SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                  FORM 10-KSB/A

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF
                      THE SECURITIES EXCHANGE ACT OF 1934

               For the fiscal year ended September 30, 1999


                      Commission File Number 000-24355
                    WebQuest International, Incorporated
           (Exact name of small business issuer in its charter)

               Nevada                            86-0894019
  (State or other jurisdiction of     (IRS Employer Identification No.)
   incorporation or organization)



           2248 Meridian Blvd, Suite A, Minden, NV 89423-8601
       (Address of principal executive offices, including Zip Code)

                               775-782-0350
                     (Registrant's telephone number,)


   Securities registered pursuant to Section 12(g) of the Exchange Act:
                       Common Stock, $.001 par value

Check  whether the issuer (1) has filed all reports required to  be  filed  by
Section  13  or  15(d)  of  the Securities Exchange Act  of  1934  during  the
preceding  12  months  (or  for such shorter period that  the  registrant  was
required  to  file  such  reports), and (2) has been subject  to  such  filing
requirements for the past 90 days.

                  Yes      [X]               No      [ ]

Check  if there is no disclosure of delinquent filers pursuant to Item 405  of
Regulation S-B contained in this form, and no disclosure will be contained, to
the  best  of registrant's knowledge, in definitive proxy or any amendment  to
this Form 10-KSB.  ( )

State issuer's revenues for its most recent fiscal year: $21,523.00

      State  the  aggregate  market value of the voting  stock  held  by  non-
affiliates computed by reference to the price at which the stock was sold,  or
the  average bid and asked price of such stock, as of a specified date  within
the past 60 days.

     Based on the closing price of the common stock quoted on the OTC Bulletin
Board as reported on December 31, 1999 ($2.50), the aggregate market value  of
the  2,113,021 shares of the common stock held by persons other than officers,
directors  and parties known to the registrant to be the beneficial owner  (as
that  term  is  defined  under  the  rules  of  the  Securities  and  Exchange
Commission)  of more than five per cent of the Common Stock on that  date  was
$5,282,553.  By  the foregoing statement, the Registrant does  not  intend  to

<PAGE>


imply  that  any  of  these  officers,  directors  or  beneficial  owners  are
affiliates  of the Registrant or that the aggregate market value, as  computed
pursuant  to rules of the Securities and Exchange Commission, is  in  any  way
indicative  of  the amount which could be obtained for such shares  of  common
stock of the Registrant.

As  of  December  31, 1999 there were 6,180,218 shares of the issuer's  Common
Stock, $.001 par value, outstanding.



                            WEBQUEST INTERNATIONAL, INC.
                                      INDEX

                                Table of Contents
                                Part I

Item 1.   Description of Business ...................................... 3
Item 2.   Description of Property .......................................5
Item 3.   Legal Proceedings .............................................5
Item 4.   Submission of Matters to a Vote of Security Holders ...........5

                               Part II

Item 5.   Market for Common Equity and Related Stockholder Matters ......5
Item 6.   Management's Discussion and Analysis or Plan of Operation .....6
Item 7.   Financial Statements..........................................17
Item 8.   Changes In and Disagreements with Accountants on Accounting
          and Financial Disclosure .....................................17


                              Part III

Item 9.   Directors, Executive Officers, Promoters and Control
          Persons; Compliance with Section 16(a) of the Exchange Act ...17
Item 10. Executive Compensation ........................................19
Item 11. Security Ownership of Certain Beneficial Owners and
         Management ....................................................22
Item 12. Certain Relationships and Related Transactions ................24
Item 13. Exhibits and Reports on Form 8-K ..............................24


                        FORWARD LOOKING STATEMENTS

          WebQuest International, Inc. (the "Company", "we" or "us")  cautions
readers that certain important factors may affect our actual results and could
cause  such  results to differ materially from any forward-looking  statements
that  may have been made in this Form 10-KSB or that are otherwise made by  or
on behalf of us. For this purpose, any statements contained in the Form 10-KSB
that are not statements of historical fact may be deemed to be forward-looking
statements.  Without limiting the generality of the foregoing, words  such  as
"may,"  "expect,"  "believe,"  "anticipate,"  "intend,"  "could,"  "estimate,"
"plan"  or  "continue" or the negative other variations thereof or  comparable
terminology are intended to identify forward-looking statements. Factors  that
may affect our results include, but are not limited to, our limited history of
non-profitability,  our dependence on a limited number of  customers  and  key
personnel,  the  need for additional financing and our dependence  on  certain
industries.  We also subject to other risks detailed herein or  detailed  from

                                    2
<PAGE>


time to time in our filings with the Securities and Exchange Commission.


                                  PART-I

ITEM 1.  DESCRIPTION OF BUSINESS

Background

      WebQuest  International, Inc., was originally incorporated in Nevada  on
November 6, 1996 as iPONG International, Inc., and is the successor by  merger
with WebQuest International, Inc., a Utah corporation formerly known as Phaser
Enterprises, Inc. in April 1997. Prior to April 1997, Phaser had no operations
for  several  years.  The purpose of these mergers was to  merge  WebQuest,  a
privately held corporation, into Phaser, a publicly held corporation and  have
WebQuest become the surviving entity.

      There  have been no bankruptcies, receiverships, similar proceedings  or
purchase or sale of a significant amount of assets not in the ordinary  course
of our business.

      Our  present business is the development and marketing of an interactive
game  arcade,  known as the iPONG Game Arcade on the Internet.  iPong  players
use  their  eye/hand  coordination and trivia knowledge  to  win  cash  and/or
prizes.  We currently derive revenue from the sale of advertising and we  plan
to  start  for-pay  iPong tournaments during 2000 that will generate  revenues
from user fees and monthly subscription fees.

      The  iPONG  Game Arcade is offered solely online over the Internet.   We
currently inform potential players about the site through a variety of  online
marketing  methods.   Players  currently play iPong  for  free.   We  plan  to
initiate iPong tournaments during 2000, where players will be charged a fee to
compete with other players to win cash and/or prizes.  For-pay player interest
and  acceptance of these business concepts is unknown at this time  and  there
can be no assurance that we will be successful with this business strategy.

Competition

   We  will  encounter intense competition in all aspects of our existing  and
proposed   business  and  will  compete  directly  with  other  companies,   a
significant  number  of  which have greater capital and  other  resources  and
longer  operating  histories than us.  Our current direct competitors  include
the  Internet  sites  games@yahoo.com, pogo.com,  gamesville.com,  uproar.com,
bignetwork.com  and itsyourturn.com.  We are not aware of any  Internet  sites
offering  entry  fee  game  tournaments.  However, there  may  be  competitive
tournaments in the planning phase that could come out in the near  future  and
dilute  our potential player base.  Additionally, Internet game players  could
choose  not to play in our iPong tournaments at sufficient levels to  generate
profits from this business.

                                    3
<PAGE>


   Games@yahoo.com  is  affiliated  with Yahoo!,  Inc.,  a  well-financed  and
profitable  Internet Portal Company.  Their focus appears  to  be  with  board
games (chess, checkers, backgammon), crossword puzzles, card games (blackjack,
bridge,  canasta, cribbage, hearts, pinochle, poker, spades, etc.) and  sports
games  like  baseball,  football, basketball, golf,  hockey  and  soccer.   We
believe games@yahoo.com is a formidable competitor.

   We  believe  that  pogo.com  was initially financed  by  Kleiner,  Perkins,
Caufield  and  Byers in 1995 and that they continue to receive financing  from
firms  that  include Goldman Sachs and Robertson, Stephens &  Company.   Their
Internet  site  includes board games (backgammon, checkers  and  chess),  word
games  (crossword puzzles, jumbler, sports crossword and word  search),  Keno,
various  arcade  games,  trivia games, bingo and card games  (bridge,  hearts,
solitaire and spades).  We believe pogo.com is a formidable competitor.

   Gamesville.com,  uproar.com, bignetwork.com and itsyourturn.com  appear  to
have  Internet games similar to games@yahoo.com and pogo.com.  Competition  in
the  Internet-based games business is highly competitive and we anticipate  it
to become more competitive in the future.

Suppliers

     We are dependent on HomeSeekers.com, Inc. for most of our programming and
hosting  services.   Subject to funding and office space issues,  we  plan  to
bring most of these support services in-house during 2000.

     We entered into a non-exclusive License Agreement on July 3, 1997, with a
Delaware corporation, Atari-JTS Corp. that owns the software, programs,  trade
names, trademarks, promotional material, and intellectual property for PONGc's
use  on  the Internet.  The agreement has a five year term, which is renewable
for  an  additional  five year period, if minimum royalty fees  are  at  least
$400,000.00  over the five year period, and allows us to license and  use  the
game  (Pong)  in  connection with our website on a  non-exclusive  basis.   As
consideration for this agreement we paid a $5,000 non-refundable execution  of
agreement  fee.   We also agreed to pay a quarterly 1/10 of  one-cent  ($.001)
royalty  fee for each player who accesses Pong; with a base amount  of  $5,000
per quarter to the Delaware corporation if the number of Pong players fails to
exceed 5,000,000 in each quarter.

      We hold no registered patents, trademarks, franchises or concessions nor
are we subject to any labor contracts.

      We  are  not  currently  subject to direct  regulation  by  the  Federal
Communications  Commission  or  any  other  agency,  other  than   regulations
applicable  to businesses generally, nor do we believe that we are subject  to
any  rules  or  regulations concerning games or sweepstakes.  However,  it  is
possible  that  some  of  the  aspects of our  for-pay  tournaments  could  be
interpreted  as gambling by certain states, thus restricted in certain  states
and  regulated in other states.  We are currently in the process of  reviewing
the  applicability of various states' regulations to our proposed  tournaments
prior to offering tournaments to such states' residents.

       Changes   in  the  regulatory  environment  relating  to  the  Internet
advertising  or  rights  of  privacy, could have  an  adverse  effect  on  our
business.   We  cannot predict the impact, if any, that future  regulation  or
regulatory changes may have on our business.

                                    4
<PAGE>


      The last two fiscal years have been dedicated primarily to research  and
development.  We did not launch our iPONG Game Arcade to the public until late
in 1998.

      We  have  not  incurred  any expense associated with  environmental  law
compliance and does not expect to do so.

      We  currently employ 11 people, 8 of whom are full-time.  From  time  to
time we also utilize independent contractors.


ITEM 2.  DESCRIPTION OF PROPERTY

      We  currently lease approximately 1,400 square feet of office  space  in
Minden,  Nevada from a non-affiliated party for $1,900.00 per  month  for  our
corporate headquarters.  We cancelled a lease in Del Mar, California in  April
1999.  The utilized premises are in excellent physical condition.


ITEM 3. LEGAL PROCEEDINGS

     We are not involved in any legal proceedings as of this date.


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

      No  matters were submitted to a vote by Security Holders during the last
quarter of this fiscal year.


ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Our  Common Stock began trading on the NASD's Over The Counter  Bulletin
Board  market in February 1999 under the trading symbol "WEBQ". The  following
table  sets  out  the high and low trade prices of our stock for  the  periods
indicated.

                                      High Price          Low Price

Second Quarter ended 3/31/99            $2.00               $1.00

Third Quarter ended 6/30/99             $3.00               $0.50

Fourth Quarter ended 9/30/99            $1.50               $0.375



      There  were approximately 220 shareholders of Company Stock on September
30,  1999  of  the  4,855,618  shares of common stock  that  were  issued  and
outstanding.   Our  transfer agent is American Registrar & Transfer  Co.,  342
East 900 South, Salt Lake City, Utah 84111.

      We have never paid dividends on our common stock and we do not expect to
pay  dividends  in  the  future, but rather plan to retain  any  earnings  for
expanding our business.

                                         5
<PAGE>


Recent Sales of Unregistered Securities


      During October 1998 we issued 10,000 shares of restricted common stock
as partial consideration for acquisition of the Internet site
scavengernet.com.  The recipients of these shares had access to or otherwise
were provided with information, including financial, concerning our Company,
and the shares issued to them contained a legend restricting transferability
absent registration under the Securities Act. Accordingly, this transaction
was exempt from the registration requirements of the Securities Act by reason
of the exemption set forth in Section 4(2) of the Securities Act and the rules
and regulations thereunder.

      We issued a $200,000 Convertible Subordinated Promissory note and 20,000
shares  of  restricted common stock to an accredited investment entity  during
April  1999 in return for $200,000.  The note is due on June 1, 2000,  accrues
interest at 12% per annum and is convertible into our restricted common  stock
at  a conversion rate of $1.25 per share.  The recipients of these shares  had
access  to  or otherwise were provided with information, including  financial,
concerning  our  Company,  and the shares issued to them  contained  a  legend
restricting  transferability absent registration  under  the  Securities  Act.
Accordingly, this transaction was exempt from the registration requirements of
the Securities Act by reason of the exemption set forth in Section 4(2) of the
Securities Act and the rules and regulations thereunder.

      During April 1999 we issued 20,000 shares of restricted common stock to
a consultant as a finders fee for the $200,000 in debt placed in this same
month, as described in the previous paragraph.  This consultant had access
to relevant information concerning us. In addition, the shares issued to this
consultant contained a legend restricting transferability absent registration
under the Securities Act. Accordingly, this transaction was exempt from the
registration requirements of the Securities Act by reason of the exemption
from registration set forth in Section 4(2) thereof and the rules and
regulations thereunder.

             During  April  1999 we issued 10,000 shares of restricted  common
stock   as  partial  consideration  for  acquisition  of  the  Internet   site
Bannerclicks.com.  The recipients of these shares had access to  or  otherwise
were  provided with information, including financial, concerning our  Company,
and  the  shares issued to them contained a legend restricting transferability
absent  registration under the Securities Act. Accordingly,  this  transaction
was  exempt from the registration requirements of the Securities Act by reason
of the exemption set forth in Section 4(2) of the Securities Act and the rules
and regulations thereunder.

