<PAGE>



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

                                 FORM 10-KSB

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

                For the Fiscal Year ended: December 31, 1999

                        Commission File No. 0-27145



                       1ST NET TECHNOLOGIES, INC.
     ----------------------------------------------------------------
     (Exact Name of Small Business Issuer as Specified in its Charter)

          Colorado                                       33-0756798
-------------------------------                    ------------------------
(State or Other Jurisdiction of                    (I.R.S. Employer Identi-
Incorporation or Organization)                         fication Number)

            11423 West Bernardo Court, San Diego, California 92127
          ----------------------------------------------------------
          (Address of principal executive offices including zip code)

Issuer's Telephone Number, Including Area Code:  (858) 675-4449

Securities Registered Pursuant to Section 12(b) of the Act:  None.

Securities Registered Pursuant to Section 12(g) of the Act:

                        COMMON STOCK, $.001 PAR VALUE
                        -----------------------------
                              (Title of Class)

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

State Issuer's revenues for its most recent fiscal year:  $3,328,387

As of December 31, 1999, 5,753,700 shares of common stock were outstanding.

Documents incorporated by reference:  NONE.

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


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                                   PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

     1st Net Technologies, Inc., a Colorado corporation (with our
subsidiaries, "1st Net" or "we"), is an Internet products and services
company.  We were incorporated in Colorado on May 14, 1990 as Snow Eagle
Investments, Inc.  On April 2, 1997, we acquired the assets of 1st Net
Technologies, LLC, a California limited liability company. On April 22, 1997,
we amended and restated our Articles of Incorporation to change our name to
1st Net Technologies, Inc.  In 1997, we commenced business operations.

     We have three subsidiaries:

     - Children's Technology Group, Inc.("CTGI"), a Nevada corporation;

     - Mariah Communications, Inc. ("Mariah"), a Colorado corporation; and

     - SSP Management Corporation ("SSP"), a Colorado corporation.

OUR COMPANY

     We provide E-business products and services that enable businesses to
develop and maintain an effective Web presence and to communicate effectively
on the Internet.  We have also developed an E-mail administration and database
management software product called "Envoy Mail."  Through our subsidiary CTG,
we are continuing to develop and deploy a range of Internet products,
including private label community Web browsers (Web browsers that appear to
users as though they are owned and operated by our customers).  We, along with
our subsidiary, SSP Management Corp., we have also built several online
financial web sites and newsletter publications, including otcdigest.com,
smallcapdigest.com, otcjournal.com, investmentopportunity.com, and
angelnetwork.com that provide financial research and information resources to
selected opt-in subscribers.

INFORMATIONAL/E-COMMERCE WEB SITES

     We have been and continue to be engaged in various types of Internet Web
site projects that have required a rapid Web site building cycle, a
combination of content and transaction processing capability, interactivity,
and personalization. Set forth below are some examples of sites we have
constructed, or are constructing, which are representative of our Web site
building capabilities:

     -    www.nofear.com is a state-of-the-art Web site that was launched in
          November 1999.  Our client, No Fear, Inc., is a leading provider of
          action sports apparel. Constructed in cooperation with Direct
          Systems Support, an IBM Premier Business Partner, it supports
          E-commerce transactions, allows customers to browse No Fear's
          selection of products, enables No Fear personnel to contribute
          up-to-the-minute content, and is to feature video-streaming of music
          and action sports.

     -    www.laforza.com is the site of Laforza Automobiles, Inc., a
          manufacturer of Italian-made sport utility vehicles. Its wholly-
          owned division, Monster Motorsports, is an after-market customizer
          of high-end, high-performance sports cars. The site features full
          information functionality, allowing customers to view the cars and
          compare prices.

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     -    www.abf-dss.com is the site of Direct Systems Support, Inc., a San
          Diego based IBM Premier Business Partner. The site allows
          prospective clients to peruse the various products and services
          offered by the company and to establish a communication link to the
          company.

INTERNET MARKETING SERVICES

     We provide online marketing programs and services for vendors of various
products and services.

E-MAIL SERVICES AND SOFTWARE

     While a large number of companies and organizations have Web sites, they
often lack the underlying sophisticated database systems to capture the names
of visitors and then sort them by select criteria for ongoing marketing and
sales efforts.  In 1999, we began development of a new software product,
called Envoy Mail Version 1.0, which is a full-featured, Web-based E-mailing
and database management system.

     Envoy Mail offers our customers valuable Web-based E-mail information
management tools. Envoy Mail allows subscribers to not only capture and manage
a database of E-mail visitors to their Web site, but also to communicate
effectively with that database. We charge our customers on a three-tiered
level based upon the number of members in their database and upon the number
of E-mails sent through our system.

COMMUNITY-BASED WEB BROWSERS

     In association with our majority-owned subsidiary, CTGI, a Nevada
corporation ("CTGI"), we have developed a secure Internet browser, Crayon
Crawler(TM), designed specifically for children.  Designed for the 5 to 11
year-old age group, Crayon Crawler helps to protect children in today's
computing environment, and provides a conduit for education, entertainment,
and exploration of the Internet without the worries associated with
unsupervised browsing. Crayon Crawler generates revenues for us through the
sale of sponsorships, receipt of subscription fees and through revenue sharing
of income from e-commerce transactions generated through the electronic
community. Specific features include the following:

     -     Browser and Database. Crayon Crawler provides access only to Web
           sites that have been pre-approved to be on our "Include List" of
           sites. Crayon Crawler will not allow a child to access a Web
           address that has not been pre-approved by the community or their
           parent/guardian.

     -     Sound And Speech Capabilities. Microsoft's Agent(TM) technologies
           provide the user with animated characters that are text-to-speech
           enabled. This allows Crayon Crawler's Agent characters to talk with
           dynamic responses. For example, characters can speak to a child or
           read a child his or her E-mail. Additionally, Crayon Crawler is
           RealAudio and MediaPlayer enabled for streaming video and audio.

     -     Instant Messaging and Who's Online. Crayon Crawler automatically
           logs children who are members of the community into the
           closed-community servers. This allows children to find out if any
           of their friends are online and to communicate with them by sending
           messages. This system also allows the community system


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           administrators the ability to track the activities of members and
           keep out potential intruders.

     -     Chat Client. Crayon Crawler provides closed chat rooms for its
           community members.  It allows children to find out who else is
           presently online with them in an environment that is closed to the
           Internet at large.  Our intention is to enable monitoring of the
           closed community in order to create a safe environment for
           children.  In this way, children can communicate with other
           community members without parents having to worry about who or what
           their child will encounter.

     -     E-mail. Crayon Crawler will provide a closed E-mail system for
           children so that "spam," pornographic banners, links, and unwanted
           E-mail cannot be sent to, or by, a child.

     In May 1999, we granted CTGI exclusive world-wide marketing rights to the
Crayon Crawler Kid Safe Web Browser and the kids browser marketplace in
exchange for 4,000,000 shares of Common Stock of CTGI.

INTERNET TELEPHONY

     Through our majority-owned subsidiary, Mariah Communications, Inc., a
Colorado corporation ("Mariah"), a development stage company, we have been in
the process of developing a deployable Internet protocol ("IP")
telecommunications gateway.  This type of service, which allows for the
transmission of packets of data over voice lines and is known generally as
Internet Protocol Telephony, or "IP Telephony," is believed to offer
significant advantages over conventional telecommunications systems, including
significantly reduced equipment costs, improved bandwidth efficiency, direct
routing of calls, lower costs and improved ease of network administration and
delivery of multi-media services over a single network infrastructure. IP
Telephony combines the low cost, global reach of the Internet and the high
quality and security of private IP-based networks with the public telephone
system's ease of access.

     Mariah expects that it will need substantial capital over the next 24
months in order to implement its planned business operations.  As Mariah does
not have any definitive agreements concerning financing, there can be no
assurance that any financing will be available or that Mariah will be able to
implement its current business plan. Without financing, or some alternative
source of funding, Mariah will only be able to conduct limited operations.  In
September 1999, Mariah received a convertible promissory note from Last Mile
Communications, Inc., an unaffiliated Colorado corporation, in the principal
amount of $220,000.  In December, 1999, this note was converted into 400,000
shares of common stock of Last Mile Communications, Inc. at a conversion rate
of $.55 per share.

