Independent Auditor's Report



Board of Directors and Stockholders
REpipeline.com, Inc.
Dallas, Texas


We have  audited  the  accompanying  balance  sheet of  REpipeline.com,  Inc. (a
development  stage company) as of June 30, 2000,  and the related  statements of
operations,  stockholders' equity, and cash flows for the period August 16, 1999
(inception)   through  June  30,  2000.  These  financial   statements  are  the
responsibility of the company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of REpipeline.com,  Inc. at June
30,  2000 and the  results of its  operations  and its cash flows for the period
August 16, 1999  (inception)  through June 30, 2000 in conformity with generally
accepted accounting principles.



Turner Stone & Associates
/s/
Certified Public Accountants
August 23, 2000


<PAGE>

                              REpipeline.com, Inc.
                         ( A DEVELOPMENT STAGE COMPANY )
                                  BALANCE SHEET
                                  JUNE 30, 2000

                                     Assets

Current assets:
          Cash                                                            23,659
          Advances to former employees                                    36,661
                 Total current assets                                     60,320

Property and equipment, at cost, less
     accumulated depreciation of $ 1,998                                   7,992

Other assets:
          Capitalized web site development costs,
               less accumulated amortization of $ 0         100,381
          Rental security deposit                            15,696      116,077


                                                                         184,389
                      Liabilities and Stockholders' Equity

Current liabilities:
          Accounts payable, trade                                         59,074
          Withholding taxes payable                                       19,238
                  Total current liabilities                               78,312

Commitments and contingencies                                                  0

Stockholders' equity:
          Common stock, $ .0001, 10,000,000 shares
               authorized, 5,561,834 shares issued and
               outstanding                                      556
          Preferred stock, $ .0001 par value, 2,000,000
               shares authorized, no shares issued and
               outstanding, no preferences determined             0
          Paid in capital in excess of par                  715,900
          Deficit accumulated during development stage     (610,379)
          Treasury stock, 3,909,267 common stock
          shares at $ 0 cost                                      0      106,077
                                                                         184,389


    The accompanying notes are an integral part of the financial statements.

<PAGE>

                              REpipeline.com, Inc.
                         ( A DEVELOPMENT STAGE COMPANY )
                             STATEMENT OF OPERATIONS
           PERIOD AUGUST 16, 1999 ( INCEPTION ) THROUGH JUNE 30, 2000




Revenues                                                                  0

Costs and expenses:
          Web site development costs             164,201
          Marketing and promotion                 26,286
         Compensation and benefits                67,922
         General and administrative              349,972
         Depreciation and amortization             1,998            610,379

Loss from operations                                               (610,379)

Interest expense                                                          0

Loss before income taxes                                           (610,379)

Provision for income tax benefit

Net loss                                                           (610,379)






The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
<CAPTION>

                              REpipeline.com, Inc.
                         ( A DEVELOPMENT STAGE COMPANY )
                        STATEMENT OF STOCKHOLDERS' EQUITY
           PERIOD AUGUST 16, 1999 ( INCEPTION ) THROUGH JUNE 30, 2000



                                        Common Stock         Additional
                                        ------------           Paid in    Accumulated     Treasury
                                 No. of Shs.       $         Capital         Deficit       Stock         Total
                                 -----------  -----------   -----------   -----------   -----------   -----------
<S>                              <C>          <C>           <C>           <C>           <C>           <C>
Balance at August 16, 1999                0             0             0             0             0             0

Common stock issued in
   exchange for organizational
   services from founder          3,930,267           393                                                     393

Common stock issued in
   exchange for cash                675,169            68       642,101                                   642,169

Common stock issued in
   exchange for services            956,398            95        73,799                                    73,894

Common stock shares expunged
   from founder and held in
   treasury                      (3,909,267)                                                      0             0

Net loss                                                                     (610,379)                   (610,379)

Balance at June 30, 2000          5,561,834           556       715,900      (610,379)            0       106,077

</TABLE>



    The accompanying notes are an integral part of the financial statements.

<PAGE>


                              REpipeline.com, Inc.
                         ( A DEVELOPMENT STAGE COMPANY )
                             STATEMENT OF CASH FLOWS
           PERIOD AUGUST 16, 1999 ( INCEPTION ) THROUGH JUNE 30, 2000




Cash flows from operating activities:
          Cash received from customers
          Cash paid to employees                             (67,922)
          Cash paid to suppliers                            (387,860)
          Interest paid
          Income taxes paid
Cash used in operating activities                           (455,782)

Cash flows from investing activities:
          Purchase of property and equipment                  (9,990)
          Web development expenditures                      (100,381)
          Rental deposit advanced                            (15,696)
          Advances to former employees                       (36,661)

Cash used in investing activities                           (162,728)

Cash flows from financing activities:
          Proceeds from issuance of common stock             642,169
Cash provided by financing activities                        642,169

Net increase ( decrease ) in cash                             23,659

Cash at beginning of the year                                      0
Cash at end of year                                           23,659






    The accompanying notes are an integral part of the financial statements.