       During  May 1999 we issued 6,000 shares of restricted common  stock  as
partial consideration for acquisition of the Internet sites nancyskitchen.com.
and  freehoroscopes.net.   The recipients of these shares  had  access  to  or
otherwise were provided with information, including financial, concerning  our
Company,  and  the  shares  issued  to them  contained  a  legend  restricting
transferability  absent  registration under the Securities  Act.  Accordingly,
this  transaction  was  exempt  from  the  registration  requirements  of  the
Securities  Act by reason of the exemption set forth in Section  4(2)  of  the
Securities Act and the rules and regulations thereunder.

                                     6
<PAGE>


       During May 1999 we issued 100,000 shares of restricted common stock  to
HomeSeekers.com,  a shareholder that owns beneficially more  than  5%  of  our
Company and a significant supplier of programming services to us, for purchase
of  the  iPONG  technology that we had previously been  licensing  from  them.
These  shares were valued at $1.75 per share, bringing the total consideration
to  $175,000.   HomeSeekers.com,  Inc.  had  access  to  relevant  information
concerning us, had a pre-existing business relationship with us and the shares
issued   to  them  contained  a  legend  restricting  transferability   absent
registration  under  the Securities Act.  Accordingly,  this  transaction  was
exempt  from the registration requirements of the Securities Act by reason  of
the  exemption set forth in Section 4(2) thereof and the rules and regulations
thereunder.

       During July and August 1999, two warrant holders exercised warrants  to
purchase  50,000 shares of restricted common stock at $1.00 per  share.  These
accredited investors had access to relevant information concerning us and  had
a  pre-existing business relationship with us. Accordingly, these transactions
were exempt from the registration requirements of the Securities Act by reason
of  the  exemption  set  forth  in Section 4(2)  thereof  and  the  rules  and
regulations thereunder.

       During  the  year  ending September 30, 1999  holders  of  all  396,000
outstanding shares of our Series B Convertible Preferred Stock converted their
preferred  stock  into  a  total  of 396,000 shares  of  common  stock.  These
investors  had  access to relevant information concerning us and  had  a  pre-
existing  business relationship with us. Accordingly, these transactions  were
exempt  from the registration requirements of the Securities Act by reason  of
the  exemption set forth in Section 4(2) thereof and the rules and regulations
thereunder.

          During  the  year ending September 30, 1999, we issued  warrants  to
purchase 1,200,000 shares of common at prices from $.50 to $1.00 per share  to
various vendors and investors.  These vendors and investors had access  to  or
otherwise were provided with information, including financial, concerning  our
Company,  and  the warrants issued to them contained language explaining  that
the  shares  to  be  issued under the warrants will have a legend  restricting
transferability  absent  registration under the Securities  Act.  Accordingly,
these  transactions  were  exempt from the registration  requirements  of  the
Securities  Act by reason of the exemption set forth in Section  4(2)  thereof
and the rules and regulations thereunder.

          During  the  year ending September 30, 1999, we granted  options  to
purchase  218,064  shares  of common at $1.00 per share  to  employees  and  a
Director.  Our  employees  and  Director had access  to  relevant  information
concerning  us and had a pre-existing business relationship with  us  and  the
options  issued to them contained language explaining that the  shares  to  be
issued under the options will have a legend restricting transferability absent
registration  under the Securities Act.  Accordingly, these transactions  were
exempt  from the registration requirements of the Securities Act by reason  of
Section 4(2) thereof and the rules and regulations thereunder.

Subsequent to September 30, 1999

      On November 10, 1999 we commenced a private offering of 4,000,000 shares
to  accredited investors at an offering price of $1.25 per share.  The  shares
are  being offered without registration under the Securities Act of  1933,  as

                                       7
<PAGE>


amended, in reliance upon the exemption from registration afforded by  section
4  (2)  of  the  act  and  regulation D promulgated  there  under.   Estimated
placement  expenses  of  $100,000 are anticipated and  the  shares  are  being
offered  on a "best efforts basis".  As of December 31, 1999, 893,000 of  such
shares had been sold generating gross proceeds of $1,116,250.


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

RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

      Certain statements contained in this Section and elsewhere in this  Form
10-KSB  regarding  matters that are not historical facts  are  forward-looking
statements  (as  such  term  is defined in the Private  Securities  Litigation
Reform  Act  of 1995).  Because such forward-looking statements include  risks
and  uncertainties, actual results may differ materially from those  expressed
or  implied  by such forward-looking statements.  All statements that  address
operating  performance,  events or developments  that  management  expects  or
anticipates to incur in the future, including statements relating to sales and
earnings  growth  or  statements  expressing  general  optimism  about  future
operating   results,  are  forward-looking  statements.   The  forward-looking
statements  are based on management's current views and assumptions  regarding
future  events  and  operating performance.  Many factors could  cause  actual
results to differ materially from estimates contained in management's forward-
looking  statements.  The differences may be caused by a variety  of  factors,
including   but  not  limited  to  adverse  economic  conditions,  competitive
pressures,  inadequate capital, unexpected costs, lower revenues,  net  income
and  forecasts, the possibility of fluctuation and volatility of our operating
results  and financial condition, inability to carry out marketing  and  sales
plans and loss of key executives, among other things.

Results Of Operations


Revenue
                     1999      %CHANGE      1998       %CHANGE          1997
                     ----     --------      ----       --------         ----

Revenue           $21,523        100%        -0-          -0-            -0-



      We  started generating revenues during 1999.  Revenues generated in 1999
were derived from the sale of web site advertising.


Operating Expenses


                          1999     %CHANGE         1998    %Change       1997
                          ----     -------         ----    -------       ----

Operating Expenses  $1,976,716       85%     $1,068,967      134%    $456,595

                                     8
<PAGE>


      Operating  expenses increased from $1,068,967 in 1998 to  $1,976,716  in
1999.   This  represents an increase of $907,749 or approximately  85%.   This
increase  was  primarily due to amortization of $825,000 in  software  license
fees  in  May  1999  as  the  result of the purchase  of  this  software  from
HomeSeekers.com,  Inc.   Other operating expenses  experienced  increases  and
decreases but not of a material nature.

       Operating expenses increased by $612,372, or 134% from $456,595 in 1997
to  $1,068,967  in 1998.  Compensation expense from issuing stock  options  to
officers  below  market value accounted for $265,467 of this increase.   Total
payroll  paid in the form of cash increased by $226,789, from $50,445 in  1997
to  $277,234  in  1998.  This  increase was the result  of  hiring  additional
executive and administrative employees during 1998.


Other Income (Expense)

                         1999     %CHANGE       1998      %CHANGE      1997
                         ----     -------       ----       ------      ----


Other Income (Expense) $(35,628)    N/A       $10,029       N/A      $(2,406)


      Other  income  and expense consists of gains on the sale  of  marketable
securities,  interest  income and interest expense.   Gains  on  the  sale  of
securities  were  similar in the two years.  The gain in 1998 totaled  $13,363
while  1999  was  slightly higher at $14,743.  However, net  interest  expense
totaled  $50,371  in 1999 versus $3,334 in 1998 as a result of  a  substantial
increase in borrowing during 1999.


Net Loss
                     1999     %CHANGE          1998         %CHANGE      1997
                     ----     -------          ----         -------      ----

Net Loss       $2,018,812        85%     $1,089,717           137%   $459,001


      Our  net  loss increased from $1,089,717 in 1998 to $2,018,812  in  1999
primarily  due to the $825,000 amortization of software license  fees  in  May
1999 as the result of the purchase of this software from HomeSeekers.com, Inc.

      The increase in our net loss of $630,716 from 1997 to 1998 was primarily
from  the  increase  in  costs associated with developing,  and  beginning  to
market, our iPong.com Internet site.



Liquidity And Capital Resources

      At September 30, 1999 our cash balance was $2,386 compared to $4,682  at
September  30,  1998.  We have experienced negative cash flow from  operations
since inception.  Total assets decreased by approximately $900,000 during  the
last  year as a result of the sale of marketable securities combined with  the
write-off  of  software licensing rights, upon the purchase of this  software.

                                    9
<PAGE>


Total  liabilities  increased approximately $516,000 during  the  fiscal  year
ended September 30, 1999.  These increases were primarily in accounts payable,
accrued  expenses  plus  borrowing from related  parties.   Operations  during
fiscal  1999  were  funded  through the above-described  activities  plus  the
issuance of $200,000 of convertible debt and the sale of $50,000 of restricted
common stock.

     Funds are currently being raised in a maximum $5,000,000 private offering
to  accredited  investors.   $1,116,250 has  been  raised  to  date.   Product
research,  development  and strategic acquisitions  over  the  next  year  are
projected  to  be  significant.  There are no plans to purchase  or  sell  any
physical plant or significant equipment.  The number of employees may increase
by 100% or more during the next year.  In order to continue operations, it may
be  necessary  to raise additional capital by borrowing or selling  additional
equity in our Company.

Plan of Operation

       Our  plan, over the next twelve months, is to start generating  revenue
from our game and leisure services Internet Sites through for-pay tournaments,
user  subscriptions and advertising.  We plan to fund the  start-up  of  these
operations through cash receipts from additional equity placements  until  our
operations  start generating positive net cash flows.  Based  on  our  current
financial  projections, we plan to become profitable during  our  fiscal  year
ending September 30, 2001.

Need for Additional Capital

      Our  business is capital intensive, particularly with respect to product
development  costs  associated with the design  and  creation  of  interactive
Internet  sites,  and  our  plan to grow through  acquisitions  and  strategic
alliances.   Accordingly, we will require additional capital  to  support  and
expand  our  operations.   To  the extent that revenues  from  operations  are
insufficient  and additional funding is required, public or private  financing
may not be available when needed or may not be available on terms favorable or
acceptable to us, if at all.  Failure to secure additional financing,  if  and
when  needed,  may have a material adverse affect on our ability to  implement
our proposed business strategy.

Uncertainty of Product and Technology Development; Technological Factors

      We have not completed development and testing of certain of our proposed
products and proposed enhancements to our products, some of which are still in
the  planning stage or in relatively early stages of development.  Our success
will depend in part upon the ability of our proposed products to meet targeted
performance  and  cost  objectives, and will also  depend  upon  their  timely
introduction into the marketplace.  We will be required to commit considerable
time,  effort  and resources to finalize development of our proposed  products
and  product enhancements.  Although we anticipate that the development of our
products   and  technology  will  be  successfully  concluded,   our   product
development  efforts  are  subject  to  all  of  the  risks  inherent  in  the
development  of  new  products and technology (including unanticipated  delay,
expenses and difficulties, as well as the possible insufficiency of funding to
complete development).  There can be no assurance as to when, or whether, such
product  development  efforts will be successfully  completed.   In  addition,
there  can  be no assurance that our products will satisfactorily perform  the
functions for which they are designed, that they will meet applicable price or

                                     10
<PAGE>


performance objectives or that unanticipated technical or other problems  will
not  occur  which would result in increased costs or material delay  in  their
development.   There can be no assurance that, despite testing by  us  and  by
current  and  potential end users, problems will not be found in new  products
after  the  commencement of customer use, resulting in loss of, or  delay  in,
market acceptance.




Challenges of Growth

     We anticipate a period of rapid growth that is expected to place a strain
on  our  administrative, financial and operational resources.  Our ability  to
manage any staff and facilities growth effectively will require us to continue
to  improve  our  operational,  financial and management  controls,  reporting
systems  and  procedures,  to install new management information  and  control
systems  and to train, motivate and manage our employees.  However, there  can
be  no  assurance that we will install such management information and control
systems  in  an  efficient and timely manner or that the new systems  will  be
adequate  to  support our future operations.  If we are unable to hire,  train
and  retain  qualified systems engineers and consultants  to  implement  these
services  or  are  unable  to manage the post-sales process  effectively,  our
ability  to  attract  repeat  sales could be  materially  adversely  affected,
thereby  limiting our growth opportunities.  If our management  is  unable  to
manage  growth effectively, such as if our sales and marketing efforts  exceed
our capacity to install, maintain and service our products or if new employees
are  unable  to  achieve adequate performance levels, our business,  operating
results and financial condition could be materially adversely affected.

Penny Stocks

      The  Securities  and  Exchange Commission has adopted  regulations  that
generally define a "penny stock" to be any equity security that has  a  market
price  (as  defined)  of  less  that  $5.00  per  share,  subject  to  certain
exceptions.  Our common stock may be deemed to be a "penny stock" and thus may
become subject to rules that impose additional sales practice requirements  on
broker/dealers  who  sell such securities to persons  other  than  established
customers and accredited investors, unless the common stock is listed  on  the
NASDAQ  Small Cap Market.  Consequently, the "penny stock" rules may  restrict
the ability of broker/dealers to sell our securities, and may adversely affect
the  ability  of  holders of the common stock to resell their  shares  in  the
secondary market.

We are dependent on the continued development of the Internet infrastructure.

    Our industry is new and rapidly evolving. Our business would be harmed  if
Internet usage does not continue to grow. Internet usage may be inhibited  for
a number of reasons, including:

  * inadequate Internet infrastructure;

  * inconsistent quality of service; and

  * unavailability of cost-effective, high-speed service.

                                   11
<PAGE>


    If  Internet usage grows, the Internet infrastructure may not be  able  to
support  the  demands  placed on it by this growth,  or  its  performance  and
reliability  may  decline.  In  addition,  web  sites,  including  ours,  have
experienced  interruptions in their service as a result of outages  and  other
delays occurring throughout the Internet network infrastructure. We anticipate
that  these outages or delays will occur from time to time in the future  and,
if  they  occur  frequently or for extended periods of time,  Internet  usage,
including usage of our web site, could grow more slowly or decline.

Our  long-term  success depends on the development of the electronic  commerce
market, which is uncertain.

   Our future revenues substantially depend upon the widespread acceptance and
use  of  the Internet as an effective medium of commerce by consumers.  Demand
for recently introduced products and services over the Internet is subject  to
a  high  level  of  uncertainty. Although independent  market  research  firms
forecast  that  the number of Internet users worldwide will grow substantially
in  the  next few years, we cannot be certain that this growth will  occur  or
that our sales will grow at the same rate. The development of the Internet  as
a viable consumer marketplace is subject to a number of risks including:

   *  potential  customers  may be unwilling to shift  their  purchasing  from
traditional sources to online sources;

   *  insufficient availability of, or changes in, telecommunications services
could result in  slower response times, which could delay the acceptance of
the Internet as an effective commerce medium;

  . continued growth in the number of Internet users;

  . concerns about transaction security;

  . continued development of the necessary technological infrastructure;

  . development of enabling technologies; and

  . uncertain and increasing government regulations.