INTERNET PORTALS

     In association with our wholly owned subsidiary, SSP Management, Inc., a
Colorado corporation ("SSP"), we own and maintain several Internet Web sites,
which have financially related themes and content. These sites present to
individual opt-in investors clear, original and timely coverage about
publicly-traded companies which generally have not yet attracted significant
attention on Wall Street or institutional money managers.  In addition, our
angelnetwork.com Web site, written exclusively for accredited investors who
must first execute an investor questionnaire to be eligible for our subscriber
base, introduces investors to companies in an early stage of financing and

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educates them about alternative investment vehicles.  Membership to our online
web sites and publications is free for all subscribers. As of December 31,
1999 we had approximately 280,000 opt-in subscribers to our online financial
publications.  We have been informed by the Securities and Exchange Commission
that it has commenced an enforcement investigation into the activities of SSP.
At the present time, the outcome of this investigation is uncertain.

OUR WEB STRATEGY

     Our primary objective for the Internet is to create leading branded Web
sites that allow our clients the ability to create an effective Web presence.
Our strategy is designed to maximize the quantity and quality of traffic to
our client's Web sites and to assist them in developing a strong and loyal
community, thereby also creating an audience which is highly attractive to
companies that are advertising and engaging in commerce over the Internet. Our
strategy to achieve this objective includes the following key elements:

     Build Traffic and Customer Loyalty.  We believe that our plans for
significantly increased marketing activities will provide us with increased
visibility among Web users and companies advertising and engaging in commerce
over the Internet. Additionally, we intend to pursue distribution
relationships with high-traffic Web sites to strategically place programming
and links to our Web sites as a key element in building traffic.

     Build and Capitalize on Attractive Audience Demographics. It is always
important to understand the demographics of your prospective client.
Therefore, we maintain a working knowledge of the potential customer
throughout the entire Web process. Our Web sites, therefore, represent an
attractive medium for companies that advertise and engage in commerce over the
Internet. In order to attract new users and grow a loyal audience that appeals
to a broad range of advertisers and business partners, we are investing in
content, improved and expanded features, advertising, and promotional
programs.

     Pursue Additional Revenue Streams. We believe that we have significant
opportunities to capitalize on our audience and content offerings to create
multiple revenue streams for future growth. We are continually exploring the
use of revenue sharing programs with our clients, as well as advertising
opportunities within each project we undertake.

SALES, MARKETING AND DISTRIBUTION

     We sell our products and services to our clients using a combination of
distribution channels, including a direct in-house sales force, online
distribution channels, and strategic relationships. As of January 1, 2000, we
had 9 employees, or approximately 27 percent of our workforce, engaged in
sales and marketing activities.

DIRECT SALES FORCE

     Our direct sales force focuses primarily on sales to corporate customers.
Our sales representatives develop and pursue leads generated from inquiries on
our Web sites, downloads of our trial products, and other direct marketing and
networking efforts.

ONLINE DISTRIBUTION CHANNELS

     Our Web site, available at http://www.1stnettech.com, allows users to get
information about the products and services that we offer as well as the

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ability to download and purchase certain products through links that reach to
our subsidiary companies' Web sites.

     These online distribution channels provide us with a low-cost, globally
accessible, 24-hour sales channel.

STRATEGIC RELATIONSHIPS

     Where appropriate and advantageous to the Company, we will identify and
develop strategic relationships with other companies that significantly
enhance our ability to develop, market or distribute our products and
services.  Currently, our strategic relationships include:

     Netsol International, Inc. (http://www.netsolpk.com).  We are developing
products and solutions in association with Netsol's offshore software
development group. Netsol employs over 200 information technology
professionals with offices in the United States, the United Kingdom and
Pakistan. Netsol International, Inc. is the parent company of Network
Solutions (PVT) Ltd. Pakistan, Netsol (U.K) Ltd. and Netsol USA, Inc. We
believe this strategic relationship provides us with a competitive advantage
for our software development products for a variety of markets due to lower
development costs through Netsol's Pakistan software development center.

MARKETING AGREEMENTS

     NO FEAR, Inc. (http://nofear.com). In April, 1999, we signed a Web Site
Development, Service and Revenue Sharing Agreement with NO FEAR, whereby we
developed a fully functional E-commerce Web site aimed at marketing NO FEAR's
line of over 500 sports apparel products. Per the terms of the original
agreement, we will be paid a commission of 10% on all Net Sales Revenues
generated by the site through November 2003.  Thereafter, the Agreement will
automatically renew for successive twelve (12) month terms unless terminated
by either party with three (3) months notice.  In August 1999, the Agreement
was amended to add an additional 2.5% commission payable to us for cost
overruns associated with the project.  The additional commissions are payable
through August 2000.

MARKETING ACTIVITIES

     Since our inception, we have invested approximately $340,285 in a broad
range of marketing activities to generate demand, gain corporate brand
identity, and establish corporate and subsidiary Web sites, and educate the
market about our products and services. These activities have included
advertising (print, radio and online), direct marketing via E-mail, sponsoring
seminars for potential clients, participating in trade shows and conferences,
and providing product and service information through our Web sites. Our
marketing programs are aimed at informing our clients and customers of the
capabilities and benefits of our products and services, increasing brand
awareness, stimulating demand across market segments and encouraging other
companies to enter into co-marketing and distribution arrangements with us.

PROFESSIONAL ONLINE CORPORATE AWARENESS PROGRAMS

     Prior to December 14, 1999, we provided certain online corporate
awareness programs for publicly traded companies to leverage their worldwide
exposure and improve their online shareholder relations.  As of December 14,
1999, however, we discontinued our involvement in our online corporate
awareness programs through the assignment of this portion of our business to a

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former officer who at that time was actively involved in the operation of that
portion of our business.  This person is no longer employed by us.

RESEARCH AND DEVELOPMENT

     We have been in development of our MindWalker series Web browsers since
August 1998, when we began a relationship with Spirit 32 Development Corp. of
Denver, Colorado ("Spirt 32").  Most of that time has been spent on developing
Crayon Crawler, our Internet safe Web browser aimed at children ages 5 - 11.
As of January 1, 2000, we had spent approximately $1.2 million toward the
development of this product line.  On January 21, 1999 we entered into an
agreement to acquire all of the outstanding shares of Spirit 32, but this
transaction was never completed.  On January 14, 2000, we rescinded the old
January 21, 1999 Agreement and entered into a new Technology Purchase
Agreement with Spirit 32, pursuant to which we have now acquired all of Spirit
32's right, title and interest in and to the Mariah Internet Protocol
Telecomputing Project, the MindWalker Series Browsers, the Crayon Crawler
Browser, the Spirit 32 Voice Mailer and all of the trade names and copyrights
associated with the names "Crayon Crawler," "Mind Walker" and "Mariah."

     Our subsidiary, Mariah Communications, Inc., through a pre-existing
arrangement with Spirit 32 Development, is developing a PC gateway for
telecommunications through an IP telephony switch, which eliminates the need
for expensive hardware-based routers. The purpose of this product line is to
reduce the costs to major telecommunications companies in implementing
voice-over IP services (the ability to transmit voice responses over data
lines).

     We have incurred certain research and development costs in the production
of Envoy Mail.  As of December 31, 1999 our total cost to develop Envoy Mail
Version 1.0 was approximately $220,000.  Further enhancement of Envoy Mail
will continue in 2000.

     Our total cost of research and development to date is approximately $1.42
million.

COMPETITION

     The market for Internet services, software and products is relatively
new, intensely competitive and rapidly changing.  The number of Web sites on
the Internet competing for consumers' attention and spending has proliferated
and we expect that competition will continue to intensify.  We all compete,
directly and indirectly, for advertisers, viewers, members and content
providers.

     We anticipate that the number of direct and indirect competitors will
increase in the future.  Many of our existing competitors, as well as a number
of potential new competitors, may have longer operating histories in the Web
market, greater name recognition, larger customer bases and higher amounts of
user traffic and significantly greater financial, technical and marketing
resources.  Such competitors may be able to undertake more extensive marketing
campaigns, adopt more aggressive pricing policies, make more attractive offers
to potential employees, distribution partners, advertisers and content
providers and may be able to respond more quickly to new or emerging
technologies and changes in Web user requirements.  Further, there can be no
assurance that they will not develop services that are equal or superior to
ours or that they achieve greater market acceptance than our product and
service offerings.  Increased competition could also result in price
reductions, reduced margins or loss of market share, any of which could

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materially adversely affect our business, results of operations and financial
condition.