<PAGE>

                              REpipeline.com, Inc.
                         ( A DEVELOPMENT STAGE COMPANY )
                             STATEMENT OF CASH FLOWS
           PERIOD AUGUST 16, 1999 ( INCEPTION ) THROUGH JUNE 30, 2000




                           Reconciliation of Net Loss
                           --------------------------
                      to Net Cash Flows Used in Operations
                      ------------------------------------


Net loss                                                             (610,379)

Adjustments to reconcile net loss to
  net cash flows used in operations:

     Depreciation and amortization                        1,998
     Common stock issued for services                    74,287
     Increase (decrease) in accounts payable             59,074
     Increase (decrease) in withholding taxes payable    19,238       154,597

Net cash used in operating activities                                (455,782)

Supplemental Disclosure of Non Cash
Investing and Financing Activities

Issuance of common stock in exchange for services                      74,287








    The accompanying notes are an integral part of the financial statements.

<PAGE>

                              REpipeline.com, INC.
                         ( A DEVELOPMENT STAGE COMPANY )
                          NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization and business
         -------------------------

The Company was  incorporated in the state of Texas on June 8,2000.  The Company
is an Applications  Service  Provider (ASP) and Business  Service Provider (BSP)
for the commercial real estate industry. On July 10, 2000, the Company agreed to
purchase  the  assets and assume the  liabilities  and  shareholder's  equity of
RealEstate4Sale.com.  RealEstate4Sale.com, ("RE4S") was incorporated in Colorado
on August 17,  1999,  and its  purpose was to provide a  commercial  real estate
listings  on  the  Internet.  However,  the  concept  was  too  narrow  for  the
marketplace,  which requires a variety of services to the commercial real estate
market  over the  Internet,  which are best  addressed  by  REpipeline.com.  The
company, currently in the development stage, anticipates its new website will be
completed and ready for use in November 2000.

         Management estimates
         --------------------

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

Significant  estimates  include the  capitalization of costs incurred to develop
the  Company's web site and the  amortization  of these costs over the estimated
useful life of the web site ( Note 2 ).

         Cash flows
         ----------

For  purposes of the  statement  of cash flows,  cash  includes  demand and time
deposits with  maturities of less than three months.  None of the Company's cash
is restricted.

         Property and equipment
         ----------------------

Property  and  equipment  are  stated at cost  less  accumulated  depletion  and
depreciation.  Depreciation  of  property  is  equipment  is being  provided  by
straight line methods over estimated useful lives of five years.

         Web site development costs
         --------------------------

The  Company  accounts  for its  costs  of  developing  its web  site ( Note 2 )
pursuant to EITF Abstract No. 00-02.  Pursuant to this pronouncement,  all costs
incurred for planning  activities  have been charged to expense.  Costs incurred
for development of the web site and its infrastructure are being capitalized and
will be amortized using the straight line method over its estimated  useful live
of three  years,  beginning  when the web site is  available  for use,  which is
anticipated to be in November 2000.  Costs incurred to operate the web site will
be charged to expense.

<PAGE>

         Advertising costs
         -----------------

The Company's  advertising  costs, which consist primarily of printed materials,
are charged to expense when incurred. For the period August 16, 1999 ( inception
) through June 30, 2000, advertising expenses totaled $19,837.

         Accounting for stock based compensation
         ---------------------------------------

SFAS No. 123, 'Accounting for Stock-Based Compensation',  encourages entities to
recognize  compensation costs for stock-based employee  compensation plans using
the fair value  method of  accounting,  as defined  therein,  but allows for the
continued  use of the  intrinsic  value method of  accounting  prescribed by APB
Opinion No. 25,  'Accounting  for Stock  Issued to  Employees'.  The Company has
adopted the intrinsic  value method to account for its stock options and as such
is not required to recognize  compensation expense in the accompanying financial
statements  because the market value of the Company's common stock was less than
the exercise price on the dates the options were granted.