Rapid technological change could render our web sites and systems obsolete and
require significant capital expenditures.

    The  Internet  and the electronic commerce industry are  characterized  by
rapid  technological  change,  sudden changes  in  customer  requirements  and
preferences, frequent new product and service introductions incorporating  new
technologies  and the emergence of new industry standards and  practices  that
could  render  our  existing  web  sites and  transaction  processing  systems
obsolete.  The emerging nature of these products and services and their  rapid
evolution  will require that we continually improve the performance,  features
and   reliability  of  our  online  services,  particularly  in  response   to
competitive game and possibly, tournament offerings. Our success will  depend,
in part, on our ability:

  * to enhance our existing games and services; and

                                   12
<PAGE>


  * to respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis.

    The  development  of  web sites and other proprietary  technology  entails
significant technical and business risks and requires substantial expenditures
and  lead time. We may be unable to use new technologies effectively or  adapt
our  web  sites, proprietary technology and transaction-processing systems  to
customer  requirements  or emerging industry standards  that  could  harm  our
business. Updating our technology internally and licensing new technology from
third  parties  may  require significant additional capital  expenditures  and
could affect our results of operations.

We  will be exposed to risks associated with electronic commerce security  and
credit  card  fraud,  which  may  reduce  collections  and  discourage  online
transactions.

    Consumer  concerns about privacy or the security of transactions conducted
on  the  Internet  may  inhibit  the growth of  the  Internet  and  electronic
commerce.   To  securely transmit confidential information, such  as  customer
credit  card numbers, we will rely on encryption and authentication technology
that  we  will  license  from  third parties. We cannot  predict  whether  the
algorithms  we  will  use  to  protect  customer  transaction  data  will   be
compromised.  Furthermore, our servers may be vulnerable to computer  viruses,
physical  or  electronic break-ins and similar disruptions.  We  may  need  to
expend significant additional capital and other resources to protect against a
security breach or to alleviate problems caused by any security breaches.  The
measures  we  take to protect against security breaches may not be successful.
Our failure to prevent security breaches could harm our business.

    Under  current credit card practices, a merchant is liable for  fraudulent
credit  card transactions where, as will be the case with the transactions  we
will  process,  that  merchant  does not obtain a  cardholder's  signature.  A
failure to adequately control fraudulent credit card transactions could affect
our revenues and harm our business.

We  could  face  liability  for information displayed  on  and  communications
through our web site.

    We  may  be  subject  to claims for defamation, negligence,  copyright  or
trademark infringement or other claims relating to the information we  publish
on  our  web  sites.  These  types  of claims  have  been  brought,  sometimes
successfully, against Internet companies as well as print publications in  the
past.  We  also utilize email as a marketing medium, which may subject  us  to
potential risks, such as:

  * liabilities or claims resulting from unsolicited email;

  * lost or misdirected messages; or

  * illegal or fraudulent use of email.

These  claims  could  result  in substantial costs  and  a  diversion  of  our
management's attention and resources, which could harm our business.

Efforts  to  regulate  or eliminate the use of mechanisms  that  automatically
collect information on visitors to our web site may interfere with our ability
to target our marketing efforts.

                                   13
<PAGE>


    Web  sites typically place a small tracking program on a user's hard drive
without  the user's knowledge or consent. These programs automatically collect
data  about  any  visits that a user makes to various  web  sites.   Web  site
operators  use  these  mechanisms for a variety  of  purposes,  including  the
collection  of  data  derived from users' Internet  activity.  Most  currently
available  Internet  browsers allow users to elect to  remove  these  tracking
programs at any time or to prevent this information from being stored on their
hard drive. In addition, some commentators, privacy advocates and governmental
bodies  have  suggested  limiting or eliminating the  use  of  these  tracking
mechanisms.  Any  reduction or limitation in the use of  this  software  could
limit the effectiveness of our sales and marketing efforts.

We  could face additional burdens associated with government regulation of and
legal uncertainties surrounding the Internet.

    New Internet legislation or regulation or the application of existing laws
and  regulations  to  the  Internet and electronic  commerce  could  harm  our
business,  financial condition and results of operations. We  are  subject  to
regulations  applicable  to  businesses  generally  and  laws  or  regulations
directly  applicable  to  communications  over  the  Internet  and  access  to
electronic  commerce.  Although there are currently few laws  and  regulations
directly  applicable to electronic commerce, it is possible that a  number  of
laws  and  regulations  may be adopted with respect to the  Internet  covering
issues  such  as  user  privacy, pricing, content,  copyrights,  distribution,
antitrust, taxation and characteristics and quality of products and  services.
For  example,  the  United  States  Congress recently  enacted  Internet  laws
regarding children's privacy, copyrights and transmission of sexually explicit
material.  In  addition, the European Union recently enacted its own  Internet
privacy regulations. Furthermore, the growth and development of the market for
electronic  commerce  may prompt calls for more stringent consumer  protection
laws that may impose additional burdens on those companies conducting business
online.   The  adoption  of any additional laws or regulations  regarding  the
Internet may decrease the growth of the Internet or electronic commerce, which
could,  in  turn, decrease the demand for our games and services and  increase
our  cost  of doing business. In addition, if we were alleged to have violated
federal,  state  or  foreign civil or criminal law, we  could  be  subject  to
liability,  and  even if we could successfully defend such  claims,  they  may
involve significant legal compliance and litigation costs.

                                 14
<PAGE>


Uncertainty of Emerging Technology and Business

   The  Internet  based games and leisure activities industry is  an  emerging
business  characterized by an increasing number of market  entrants  who  have
introduced  or  are developing an array of new products and services.   As  is
typically  the case in an emerging industry, demand and market acceptance  for
newly  introduced  products  and  services is  subject  to  a  high  level  of
uncertainty. In light of the evolving nature of this industry, there can be no
assurance  as  to  the ultimate level of demand or market acceptance  for  our
products  and services.  In addition, there can be no assurance that  we  will
successfully implement our business strategies, expand our capacity,  maintain
the  cost and technological competitiveness of our products and services, meet
our current marketing objectives or succeed in positioning us as the preferred
Internet  games  and entertainment services provider.  There can  also  be  no
assurance  that  the present trends in growth of Internet use and  users  will
continue  or  that capacity of the Internet in general will be  sufficient  to
meet  anticipated demands or that the present pricing structure  for  Internet
access will be maintained in the future.

Dependence  on  and  Uncertain Acceptance of the  Internet  as  a  Medium  for
Commerce or Advertising

   Use  of the Internet by consumers is at an early stage of development,  and
market  acceptance of the Internet as a medium for commerce is  subject  to  a
high  degree of uncertainty. Our future success will depend on its ability  to
significantly  increase revenues, which will require the  further  development
and  widespread  acceptance  of the Internet as  a  medium  for  commerce  and
advertising. There is no assurance that the Internet will become a  successful
retailing  channel.  The  Internet may not prove to  be  a  viable  commercial
marketplace because of inadequate development of the necessary infrastructure,
such  as  reliable network backbones or complementary services, such as  high-
speed modems and security procedures for financial transactions. The viability
of  the  Internet  may  prove uncertain due to delays in the  development  and
adoption  of  new  standards and protocols (for example, the  next  generation
Internet Protocol) to handle increased levels of Internet activity or  due  to
increased government regulations. If use of the Internet does not continue  to
grow,  or  if the necessary Internet infrastructure or complementary  services
are  not developed to effectively support growth that may occur, our business,
results  of  operations and financial condition could be materially  adversely
affected.   Further,  there is no assurance that advertisers  and  advertising
agencies  will  accept  the  Internet as an advertising  medium.  If  Internet
advertising  is  not  widely  accepted by, or if  we  are  not  successful  in
generating  significant advertising revenues from, advertisers, our  business,
results  of  operations  and  financial  condition  could  be  materially  and
adversely affected.

Uncertain Acceptance of Our Internet Content

   There  can  be  no  assurance that our content  will  be  attractive  to  a
sufficient number of users to generate significant revenues. There can also be
no  assurance  that  we will be able to anticipate, monitor  and  successfully
respond  to  rapidly  changing consumer needs and  preferences  to  attract  a
sufficient  number  of  users to our Web sites. If we are  unable  to  develop
Internet  content that allows us to attract, retain and expand  a  loyal  user
base,  our  business, results of operations and financial  condition  will  be
materially and adversely affected.

                                  15
<PAGE>


Security Risks

   Despite  the  implementation  of  network  security  measures  by  us,  our
infrastructure  is  potentially vulnerable to computer break-ins  and  similar
disruptive  problems caused by our customers or others. Consumer concern  over
Internet  security has been, and could continue to be, a barrier to commercial
activities requiring consumers to send their credit card information over  the
Internet. Computer viruses, break-ins or other security problems could lead to
misappropriation  of  proprietary information  and  interruptions,  delays  or
cessation  in  service  to  our customers. Further, until  more  comprehensive
security  technologies  are developed, the security and  privacy  concerns  of
existing and potential customers may inhibit the growth of the Internet  as  a
merchandising medium.

Government Regulation and Legal Uncertainties

   We  are  subject,  both  directly  and  indirectly,  to  various  laws  and
governmental  regulations relating to its business. We  believe  that  we  are
currently  in compliance with such laws and that they do not have  a  material
impact  on  our  operations.   Moreover,  there  are  currently  few  laws  or
regulations  directly applicable to access to, or commerce  on  the  Internet.
However,  due to increasing popularity and use of the Internet, it is possible
that  a  number  of laws and regulations may be adopted with  respect  to  the
Internet.  Such  laws and regulations may cover issues such as  user  privacy,
pricing  and  characteristics  and  quality  of  products  and  services.  The
enactment of any such laws or regulations in the future may slow the growth of
the  Internet,  which could in turn decrease the demand for our  services  and
increase our cost of doing business or otherwise have an adverse effect on our
business,  results  of operations and financial condition.  In  addition,  the
applicability  to  the  Internet of existing laws  governing  issues  such  as
property  ownership, libel and personal privacy is uncertain and could  expose
us  to  substantial liability for which we might not be indemnified by content
providers.  We believe that our use of material on our Web sites is  protected
under  current provisions of copyright law. However, legal rights  to  certain
aspects of Internet content and commerce are not clearly settled. There is  no
assurance  that we will be able to continue to maintain rights to information.
The failure to be able to offer such information would have a material adverse
effect on our business, results of operations and financial condition.

Legality of our iPong Game and providing tournaments on the Internet

   We  believe that our iPong game is a game of skill, and when included in an
entry  fee tournament format, it does not fall under the category of  gambling
on the Internet for Federal and most state's within the U.S.  We believe there
are  a  minority of states that may consider this entry fee tournament  format
gambling on the Internet.  We plan to obtain written approval, or non-approval
to  operate  our  tournaments  in all 50 states  from  the  appropriate  state
agencies.   However, should a state or Federal agency determine otherwise,  we
could incur significant legal expenses fighting this issue, or could find that
certain  states  will not allow this type of pay-for-play  tournaments  within
their state.  Should we find that certain states do not allow our tournaments,
we  have  the  ability to "lock out" participants from those states  based  on
their  zip code.  We believe at a minimum, the states of Nevada, Nebraska  and
Texas will not allow this form of tournament to operate on the Internet.

                                 16
<PAGE>


   There  is  no  assurance that we will be able to continue  to  operate  our
iPong  game  on the Internet. The failure to be able to offer this game  would
have  a  material  adverse effect on our business, results of  operations  and
financial condition.

Liability for Information Retrieved from the Internet

   Since  material  may be downloaded from Web sites and may  be  subsequently
distributed  to others, there is a potential that claims will be made  against
us  for  defamation, negligence, copyright or trademark infringement or  other
theories  based on the nature and content of such material. Such  claims  have
been brought, and sometimes successfully pressed, against on-line services  in
the  past. In addition, we could be exposed to liability with respect  to  the
material  that may be accessible through our branded products and  Web  sites.
Although  we  carry general liability insurance, our insurance may  not  cover
potential  claims  of  this type or may not be adequate  to  cover  all  costs
incurred  in defense of potential claims or to indemnify us for all  liability
that  may be imposed. Any costs or imposition of liability that is not covered
by  insurance or in excess of insurance coverage could have a material adverse
effect on our business, results of operations and financial condition. We  are
currently not aware of any such claims.

Dependence on Executive Officers and Key Employees

   Our  success  will  depend  upon the services of our  directors,  executive
officers and certain key employees.  There can be no assurance that we will be
successful  in attracting and retaining such personnel, and our  inability  to
attract such personnel could have a material adverse effect on us.  We  intend
to  enter  into agreements with all of our executive officers containing  non-
disclosure  and  non-competition provisions, however, no such agreements  have
yet  been  executed except with Mr. Kirk Johnson, our CEO.  There  can  be  no
assurance that our directors, executive officers, or key employees will remain
associated  with us in any particular capacity or that they will not  compete,
directly or indirectly, with us.



ITEM. 7 FINANCIAL STATEMENTS

      Comparative  Financial  Statements  appear  in  this  report  after  the
signature page.


ITEM. 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

      There  have  been no changes in, or disagreements with  our  Independent
Auditors on accounting or financial disclosure issues.


ITEM. 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

      The  following table sets out the names, positions held and age  of  our
executive  officers and directors.  Directors are elected by the  stockholders
and  serve until their successors are elected.  Officers are appointed by  the
Board  of  Directors and their appointment, except to the extent  governed  by
contract, is at the discretion of the Board.  An individual may serve as  both
a Director and Officer of our Company.