     The Web, and 1st Net specifically, also must compete with traditional
advertising media, such as print, radio and television, for a share of
advertisers' total advertising budgets. Web companies and 1st Net would lose
revenue if the Web were not perceived as an effective advertising medium.  In
addition, well-established traditional media companies may acquire, invest or
otherwise establish commercial relationships with our competitors.  Greater
competition resulting from such relationships could have a material adverse
effect on our business and, ultimately, our stock price.  As a result, there
can be no assurance that we will be able to compete successfully against our
current or future competitors or that competition will not have a material
adverse effect on our business, results of operations and financial condition.

     We believe that Mariah's ability to compete in the Internet telephony
industry successfully will depend upon a number of factors, including our
ability to develop a commercially viable product; the pricing policies of
competitors and suppliers; the capacity, reliability, availability and
security of the Internet telephony infrastructure; marketing; the timing of
introductions of new products and services into the industry; Mariah's ability
to support existing and emerging industry standards; Mariah's ability to
balance network demand with the fixed expenses associated with network
capacity; and industry and general economic trends.

     The market for telecommunications services, in particular, is extremely
competitive and there are a growing number of competitors in the Internet
telephony industry.  There are many companies that offer business
communications services and which will compete with Mariah at some level.
These include large telecommunications companies and carriers such as AT&T,
MCI, and Sprint; smaller, regional resellers of telephone line access; and
other existing Internet telephony companies.  These companies, as well as
others, including manufacturers of hardware and software used in the business
communications industry, could in the future develop products and services
that could compete with those of Mariah on a direct basis.  Many of these
entities have far greater financial and organizational resources than Mariah
and control significant market share in their respective industry segments.
Therefore, there is no assurance that Mariah will be able to successfully
compete in the Internet telephony industry.

INTELLECTUAL PROPERTY

     Our success and ability to compete are dependent to a significant degree
on our proprietary technology.  We rely primarily on state and federal
copyright, trade secret and trademark common law to protect our proprietary
technology.  We have several unregistered trademarks, various unregistered
copyrights and certain licenses of technology with third parties.  We have no
patents or other registered intellectual property, other than certain
trademarks.  The source code for our proprietary software is protected as a
trade secret but not as a formally copyrighted work.  At present, some of our
trademarks or copyrights are not registered with the United States government;
therefore,  we do not enjoy the same degree of protection that we might
otherwise have if they were already registered (as registration puts others on
notice that particular copyrights and trademarks are in use and protected).
The Company intends to eventually register all of its proprietary names and
marks.  The loss of any of our unregistered trademarks or copyrights
(particularly source codes) could have a material adverse effect on our
business.


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     It is our policy to enter into confidentiality and non-competition
agreements with our associates and generally to control access to and
distribution of our proprietary technology.  Notwithstanding the precautions
taken by us to protect our intellectual property rights, it is possible that
third parties may copy or otherwise obtain and use our proprietary technology
without authorization or otherwise infringe on our proprietary rights.  It is
also possible that third parties may independently develop technologies
similar to those of our own.  Policing unauthorized use of our intellectual
property rights may be difficult, particularly because it is difficult to
control the ultimate destination or security of information transmitted over
the Internet.  In addition, the laws of foreign countries may afford
inadequate protection of intellectual property rights.

     We may need to engage in litigation in order to enforce our intellectual
property rights in the future or to determine the validity and scope of the
proprietary rights of others.  Such litigation could result in substantial
costs and diversion of management and other resources, either of which could
have a material adverse effect on our business, operating results and
financial condition.  We also use certain third-party technology, such as
Agent (TM) software from Microsoft, and data and content from third parties.
In these license agreements, the licensors have generally agreed to defend,
indemnify and hold us harmless with respect to any claim by a third party that
the licensed software or content infringes any person's proprietary rights.
There can be no assurance that the outcome of any litigation between such
licensors and a third party or between us and a third party will not lead to
royalty obligations for which we are not indemnified or for which such
indemnification is insufficient, or that we will be able to obtain any
additional license on commercially reasonable terms, if at all.

     In the future, we may seek to license additional technology or content in
order to enhance our current features or to introduce new services, such as
certain of the community features we may introduce.  There can be no assurance
that any such licenses will be available on commercially reasonable terms, if
at all.  The loss of or inability to obtain or maintain any of these
technology licenses could result in delays in introduction of new services
until equivalent technology, if available, is identified, licensed and
integrated, which could have a material adverse effect on our business,
results of operations and financial condition.

     Because we license some data and content from third parties, our exposure
to copyright infringement actions may increase because we must rely upon such
third parties for information as to the origin and ownership of such licensed
content.  We generally obtain representations as to the origins and ownership
of such licensed content and generally obtain indemnification to cover any
breach of any such representations.  However, there can be no assurance that
such representations will be accurate or that such indemnification will be
sufficient to provide adequate compensation for any breach of such
representations.  There can be no assurance that infringement or other claims
will not be asserted or prosecuted against us in the future, whether resulting
from our internally developed intellectual property or licenses or content
from third parties.  Any future assertions or prosecutions could materially
adversely affect our business, results of operations and financial condition.
Any such claims, with or without merit, could be time-consuming, result in
costly litigation and diversion of technical and management personnel or
require us to introduce new content or trademarks, develop non-infringing
technology or enter into royalty or licensing agreements.  Such royalty or
licensing agreements, if required, may not be available on acceptable terms,
if at all. In the event of a successful claim of infringement and our failure
or inability to introduce new content or trademarks, develop non-infringing

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technology or license the infringed or similar technology on a timely basis,
our business, results of operations and financial condition could be
materially adversely affected.

GOVERNMENT REGULATION

     The laws and regulations applicable to the Internet and our services are
evolving and unclear and could damage our business.  There are currently few
laws or regulations directly applicable to access to, or commerce on, the
Internet.  Due to the increasing popularity and use of the Internet, it is
possible that laws and regulations may be adopted, covering issues such as
user privacy, defamation, pricing, taxation, content regulation, quality of
products and services, and intellectual property ownership and infringement.
Such legislation could expose us to substantial liability, as well as dampen
the growth in use of the Internet, decrease the acceptance of the Internet as
a communications and commercial medium, or require us to incur significant
expenses in complying with any new regulations.

     The European Union has recently adopted privacy and copyright directives
that may impose additional burdens and costs on international operations.  In
addition, several telecommunications carriers, including America's Carriers'
Telecommunications Association, are seeking to have telecommunications over
the Internet regulated by the Federal Communications Commission ("FCC"), in
the same manner as other telecommunications services.  Because the growing
popularity and use of the Internet has burdened the existing
telecommunications infrastructure and many areas with high Internet usage have
begun to experience interruptions in phone services, local telephone carriers,
such as Pacific Bell, have petitioned the FCC to regulate the Internet and to
impose access fees.  Increased regulation or the imposition of access fees
could substantially increase the costs of communicating on the Internet,
potentially decreasing the demand for our service.

     A number of proposals have been made at the federal, state and local
level that would impose additional taxes on the sale of goods and services
through the Internet.  Such proposals, if adopted, could substantially impair
the growth of electronic commerce and could adversely affect us.  Also, the
United States Congress ("Congress") recently enacted the Digital Millennium
Copyright Act, which is intended to reduce the liability of online service
providers for listing or linking to third-party Web sites that include
materials that infringe copyrights.

     We are aware of this legislation, but cannot currently predict the
effect, if any, that this legislation will have on our business.  There can be
no assurance that this legislation will have significant additional costs on
our business or subject us to additional liabilities.  Moreover, the
applicability to the Internet of existing laws governing issues such as
property ownership, copyright, defamation, obscenity and personal privacy is
uncertain.  We may be subject to claims that our services violate such laws.
Any new legislation or regulation in the United States or abroad or the
application of existing laws and regulations to the Internet could damage our
business and cause the price of our common stock to decline.  Due to the
global nature of the Internet, it is possible that the governments of other
states and foreign countries might attempt to regulate its transmissions or
prosecute us for violations of their laws.  We might unintentionally violate
such laws.  Such laws may be modified, or new laws may be enacted, in the
future.  Any such development could damage our business.

     The securities industry in the United States is subject to extensive
regulation under both federal and state laws.  In addition, the Securities and

                                        10
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Exchange Commission (the "Commission"), the NASD, various stock exchanges, and
other regulatory bodies, such as state securities commissions, require strict
compliance with their rules and regulations.  As a matter of public policy,
regulatory bodies are charged with safeguarding the integrity of the
securities and other financial markets and with protecting the interests of
customers participating in those markets.  Our failure to comply with any of
these laws, rules or regulations could result in censure, fine, the issuance
of cease-and-desist orders, any of which could have a material adverse effect
on our business, financial condition and operating results.  The Securities
and Exchange Commission has informed us that it has commenced an investigation
with respect to SSP's past business activities.  The outcome of this
investigation is uncertain at the present time.

