IN THESE
MARKETS IS INTENSE. IF WE ARE UNABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND
FUTURE COMPETITORS THAT ENTER THESE MARKETS, OUR REVENUES AND OPERATING RESULTS
COULD BE IMPAIRED.

      The Internet markets are new, rapidly evolving and intensely competitive,
and we expect that competition could further intensify in the future. Barriers
to entry are limited, and current and new competitors can launch web sites and
other similar businesses at a relatively low cost. Many of our current and
potential competitors have longer operating histories and significantly greater
financial, marketing and other resources than us. Increased competition may
result in reduced operating margins and loss of market share.

      We have not yet determined whether we will be able to compete successfully
against our current and future competitors. Further, as a strategic response to
changes in the competitive environment, we may from time to time make marketing
decisions or acquisitions that could adversely affect our business, prospects,
financial condition and results of operations.

OUR GROWTH AND OPERATING RESULTS WILL BE IMPAIRED IF THE INTERNET AND ONLINE
COMMERCE INDUSTRIES DO NOT CONTINUE TO GROW.


                                    Page 18
<PAGE>


      Our growth and operating results depend in part on widespread acceptance
and use of the Internet as a point of convergence in the telecommunications,
entertainment and technology industries, as well as on continued consumer
acceptance and use of the Internet for purposes of chat rooms and other forms of
communication. These practices are at an early stage of development, and demand
and market acceptance are uncertain.

      The Internet may not become a viable medium for telecommunications,
entertainment and technology convergence or a healthy commercial marketplace due
to inadequate development of network infrastructure and enabling technologies
that address the public's concerns about:

            o     network performance;

            o     reliability;

            o     speed of access;

            o     ease of use; and

            o     bandwidth availability.

      In addition, the Internet's overall viability could be adversely affected
by increased government regulation. Changes in or insufficient availability of
telecommunications or other services to support the Internet could also result
in slower response times and adversely affect general usage of the Internet.
Also, negative publicity and consumer concern about the security of transactions
conducted on the Internet and the privacy of users may also inhibit the growth
of commerce on the Internet.

BURDENSOME GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD IMPAIR OUR
RESULTS OF OPERATIONS.

      It is possible that a number of laws and regulations may be adopted
concerning the Internet, relating to, among other things:

            o     user privacy;

            o     content;

            o     copyrights;

            o     distribution;

            o     telecommunications; and

            o     characteristics and quality of products and services.

      The adoption of any additional laws or regulations may decrease the
popularity or expansion of the Internet. A decline in the growth of the Internet
could decrease demand for our services and increase our cost of doing business.
The application of laws and regulations from jurisdictions whose laws do not
currently apply to our business, or the application of existing laws and
regulations to the Internet and other online services could also harm our
business.


                                    Page 19
<PAGE>


OUR OUTSTANDING OPTIONS AND WARRANTS MAY DILUTE OUR STOCKHOLDERS' INTERESTS AND
COULD HINDER US FROM OBTAINING ADDITIONAL FINANCING.

      As of March 31, 2000, we have granted options and warrants to purchase a
total of 11,255,747 shares of common stock that have not been exercised. To the
extent that these outstanding options and warrants are exercised, our
stockholders' interests will be diluted. Also, we may not be able to obtain
additional equity capital on terms we like, since the holders of the outstanding
options and warrants will likely exercise them at a time when we may be able to
obtain such capital on better terms than those in the options and warrants.

THE CONVERSION OF OUR CONVERTIBLE PREFERRED STOCK MAY DILUTE OUR STOCKHOLDERS'
INTERESTS AND COULD HINDER US FROM OBTAINING ADDITIONAL FINANCING.

      As of March 31, 2000, we have issued and outstanding 1,000,000 shares of
our Series A Preferred Stock, 50,000 shares of our Series D Preferred Stock,
50,000 shares of our Series F Preferred Stock and 1,505 shares of our Series G
Preferred Stock. At our option, we can pay the dividends on our Series A
Preferred Stock in cash or in shares of common stock. No dividends are currently
due on the Series C Preferred Stock. We are not required to pay dividends on the
Series F Preferred Stock; however, we are required to pay dividends on our
Series G Preferred Stock.

      Holders of our convertible preferred stock could convert their shares into
common stock at any time in the future. To the extent all of the shares of our
outstanding convertible preferred stock are converted into common stock, our
common stockholders' interests will be diluted. Since these shares of common
stock will be registered for sale in the marketplace, future offers to sell such
shares could potentially depress the price of our common stock. In the future,
this could make it difficult for us or our stockholders to sell the common
stock. Also, we may have problems obtaining additional equity capital on terms
we like, since we can expect the holders of our convertible preferred stock to
convert their shares into common stock at a time when we would be able to obtain
any needed capital on more favorable terms than those of the convertible
preferred stock.

STOCK PRICES OF INTERNET-RELATED COMPANIES HAVE FLUCTUATED WIDELY IN RECENT
MONTHS AND THE TRADING PRICE OF OUR COMMON STOCK AND REDEEMABLE WARRANTS IS
LIKELY TO BE VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES TO INVESTORS.