                                    17
<PAGE>


     Name           Age                      Position

Kirk Johnson        43             Chief Executive Officer,
                                   Secretary/Treasurer
                                   and Chairman of the Board

Frank Howard        51             President, Chief Operating
                                   Officer and Director

Scott Berry         41             Chief Financial Officer

David Gallagher     45             Vice President of Marketing


      KIRK JOHNSON has served as our Chief Executive Officer, President,
Secretary and Treasurer since January 1999,  has served  as  our  Chairman  of
the Board since January  2000,  served  as  our President  from January 1999
until January 2000, served as our Vice  President from  October  1997  to
December 1998, and has been a Director  since  October 1997.   Mr.  Johnson
has been involved in all phases  of  management  of  our Company.   Mr.
Johnson brings 17 years of investment and corporate  management experience  as
owner  and operator of Nevada-Johnson,  Inc.,  a  real  estate development and
construction firm, and has knowledge and experience in  the capitalization of,
and development of startup companies.

      FRANK HOWARD has served as our President and Chief Operating Officer
since January 19, 2000, served as our Chairman of the Board from January  1999
until  January  2000 and has been a Director since December  1997.   Prior  to
joining  us  as a full-time officer in January 2000, Mr. Howard founded  Sales
Technology,  Inc.  ("STI")  in March 1989, a manufacturer  and  manufacturer's
representative  of  industrial  electronic products.   Mr.  Howard  served  as
President and CEO of STI from March 1989 to January 2000.  From 1976  to  1989
Mr. Howard worked for Bently Nevada Corporation, an international supplier  of
high-speed  electronic monitoring devices, where his last position was  acting
Vice President of Sales.

     SCOTT BERRY has served as our Chief Financial Officer since October  1999
and  is  responsible for investor relations, accounting, risk  management  and
financial  planning and control.  Mr. Berry served as Chief Financial  Officer
of HomeSeekers.com, Inc., an Internet Company providing marketing services and
products to real estate professionals, from October 1997 until September 1999.
Between  1994  and  October 1997, Mr. Berry served as  Controller  of  several
businesses including Dennis Banks Construction Company from February  1997  to
October 1997, Advanced Plastic Molding, Inc. from April 1996 to January  1997,
and Siller Brothers, Inc. from December 1994 to February 1996.  From July 1993
to  August  1994, Mr. Berry served as Vice President of Finance for  Precision
Resource  Corporation,  a software developer and computer  hardware  reseller.
From  September 1988 through June 1993, Mr. Berry was Chief Financial  Officer
of  Lansmont  Corporation,  a  developer and  manufacturer  of  computer-based
product and package test equipment.  He started his career as a CPA with Ernst
&  Whinney, received his accounting degree from Chico State University and his
MBA from Santa Clara University.

     DAVID  GALLAGHER  has  served as our Vice President  of  Marketing  since
February  22,  2000.   Mr.  Gallagher served as  Vice  President  of  Sales  &

                                     18
<PAGE>


Marketing  of Sales Technology, Inc. ("STI"), from August 1993 until  February
2000,   a   manufacturer  and  manufacturer's  representative  of   industrial
electronic products.

         Late Filings of Form 3's and Form 4's

      Mr. Kirk Johnson, Mr. Frank Howard and certain shareholders known to
beneficially own more than 10% of our common stock have not filed  their  Form
3's  and  in  some cases, Form 4's with the Securities and Exchange Commission
(SEC).   Our  Chief  Financial Officer is in the process  of  notifying  these
people of their Section 16 filing requirements with the SEC.


ITEM.10 EXECUTIVE COMPENSATION

          The following table shows, for the three year period ended September
30, 1999, the cash and other compensation paid to its Chief Executive Officers
and to each of the executive officers who had annual compensation in excess of
$100,000.00 during the last fiscal year.


                        SUMMARY COMPENSATION TABLE

Name And  Fiscal Salary Bonus  Other    Awards   Securities Payouts  All Other
Principal  Year                Annual Restricted Underlying  LTIP     Compen-
Position                       Compen-  Stock     Options   Payouts   sation
                               sation   Awards    (SARS)#

Robert
Horn(1)
CEO,
Chairman   1999  45,000    -      -         -         -         -        -
and        1998 120,000    -      -         -         -         -        -
President  1997    -       -      -         -      100,000      -        -


Kirk
Johnson(2)
Vice
President
Secretary/ 1999 136,917    -      -         -      200,000      -        -
Treasurer, 1998 104,000    -      -         -         -         -        -
CEO,       1997    -       -      -         -      180,000      -        -




  (1)  Mr. Horn was Chairman of The Board, Chief Executive Officer and President
     from September 1997 until January 1999, when he resigned.

  (2)  Mr.  Johnson was Vice President, Secretary/Treasurer and Director from
     October 1997 until Mr. Horns' resignation in January 1999, when he accepted
     the additional responsibilities of President and CEO.

Employment Agreements

Subsequent To Year End

                                    19
<PAGE>

     Kirk Johnson CEO, President, Secretary/Treasurer and Director- On October
1,  1999  we  entered into a five-year employment agreement with  Mr.  Johnson
whereby  he  continues  to  serve as our CEO and  Director.   Mr.  Johnson  is
entitled  to  receive a base salary of $130,000.00 annually, plus  options  to
purchase  300,000 shares of our Common Stock at $1.00 per share.  The  options
vest  as  follows;  100,000  on the date of the agreement,  100,000  one  year
thereafter and the remaining 100,000 two years thereafter.  The options have a
three-year  life after vesting.  As a director, we will reimburse Mr.  Johnson
for  expenses comparably to other directors.  Mr. Johnson will also receive  a
$200.00 monthly vehicle allowance.




Option Grants in Last Fiscal Year

      The following table sets forth information with respect to the grant  of
options  to  purchase  shares of common stock during  the  fiscal  year  ended
September  30,  1999  to  each person listed in the  above  Executive  Officer
Summary Compensation Table.




              Number of        % Of Total        Price      Expiration
   Name       Securities        Options        ($/Shares)      Date
              Underlying       Granted to
               Options         Employees
              Granted (#)    In Fiscal Year

   Kirk        200,000             92%            $1.00      DEC 2001
  Johnson


      As of September 30, 1999, there were options outstanding to purchase  an
aggregate of 464,730 shares of the Company Common Stock.

      The  following table covers information with respect to the exercise  of
options  to  purchase  shares of common stock during  the  fiscal  year  ended
September 30, 1999 to each person named in the Summary Compensation Table  and
the unexercised options held at the end of the fiscal year.

                                      20
<PAGE>


              Aggregated Option/SAR Exercises in Last Fiscal Year
                     And Fiscal Year-End Option/SAR Values



                 Number                 Securities        Value Of
                   of                   Underlying       Unexercised
                 Shares                 Unexercised      In-The-Money
                Acquired               Options/SARS      Options/SARS
                   on                    FY End #       At Year End $
                Exercise      Value    Exercisable/     Exerciseable/
   Name        Realized #   Realized   Unexercisable    Unexercisable


Kirk Johnson       0           $0       380,000/0(1)    $159,120 / $0         )


(1) Does not include a stock option to purchase 300,000 shares at $1.00 per
share granted to Mr. Johnson on October 1, 1999.  This option vests 100,000
shares on October 1, 1999, 100,000 shares on October 1, 2000 and 100,000
shares on October 1, 2001.

                                      21
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following table sets forth certain information regarding our  Common
Stock  beneficially  owned as of December 31, 1999 for  (i)  each  stockholder
known  by  us to be the beneficial owner of five (5%) percent or more  of  our
outstanding  Common  Stock,  (ii)  each of our  directors,  (iii)  each  named
executive  officer (as defined in Item 402(a)(2) of Regulation SB),  and  (iv)
all  executive officers and directors as a group.  At December 31, 1999  there
were 6,180,218 shares of Common Stock outstanding.  Except as specifically set
forth  in the notes below, the table does not give effect to 1,674,125  shares
of  Common Stock in the event of exercise of outstanding warrants, and  up  to
864,730  shares  of  Common  Stock in the event  of  exercise  of  outstanding
options.

Name and Address of        Amount and   Percentage
  Beneficial Owner (1)     Nature of       Of
                           Beneficial     Class
                           Ownership
                              (2)

Bridget Becker (3)            3,126       0.1%

Scott Berry (4)               8,088       0.1%

Frank Howard (5)             22,500        .4%

Kirk Johnson (6)            675,221      10.1%

All directors and
officers                    708,935      10.6%
As a  group (four
people)

HomeSeekers.com, Inc. (7)   800,000      12.9%

Greg & Jeanie Johnson (8)   925,499      14.0%

Ruth Kelly (9)              847,138      13.7%

Darin Murphy (11)           678,693      11.0%

Octagon Worldwide           385,058       6.0%
Limited (12)

Douglas Swanson (13)        450,000       6.8%

William Tomerlin (14)       525,000       8.5%

Huck Huckabay (15)          400,000       6.5%







(1)   Unless  otherwise  indicated, the address of each of  the  listed
beneficial owners  identified  is  1662 North Highway 395, Suite 203,  Minden,

                                        22
<PAGE>


Nevada  89423-4328.  Unless  otherwise  noted, we believe that all persons
named  in  the  table have   sole   voting  and  investment  power  with
respect  to  all   the   Shares beneficially owned by them.

(2)A  person  is deemed to be the beneficial owner of securities that  can  be
acquired  by  such  person  within 60 days upon the exercise  of  warrants  or
options  or the conversion of convertible securities. Each beneficial  owner's
percentage  ownership  is  determined by assuming that  warrants,  options  or
convertible  securities that are held by such person (but not  those  held  by
any  other person) and that are exercisable within 60 days have been exercised
or converted.

(3)Ms. Becker was our Vice President of Marketing through January 6, 2000.
Includes options to purchase 3,126 shares of Common Stock.

(4)Mr. Berry is our Chief Financial Officer.

(5)Mr.  Howard  is Chairman of our Board of Directors.  Includes  warrants  to
purchase 10,000 Shares. Mr. Howard's address is 2911 South Shore Blvd.,  Suite
170, League, Texas 77573.

(6)Mr. Johnson is Chief Executive Officer, President, Secretary, Treasurer and
a Director of our Company.  Includes options to purchase 480,000 Shares.

(7)We purchased our iPong technology from HomeSeekers and continue to purchase
programming  services from HomeSeekers.  HomeSeekers' address  is  6490  South
McCarran Blvd., Suite D-28, Reno, NV 89509.

(8)Includes  warrants to purchase 451,250 Shares.  Mr. Greg Johnson  and  Mrs.
Jeannie Johnson are the brother, and sister-in-law, respectively, of Mr.  Kirk
Johnson.   Mr. Greg Johnson is the Chief Technology Officer and a Director  of
HomeSeekers.com,  Inc.,  ("HomeSeekers") and is  a  principal  shareholder  of
HomeSeekers.   HomeSeekers  is also a principal shareholder  of  our  Company.
The  Johnson's address is c/o HomeSeekers.com, Inc. 2241 Park Place, Suite  E,
Minden, NV 89423.

(9) Mrs. Kelly's address is 7230 Sierra Vista Way, Reno, NV 89511.

(10)Mr. McCalla's address is 1874 Milkweed Court, Gardnerville, NV 89410.

(11)Includes warrants to purchase 1,250 Shares.  Mr. Murphy's address is 4465
Juniper Trail, Reno, NV 89509.

(12)Includes  warrants  to  purchase 250,000 Shares.   Octagon  Worldwide
Limited's  address  is  P.  O.  Box 146, Road Town,  Tortola,  British  Virgin
Islands.

(13)Mr. Swanson is Vice Chairman of the Board of Directors and Executive Vice
President  of  HomeSeekers  and  is a principal  shareholder  of  HomeSeekers.
HomeSeekers  is  also  a principal shareholder of our  Company.   Consists  of
options  to  purchase  450,000  Shares.   Does  not  include  678,693   shares
beneficially  owned  by Darin Murphy, the son-in-law of  Mr.  Swanson,  as  to
which  shares  Mr.  Swanson  disclaims beneficial  ownership.   Mr.  Swanson's
address  is  c/o HomeSeekers.com, Inc. 6490 South McCarran Blvd., Suite  D-28,
Reno, NV 89509.

(14)Includes warrants to purchase 5,000 Shares.

(15)Mr. Huckabay's address is 2531 Lake Ridge Shores Circle, Reno, NV 89509.

                                   23
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

           During  October 1998 a shareholder loaned us $40,000 during October
1998  and  another $40,000 during September 1999.  Interest  was  at  12%  per
annum,  the  notes were unsecured and warrants to purchase a total of  195,000
shares  of common stock at $1.00 per share with a three-year life were  issued
as  additional consideration to Mr. McCalla.  $20,000 was repaid during  April
1999,  $20,000 was repaid during May 1999 and the $40,000 balance plus accrued
interest was repaid to the shareholder during December 1999.

           During March 1999 we borrowed $50,000 from HomeSeekers.com, Inc., a
shareholder  with  over  5%  beneficial  ownership  in  our  Company,  and   a
significant  provider  of  programming and web site hosting  services  to  us.
Interest was at 12% per annum and the note was unsecured.  During October 1999
we paid off this note and all accrued interest in the form of 53,800 shares of
our restricted common stock, valued at $1.00 per share.


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

A)   Index to Exhibits


Exhibits  Description of Documents

3.1       Articles Of Incorporation for WebQuest International, Inc. dated
          April 17, 1997 (1)
3.2       Articles Of Merger for WebQuest International, Inc. dated May 12,
          1997(1)
3.3       By-laws for WebQuest International, Inc. dated April 18, 1997(1)
10.1      Licensing Agreement between NDS Software, Inc. and WebQuest
          International, Inc.(1)
10.2      Bob Horn Employment Agreement dated September 24, 1997(1)
10.3      Kirk Johnson Employment Agreement dated October 1, 1997(1)
10.4      Scavengernet Purchase Agreement dated October 9, 1998(2)
10.5      Atari Contract dated July 3, 1997 (2)
10.6      Asset Purchase Agreement with Nancy Ann Rogers dated May 30, 1999(3)
10.7      Employment Agreement between Kirk Johnson and us dated October 1,
            1999 (3)
24.1      Power of Attorney (3)
27        Financial Data Schedule (3)

  (1)Incorporated by reference to Exhibits with corresponding numbers from the
     Company's Form 10-SB Registration Statement, as amended, as filed with the
     Securities and Exchange Commission.
  (2)Incorporated by reference to Exhibits with corresponding numbers from the
     Company's Form 10-KSB for year ended September 30, 1998.
  (3)Included with this document.