2.  WEB SITE DEVELOPMENT

During the period August 16, 1999 ( inception ) through June 30, 2000,  the RE4S
purchased a web site domain name for $ 90,000. This web site allowed the RE4S to
provide  commercial  listings  of real  estate  properties  over  the  Internet.
However,  the focus of these services was too narrow and was not accepted by the
commercial real estate market, therefore the Company subsequently abandoned this
web site and  returned  it to the seller,  who  forgave  the  remaining $ 64,000
balance owed on the purchase  price.  The actual payments made for this web site
totaling $26,000, along with the operating costs, were charged to expense.

The  RE4S  website  technology  was  discontinued  and  REpipeline's  technology
platform was launched June 1, 2000.

In connection  with the  development of  REpipeline's  website,  the Company has
capitalized  $ 100,381 of  development  costs,  which  consist  primarily of the
internal  labor costs of  employees  directly  associated  with the  development
activity and external direct costs of materials and services consumed during the
development  activity.  These  costs  will be  amortized  over  the  three  year
estimated  useful  life of the web  site  beginning  at the time the web site is
available for use, currently anticipated to be in November 2000.

<PAGE>

3.  LEGAL PROCEEDINGS/FORMER STOCKHOLDER

Many of the employees of the Company had previously  been employees of RE4S. Tom
Bailey, who was hired as President and CEO of RE4S on January 27, 2000, resigned
his  position  as of May 1, 2000,  citing a breach of  Contract  and  failure to
disclose the criminal background of Mr. Douglas Fonteno,  the founder and acting
officer  of  RE4S.  Tom  Bailey  incorporated  REpipeline.com,   Inc.,  a  Texas
corporation subsequent to leaving as President of RE4S.

In April 2000, Mr. Fonteno was  incarcerated  for parole  violation from a prior
conviction of securities  fraud. On April 28, 2000, the board of directors voted
to expunge all shares of RE4S owned by Mr.  Fonteno,  his family  members and/or
affiliated companies,  which were issued for inadequate consideration and proper
approval  by the Board of  Directors.  These  shares,  totaling  3,909,267,  are
currently held in treasury by a wholly owned nominee  corporation to be reissued
in the future to  outsiders  for  corporate  financing  of the  Company  and /or
acquisition.

Prior to his  displacement  from RE4S,  Mr.  Fonteno made  numerous non interest
bearing  advances to himself and several  entities  controlled by him totaling $
183,906.  Although these advances have been written off as  uncollectable in the
accompanying financial statements,  the Company is in the process of obtaining a
Writ of  Garnishment  against  Mr.  Fonteno in the amount of $ 180,858  and will
attempt to  collect  this  amount.  Any amount  received  in the future  will be
recorded as income.

4.  COMMITMENTS AND CONTINGENCIES

         Legal proceedings
         -----------------

The  Company is  subject to legal  proceedings  and  claims  which  arise in the
ordinary  course  of its  business.  As of  this  date,  except  for  its  legal
proceedings  against  its  founder ( Note 3 ), the  Company  is not a party to a
lawsuit or other legal claims or contingencies.  Management does not believe the
outcome of its  lawsuit  with its  founder  will have an  adverse  effect on the
Company's financial position, operating results or cash flows.

         Employment agreements
         ---------------------

On May 1, 2000,  the Company  entered into an employment  agreement  with George
Thomas Bailey,  its President/CEO.  The agreement,  which expires June 30, 2003,
provides for annual  compensation  of $150,000  increasing to $225,000 after the
Company  raises $ 2 million  in  equity  funding.  In  addition,  the  agreement
provides a $200,000  signing  bonus,  payable  after the above  funding has been
raised.  The company has the option to pay half of the amount  payable in common
stock  shares  of the  company  valued  at the bid  price of the stock as of the
effective  date of the  agreement.  In the case of  termination,  the  agreement
provides  for a 12  month  salary  severance  package,  reduced  by  50%  if the
termination is for cause. The agreement  provides for an equity bonus package if
the Company  completes its proposed  merger with a public company ( Note 7 ) and
if the  Company  achieves  various  goals  as these  goals  are  defined  in the
agreement.  In the case of the Photonics  merger, an option to purchase at $0.10
per share approximately 11,000,000 shares would be issued to Mr. Bailey.

<PAGE>

In addition,  this  employment  agreement  provides  qualified stock options for
500,000 of the Company's  common stock at an exercise  price of $ 0.10 per share
(post  merger).  These  options vest over the three year term of the  employment
agreement  and  automatically  expire three years from the date they vest.  Upon
termination,  all vested options must be exercised within 45 days or they expire
and all  non-vested  options will be  cancelled.  Subject to the approval of the
Photonic's shareholders.