     Mariah uses the Internet for transmission of long distance telephone
calls. Presently, the federal government does not regulate companies that
provide Internet Telephony services as common carriers or telecommunications
service providers.  Notwithstanding the current state of the rules, the FCC's
potential jurisdiction over the Internet is broad because the Internet relies
on wire and radio communications facilities and services over which these
regulatory authorities have long-standing authority.  Access charges are
assessed by local telephone companies to long distance companies for the use
of the local telephone network to originate and terminate long distance calls
generally on a per minute basis.  Access charges have long been a source of
dispute, with long distance companies arguing that the access rates are
substantially in excess of cost and local telephone companies arguing that
access rates are needed to subsidize lower local rates for end user and other
purposes.  The FCC currently is considering whether subscriber calls to
Internet service providers should be classified as "local" or "interstate"
calls.  Although the FCC to date has determined that Internet service
providers should not be required to pay interstate access charges to local
telephone companies, this decision may be reconsidered in the future if the
FCC finds these calls to be "interstate."  Mariah's costs for doing business
would increase if Mariah were required to pay interstate access charges.

EMPLOYEES

     As of January 1, 2000, the Company and its subsidiaries employed 33
full-time employees.  We also utilize independent contractors for legal
services and sales development, among other functions.  None of our employees
is represented by a labor union. We have not experienced any work stoppages
and consider our employee relations to be satisfactory.

ITEM 2.  DESCRIPTION OF PROPERTY.

     We presently maintain our executive and administrative offices at 11423
West Bernardo Court, San Diego, California 92127. We lease this space, which
is approximately 8,000 square feet, from Entrepreneur Investments, LLC, a
Colorado limited liability company that is controlled by James H. Watson, Jr.,
our Chief Executive Officer, Chairman and a Director ("EI") at a rate of
$8,000 per month on a five-year term that began on September 1, 1998.

     Our property and equipment as of December 31, 1999 consists of the
following:



                                       11
<PAGE>


     1999
     ----

  Office Furniture and Fixtures and Equipment............... $ 217,933
  Office Equipment - Capitalized Leases.....................   291,407
  Leasehold Improvements....................................    22,954
  Vehicle - Capitalized Leases..............................    27,219
  Radio Equipment...........................................     4,243
  Computer Equipment -- Capitalized Leases..................    38,898
  Computer Equipment and Peripherals........................    50,546
                                                              --------
          Total.............................................   653,200

  Less Accumulated Depreciation.............................  (117,917)
                                                              --------
          Net Property and Equipment........................  $535,283
                                                              ========

     The future minimum annual aggregate rental payments required under both
capital and operating leases that have initial or remaining non-cancelable
lease terms in excess of one year are as follows:

YEARS ENDING DECEMBER 31,
-------------------------
2000........................................................  $216,928
2001........................................................   186,494
2002........................................................   185,254
2003........................................................   135,878
2004........................................................    42,404
Thereafter..................................................     -0-
                                                              --------
          Total.............................................  $766,958


ITEM 3.  LEGAL PROCEEDINGS.

     As of March 31, 2000, we were not a party to any material pending legal
proceedings, and we are not aware of any material threatened legal proceedings
to which we would be a party.

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

     No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1999.


                                     12
<PAGE>


                                  PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Although a trading market for our Common Stock has at times existed in
the past during periods while our shares were quoted on the OTC Bulletin
Board, it is currently only sporadically traded through the "pink Sheets."
Consequently, no meaningful market information is currently available.

     During the fiscal year ended December 31, 1999, we sold 472,400 shares of
our Preferred Stock and 236,200 warrants in units of $5 each for gross
proceeds of $1,181,000.  The offering closed on March 11, 1999 and was
conducted in reliance upon the safe harbor provision afforded by Rule 505 of
Regulation D.  The offering was sold to accredited investors and fewer than 35
non-accredited investors, each of whom received disclosure documents regarding
the investment.

     The number of record holders of the Company's $.001 par value common
stock at March 31, 2000, was approximately 1,500.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

     The following discussion contains certain forward-looking statements that
are subject to business and economic risks and uncertainties, and our actual
results could differ materially from those forward-looking statements.  The
following discussion regarding our financial statements should be read in
conjunction with our financial statements and notes thereto.

     The going concern opinion of our independent accountant, as disclosed in
our Independent Auditors' Report attached to part F/S, is as follows:

          "The Company [1st Net] has a relatively short history of operations
and has experienced losses in the year ended December 31, 1997, 1998 and 1999.
As of December 31, 1999, the Company maintains an excess of $1,954,000 in
retained deficits.  In view of this matter, realization of a portion of the
assets in the accompanying financial statements is dependent upon continued
operations of the Company and upon the Company's ability to raise funds
through debt or equity offerings.  These factors raise substantial doubt about
the Company's ability to continue as a going concern (see Note 1a).
Accordingly, these consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence."

Overview
--------

     We derive our revenue from services provided in the Internet and multi-
media industries. Specifically, we provide design and development services and
products for companies looking to launch, increase or maximize their
Internet/e-commerce presence. Also, we have developed certain proprietary
technologies (i.e. our Crayon Crawler kid's Web Browser and Envoy Mail a
database management product) which we feel will increase our overall
capability to generate revenue and add value for our shareholders.
Historically, we have provided corporate awareness programs for publicly
traded companies looking to gain exposure via the Internet. Typically, that
meant contracting us to build an effective Internet Web site for the client
that would drive interested parties to their Web site for relevant information
on the client's products, services or shareholder information. A majority of
our services are billed on an hourly rate based upon a project specification

                                      13
<PAGE>


document developed in association with the client.  Fees for other services
vary, based on the type of service and client. For example, clients who
subscribe to our Envoy Mail program and system are charged on a three-tiered
level based upon the number of members in their database and the number of
emails they send through our system on a monthly basis.

     We maintain three (3) subsidiary corporations:

     (1) In January 1999, we acquired a 100% interest in SSP Management Corp.,
a Colorado corporation, from a private company that is considered a related
party. Through our acquisition of that company, we have successfully built
several investment-oriented Internet Web sites and on-line newsletter
publications. During the 4th Quarter of 1999, Management decided that the
Company had begun to grow its business away from that specific model. Thus, in
December 1999, we began to divest ourselves of those types of clients and
services and, where applicable, sell our information-based assets to companies
whose long-term business objective is to participate in that arena.

     (2) In May 1999, we acquired a controlling interest in The Children's
Technology Group, Inc. (CTG) (formerly Tummybusters, Inc.), a Nevada
corporation. CTG is the company responsible for deploying our Crayon Crawler
Kid's Safe Web Browser and community. The business model of CTG is quite
simple. Our goal is to build a safe and enjoyable Internet community for
children on-line. We feel that the potential market for this type of community
is just beginning to materialize. We also believe that the overall public
concern around the child safety issue on the Internet is growing rapidly.  Our
concept centers on the fact that until a true closed and monitored on-line
community is established, where children can go without fear of encountering
the harmful influences inherent in the open Internet, this problem cannot be
solved.  With the tremendous success of America Online, the community concept
has proven itself to be an effective model. CTG's plan is to identify those
elements that have made AOL's community so successful and adapt it
specifically around children-oriented protection and content.

     (3) In August 1998, we acquired a controlling interest in Mariah
Communications, Inc., a Colorado corporation. This company is responsible for
spearheading our continued research and development into the business of
Internet Protocol (IP) Telephony. To date, the Company has not been successful
in developing a marketable product. It is presently not known when, or if, we
will be successful in doing so.

     Our historical financial information contained in this prospectus is that
of 1st Net Technologies, Inc. and its subsidiary corporations on a
consolidated basis.