B)   Reports on Form 8-K.

None.

                                     24
<PAGE>


                                  SIGNATURES

            In accordance with Section 13 or 15 (d) of the Securities Exchange
Act  of 1934, the Registrant caused this report to be signed on its behalf  by
the undersigned, thereunto duly authorized.

                                   WebQuest International, Incorporated
                                   (Registrant)

Date:          April 24, 2000      By: /s/ Scott Berry
                                   Scott Berry
                                   Chief Financial Officer


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

Date:          April 24, 2000

By: /s/ Kirk Johnson               By: /s/ Frank Howard
Kirk Johnson                       Frank Howard
Chief Executive Officer            President, Chief Operating Officer
Treasurer, Secretary and Chairman  and Director
of the Board                       Formerly Chairman of the Board
Formerly President

By: /s/ Scott Berry
Scott Berry
Attorney-in-fact














                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                             FINANCIAL STATEMENTS

                          SEPTEMBER 30, 1999 and 1998




















                        PRITCHETT, SILER & HARDY, P.C.
                         CERTIFIED PUBLIC ACCOUNTANTS


<PAGE>
                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]




                                   CONTENTS

                                                               PAGE

        -  Independent Auditor's Report                          1


        -  Balance Sheets, September 30, 1999 and 1998         2 - 3


        -  Statements of Operations, for the years ended
             September 30, 1999 and 1998 and from inception
             on November 5, 1996 through September 30,
             1999                                               4


        -  Statement of Stockholders' Equity, from inception
             on November 5, 1996 through September 30, 1999   5 - 8


        -  Statements of Cash Flows, for the years ended
             September 30, 1999 and 1998 and from inception
             on November 5, 1996 through September 30,
             1999                                            9 - 10


        -  Notes to Financial Statements                    11 - 25








<PAGE>


                         INDEPENDENT AUDITOR'S REPORT



Board of Directors
WEBQUEST INTERNATIONAL, INC.
Minden, Nevada

We  have  audited  the accompanying balance sheets of Webquest  International,
Inc. [a development stage company] as of September 30, 1999 and 1998, and  the
related statements of operations, stockholders' equity and cash flows for  the
years  ended  September  30, 1999 and 1998 for the period  from  inception  on
November  5, 1996 through September 30, 1999.  These financial statements  are
the  responsibility  of the Company's management.  Our  responsibility  is  to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance with  generally  accepted  auditing
standards.   Those  standards require that we plan and perform  the  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  significant
estimates  made  by  management, as well as evaluating the  overall  financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In  our opinion, the financial statements referred to above present fairly, in
all  material respects, the financial position of Webquest International, Inc.
as  of September 30, 1999 and 1998, and the results of its operations and  its
cash  flows for the years ended September 30, 1999 and1998 and for the  period
from  inception  through  September 30, 1999,  in  conformity  with  generally
accepted accounting principles.



/s/ Pritchett, Siler & Hardy, P.C.

PRITCHETT, SILER & HARDY, P.C.

December 22, 1999
Salt Lake City, Utah

                                      1
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                                BALANCE SHEETS


                                    ASSETS





                                              September 30,
                                         ________________________
                                             1999         1998
                                         ___________  ___________
CURRENT ASSETS:
  Cash                                    $   2,386    $   4,682
  Marketable Securities, available-
    for-sale                                      -      107,451
  Employee advances                             671          258
  Accounts receivable                         3,980            -
                                         ___________  ___________
        Total Current Assets                  7,037      112,391
                                         ___________  ___________

PROPERTY AND EQUIPMENT, net                  53,846       21,875
                                         ___________  ___________
OTHER ASSETS:
  Software licensing rights, net                  -      825,000
  Refundable deposits                         3,201        3,751
                                         ___________  ___________
        Total Other Assets                    3,201      828,751
                                         ___________  ___________
                                          $  64,084    $ 963,017
                                         ___________  ___________
























                                  [Continued]

                                       2
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                                BALANCE SHEETS

                                  [Continued]


                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                      September 30,
                                                 ________________________
                                                     1999         1998
                                                 ___________  ___________
CURRENT LIABILITIES:
  Accounts payable                                $ 204,530    $  71,114
  Advances - related parties                              -        6,500
  Notes payable - related parties                   342,909       17,582
  Other accrued liabilities                         139,601      100,989
  Accrued dividends payable                          58,770       30,779
  Current portion - capital lease obligation          3,360        2,420
                                                 ___________  ___________
        Total Current Liabilities                   749,170      229,384
                                                 ___________  ___________

CAPITAL LEASE OBLIGATION, less current portion        3,778        7,137
                                                 ___________  ___________
STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred stock, $.001 par value, 5,000,000
   shares authorized, 0 and 396,000
   shares of 12% Series B convertible preferred
   stock issued and outstanding for which
   500,000 shares have been authorized                    -          396
  Common stock, $.001 par value, 20,000,000
   shares authorized, 4,870,618 and 4,258,618
   shares issued and outstanding                      4,871        4,259
  Capital in excess of par value                  2,909,909    2,630,515
  Deficit accumulated during the
   development stage                             (3,567,530)  (1,548,718)
                                                 ___________  ___________
                                                   (652,750)   1,086,452

  Less:  Receivable stock subscription              (36,114)     (36,114)
         Deferred compensation expense
          in accordance with APB 25                       -     (239,407)
         Unrealized (loss) - marketable
          securities                                      -      (84,435)
                                                 ___________  ___________
        Total Stockholders' Equity Deficit         (688,864)     726,496
                                                 ___________  ___________
                                                  $  64,084    $ 963,017
                                                 ___________  ___________








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

                                      3
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                           STATEMENTS OF OPERATIONS


                                            For the            From Inception
                                           Year Ended          on November 5,
                                         September 30,          1996 Through
                                  ___________________________   September 30,
                                       1999         1998            1999
                                  _____________ _____________  ______________

REVENUE                            $    21,523   $         -     $    21,523
                                  _____________ _____________  ______________

EXPENSES:
  Selling expense                      151,962       137,906         489,158
  General and administrative         1,802,644       661,671       2,720,697
  Compensation expense recorded
   in accordance with APB 25 for
   stock options issued below
   market value                         22,110       269,390         295,423
                                  _____________ _____________  ______________
        Total Expenses               1,976,716     1,068,967       3,505,278
                                  _____________ _____________  ______________
LOSS FROM OPERATIONS                (1,955,193)   (1,068,967)     (3,483,755)
                                  _____________ _____________  ______________
OTHER INCOME (EXPENSE):
  Gain on sale of marketable
   securities                           14,743        13,363          25,106
  Interest expense                     (50,392)       (3,334)        (56,132)
  Interest income                           21             -              21
                                  _____________ _____________  ______________
        Total Other Income
         (Expense)                     (35,628)       10,029         (25,005)
                                  _____________ _____________  ______________

LOSS BEFORE INCOME TAXES            (1,990,821)   (1,058,938)     (3,508,760)

CURRENT TAX EXPENSE                          -             -               -

DEFERRED TAX EXPENSE                         -             -               -
                                  _____________ _____________  ______________

NET LOSS                           $(1,990,821)  $(1,058,938)    $(3,508,760)

LESS:  PREFERRED DIVIDEND
  REQUIREMENTS                         (27,991)      (30,779)        (58,770)
                                  _____________ _____________  ______________
NET LOSS APPLICABLE TO
  COMMON STOCKHOLDERS              $(2,018,812)  $(1,089,717)    $(3,567,530)
                                  _____________ _____________  ______________

LOSS PER COMMON SHARE              $      (.45)  $      (.28)    $     (1.00)
                                  _____________ _____________  ______________




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

                                     4
<PAGE>

<TABLE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                       STATEMENT OF STOCKHOLDERS' EQUITY

                FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH SEPTEMBER 30, 1999

<CAPTION>                                                                                                Deficit
                                                                                              Accumulated
                                             Preferred Stock       Common Stock     Capital in During the
                                            __________________ ____________________ Excess of  Development
                                             Shares    Amount    Shares    Amount   Par Value    Stage
                                            _________ ________ __________ _________ __________ ___________
<S>                                          <C>      <C>      <C>        <C>       <C>        <C>
BALANCE, November 5, 1996                           - $      -          - $       - $        -  $       -

Issuance of 2,438,333 shares common stock
 for cash, January 1997, at $.123 per share         -        -  2,438,333     2,438    297,562          -

Issuance of 116,667 shares common stock
 for services, January 1997, at $.116 per
 share                                              -        -    116,667       117     13,417          -

Recapitalization of Phaser, issuance of
 200,201 shares of common stock for
 Phaser stock, May 1997                             -        -    200,201       200     (2,282)         -

Issuance of 93,750 shares preferred and
 common stock for cash, March through
 September 1997, at $1.00 per share            93,750       94     93,750        94    187,312          -

Issuance of 30,000 shares common stock
 for services, August 1997, at $1.00 per
 share                                              -        -     30,000        30     29,970          -

Issuance of 700,000 shares common stock
 for licensing agreement, at $1.00 per
 share, September 1997                              -        -    700,000       700    699,300          -

Granting of options to acquire 400,000
 shares of common stock at below market
 value.  Compensation expense calculated
 in accordance with APB 25.                         -        -          -         -    353,600          -

Net loss for the period ended
 September 30, 1997                                 -        -          -         -          -   (459,001)

                                            _________ ________ __________ _________ __________ ___________
BALANCE, September 30, 1997                    93,750 $     94  3,578,951 $   3,579 $1,578,879  $(459,001)

Issuance of 251,000 shares preferred
 and common stock for cash, October,
 1997 through September, 1998 at
 $1.00 per share                              251,000      251    251,000       251    501,498          -

Issuance of 126,943 shares preferred and
 common stock for non-cash consideration,
 July, 1998 at $1.00 per share                126,943      127    126,943       127    253,632          -




                                  [Continued]

                                       5
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                       STATEMENT OF STOCKHOLDERS' EQUITY

                FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH SEPTEMBER 30, 1999

                                  [Continued]

                                                                                                Deficit
                                                                                              Accumulated
                                             Preferred Stock       Common Stock     Capital in During the
                                            __________________ ____________________ Excess of  Development
                                             Shares    Amount    Shares    Amount   Par Value    Stage
                                            _________ ________ __________ _________ __________ ___________
Issuance of 18,057 shares preferred and
 common stock at $1.00 per share,
 accounted for as a subscription receivable,
 July to September, 1998                       18,057       18     18,057        18     36,078           -

Granting of options to an officer to
 acquire 150,000 shares of common
 stock at below market value.
 Compensation expense calculated
 in accordance with APB 25, October 1997            -        -          -         -    132,600           -

Granting of options to an officer to acquire
 30,000 shares of common stock at below
 market value.  Compensation expense
 calculated in accordance with APB 25,              -        -          -         -     26,520           -

Issuance of 50,000 shares common stock
 upon exercise of options by an officer,
 February 1998, at $.116 per share                  -        -     50,000        50      5,750           -

Issuance of 50,000 shares common stock
 upon exercise of options by an officer,
 July 1998, at $.116 per share                      -        -     50,000        50      5,750           -

Issuance of 5,000 shares common stock to
 an officer for cash at $1.00 per share,
 July, 1998                                         -        -      5,000         5      4,995           -

Issuance of 62,000 shares common stock
 for consulting services at $1.00 per share,
 May, 1998                                          -        -     62,000        62     61,938           -

Issuance of 22,898 shares of common stock
 for consultation, programming and other
 services rendered at $1.00 per share, to
 employees, officers and directors of the
 Company                                            -        -     22,898        23     22,875           -

Assumed mandatory conversion of Series B
 preferred stock during the period ended
 September 30, 1998                           (93,750)     (94)    93,750        94          -           -

                                  [Continued]

                                       6
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                       STATEMENT OF STOCKHOLDERS' EQUITY

                FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH SEPTEMBER 30, 1999

                                  [Continued]

                                                                                                Deficit
                                                                                              Accumulated
                                             Preferred Stock       Common Stock     Capital in During the
                                            __________________ ____________________ Excess of  Development
                                             Shares    Amount    Shares    Amount   Par Value    Stage
                                            _________ ________ __________ _________ __________ ___________
Accrued preferred dividends for period
 ending September 30, 1998                          -        -          -         -          -     (30,779)

Shares issued due to rounding                       -        -         19         -          -           -

Net loss for the year ended September 30,
 1998                                               -        -          -         -          -  (1,058,938)
                                            _________ ________ __________ _________ __________ ___________
BALANCE, September 30, 1998                   396,000 $    396  4,258,618 $   4,259 $2,630,515 $(1,548,718)

Issuance of 50,000 shares of common stock
 upon exercise of warrants at $1.00 per
 share                                              -        -     50,000        50     49,950           -

Stock offering cost                                 -        -          -         -    (40,000)          -

Issuance of 20,000 shares of common stock
 for interest valued at $1.00 per share             -        -     20,000        20     19,980           -

Issuance of 20,000 shares of common stock
 for services valued at $1.00 per share             -        -     20,000        20     19,980           -

Issuance of 26,000 shares of common
 stock for purchase of software at
 $1.00 per share                                    -        -     26,000        26     25,974           -

Issuance of 100,000 shares of common
 stock for purchase of software at $1.75
 per share, May 1999                                -        -    100,000       100    174,900           -

Assumed mandatory conversion of Series B
 preferred stock during the period ended
 September 30, 1999                          (396,000)    (396)   396,000       396          -           -

Accrued preferred dividends for period
 ending September 30, 1999                          -        -          -         -          -     (27,991)

Granting of options and warrants to acquire
 common stock at below market value.
 Compensation expense calculated in
 accordance with APB25                              -        -          -         -     22,110           -


                                  [Continued]

                                        7
<PAGE>
                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                       STATEMENT OF STOCKHOLDERS' EQUITY

                FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH SEPTEMBER 30, 1999

                                  [Continued]

                                                                                                Deficit
                                                                                              Accumulated
                                             Preferred Stock       Common Stock     Capital in During the
                                            __________________ ____________________ Excess of  Development
                                             Shares    Amount    Shares    Amount   Par Value    Stage
                                            _________ ________ __________ _________ __________ ___________
Granting of warrants to acquire common stock
 at below market value in relations to note
 payable.  Interest expense calculated in
 accordance with APB25                              -        -          -         -      6,500           -

Net loss for the year ended
 September 30, 1999                                 -        -          -         -          -  (1,990,821)
                                            _________ ________ __________ _________ __________ ___________


BALANCE, September 30, 1999                         - $      -  4,870,618 $   4,871 $2,909,909 $(3,567,530)
                                            _________ ________ __________ _________ __________ ___________

</TABLE>






























   The accompanying notes are an integral part of this financial statement.