         Leases
         ------

The Company is obligated under a non-cancelable operating sublease agreement for
its office facilities, effective May 1, 2000 and expiring December 31, 2001. The
agreement  provides  for a monthly  rental  payment of $ 5,232 and a three month
security deposit. There is no option for renewal. Prior to May 1, 2000, the RE4S
leased office space from its founder,  a corporation  of Mr.  Fonteno ( Note 3 )
under a month to month agreement at $ 3,000 per month. Rent under this agreement
totaled $ 15,000.  At June 30, 2000,  future  minimum rental  payments  required
under the terms of the above sublease agreement is as follows.

                     Year Ended June 30,                  Amount
                                --------
                             2001                          62,784
                             2001                          31,392
                             2003                               0
                                                         --------
                                                           94,176
                                                         ========

         Common stock to be issued
         -------------------------

The  Company  has agreed  with  three of its  vendors to satisfy $ 36,250 of its
accounts  payable  obligations  through the  issuance  of 145,750  shares of its
common  stock.  No specific  time has been  established  for these  shares to be
issued.

5.  INCOME TAXES

The  Company  uses the  accrual  method of  accounting  for  federal  income tax
reporting purposes. At June 30, 2000, the Company has a net operating loss carry
forward for tax  reporting  purposes of  approximately  $ 580,000  which expires
through the year 2010.

Deferred  income  taxes are  recognized  for the net tax  effects  of  temporary
differences between the carrying amounts of assets and liabilities for financial
reporting  purposes and the tax bases of those assets and liabilities  that will
result in  taxable or  deductible  amounts in future  years.  At June 30,  2000,
pursuant to Statement of Financial Accounting Standards No. 109, the Company has
recognized  deferred tax assets and liabilities,  the significant  components of
which are summarized below.

                Deferred tax assets:

                     Net operating loss carry forward         197,200

                Deferred tax liability:

                     Depreciation and amortization               (800)
                                                           ----------

                Gross deferred tax asset                      196,400

                Valuation allowance                          (196,400)
                                                           ----------

                Net deferred tax asset                              0
                                                           ==========

<PAGE>

A reconciliation  of income tax expense at the statutory  federal rate of 34% to
income tax expense at the Company's effective tax rate for the period August 16,
1999 ( inception ) through June 30, 2000 is as follows:

                Tax expense ( benefit ) computed at statutory rate     (196,400)
                Valuation allowance increase                            196,400
                                                                    -----------

                Income tax expense ( benefit )                                0
                                                                    ===========

6.  FINANCIAL INSTRUMENTS

The Company's financial instruments, none of which are held for trading purposes
and which potentially  subject the Company to credit risks,  consist of its cash
and advances to its former employees.

         Cash
         ----

The Company  maintains  its cash in bank deposit and other  accounts  which,  at
times, may exceed federally insured limits.  The Company has not experienced any
losses in such  accounts  and does not believe it is subject to any credit risks
involving its cash.

         Advances to former employees
         ----------------------------

The Company's advances to its former employees are non interest bearing,  due on
demand and are secured by 28,186 shares of the Company's  common stock issued to
the  former  employees  but  held  by  the  Company.  Management  believes  this
collateral will be sufficient to induce repayment of the advances and that it is
not exposed to any  significant  credit risks  affecting these advances and that
these advances are fairly stated at estimated net realizable amounts.

7.  PROPOSED MERGER WITH PUBLIC COMPANY

On June 30, 2000, the Company entered into an agreement with an inactive, public
California  corporation  whereby the  stockholders of the Company would exchange
their common stock shares for 85% of the outstanding  common stock shares of the
public company.  The public company would survive the merger and the transaction
would be accounted for as a reverse merger similar to a pooling of interests.

A condensed  pro forma  balance  sheet of the combined  companies,  assuming the
merger was effected June 30, 2000, is a follows.

              Assets
              Current assets                                         135,320
              Other assets                                           124,069
                                                                ------------
                                                                     259,389

                                  Liabilities & Equity
                                  --------------------
              Current liabilities                                  4,025,049
              Other liabilities                                            0
              Stockholders' equity                                (3,765,660)
                                                                ------------
                                                                     259,389

<PAGE>

8.  STOCK OPTIONS

At May 1, 2000, pursuant to an employment  agreement ( Note 4 ), the Company had
granted 27,778 options to purchase the Company's common stock at an excise price
of $ 1.00.  The following pro forma  information is required by SFAS No. 123 and
is  based on the  fair  value  of the  options  estimated  by  management  to be
approximately $ .09 per share.  Management's estimate of fair value is primarily
based on the book value of the Company since no other  recoverable form of value
measurement is available.

              Pro forma net loss                                    (662,687)