Capital Resources
-----------------

     Year Ended December 31, 1999

     At December 31, 1999, we had working capital of $12,873, accounts
receivable of $67,498, and marketable securities (present value) of $1,158,366
comprising our current assets of $1,238,737. We had current liabilities of
$680,387. During the 4th Quarter of 1999, the Company experienced a
significant deficit in available working capital.  It required us to obtain
certain short-term loans, primarily to meet our payroll obligations.  However,
on a going forward basis, management feels comfortable that our reservoir of
marketable securities which are available to us throughout the year 2000,
combined with an anticipated increase of product/service revenue from our
business realignment will be sufficient to grow our operation for the fiscal

                                     14
<PAGE>


year 2000.  Although, it is impossible to ascertain the actual value that will
be eventually realized by us when we decide to sell our marketable securities,
Management feels comfortable that we will realize significant income from
these securities, when liquidation is prudent. Our greatest need for cash is
payment of salaries and benefits to our management, programmers, and marketing
staff, as well as administrative personnel. Our greatest reduction is expense,
as a percentage of revenue, for the coming year should be outside services and
contractors, which accounted for $921,543 or 27.6% of revenue, in 1999. This
was due, in large part, to our continued beta development of the Crayon
Crawler and Envoy Mail product lines. This represents a substantial investment
for us, and Management feels comfortable that this investment will begin
showing a return to the Company during fiscal year 2000 in the form of
increased revenues.  Management also anticipates that Professional Fees, which
accounted for $615,604 or 18.5% of revenue, in 1999, will be lower in fiscal
year 2000 because, in part, we are not currently anticipating a need to sell
additional equity to raise operational/working capital during our 2000 fiscal
year.  However, we are unable to predict with any degree of certainty the
results of our operations this year, and accordingly, make no assurance as to
future cash flow.

Comparison of fiscal year ended December 31, 1999 to December 31, 1998
----------------------------------------------------------------------
     Our overall financial condition improved slightly from the fiscal year
ended December 31,1998 as compared to the fiscal year ended December 31, 1999,
although our net loss from operations increased significantly from ($150,431)
in fiscal year 1998 to ($1,613,634) in fiscal year 1999, due primarily to the
substantial investment in our intellectual properties.  Our biggest concern at
the end of 1999 was our lack of cash on-hand but, as discussed earlier,
Management felt that we would have some remedy available to us in this area in
fiscal year 2000, and that it would not adversely affect our ability as a
going concern for the upcoming fiscal year.  Our current assets increased 397%
to 1,238,737 from December 31, 1998 to 1999, while current liabilities also
increased, but in a smaller amount. Our Net (Loss) before taxes increased from
($286,978) in fiscal year 1998 to ($1,767,310) in fiscal year 1999.

Results of Operation
--------------------
Year ended December 31, 1999
----------------------------
     During the year ended December 31, 1999, we realized a net (loss) after
taxes of ($1,525,313), or ($.33) per share, on revenues of $3,328,387, a 319%
increase year over year. Shareholders equity increased approximately 82% year
over year to $818,059. Costs of our revenue include primarily salaries and
benefits for our personnel, outside contractors & consultants, and
professional fees. We believe these costs were higher relative to our revenues
during 1999 due to the integration of many new employees, the increase in our
intellectual property investments, and the legal costs associated with our
equity offerings and SEC filings. We expect each of these situations to
decrease somewhat for fiscal year 2000. The most significant items included in
general and administrative expenses were payroll and related expenses, in the
approximate amount of $1,943,488. We believe salaries and benefits for our
management and administrative personnel will decrease slightly during 2000 as
we realign our business to a less labor-intensive model. We also incurred
approximately $921,543 of expenses during 1999 for outside services &
consulting primarily associated with the development of our intellectual
properties. We anticipate that this will decrease dramatically for 1st Net
Technologies during fiscal year 2000, however, our subsidiary CTG will
continue to have on-going development cost associated with the Crayon Crawler
product line. During the year ended December 31, 1999, we also incurred

                                       15
<PAGE>


approximately $615,604 of expenses for professional fees. We expect those
expenses will be reduced somewhat during 2000 following completion of our Form
10-SB filing with the SEC.  However, we will incur certain professional fees
as we begin filing other required reports with the SEC. On a go-forward basis,
our revenues will be divided between Web site design/development fees,
multimedia programming services, and sponsorship fees. Revenues realized from
stock sales, which represented the majority of our revenues in 1999, will
decrease over the long term as we liquidate those holdings without adding
other stock-based compensation. However, Management believes that its
reservoir of unrealized gains on equities currently held by the Company will
prove to be very valuable to our shareholders and us in the future.

     Because the equity securities that we currently hold amount to more than
40% of our total assets, we may be deemed to be an "Investment Company" and
required to register under the Investment Company of 1940. We view this
situation to be an anomaly, however, and we do not intend to be engaged in the
business of investing, reinvesting owning, holding or trading in securities.
We intend to rectify this situation within the next twelve months so that the
amount of our equity securities will not exceed 40% of our assets.  In the
event that we are unsuccessful (or in the event that this situation occurs
more than once in any three year period), it is likely that we would be forced
to register which would significantly increase out regulatory burdens and
professional fees.

Comparison of fiscal year ended December 31,1999 to the fiscal year
ended December 31, 1998
-------------------------------------------------------------------
     During the year ended December 31, 1998, we realized a net (loss) after
taxes of ($286,076), or ($.09) per share, on total revenue of $1,042,646. Our
revenues increased 319% from 1998 to 1999, while our net (loss) increased
approximately 21%. The substantial increase in our revenue from 1998 to 1999
resulted from the addition of many new clients, as well as a realization of
deferred income on previous or existing clients.

Liquidity
---------
     Whereas, we do not feel at this time that 1st Net will require additional
equity capital to fully realize its business operations in fiscal year 2000,
it is almost certain that one or more our subsidiaries, notably CTG and
Mariah, will need to secure additional equity capital if they are going to be
successful in deploying their business plan.

Inflation
---------
     We are unable at this time to accurately predict what effect, if any,
inflation will have on our operations in the future. Further, we cannot
predict what effect any new products or services will have on our operation,
as this is an evolving part of our business.

YEAR 2000 COMPLIANCE

     The Company has experienced no major problems with its systems as a
result of the Year 2000 issue.


ITEM 7.  FINANCIAL STATEMENTS.

     The financial statements are set forth on pages F-1 through F-24 hereto.


                                       16
<PAGE>


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL
         DISCLOSURE.

     By letter dated April 14, 2000, our former independent certified
accountants, Corbin & Wertz, informed us that they were resigning as our
independent certified accountants effective April 14, 2000.  The letter states
that the reason for the resignation is that we could not come to an agreement
with Corbin & Wertz on the scope of the audit work to be performed by them on
the December 31, 1999 audit.  In addition, Corbin & Wertz stated that they
were also withdrawing their previously issued opinion on the separate April
30, 1999 financial statements of Children's Technology Group, Inc., our
majority-owned subsidiary.

     After Corbin & Wertz had commenced their audit of our consolidated
financial statements, they informed us that the audit would be more work than
originally anticipated because of the state of our financial records and the
need to expand audit scope to comply with Statement of Auditing Standards No.
82 relating to the state of our financial records and an enforcement
investigation commenced by the Securities and Exchange Commission with respect
to certain aspects of our business, and informed us that they would need to
increase their fees accordingly.  We could not come to an agreement with
Corbin & Wertz with respect to the amount of the increase in fees, and a
decision was mutually made to terminate the relationship.  Our Board of
Directors discussed the problem with Corbin & Wertz, and we have authorized
Corbin & Wertz to respond fully to inquiries from the new certified public
accounting firm regarding any matters deemed appropriate by the new auditors,
including, but not limited to, the scope of the audit.

      Corbin & Wertz's report on the Children's Technology Group, Inc.'s
financial statements for the period of inception (July 30, 1998) through April
30, 1999 contained a going concern paragraph but otherwise did not contain a
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles.  Other than the Children's Technology
Group, Inc. report, Corbin & Wertz has never issued any report on any
financial statements for us or any of our parents or subsidiaries.  During our
two most recent fiscal years and the interim period up to the date of
resignation, there were no disagreements between us and Corbin & Wertz that
are required to be disclosed under Item 3-04(a)(1)(iv) of Regulation S-K, and
there were no reportable events involving Corbin & Wertz as described under
paragraphs (A) through (D) of Item 3-04(a)(1)(iv) of Regulation S-K.

     Subsequent to the resignation Corbin & Wertz, we engaged Argy & Company
as our independent accountants.

                                   PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     The Directors and Officers of the Company are as follows:

          Name                Age       Positions and Offices Held
          ----                ---       --------------------------

     James H. Watson, Jr.     37        Chairman, Chief Executive Officer
                                        and Director
     Clifford J. Smith        40        President and Director
     Mary E. Writer           41        Secretary


                                                        17

     Although there is no family relationship between any Director or
Executive Officer of the Company, Mary E. Writer is the wife of Gregory D.
Writer, our former Chief Executive Officer and the current Chief Executive
Officer of Children's Technology Group, Inc., our majority-owned subsidiary.

     The Company presently has no committees.