                                      8
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                           STATEMENTS OF CASH FLOWS

                          Increase (Decrease) in Cash

                                              For the Year        From Inception
                                                  Ended           on November 5,
                                      ___________________________  1996 Through
                                      September 30, September 30,  September 30,
                                           1999        1998            1999
                                      _____________ _____________ ______________
Cash Flows from Operating Activities:
 Net loss applicable to common
  stockholders                         $(2,018,812)  $(1,089,717)   $(3,567,530)
 Adjustments to reconcile net loss to
  net cash used by operating
  activities:
   Depreciation and amortization           941,515       103,167      1,120,053
   Stock issued for services and goods     300,407        89,038        432,978
   APB 25 compensation recorded for
    stock options issued below market
    value                                   28,610       269,390        301,923
   Changes in assets and liabilities:
    (Decrease) in employee advances           (413)         (258)          (671)
    Increase (Decrease) in accounts
     payable                               133,416       (69,782)       204,530
    (Increase) Decrease in advances
     - related parties                      (6,500)        6,200              -
    Increase in accrued liabilities         38,612        88,642        139,601
    (Decrease) in accounts receivable       (3,980)            -         (3,980)
                                      _____________ _____________ ______________
        Net Cash (Used) by Operating
         Activities                       (587,145)     (603,320)    (1,373,096)
                                      _____________ _____________ ______________
Cash Flows from Investing Activities:
 (Increase) Decrease in refundable
  deposits                                     550        (3,751)        (3,201)
 Purchase of equipment                      (8,486)      (19,326)       (33,899)
 Purchase of software licensing rights           -             -       (300,000)
 Proceeds from marketable securities
  sales                                    191,886        70,363        262,249
                                      _____________ _____________ ______________

        Net Cash Provided (Used) by
         Investing Activities              183,950        47,286        (74,851)
                                      _____________ _____________ ______________

Cash Flows from Financing Activities:
 Proceeds from notes payable               371,327        18,500        499,827
 Payments on notes payable                 (46,000)      (16,152)      (159,532)
 Payments on capital lease obligation       (2,419)         (332)        (2,751)
 Proceeds from preferred stock issuance          -       251,000        344,750
 Proceeds from common stock issuance        50,000       267,600        709,269
 Increase in accrued dividends payable      27,991        30,779         58,770
                                      _____________ _____________ ______________

        Net Cash Provided by
         Financing Activities              400,899       551,395      1,450,333
                                      _____________ _____________ ______________

Net Increase (Decrease) in Cash             (2,296)       (4,639)         2,386

Cash at Beginning of Period                  4,682         9,321              -
                                      _____________ _____________ ______________

Cash at End of Period                  $     2,386   $     4,682   $      2,386
                                      _____________ _____________ ______________


Supplemental Disclosures of Cash Flow Information:
  Cash paid during the year and from inception for:
    Interest                           $     2,175   $       541   $     2,890
    Income taxes                       $         -   $         -   $         -
                                  [Continued]

                                       9
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                     STATEMENTS OF CASH FLOWS [Continued]

                          Increase (Decrease) in Cash

                                  [Continued]

Supplemental Schedule of Non-Cash Investing and Financing Activities:
  For the period ended September 30, 1999:
     The  Company has accounted for 396,000 shares of common stock due to the
     mandatory conversion of 396,000 preferred shares.

     The  Company  issued  26,000 shares of common stock valued at $26,000 to
     purchase software.

     The  Company  issued 100,000 shares of common stock valued at $175,000 to
     purchase software.

     The  Company  issued  20,000 shares of common stock valued at $20,000 as
     payment for additional interest on interest bearing debt.

     The  Company  issued  20,000 shares of common stock to an individual for
     services rendered valued at $20,000.

  For the year ended September 30, 1998:
     The  Company  has accounted for 93,750 shares of common stock due to the
     mandatory conversion of 93,750 preferred shares.

     The  Company  has  issued  a  total of 22,898 shares  of  common stock to
     employees, officers and directors for consultation, programming, or other
     services rendered, valued at $22,898.

     The  Company  issued 2,500 shares of common and 2,500 shares of preferred
     stock in payment of legal fees.

     The Company issued 124,443 shares of common and 124,443 shares of preferred
     stock for non-cash consideration consisting of marketable securities valued
     at $248,886.

     The Company issued a total of 18,057 shares of common and 18,057 shares  of
     preferred stock valued at $36,114 and recorded a subscription receivable of
     $36,114.

     The  Company  issued 62,000 shares of common stock valued at $62,000  along
     with warrants to purchase 100,000 shares of common stock to another company
     for consulting services.

     The Company issued stock options to purchase 180,000 shares of common stock
     to an officer of the Company at below market value prices.  Additional paid
     in  capital  of  $159,120  was recorded, $92,638  in  current  compensation
     expense  was  recorded  and  $66,482 of deferred  compensation  expense  (a
     reduction to stockholders' equity) was recorded.

     Amortization  of  deferred compensation on stock options granted  prior  to
     October 1, 1997, amounted to $176,752.










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

                                       10
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Organization - WebQuest International, Inc. (the Company) was organized  under
  the  laws  of  the State of Nevada on November 5, 1996 as IPONG International,
  Inc.,  but  subsequently reorganized with WebQuest International, Inc.  (which
  was formed to serve as a vehicle for a reorganization of the Company).  During
  April  1997,  the  Company entered into a plan and agreement  of  merger  with
  Phaser  Enterprises, Inc. ["Phaser"], a publicly held Utah corporation wherein
  the  operations  of  the  Company is the surviving  entity.   The  Company  is
  considered a development stage company as defined in SFAS No. 7.  The  Company
  is  engaging  in the business of developing and marketing an interactive  game
  arcade,  known as the iPONG Game Arcade on the Internet.  The Company  derives
  its  revenue  from  tournament  fees, annual subscriptions, and  the  sale  of
  advertising.  The Company may also pursue other Internet related businesses.

  Property  and  Equipment  -  Property  and  equipment  are  stated  at   cost.
  Expenditures  for major renewals and betterments that extend the useful  lives
  of  property  and  equipment are capitalized, upon being  placed  in  service.
  Expenditures  for maintenance and repairs are charged to expense as  incurred.
  Depreciation  is computed for financial statement purposes on a  straight-line
  basis  over the estimated useful lives of the assets, which ranges from  three
  to seven years.

  Income  Taxes  -  The  Company accounts for income taxes  in  accordance  with
  Statement  of Financial Accounting Standards No. 109, "Accounting  for  Income
  Taxes."   This  statement  requires  an  asset  and  liability  approach   for
  accounting for income taxes.

  Dividend  Policy - The Company has not paid any dividends on common  stock  to
  date  and  does  not  anticipate  paying dividends  on  common  stock  in  the
  foreseeable  future.  The Company has a dividend requirement with  respect  to
  its preferred stock [See Note 7].

  Revenue Recognition - Revenue is recognized at the time of the sale.

  Earnings  (Loss) Per Share - Effective for the year ended September 30,  1998,
  the Company adopted Statement of Financial Accounting Standards (SFAS) No. 128
  "Earnings  Per  Share", which requires the Company to present  basic  earnings
  (loss)  per  share and dilutive earnings (loss) per share when the  effect  is
  dilutive.   There was no effect on the financial statements for the change  in
  accounting principle [See Note 12].

  Cash  and Cash Equivalents - For purposes of the statement of cash flows,  the
  Company considers all highly liquid debt investments purchased with a maturity
  of three months or less to be cash equivalents.

  Stock   Based  Compensation  -  The  Company  accounts  for  its  stock  based
  compensation in accordance with Statement of Financial Accounting Standard 123
  "Accounting  for  Stock-Based Compensation".  This  statement  establishes  an
  accounting  method  based on the fair value of equity instruments  awarded  to
  employees  as  compensation.  However, companies  are  permitted  to  continue
  applying previous accounting standards in the determination of net income with
  disclosure in the notes to the financial statements of the differences between
  previous  accounting measurements and those formulated by the  new  accounting
  standard.  The Company has adopted the disclosure only provisions of SFAS  No.
  123,  accordingly,  the  Company has elected to  determine  net  income  using
  previous accounting standards.

                                       11
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]

  Recently  Enacted  Accounting Standards - Statement  of  Financial  Accounting
  Standards  (SFAS)  No. 132, "Employer's Disclosure about  Pensions  and  Other
  Postretirement Benefits", SFAS No. 133, "Accounting for Derivative Instruments
  and  Hedging  Activities",  SFAS  No.  134,  "Accounting  for  Mortgage-Backed
  Securities."  and  SFAS  No. 135, "Rescission of FASB  Statement  No.  75  and
  Technical Corrections" were recently issued.  SFAS No. 132, 133, 134  and  135
  have  no current applicability to the Company or their effect on the financial
  statements would not have been significant.

  Accounting  Estimates - The preparation of financial statements in  conformity
  with  generally  accepted accounting principles requires  management  to  make
  estimates  and  assumptions that effect the reported  amounts  of  assets  and
  liabilities, the 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 estimated
  by management.

NOTE 2 - RECAPITALIZATION

  The Company was organized on November 5, 1996 as IPONG International, Inc. and
  subsequently reorganized with Webquest International, Inc. (which  was  formed
  to  serve  as  a vehicle for a reorganization of the Company).   During  April
  1997,  the  Company  entered into a plan and agreement of merger  with  Phaser
  Enterprises, Inc., a public corporation, wherein Webquest International,  Inc.
  was  the  surviving  entity.   The transaction has been  accounted  for  as  a
  recapitalization of the Company.  The operations of Phaser are  included  only
  from  the date of recapitalization.  Accordingly, the previous operations  and
  retained  deficits  of  Phaser prior to the date of reorganization  have  been
  eliminated.  In anticipation of the reorganization, Phaser effected a  reverse
  stock  split  on  the  basis of 1 share issued for each 27  shares  previously
  outstanding.   The  former shareholders of Phaser held  approximately  200,201
  shares of common stock immediately after the reorganization.

NOTE 3 - MARKETABLE SECURITIES

  During  the year ended September 30, 1998, the Company accepted 53,924  shares
  of  marketable  securities  valued  at $248,886  in  an  entity,  which  is  a
  shareholder of the Company, for the purchase of 124,443 shares of  common  and
  preferred stock of the Company.  During the year ended September 30, 1998, the
  Company  sold  12,000  shares  of the marketable securities  for  $70,363  and
  realized a gain of $13,363.  As of September 30, 1998 the remaining marketable
  securities had a value of $107,451 and the Company recorded an unrealized loss
  on such securities of $84,435, which was subtracted from stockholders' equity.
  As  of September 30, 1999, the Company has sold all marketable securities.   A
  gain of $14,743 was realized during 1999.

                                      12
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 4 - SOFTWARE LICENSE RIGHTS

  Licensing  and  Marketing Agreement - During December 1996, the  Company  paid
  $300,000  for  an  option  to  acquire  licensing  rights  to  an  interactive
  advertising  game  for use on the Internet.  On January 5, 1997,  the  Company
  exercised  its  option  and entered into a licensing and  marketing  agreement
  (with  technical  support)  with a Nevada corporation,  HomeSeekers.com,  Inc.
  (formerly,  NDS Software, Inc.), that owns the software rights.   The  license
  agreement  has  a ten-year term, which automatically renews for an  additional
  ten-year term, and allows the Company to develop, use, and market the  product
  on  an exclusive basis.  Licensing rights are capitalized and amortized  on  a
  ten-year  basis  (the  original life of the agreement).   Database  management
  costs  (including programming costs) are expensed as incurred and amounted  to
  $102,462  for  the year ended September 30, 1998.  As consideration
  for  this  agreement the Company agreed:  i) to pay $58,333 per  month  for  a
  year,  commencing January 5, 1997.  During September 1997, the Company  issued
  700,000  shares of restricted common stock at an agreed upon value of $700,000
  (or $1.00 per share) for full consideration of the one year, $58,333 per month
  payment.   ii) to pay 7% of gross revenues for the first year after  the  live
  date (April 1, 1998), 10% of gross revenues for the second year after the live
  date,  and  15% thereafter.  iii) to pay $20,000 per month commencing  at  the
  live date for "website" fees to the Nevada corporation.  During July 1998, the
  payment  of  $20,000 per month was amended to a pro-rata charge for  services.
  and  iv)  to  pay  $125 per hour for Webpage development, website  changes  or
  customization, and management consulting, plus $0.50 per question for question
  development to the Nevada corporation for technical support.  Upon merger with
  IPONG  International, Inc. on April 18, 1997, Webquest assumed the rights  and
  obligations to this agreement.  HomeSeekers.com, Inc. is considered to  be  a
  related entity because it is a major shareholder.

  During  May  1999,  the license agreement was canceled and the  Company  fully
  expensed the licensing rights.  Amortization expense for the year ended
  September 30, 1999 amounted to $825,000.  Also during May 1999, the  Company
  entered  into  a new agreement with HomeSeekers.com wherein the new  agreement
  provided  for  the  transfer  of ownership to the Company  of  the  technology
  rights,   software  and  source  code  that  was  previously   licensed.    As
  consideration, the Company agreed to pay a royalty of 7% of gross revenues for
  a  period  of  five  years  and to issue 100,000 shares  of  common  stock  to
  HomeSeekers.com  valued at $175,000.  As the technology was purchased  from  a
  related  party, the Company recorded the purchase at the carry  over-basis  of
  the  technology of $0, resulting in the $175,000 being expensed.  The  Company
  will  continue its business relationship with HomeSeekers.com for such  things
  as consultation, programming services and Website hosting.