      As a result of our recent expansion into Internet and online commerce, the
trading price of our common stock and redeemable warrants could become more
volatile and could fluctuate widely in response to factors including the
following, some of which are beyond our control:

      o     variations in our operating results;

      o     announcements of technological innovations or new services by us or
our competitors;

      o     changes in expectations of our future financial performance,
including financial estimates by securities analysts and investors;


                                    Page 20
<PAGE>


      o     changes in operating and stock price performance of other
Internet-related companies similar to us;

      o     conditions or trends in the Internet and technology industries;

      o     additions or departures of key personnel;

      o     future sales of our common stock; and

      o     acceptance by the market of our acquisition of NC Services.



      Domestic and international stock markets often experience significant
price and volume fluctuations. These fluctuations, as well as general economic
and political conditions unrelated to our performance, may adversely affect the
price of our common stock and redeemable warrants.

TAKEOVER EFFORTS COULD BE DETERRED AS A RESULT OF OUR RIGHT TO ISSUE PREFERRED
STOCK IN THE FUTURE AND CERTAIN PROVISIONS IN OUR CERTIFICATE OF INCORPORATION.

      Our Certificate of Incorporation permits our Board of Directors to issue
up to 20,000,000 shares of "blank check" Preferred Stock. Our Board of Directors
also has the authority to determine the price, rights, preferences, privileges
and restrictions of those shares without any further vote or action by our
stockholders. We have issued and outstanding 1,000,000 shares of Series A
Preferred Stock, 50,000 shares of Series D Preferred Stock, 50,000 shares of
Series F Preferred Stock and 1,505 shares of Series G Preferred Stock. If we
issue additional preferred stock with voting and conversion rights, the rights
of our common stockholders could be adversely affected by, among other things,
the loss of their voting control to others. Any additional issuances could also
delay, defer or prevent a change in our control, even if these actions would
benefit our stockholders.

      Additionally, provisions of Delaware law and our Certificate of
Incorporation could make it more difficult for a third party to acquire us, even
if doing so would be beneficial to our stockholders.

WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK.  WE PAY ANNUAL CASH OR STOCK
DIVIDENDS ON SOME OF OUR PREFERRED STOCK.

      We have never paid cash dividends on our common stock and we do not expect
to pay these dividends in the foreseeable future. Holders of our Series A
Preferred Stock are entitled to annual dividends of 8 1/2% (aggregating $425,000
annually, in cash or stock at our option, assuming no conversion). Holders of
our Series C Preferred Stock are entitled to dividends of 8% annually, so long
as we have net income in excess of $1,000,000 in the applicable fiscal year. We
pay these dividends quarterly, in cash or in shares of our common stock.
Beginning January 1, 2000, holders of our Series G Preferred Stock were entitled
to dividends of $60 per year per share of Series G Preferred Stock, payable
quarterly. For the foreseeable future, we anticipate that we will retain all of
our cash resources and earnings, if any, for the operation and expansion of our
business, except to the extent required to satisfy our obligations under the
terms of the Series A Preferred Stock, Series C Preferred Stock and Series G
Preferred Stock.


                                    Page 21
<PAGE>


SALES OF ADDITIONAL SHARES OF OUR COMMON STOCK INTO THE PUBLIC MARKET MAY CAUSE
OUR STOCK PRICE TO FALL.

      If we or our stockholders sell substantial amounts of our common stock
(including shares issued upon the exercise of outstanding options and warrants
or upon the conversion of shares of our convertible preferred stock) in the
public market, the market price of our common stock could fall. As of March 31,
2000, we had outstanding 30,596,005 shares of our common stock. The unregistered
common stock and the common stock held by our officers and directors are
"restricted" securities, as that term is defined by Rule 144 under the
Securities Act. In the future, these restricted securities may be sold only in
compliance with Rule 144 or if they are registered under the Securities Act or
under an exemption. Generally, under Rule 144, each person who holds restricted
securities for a period of one year may, every three months, sell in ordinary
brokerage transactions an amount of shares which does not exceed the greater of
1% of our then-outstanding shares of common stock, or the average weekly volume
of trading of our common stock as reported during the preceding four calendar
weeks. A person who has not been an affiliate of ours for at least the three
months immediately preceding the sale and who has beneficially owned shares of
common stock for at least two years can sell such shares under Rule 144 without
regard to any of the limitations described above. Sales of substantial amounts
of common stock in the public market, or the perception that such sales could
occur, may adversely affect the prevailing market price for our common stock and
could impair our ability to raise capital through a public offering of equity
securities.

      In addition, as of March 31, 2000, holders of options and warrants may
acquire approximately 11,255,747 shares of common stock and holders of shares of
our Series A Preferred Stock, Series C Preferred Stock, Series F Preferred Stock
and Series G Preferred Stock may acquire shares of common stock at various
conversion rates.