     Set forth below are the names of all Directors and Executive Officers of
the Company, all positions and offices with the Company held by each such
person, the period during which he has served as such, and the business
experience of such persons during at least the last five years:

     James H. Watson, Jr., 37, has served as our Chief Executive Officer and
Chairman of our Board of Directors since June 30, 1999. He has been a member
of our Board since 1997.  Mr. Watson is Founder and the General Managing
Member of Entrepreneur Investments, LLC, (EI) a private financial consulting
and investment firm that specializes in the unique needs of development stage
companies. Started in 1996, EI has worked hand in hand with both public and
private companies, assisting them with such critical issues as corporate
capitalization, mergers/acquisitions, management placement, and business
strategy.  From 1995 - 1996, he was a Founder and Chief Operating Member of N8
Concepts, LLC, a private company that specialized in sports-related Trademark
Licensing and Event Management. Currently, Mr. Watson is the Chairman of the
Board and CEO of 1st Net Technologies, Inc., as well as a member of the Board
of Directors of its subsidiary, Children's Technology Group, Inc. In addition,
Mr. Watson currently serves in the capacity of CEO of 1st Net's subsidiary,
Mariah Communications, Inc.  Mr. Watson serves as Chairman of the Board and
Interim CEO of PROBOOK, Inc. a San Diego, California based sports marketing
company. He holds a seat on the Board of Directors of Nicklebys.com, Inc., an
Internet art auction company.  Mr. Watson graduated from the University of
Tennessee at Chattanooga in 1985 with a B.S. in Political Science.

     Clifford J. Smith, 40, has served as our President and a Director since
September 1997. From 1991 until 1997, Mr. Smith was a food and beverage
executive for Marriot Corporation in San Diego.

     Mary E. Writer, 41, has served as our corporate Secretary since December,
1999.  Ms. Writer also currently serves the corporate secretary and treasurer
of Probook, Inc., a sports marketing firm of which EI (our largest percentage
shareholder) owns a majority interest.  Her duties with both of these entities
are essentially involved with payroll, accounting and record keeping
functions.  From December of 1996 through May of 1997, she served as the
corporate secretary and treasurer of Celebrity Network, Inc, (now known as
LaForza Automobiles, Inc.).  From 1996 to 1998 she was also employed as an
administrative assistant for EI, an affiliated entity that is controlled by
James H. Watson.  Prior to that time (until January 1996) she served as the
corporate secretary and treasurer of Shareholder Communications Online, Inc.

SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE

     Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, and certain written representations, no persons who were either a
director, officer, or beneficial owner of more than 10% of the Company's
common stock failed to file on a timely basis reports required by Section
16(a) of the Exchange Act during the most recent fiscal year.



                                       18
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION.

     The following table sets forth the annualized base salary that we paid to
Gregory D. Writer, Jr., our former Chief Executive Officer from 1997 through
June, 1999. James H. Watson, Jr. became our Chief Executive Officer on June
29, 1999 and has not received any cash compensation for serving in such
capacity. All other compensation for our executives or directors has not
exceeded $100,000 on an annualized basis. Prior to 1997, we had not previously
paid compensation to executives. We reimburse our officers and directors for
any reasonable out-of-pocket expenses incurred on our behalf.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                              ANNUAL COMPENSATION
                              -------------------     RESTRICTED    SECURITIES
NAME AND PRINCIPAL                                      STOCK       UNDERLYING    ALL OTHER
POSITION                   YEAR   SALARY($)  BONUS($)   AWARDS      OPTIONS      COMPENSATION
------------------         ----   ---------  -------- ----------    ----------   ------------
<S>                        <C>    <C>        <C>      <C>           <C>          <C>

Gregory D. Writer, Jr.     1997   $20,000         0           0            0            0
  Chief Executive Officer  1998         0         0           0            0            0
  from 1996 until          1999   $45,000         0           0            0            0
  June 29, 1999

James H. Watson, Jr.       1997         0         0           0            0            0
  Chairman and Chief       1998         0         0           0            0            0
  Executive Officer        1999         0         0           0            0            0
  since June 29, 1999

</TABLE>

1999 NON-QUALIFIED STOCK OPTION PLAN

     We do not have any pension or profit-sharing plans. No stock options were
issued in 1996, 1997 or 1998. In January 1999, we adopted a 1999 Non-Qualified
Stock Option Plan, pursuant to which we issued 675,000 options to purchase
Common Stock to certain employees.  All of these options have expired with
none being exercised.  We had no incentive plan for employees or executives in
1997 or 1998.

COMPENSATION OF DIRECTORS

     When traveling from out-of-town, members of the Board of Directors are
eligible for reimbursement for their travel expenses incurred in connection
with attendance at Board meetings and meetings of committees of the Board of
Directors. Non-employee directors will be paid $1,000 for their participation
in Board or Board committee meetings. Non-employee directors will also be
eligible for initial options granted upon becoming a member of the Board and
annual option grants so long as they remain on the Board. See "1999 Incentive
Plan."

     In 1999, we entered into a two (2) year Outside Director's Agreement with
Steven J. Santamaria which entitled him to be paid an annual base compensation
of 25,000 shares of our Common Stock, but since Mr. Santamaria resigned as a
Director on January 1, 2000, he was only entitled to receive one year's
compensation under this agreement. No other directors have received
compensation for serving on our Board of Directors.



                                      19
<PAGE>


EMPLOYMENT AGREEMENTS

     On April 19, 1999, Mr. Lawrence K. Kimball entered into an employment
agreement with us that was scheduled to end on April 19, 2002. Mr. Kimball's
employment agreement provided for an annual base salary of $70,000 and granted
him an option to purchase 150,000 shares of our Common Stock, having a
ten-year term, at $5.00 per share, with vesting contingent upon his continued
employment, in equal quarterly installments of 12,500 options. In addition to
his cash compensation, Mr. Kimball received an automobile allowance of $300
per month. Mr. Kimball terminated his employment with the Company on November
30, 1999.

1999 INCENTIVE PLAN

     We have adopted an equity incentive plan ("1999 Incentive Plan"). The
1999 Incentive Plan is designed to promote the success of our business by more
closely aligning the interests of employees, officers, directors and
consultants with shareholders through the use of equity-based incentives. The
total number of shares of Common Stock that may be granted or awarded under
the 1999 Incentive Plan may not exceed 1,000,000, plus 10 percent of any
increase in outstanding shares of Common Stock that occurs after December 31,
1999 (including any increase as a result of the issuance of shares under the
1999 Incentive Plan).

     The 1999 Incentive Plan provides for the granting of options, including
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code, non-qualified stock options, stock appreciation rights,
restricted stock, stock bonuses, non-employee director options and other
stock-based awards (collectively "Awards"). All Awards will be evidenced by an
Award Agreement setting forth the terms and conditions applicable thereto. The
1999 Incentive Plan will be administered by a committee comprised of members
of the Board of the Directors ("Committee"). Eligibility criteria, the number
of participants and all other terms and conditions of the Plan will be
determined by the Committee. The option price payable for the shares of Common
Stock subject to each ISO shall not be less than 100 percent of the fair
market value of the Common Stock on the date such option is granted.

     Pursuant to the 1999 Incentive Plan, non-employee directors are
automatically granted options to purchase 25,000 shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock on the grant
date and thereafter non-employee directors will receive, on an annual basis,
an option to purchase 2,500 shares of Common Stock at the fair market value at
the time of such grant.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following table sets
forth information regarding the beneficial ownership of the shares of the
Common Stock (the only class of shares outstanding) of 1st Net on December 31,
1999, by each person known by us to be the beneficial owner of more than five
percent of the outstanding shares of our Common Stock and by each person known
by us to be a director or nominee or executive officer owning a beneficial
interest in our equity securities.



                                        20
<PAGE>


                                                 AMOUNT AND
                   NAME AND ADDRESS OF            NATURE OF       PERCENT OF
TITLE OF CLASS     BENEFICIAL OWNER(a)      BENEFICIAL OWNERSHIP    CLASS

Common Stock       Clifford J. Smith,
                    President and Director         300,000           5.2%

Common Stock       Entrepreneur Investments,
                    LLC/James H. Watson, Jr.     2,140,500          37.2%
                    Chief Executive Officer
                    and Chairman (b)
-----------------------

(a) All beneficial owners referenced are at the same address: 11423 West
Bernardo Court, San Diego, California 92127. Unless otherwise indicated, all
persons listed have sole voting and investment power with respect to their
shares of Common Stock, except to the extent authority is shared by spouses
under applicable law.