  Non-exclusive License Agreement - On July 3, 1997, the Company entered into  a
  non-exclusive licensing agreement with a Delaware corporation, Atari-JTS Corp.
  that  owns  the  software,  programs,  trade  names,  trademarks,  promotional
  material,  and  intellectual property for use on the Internet.  The  agreement
  with  the  Company has a five year term, which is renewable for an  additional
  five  years  if minimum royalty fees received are at least $400,000  over  the
  five year period, and allows the Company to license and use the game (Pong) in
  connection with its "website" on a non-exclusive basis.  As consideration  for
  this agreement the Company paid a $5,000 non-refundable execution of agreement
  fee.   The  Company  also agreed to pay a quarterly 1/10 of one  cent  ($.001)
  royalty  fee for each player who accesses Pong; with a base amount  of  $5,000
  per quarter to the Delaware corporation if the number of Pong players fails to
  exceed  5,000,000  in  each quarter.  Royalty fees are expensed  as  incurred.
  Royalty expense amounted to $21,667 and $23,333 for the years ended
  September 30, 1999 and 1998, respectively.

                                      13
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 5 - PROPERTY AND EQUIPMENT

  The  following  is  a  summary  of property and  equipment  -  at  cost,  less
  accumulated depreciation as of September 30, 1999 and 1998:

                                            1999       1998
                                         _________  _________
         Office equipment                 $15,577    $13,299
         Computer equipment                18,322     12,114
         Software                          65,000          -
                                         _________  _________
                                           98,899     25,413
         Less:  accumulated depreciation  (45,053)    (3,538)
                                         _________  _________
                                          $53,846    $21,875
                                         _________  _________

  Depreciation expense for the year and period ended September 30, 1999 and 1998
  amounted to $41,515 and $3,167, respectively.

NOTE 6 - NOTES PAYABLE - RELATED PARTIES

  Notes payable consist of the following at September 30:

                                                         1999       1998
                                                      _________  _________
  Notes payable to a shareholder of the Company,
    annual compounding interest at 12%, due upon
    demand, unsecured                                 $ 17,062   $ 15,234

  Notes payable to a shareholder of the Company,
    interest at 10% and 12%, due upon demand,
    unsecured                                            4,294        294

  Note payable to a shareholder of the Company,
    interest at 12%, due upon demand, unsecured          4,313         54

  Note payable to an entity related to a shareholder
    of the Company, annual compounding interest
    at 12%, due upon demand, unsecured                   2,240      2,000

  12% unsecured demand notes payable to a
    shareholder of the Company                          40,000          -

  12% unsecured convertible notes payable to a
    shareholder of the Company                         200,000          -

  12% unsecured demand note payable to a
    shareholder of the Company                          15,000          -

  12% unsecured demand note payable to a
    shareholder of the Company                          10,000          -

  12% unsecured demand note payable to a related
    entity, which is a shareholder of the Company       50,000          -
                                                      _________  _________
                                                      $342,909   $ 17,582
                                                      _________  _________

                                       14
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 7 - CAPITAL STOCK

  Preferred Stock - The Company authorized 5,000,000 shares of preferred  stock,
  $.001  par  value  with such rights, preferences and designations  and  to  be
  issued in such series as determined by the Board of Directors.

  Series  B Convertible Preferred Stock - The Company authorized 500,000  shares
  of  preferred stock to be designated as Series B Convertible Preferred  Stock.
  The Series B Convertible Preferred Stock pays dividends at the rate of 12% and
  is  fully  cumulative.   The  Series B Convertible Preferred  Stock  shall  be
  entitled to receive dividends, commencing December 1, 1998, at an annual  rate
  of 12% per share out of the funds legally available and to the extent declared
  by  the  Board  of Directors.  The dividends shall be payable  in  semi-annual
  installments  on  December  1 and June 1 commencing  December  1,  1998.   The
  dividends may be paid either in cash, in common stock of the corporation or  a
  combination  thereof.   The  Series  B Convertible  Preferred  Stock  will  be
  automatically converted to one (1) share common stock one year from  the  date
  of  issuance.   The holders of Series B Convertible Preferred Stock  shall  be
  entitled  to  one  (1)  vote for each share of Series B Convertible  Preferred
  Stock  held.   As  of  September 30, 1999, the Company has  accrued  preferred
  dividends  of  $58,770.   During the year ended September  30,  1999,  212,250
  shares  of  preferred  stock have been accounted for as converted  to  212,250
  shares  of common stock due to the automatic conversion of preferred to common
  at  one  year  from date of issuance.  At September 30, 1999,  all  previously
  issued shares of preferred stock were considered converted to common stock.

  Common  Stock  -  During the year ended September 30, 1999, the  Company  made
  various  issuances of common stock.  A total of 40,000 shares were issued  for
  services and interest.

  During  the year ended September 30, 1998, the Company made various  issuances
  of  common stock.  A total of 22,898 shares were issued to employees, officers
  and  directors for consultation, programming, or other services rendered.  The
  stock was valued at $1.00 per share.  The Company also issued 62,000 shares of
  common stock valued at $1.00 per share and 100,000 warrants to purchase common
  stock at $2.00 per share to an entity pursuant to a consultation agreement.

  During  the  year  ended September 30, 1998, an officer exercised  options  to
  purchase  a  total of 100,000 shares of common stock [See Note 8].   The  same
  officer also paid $5,000 cash to acquire 5,000 shares of common stock.

  During  January  1997, the Company issued 2,438,333 shares of  its  previously
  authorized,  but  unissued  common stock to its initial  shareholders.   Total
  proceeds  from  the sale of stock amounted to $300,000 (or $.123  per  share).
  During September 1997, the Company issued 700,000 shares of common stock to an
  affiliated  company  for  software licensing  rights,  which  were  valued  at
  $700,000  (or  $1.00  per  share).  During January 1997,  the  Company  issued
  116,667  shares  of common stock for services rendered which  were  valued  at
  $13,534  (or  $.116 per share).  Also, during August 1997, the Company  issued
  30,000  shares  of  common stock for services rendered which  were  valued  at
  $30,000 (or $1.00 per share).

                                    15
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 7 - CAPITAL STOCK [Continued]

  Public  Offering  - During the period from March through September  1997,  the
  Company  sold  93,750 shares of common stock and 93,750  shares  of  series  B
  preferred  stock  pursuant to a public offering.  From  October  1997  through
  September  1998, the Company sold an additional 396,000 shares of  common  and
  preferred  stock. This offering was  made  in reliance on  Rule 504 of
  Regulation  D  under  the Securities Act of 1933. An offering  price of
  $10,000 per unit was arbitrarily determined  by the Company and the sales
  agent.  Each unit sold  consisted  of 5,000  shares  of  common stock,
  2,500 warrants to purchase common  stock  and 5,000 shares of Series B
  12% convertible preferred stock.  Total proceeds from the stock sold through
  September 30, 1997 amounted to $187,500.  Proceeds from the  subsequent  sales
  through  September 1998  amounted  to  $792,000.   The  warrants  are
  exercisable at $7.50 per share commencing  July  11,  1999  and  continuing
  until July 11, 2000.  The warrants are subject to redemption by the Company
  at  $.01  per warrant provided the common stock of  the  Company  has
  traded  at  a  price  of more than $10.00 for 10 consecutive  days  concluding
  within any 20 consecutive day period immediately prior to the date the Company
  has provided notice of such redemption.  Included in the above sales are 2,500
  shares  of  common and preferred stock, which were issued for legal  fees  and
  124,443 shares of common and preferred stock, which were issued in return for
  marketable securities [See Note 3].

  Confidential  Offering  Memorandum - During April  1999,  the  Company  issued
  20,000  shares  of  its common stock as an incentive to  acquire  $200,000  in
  convertible  promissory  notes.  Also during April 1999,  the  Company  issued
  20,000  shares of its common stock as a finder's fee in acquiring the $200,000
  in convertible promissory notes [See Note 6].

  SCAVENGERnet  -  During  October 1998, the Company  entered  into  a  purchase
  agreement  with two individuals to purchase a game (with all rights, software,
  programs,  source codes, copyrights, trade secrets, patent rights,  and  other
  applicable  rights  for  use  on  the  Internet)   called  SCAVENGERnet.    As
  consideration for this purchase agreement the Company gave $5,000 down, $5,000
  due  on  January  9,  1999, and 10,000 shares of its common  stock  valued  at
  $10,000  or  $1.00  per  share.  During January 1999,  the  Company  paid  the
  remaining $5,000.

  BannerClicks  -  During  April  1999, the  Company  entered  into  a  purchase
  agreement  with an individual to purchase a banner exchange program (with  all
  rights,  software,  programs, customer lists, licenses, and  other  applicable
  rights for use on the Internet).  As consideration for this purchase agreement
  the  Company  paid $10,000 cash and issued 10,000 shares of its  common  stock
  valued at $10,000 or $1.00 per share.

  iPONG - During May 1999, the Company issued 100,000 shares of common stock for
  the  purchase of the previously licensed Internet software called iPONG valued
  at $175,000 or $1.75 per share.

  Nancy's  Kitchen  -  During  May 1999, the Company  entered  into  a  purchase
  agreement  with an individual to purchase a website (with all right, software,
  programs,  source codes, copyrights, trade secrets, patent rights,  and  other
  applicable  rights  for  use  on the Internet)  called  Nancy's  Kitchen.   As
  consideration for this purchase agreement the Company paid $19,000 cash during
  May and June 1999 and issued 6,000 shares of its common stock valued at $6,000
  or $1.00 per share.

                                       16
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 7 - CAPITAL STOCK [Continued]

  Stock  Subscriptions - During the year ended September 30,  1998  the  Company
  issued a total of 18,057 shares of common stock and 18,057 shares of preferred
  stock, pursuant to its public offering (see above), where the stock was issued
  but  the  consideration  has not yet been received.  Management  believes  the
  consideration will be received in full and has recorded an account  receivable
  for  the consideration amounting to $36,114.  The subscription receivable  has
  been  reflected  in the financial statements as a reduction  to  stockholders'
  equity.  Subsequent to the date of this audit, $12,114 was received in October
  1999. [See Note 13]

  Warrants - At September 30, 1998, the Company had 244,875 warrants to purchase
  common stock outstanding that were issued in conjunction with the public stock
  offering (see above).  The warrants are exercisable at $7.50 per share and are
  subject  to  redemption by the Company at $.01 per share under the  conditions
  explained  above (See Public Offering).  As of September 30,  1999  and  1998,
  none of the warrants have been exercised.

  Also  at  September 30, 1999, the Company had an additional 1,491,125 warrants
  outstanding to purchase common stock at prices ranging from $.87 to $7.50  per
  share  and expiring through June 1, 2001 that were issued in conjunction  with
  the Company obtaining financing and for consulting services.

NOTE 8 - STOCK OPTIONS

  During  September  1997, the Company granted options  to  an  officer  of  the
  Company  to purchase 400,000 shares of common stock at $.116, which was  below
  the  current market value of $1.00 per share.  Total compensation expense  (in
  accordance  with  APB 25) of $353,600 has been calculated  with  $3,923  being
  recorded as a compensation expense through September 30, 1997 and $176,752 for
  the  year  ended September 30, 1998.  $239,407 was recorded to expense  during
  1999.   The deferred portion of $172,925 as of September 30, 1998, is recorded
  as  a  reduction to stockholders' equity.  During February 1998,  the  officer
  exercised 50,000 options for $5,800 or $.116 per share.  During July 1998, the
  officer  exercised an additional 50,000 shares for $5,800 or $.116 per  share.
  During the year ended September 30,1999 no options were exercised by officers.
  As of September 30, 1999 all deferred compensation was expensed.

  During October 1997, the Company granted options to the Vice-President of  the
  Company  to purchase 150,000 shares of common stock at $.116, which was  below
  the  current market value of $1.00 per share.  Total compensation expense  (in
  accordance  with  APB 25) of $132,600 has been calculated with  $66,118  being
  recorded  as compensation expense for the year ended September 30, 1998.   The
  deferred  portion  of  $66,482 as of September 30,  1998,  is  recorded  as  a
  reduction  to  stockholders' equity.  As of September 30,  1999  all  deferred
  compensation was expensed.

  During November 1997, the Company granted options to the Vice-President of the
  Company  to purchase 30,000 shares of common stock at $.116, which  was  below
  the  current market value of $1.00 per share.  The options were issued in lieu
  of  salary  for  services rendered during October and  November  1997.   Total
  compensation expense (in accordance with APB 25) of $26,520 has been  recorded
  as of November 1997.

                                     17
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 8 - STOCK OPTIONS [Continued]

  A  summary  of the status of the options granted under agreements at September
  30,  1999  and  1998, and changes during the year and period  then  ended  are
  presented in the table below:

                                       1999                       1998
                           __________________________ __________________________
                                     Weighted Average           Weighted Average
                             Shares   Exercise Price   Shares    Exercise Price
                           _________ ________________ _________ ________________
  Outstanding at beginning
   of period                482,500    $       .112    400,000    $      .116
  Granted                   615,564           1.00     382,500           .479
  Exercised                       -               -   (100,000)          .116
  Forfeited                       -               -   (200,000)          .80
  Canceled                 (633,334)           .116          -              -
                           _________ ________________ _________ ________________
  Outstanding at end of
   period                    464,730   $       .73     482,500    $      .12
                           _________ ________________ _________ ________________

  Exercisable at end of
   period                    464,730   $       .73     130,313    $      .117
                           _________ ________________ _________ ________________
  Weighted average fair
   value of options
   granted                   615,564   $       .06     382,500    $      .52
                           _________ ________________ _________ ________________


  The  fair value of each option granted is estimated on the date granted  using
  the  Black-Scholes  option pricing model, with the following  weighted-average
  assumptions  used  for grants during the year ended  September  30,
  1999  and  1998:  risk-free interest rate of 5.2% and 5.6%, expected  dividend
  yield of zero, expected lives of 4 and 5 years and expected volatility of 130%
  and 167%.