NASDAQ COULD DELIST OUR COMMON STOCK AND/OR REDEEMABLE WARRANTS, WHICH COULD
MAKE IT MORE DIFFICULT FOR YOU TO SELL OR OBTAIN QUOTATIONS AS TO THE PRICE OF
OUR COMMON STOCK AND/OR REDEEMABLE WARRANTS.

      In order to continue to be listed on Nasdaq, we must meet the following
requirements:

o     net tangible assets of at least $2,000,000, or a market capitalization of
      $35,000,000 or $500,000 in net income for two of the last three years;

o     a minimum bid price of $1.00;

o     two market makers;

o     300 stockholders;

o     at least 500,000 shares in the public float or a minimum market value for
      the public float of $1,000,000; and

o     compliance with certain corporate governance standards.

      If we cannot satisfy Nasdaq's maintenance criteria in the future, Nasdaq
could delist our common stock and/or redeemable warrants. In the event of
delisting, trading, if any, would be


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<PAGE>


conducted only in the over-the-counter market in the so-called "pink sheets" or
the NASD's Electronic Bulletin Board. As a result of any delisting, an investor
would likely find it more difficult to sell or obtain quotations as to the price
of our common stock and/or redeemable warrants.

      WE HAVE OUTSTANDING WARRANTS THAT TRADE ON NASDAQ, AND THE COMMON STOCK
UNDERLYING THESE WARRANTS ARE NOT CURRENTLY FREELY TRADABLE.

      We have issued and outstanding common stock purchase warrants that trade
on the Nasdaq SmallCap Market under the symbol "NTCSW." We initially registered
the shares of common stock underlying these warrants with the SEC through the
filing of a registration statement. However, until March 28, 2000 we had not
updated the registration statement with current information. As a result, upon
exercise of the warrants, the underlying shares of common stock will not be
freely tradable until the post-effective amendment to the registration statement
has been declared effective by the SEC. Until the post-effective amendment is
declared effective, the underlying shares will be restricted securities under
U.S. federal and applicable state laws, and may not be transferred, sold or
otherwise disposed of in the United States except as permitted under U.S.
federal and state securities laws, pursuant to exemption from registration. The
warrant holders should be prepared to hold the shares of common stock issuable
upon exercise of the warrants for an indefinite period of time.

IF THE SOFTWARE, HARDWARE, COMPUTER TECHNOLOGY AND OTHER SYSTEMS AND SERVICES
THAT WE USE ARE NOT YEAR 2000 COMPLIANT, OUR OPERATING RESULTS COULD BE
IMPAIRED.

      Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
recent change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond the year
2000. This could result in system failures or miscalculations causing
disruptions of operations, including, among others, a temporary inability to
process transactions, send invoices or engage in similar normal business
activities.

      We have assessed our hardware and software systems and we believe that our
systems correctly define the year 2000. We have also assessed the embedded
system contained in our leased equipment, which we believe to be Year 2000
compliant.

      In addition, we have received information from our key vendors and
customers with respect to their significant Year 2000 exposures that would have
a material effect on us. The financial impact on us of such third parties not
achieving high levels of Year 2000 readiness cannot be estimated with any degree
of accuracy. In the area of business continuity, technological operations
dependent in some way on one or more third parties, the situation is much less
in our ability to predict or control. In some cases, third party dependence is
on vendors who are themselves working toward solutions to Year 2000 problems. In
other cases, third party dependence is on suppliers of products and services to
ascertain the state of Year 2000 readiness of significant third parties. We are
taking steps to attempt to ensure that the third parties on which we are heavily
reliant are Year 2000 ready, but cannot predict the likelihood of such
compliance nor the direct and indirect costs of non-readiness by those third
parties or of securing such services from alternate third parties. We are not
yet aware of any Year 2000 issues relating to third parties with which we have a
material relationship. If such critical third party


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providers experience difficulties resulting in disruption of service to us, a
shutdown of our operations at individual facilities could occur for the duration
of the disruption.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

              In the normal course of our business, we are subject to various
claims and legal actions. We believe that we will not be materially adversely
affected by the ultimate outcome of any of these matters either individually or
in the aggregate.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

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

      None

ITEM 5.  OTHER INFORMATION

      None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A

        (a)  EXHIBITS

              27.1  -   Financial Data Schedule

(b)   Reports on Form 8-K

          The Company filed a Current Report on Form 8-K on February 4, 2000.
          Item 8 was reported. The Company filed a Current Report on Form 8-K on
          March 9, 2000. Items 5 and 7 were reported.


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                                   SIGNATURES

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


                     THE PRODUCERS ENTERTAINMENT GROUP LTD.
                                  (Registrant)

  Dated:   MAY 16, 2000       /S/ IRWIN MEYER
                              Irwin Meyer, Chief Executive Officer

  Dated:   MAY 16, 2000       /S/ MICHAEL ISCOVE
           ------------       ------------------
                              Michael Iscove,
                              Chief Financial Officer


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