(b) James H. Watson is deemed to be the beneficial owner of all of the shares
owned by EI.


     CHANGES IN CONTROL.  We are not aware of any arrangement which might
result in a change in control of 1st Net in the future.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     On November 5, 1997, we entered into an agreement to purchase eight
automobiles from LaForza Automobiles, Inc. ("LaForza") (formerly Celebrity
Networks, Inc.) for which we paid $400,000.  As we had historically been
successful in generating sales leads for LaForza in the past, our intent was
to re-sell the vehicles over the Internet as a distributor and to use LaForza
to handle the legal aspects of the sales.  The vehicles were to be delivered
to us beginning no later than March 30, 1998, with final delivery no later
than August 30, 1998.  Due to LaForza's inability to deliver the vehicles to
us in a timely manner, we renegotiated the terms of the purchase in 1998 and
received 200,000 shares of LaForza's common stock instead of the automobiles.
The net market value of these shares as of December 31, 1998 had declined to
$262,600 from their value of $400,000 as of December 31, 1997, and resulted in
the recording of unrealized losses of $137,400 during 1998.  Likewise, the net
market value of these shares declined in 1999 to $100,000, resulting in
unrealized losses of $162,600.

     Additionally, in 1999, through Mariah, we invested $220,000 in restricted
shares of the Last Mile Communications Corporation, whose CEO and chairman of
the board formerly held the same positions in Mariah.

     In 1999, we had aggregate related party sales of $1,276,121 of which
$775,000 was eliminated in consolidation.  There were no related party
receivables as of December 31, 1999.

     In 1998, we had sales to related parties amounting to $622,156.  In
addition, the accounts receivable balance of $134,467 was all due from related
parties, with approximately $119,000 attributable to SSP, which was acquired
subsequent to December 31, 1998.  (See Note 2 to our Financial Statements).

     We issued 265,000 shares of our common stock to employees during 1998 as
bonuses for the 1997 year.  Since the stock is restricted for a one-year

                                      21
<PAGE>


period and there was no established market for the shares, the issuance of
shares was recorded at par for a total of $265.  We issued 595,300 additional
shares of our common stock to management and key employees during 1999, as
incentives and bonuses for the 1998 year, and 173,000 shares as payment for
services.  These shares issued are likewise restricted for a one year period,
with no established market for trading and, accordingly, the issuance of such
shares was recorded at par.

     EI currently owns approximately 37% of our outstanding shares and is our
largest percentage owner (see Note 4 to our Financial Statements) and also
owns a majority interest in Probook, Inc.  The sole shareholder of EI also
serves on the Board of each of our subsidiaries.  The Company and/or EI also
have officers or directors in common with various other entities.

     In 1999, sales to one unrelated customer totaled $970,500 which
represented 28% of our sales.  In 1998, sales to one customer, SSP, which was
subsequently acquired, accounted for approximately 42% of our total revenues.
Further, in 1999 and 1998, approximately 69.6% and 31%, respectively, of our
revenue was in the form of common stock received, including the realized and
unrealized gains on such stocks, as payment for services.

     In March 1998, we entered into an Investment Banking Agreement with EI,
whereby EI provided $30,000 in consulting services to us, of which $15,000 is
included in the accompanying financial statements as offering costs. As of
December 31, 1997 and 1998, $12,500 and $6,162, respectively, are included in
accounts payable as a result of our activities with EI. EI advanced us
approximately $60,000 on an interest-free basis during 1997, of which we
repaid $25,000 during 1997. The remaining balance of $34,500 is included in
the accompanying financial statements as due to related parties as of December
31, 1997. This balance of the loan was repaid in full in June 1998.

     During the years ended December 31, 1999 and 1998, we subleased office
space from EI for total rent payments of $96,000 and $41,347, respectively.

     On December 15, 1998, EI loaned us $5,400 on an interest-free basis,
which is part of the related party balance due of $44,000 as of December 31,
1998. The remaining balance of $39,000 consists of a loan payable to CTGI of
$24,000, and loans payable to two other affiliates totaling $15,000.

     On November 9, 1998, we entered into an Internet Web Site Development
Agreement with La Jolla Fresh Squeezed Coffee Company, a Washington
corporation ("La Jolla Coffee"), by which we provided corporate due diligence
and Web site services to La Jolla Coffee. In exchange therefor, we received
$30,000 and approximately five percent of the issued and outstanding stock of
La Jolla Coffee, in addition to a stock option to purchase an additional three
and three tenths percent (3.3%) of La Jolla Coffee's outstanding shares.

     In 1998, we had sales to related parties amounting to $622,156. In
addition, the accounts receivable balance of $134,467 is all due from related
parties, with approximately $119,000 attributable to SSP, which was acquired
by us in January 1999.

     In January 1999, we borrowed $138,000 from Grey Mare, LLC, a Colorado
limited liability company ("Grey Mare") on an interest-free basis. Mr. Wilford
Purcell, the stepfather of Mr. Gregory D. Writer, Jr., our former Chief
Executive Officer and Chairman, is the sole owner of Grey Mare. We repaid this
loan in full on February 19, 1999.


                                      22
<PAGE>


     We believe that all of the related party transactions discussed above
were on terms no less favorable to us than we would have received if the
transactions were negotiated with disinterested third parties.

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

     (a)  EXHIBITS.

EXHIBIT
NUMBER      DESCRIPTION                    LOCATION

 3.1        Articles of Incorporation      Incorporated by reference to
                                           Exhibit 3.1 to the Registrant's
                                           Form 10-SB Registration
                                           Statement filed on September 25,
                                           1999 (No. 0-27145)

 3.2        Bylaws                         Incorporated by reference to
                                           Exhibit 3.2 the Registrant's
                                           Form 10-SB Registration
                                           Statement filed on September 25,
                                           1999 (No. 0-27145)

27          Financial Data Schedule        Filed herewith electronically


     (b)  REPORTS ON FORM 8-K.  No reports on Form 8-K were filed during the
quarter ended December 31, 1999.

     On February 29, 2000, a Form 8-K was filed reporting the Technology
Purchase Agreement with Spirit 32.

     On April 19, 2000, a Form 8-K was filed reporting the resignation of
Corbin & Wertz (our former independent certified accountants).

     On April 25, 2000, a Form 8-K was filed reporting the engagement of Argy
& Company as our new independent accountants.





                                       23
<PAGE>


                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                      Consolidated Financial Statements

                Twelve months ended December 31, 1999 and 1998





                                   CONTENTS


                                                                     Page

Auditors' report                                                      F-2

Consolidated balance sheets - assets                                  F-3

Consolidated balance sheets - liabilities and shareholders' equity    F-4

Consolidated statements of operations                                 F-5

Consolidated statements of changes in shareholders' equity            F-7

Consolidated statements of cash flows                                 F-8

Notes to consolidated financial statements                            F-10




























                                      F-1
<PAGE>



                         Independent Auditors' Report

The Board of Directors
1st Net Technologies, Inc.
11423 West Bernardo Court
San Diego, California 92127


We have audited the accompanying consolidated balance sheets of 1st Net
Technologies, Inc. (a Colorado corporation) and Subsidiaries, as of December
31, 1999 and 1998, and the related consolidated statements of operations,
shareholders' equity and cash flows for the years then ended.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our 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 consolidated financial
statements are free of material misstatement.  An audit includes examining, on
a test-basis, evidence supporting the amounts and disclosures in the
consolidated financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We believe
that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of 1st Net Technologies, Inc., and Subsidiaries as of December 31, 1999 and
1998, and the consolidated results of their operations and their cash flows
for the years then ended, in conformity with generally accepted accounting
principles.

The Company is affiliated with other companies in the same line of business,
all of which are controlled by a common control group with the ability to
influence the volume of business done by each company.  As discussed in Note
3, the Company and its affiliates have engaged in significant transactions
with each other.

The Company has a relatively short history of operations and has experienced
losses in the years ended December 31, 1997, 1998, and 1999.  As of December
31, 1999, the Company maintains an excess of $1,954,000 in retained deficits.
In view of this matter, realization of a portion of the in the accompanying
financial statement is dependent upon continued operations of the Company and
upon the Company's ability to raise funds through debt or equity offerings.
These factors raise substantial doubt about the Company's ability to continue
as a going concern (see Note 1a).  Accordingly, these consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue
in existence.