  A  summary  of  the  status  of the options outstanding  under  agreements  at
  September 30, 1999 is presented below:

                     Options Outstanding          Options Exercisable
            ____________________________________ _____________________
                           Weighted
                           -Average    Weighted              Weighted
    Range of               Remaining   -Average              -Average
    Exercise    Number    Contractual  Exercise    Number    Exercise
     Prices   Outstanding    Life        Price   Exercisable   Price
    ________ ____________ ____________ _________ ___________ _________
    $   .116    180,000      3 years   $    .116   180,000   $    .116
    $  1.00     218,064      3 years   $   1.00    218,064   $   1.00
    $  1.50      66,666      5 years   $   1.50     66,666   $   1.50


                                      18
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 8 - STOCK OPTIONS [Continued]

  The  Company accounts for options agreements under Accounting Principles Board
  Opinion  No.  25,  "Accounting for Stock Issued  to  Employees",  and  related
  interpretations.   Had  compensation cost for these options  been  determined,
  based  on the fair value at the grant dates for awards under these agreements,
  consistent  with  the  method prescribed by Statement of Financial  Accounting
  Standards  No.  123, "Accounting for Stock-Based Compensation", the  Company's
  net loss would have been the proforma amounts as indicated below:


                                              For the
                                             Year Ended         From Inception
                                            September 30,          Through
                                    ___________________________  September 30,
                                         1999          1998         1999
                                    _____________ _____________ ______________
 Net Loss applicable
  to common stockholders
                   As reported       $(2,018,812)  $(1,089,717)  $(3,567,530)
                   Proforma          $(2,028,837)  $(1,089,717)  $(3,577,555)

 Earnings per Share
                   As reported       $      (.45)  $      (.28)  $     (1.00)
                   Proforma          $      (.45)  $      (.28)  $     (1.00)

NOTE 9 - INCOME TAXES

  The  Company  accounts  for  income  taxes in  accordance  with  Statement  of
  Financial Accounting Standards(SFAS) No.109 Accounting for Income taxes.
  SFAS 109 requires the Company to provide a net deferred tax asset or liability
  equal  to  the  expected future tax benefit or expense of temporary  reporting
  differences  between book and tax accounting and any available operating  loss
  or tax credit carryforwards.  At September 30, 1999 and 1998, the total of all
  deferred  tax assets was $1,054,719 and $460,396 and the total of the deferred
  tax liabilities was $0 and $80,378. The amount of and ultimate realization  of
  the  benefits  from  the  deferred  tax assets  for  income  tax  purposes  is
  dependent,  in  part,  upon  the  tax laws in  effect,  the  Company's  future
  earnings,  and other future events, the effects of which cannot be determined.
  Because  of  the uncertainty surrounding the realization of the  deferred  tax
  assets,  the  Company has established a valuation allowance of $1,054,719  and
  $380,018 as of September 30, 1999 and 1998, which has been offset against  the
  net deferred tax assets.  The net change in the valuation allowance during the
  years ended September 30, 1999 and 1998 amounted to approximately $674,701 and
  $334,610.

                                      19
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 9 - INCOME TAXES [Continued]

  The  components of income tax expense from continuing operations for the years
  ended September 30, 1999 and 1998 consist of the following:

                                                     1999            1998
                                                  __________      __________
    Current income tax expense:
     Federal                                      $       -       $       -
     State                                                -               -
                                                  __________      __________
      Net tax expense                                     -               -
                                                  __________      __________
    Deferred tax expense (benefit) arising from:
     Excess of tax over financial
       accounting depreciation                    $(324,016)      $ (10,706)
     Excess of tax over financial
       accounting compensation                       10,512         (10,512)
     Carryforwards of excess contributions                -            (156)
     Deferred compensation - stock options          (80,378)        (38,513)
     Net operating loss carryforward               (280,819)       (274,723)
     Valuation allowance                            674,701         334,610
                                                  __________      __________
      Net deferred tax expense                    $       -       $       -
                                                  __________      __________

  Deferred  income tax expense results primarily from the reversal of  temporary
  timing differences between tax and financial statement income.

  A reconciliation of income tax expense at the federal statutory rate to income
  tax expense at the Company's effective rate is as follows:

                                                     1999            1998
                                                  __________      __________

    Computed tax at the expected
      statutory rate                                 34.00%          34.00%
                                                  __________      __________
    State and local income taxes, net of
      federal benefit                                     -               -
    Other                                              (.11)           (.22)
    Deferred compensation - stock options                 -           (2.18)
    Valuation allowance                              (33.89)         (31.60)
                                                  __________      __________
    Income tax expense                                    -               -
                                                  __________      __________

  As of September 30, 1999 and 1998 the Company has net tax operating loss (NOL)
  carryforwards  available  to  offset  its  future  income  tax  liability   of
  approximately  $2,092,891 and $1,266,953 that expire in various years  through
  2019.

                                     20
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 9 - INCOME TAXES [Continued]

  The  temporary  differences  and carryforwards  gave  rise  to  the  following
  deferred tax asset (liability) at September 30, 1999 and 1998:

                                                      1999        1998
                                                  ___________  ___________
        Excess of tax over book accounting
          depreciation                            $  342,980   $   18,964
        Excess of tax over book accounting
          compensation                                     -       10,512
        Contribution carryover                           156          156
        Deferred compensation - stock options              -      (80,378)
        Net operating loss carryover                 711,583      430,764

  As of September 30, 1999 and 1998 the deferred tax asset (liability) consisted
  of the following:
                                                      1999         1998
                                                  ___________  ___________
         Current deferred tax assets              $1,054,719   $  460,396
         Deferred tax assets (liabilities)                 -      (80,378)
                                                  ___________  ___________
                                                  $1,054,719   $  380,018
                                                  ___________  ___________

NOTE 10 - RELATED PARTY TRANSACTIONS

  Notes Payable - During the years ended September 30,1999 and 1998, the Company
  entered into several notes payable with shareholders. [See Note 6].

  During  February  1998  through September 1998,  a  shareholder  advanced  the
  Company  a total of $17,700.  The advances were non-interest bearing  and  are
  due upon demand.

  Employment  Agreements - During the years ended September  30, 1998 and  1997,
  the Company entered into four employment agreements with  officers  and
  employees of the Company.

                                      21
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 10 - RELATED PARTY TRANSACTIONS [Continued]

  The  employment  agreement  for the position, which  includes  Vice-President,
  Secretary and Treasurer, was effective as of October 1, 1997 and has a term of
  two  years.   The  agreement provides for a base salary  of  $2,000  per  week
  ($104,000 per year) commencing December 1, 1997.  For the period from  October
  1,  1997  through  November 30, 1997 the employee received  stock  options  as
  follows:   10,000  upon signing and 2,500 per week.  The  options  vest  on  a
  monthly  basis.  At November 30, 1997, all 30,000 options received were  fully
  vested.  Beginning December 1, 1997, the employee can elect to receive options
  in  lieu  of  cash salary at the rate of 2,500 options per week.  The  options
  will vest on a monthly basis.  The employee may terminate the agreement on  30
  days  notice.   No  such election was made.  The agreement also  provided  for
  stock  options  to  be  immediately granted  to  purchase  150,000  shares  of
  registered common stock of the Company. Options to purchase 75,000  shares  of
  common  stock  vest  on  October 1, 1998 while the remainder  of  the  options
  (75,000 shares) vest on October 1, 1999.  There are no restrictions on any  of
  the  underlying common stock except for those imposed under Rule  144  of  the
  Securities  Act  of 1933, as amended. Once vested the options are  exercisable
 for a three-year period from the date of vesting whether or not the employee is
  still employed by the Company.  However, the employee must be employed by  the
  Company  on  the date of vesting or the options for that date will  not  vest.
  The  options are exercisable at $.116 per share which is less than the current
  market  value  of  the  stock on the date the agreement took  effect  and  the
  options were granted [See Note 8].

  Subsequent  to September 30, 1999 the vice president, secretary and  treasurer
  was  elected  to be the chief executive officer.  On the October 1,  1999  the
  Company  entered into an employment agreement that calls for a base salary  of
  $130,000  per  year.  The agreement also calls for 300,000  stock  options at
  $1.00 per share to purchase employer common stock.  The options vest as
  follows: 100,000 shares on October 1, 1999, 100,000 shares on October 1, 2000,
  100,000 shares on October 1, 2001.   The agreement also calls for a monthly
  auto allowance in the  amount of  $200.00  per  month.  There are no
  restrictions on any of  the  underlying common stock except for those imposed
  under Rule 144 of the Securities Act  of 1933.   The  term of the employment
  agreement shall end October 1,  2004  [See Note 13].

  NOTE 11 - LEASE OBLIGATIONS

  Operating  Leases  -  During May 1998 and effective  June  1998,  the  Company
  entered  into  a one-year lease agreement for office space in Minden,  Nevada.
  The  lease agreement calls for monthly rents of $815 and is for one year.  The
  Company  amended  their  lease agreement in Minden, Nevada,  which  calls  for
  monthly  rents of $1,204 and is for one year, which automatically  renews  for
  another  year  with an increase of .75% or $1,213.  Rent expense  amounted  to
  $19,716 and $13,060 for the periods ended 1999 and 1998, respectively.

  Capital  Lease - The Company is the lessee of equipment under a capital  lease
  expiring  in  2001.  The assets and liabilities under the capital  lease  were
  recorded  at the fair value of the assets at the time of purchase,  which  was
  the lower of the present value of the minimum lease payments or the fair value
  of  the  assets  at the time of purchase.  The assets are amortized  over  the
  related  lease term.  Amortization expense amounted to $3,296 and  $1,057  for
  the  assets under the capital lease as of September 30, 1999 and 1998 and  the
  amortization expense has been included in depreciation expense for  the  years
  ended September 30, 1999 and 1998.

                                      22
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

  NOTE 11 - LEASE OBLIGATIONS [Continued]

  Equipment at September 30, 1999 and 1998 under capital lease obligations is as
  follows:

                                                 1999       1998
                                              _________  _________
         Office equipment                     $  9,889   $  9,889
         Less:  accumulated amortization        (4,353)    (1,057)
                                              _________  _________
                                              $  5,536   $  8,832
                                              _________  _________

  Total  future minimum lease payments, executory costs and current  portion  of
  capital lease obligations are as follows:

  Future minimum lease payments for the year ended September 30:

                                                     Lease Payments
                                                     ______________
                      2000                              $  5,620
                      2001                                 4,684
                      2002                                     -
                      2003                                     -
                                                     ______________
               Total future minimum lease payments      $ 10,304
               Less:  amounts representing interest
                 and executory costs                      (3,166)
                                                     ______________
               Present value of the future minimum
                 lease payments                            7,138
               Less:  lease current portion               (3,360)
                                                     ______________
               Capital lease obligations - long term    $  3,778
                                                     ______________

                                       23
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 12 - EARNINGS (LOSS) PER SHARE

  The  following  data  show the amounts used in computing earnings  (loss)  per
  share  and  the effect on income and the weighted average number of shares  of
  dilutive  potential common stock for the years ended September  30,  1999  and
  1998 and from inception on November 5, 1996 through September 30, 1999:

                                              For the
                                             Year Ended         From Inception
                                            September 30,          Through
                                    ___________________________  September 30,
                                         1999          1998         1999
                                    _____________ _____________ ______________
    Income (loss) from continuing
     operations applicable to
     common stock                    $(1,990,821)  $(1,058,938)  $(3,508,760)

    Less:  preferred dividends           (27,991)      (30,779)      (58,770)
                                    _____________ _____________ ______________

    Income (loss) available to
     common stockholders used in
     earnings (loss) per share       $(2,018,812)  $(1,089,717)  $(3,567,530)
                                    _____________ _____________ ______________

    Weighted average number of
     common shares outstanding
     used in earnings (loss) per
     share during the period           4,473,733     3,852,383     3,537,806
                                    _____________ _____________ ______________


  Dilutive  earnings (loss) per share was not presented, as its effect is  anti-
  dilutive.   The  Company had at September 30, 1999, options  and  warrants  to
  purchase  1,955,855 shares of common stock, at prices ranging  from  $.116  to
  $7.50 per share, that were not included in the computation of diluted earnings
  (loss) per share because their effect was anti-dilutive.

NOTE 13 - SUBSEQUENT EVENTS

  Acquisition -  On  January 13, 2000, the Company closed a purchase  agreement
  with  an  individual to  purchase  the internet site chessed.com.  The total
  purchase  price  of  the transaction  was $192,500, $57,500 was paid with cash
  and the  Company  issued 40,785  shares of its common stock at an agreed upon
  value of $3.31 per share, or $135,000.

  Employment Agreement - Subsequent to September 30, 1999, the Company  hired  a
  Chief  Financial  Officer.  The Employment agreement calls  for  a  salary  of
  $85,000  a year, one half to be paid in cash and the other half to be paid  in
  stock.  The agreement has a six month life.

  Subsequent  to  September 30, 1999, the Company entered into a new  employment
  agreement with a new Chief Executive Officer.  The agreement life is for  five
  years  and calls for a salary of $130,000 per year plus 300,000 stock  options
  [See Note 10].

  Settlement Agreement - On October 27, 1999, the Company issued 400,000  shares
  of its common stock to HomeSeekers.com for payment of a $50,000 note  payable,
  $3,800  to  accrued interest on the loan, $153,500 to outstanding payables for
  programming  services and $192,700 to termination of the previous  programming
  contract, that included a 7% royalty on gross revenues.

                                     24
<PAGE>

                         WEBQUEST INTERNATIONAL, INC.
                         [A Development Stage Company]

                         NOTES TO FINANCIAL STATEMENTS

NOTE 13 - SUBSEQUENT EVENTS [Continued]

  Confidential Private Placement - Subsequent to September 30, 1999 the  Company
  started  offering  for  sale  to persons who are  "accredited  investors",  no
  minimum  and  a  maximum of 4,000,000 shares of its previously authorized  but
  unissued  common  stock,  for $1.25 per share for  gross  proceeds  of  up  to
  $5,000,000.  As of the date of this audit the Company had successfully  raised
  $1,091,250.

  Receipt  of  Stock  Subscription - During October 1999  the  Company  received
  $12,114 for payment of subscription receivables.










                                       25