                                       /s/ Argy & Company
                                       Argy & Company

Fountain Valley, California
April 30, 2000

                                      F-2
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                         Consolidated Balance Sheets


                                  ASSETS

                                                   December 31,  December 31,
                                                      1999          1998
                                                   ------------  ------------
Current Assets:

     Cash (Note 1c)                                $    12,873   $  17,888

     Accounts Receivable, net of allowance for
      doubtful accounts of $22,999 and $20,285
      (Notes 1f & 3)                                    67,498     134,467

     Marketable Securities (Note 1e)                 1,158,366      78,496

     Investments                                           -0-      40,620

     Prepaid Expenses                                      -0-      10,186

     Related Party Loans Receivable (Note 1g)              -0-      30,226
                                                   -----------   ---------

     Total Current Assets                            1,238,737     311,883

Restricted Securities (Note 3)                         320,000     262,600

Property and Equipment, at cost,
     net of accumulated depreciation of
     $ 117,917 and $ 23,246 (Notes 1i & 5)             535,283     175,976

Proprietary Technology (Note 5)                        279,980         -0-

Intangible Assets, net of accumulated
     amortization of $126,223 and
     $9,323 (Notes 1i & 1j)                            317,643      13,000

Goodwill, net of accumulated amortization
     of $ 8,963 and $ 0 (Notes 1j & 2)                 125,482         -0-

Organization Costs, net of accumulated
     amortization of $15,624 and
     $13,593 (Note 1i)                                     -0-      11,270

Research and Development net of accumulated
     amortization of $ 5,540 and $ 0 (Note 1j)          16,023      28,491

Other Assets (Note 1h)                                  15,926         -0-
                                                   -----------   ---------

     Total Assets                                  $ 2,849,074   $ 803,220
                                                   ===========   =========

The accompanying notes are an integral part of the consolidated financial
statements.
                                      F-3
<PAGE>


                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                         Consolidated Balance Sheets

                    LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   December 31,  December 31,
                                                      1999          1998
                                                   ------------  ------------
Current Liabilities:

  Accounts Payable and Accrued Liabilities        $    591,723   $   187,781
  Accounts Payable, Related Party                       20,169         6,162
  Current Portion of Long Term Debt (Note 1l)           66,095        15,878
  Due to Related Parties (Note 1g)                         -0-        44,000
  Demand Notes & Customer Deposits (Note 6)                -0-        10,000
  Dividends Payable (Note 8)                               -0-         6,000
  Deferred Revenues (Note 6)                               -0-        11,122
  Income Taxes Payable (Notes 1k & 6)                    2,400         2,400
                                                  ------------   -----------
     Total Current Liabilities                         680,387       283,343

Long Term Debt, Net of Current (Note 1l)               246,476        26,620
Deferred Credits from Acquisition of CTG,
  net of accumulated amortization of
  $29,504 and $0 (Note 2)                              634,332           -0-
Long Term Notes Payable                                 68,000           -0-
Long Term Notes Payable-Related Parties (Note 1g)      335,972           -0-

Commitments and Contingencies (Note 6)                     ---           ---
                                                  ------------   -----------
     Total Liabilities                               1,965,167       309,963
                                                  ------------   -----------

Minority Interest in Subsidiaries (Notes 1b & 2)        65,848          (342)
                                                  ------------   -----------
Stockholders' Equity:

Preferred Stock, $.001 par value; 10,000,000
  shares authorized: Series A-$2.50 participating,
  convertible, voting, cumulative; 400,000 shares
  authorized, issued and outstanding, -0- shares
  at December 31, 1999 and 20,000 at
  December 31, 1998 (Notes 1b, & 8)                        -0-        50,000

Common Stock, $.001 Par Value.  Authorized
  50,000,000 shares; issued and outstanding,
  5,753,700 shares at December 31, 1999 and
  3,513,000 at December 31, 1998 (Notes 1b & 7)          5,754         3,513

Additional Paid-In Capital (Notes 1b, 7 & 8)         2,766,629       874,415

Retained (Deficit) (Note 1a)                        (1,954,324)     (435,013)
                                                  ------------   -----------
     Total Stockholders' Equity                        818,059       492,915
                                                  ------------   -----------
     Total Liabilities and Stockholders' Equity   $  2,849,074   $   803,220
                                                  ============   ===========

The accompanying notes are an integral part of the consolidated financial
statements.
                                      F-4

<PAGE>


                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Twelve Months Ended:
                                                  December 31,   December 31,
                                                     1999           1998
                                                  ------------   ------------
REVENUES (Notes 1a, 1f & 3)
  Web Page Design                                 $    352,865   $   497,062
  Web Page Design in Exchange for Stock                 36,254       237,660
  Internet Marketing Services                          105,000        97,000
  Internet Marketing Services in Exchange for Stock     35,000           -0-
  Consulting and Internet Hosting                      547,400           810
  Consulting  in Exchange for Stock                    277,544        90,480
  Realized Gain/(Loss) on Stocks derived
    from earnings                                    1,271,291        28,177
  Unrealized Gain/(Loss)on Stocks derived
    from earnings                                      696,134       (11,613)
  Realized Gain/(Loss) on Stock Sales                      -0-        96,177
  Other Service Income                                   6,899         6,893
                                                   ------------   ----------
     TOTAL REVENUES                                  3,328,387     1,042,646
                                                   ------------   ----------
OPERATING EXPENSES
  Salaries, Wages, Benefits and Payroll
    Taxes (Note 4)                                   1,943,488       496,190
  Advertising and Promotional                          300,927       206,307
  Bad Debts (Note 1f)                                  182,030        25,572
  Interest                                              21,719         2,930
  Internet Access and Other Fees                       106,528        59,621
  Insurance                                             14,186         6,390
  Office and Administrative Costs                      282,632        36,507
  Outside Services, Contractors and Referral Fees      921,543       211,889
  Professional Fees                                    615,604        13,535
  Office Rent                                           38,189           -0-
  Office Rent, Paid to an Affiliate (Note 3)           101,844        53,902
  Repairs & Maintenance                                 12,394           -0-
  Telephones & Utilities                               100,003        26,792
  Travel                                                88,740        25,985
  Depreciation and Amortization (Notes 1i & 1j)        212,194        27,457
                                                   ------------   ----------
     TOTAL OPERATING EXPENSES                        4,942,021     1,193,077
                                                   ------------   ----------
     NET (LOSS) FROM OPERATIONS                     (1,613,634)     (150,431)

OTHER INCOME (EXPENSE)
  Unrealized Loss on Decline of Restricted
    Stock Investment (Note 3)                         (162,600)     (137,400)
  Interest and Dividends                                 8,924           853
                                                   ------------   ----------
NET (LOSS) BEFORE TAXES ON INCOME AND SHARE OF      (1,767,310)     (286,978)
  MINORITY INTEREST IN LOSS OF SUBSIDIARIES
     TAXES ON INCOME (Notes 1k & 6)
       Minimum State Corporate Tax                       3,200         1,600
       Current Benefit                                (589,533)      (87,364)
       Deferred Expense                                589,533        87,364
                                                   ------------   ----------

The accompanying notes are an integral part of the consolidated financial
statements.
                                      F-5
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                (Continued)

                                                     Twelve Months Ended:
                                                  December 31,   December 31,
                                                     1999           1998
                                                  ------------   ------------

NET (LOSS) BEFORE MINORITY INTEREST'S SHARE
  IN LOSS OF SUBSIDIARIES                           (1,770,510)     (288,578)
     Minority Interest in Undistributed Loss           245,197         2,502
                                                   ------------   ----------
NET (LOSS)                                         $(1,525,313)   $ (286,076)
                                                   ===========    ==========
EARNINGS PER SHARE (EPS) (Note 1n)
  BASIC EPS (Note 1n)                              $      (.33)  $      (.09)
                                                   ===========   ===========
  DILUTED EPS (Note 1n)                            $      (.33)  $      (.09)
                                                   ===========   ===========
    WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
     BASIC EPS                                       4,633,350     3,165,500
                                                   -----------   -----------
     DILUTED EPS                                     5,148,350     3,170,500
                                                   -----------   -----------


























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


                                      F-6
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
           Consolidated Statements of Changes In Shareholders' Equity
                    Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                 Preferred                Common
                           ----------------------  ---------------------- Additional                  Total
                           Number of ($0.001 Par)  Number of ($0.001 Par)  Paid-in    Accumulated   Stockholders'
                           Shares    $ Amount      Shares     $ Amount     Capital      Deficit       Equity
                           ----------------------  ---------------------- ----------  -----------   -------------
<S>                        <C>       <C>           <C>          <C>       <C>         <C>            <C>

Balance at
 December 31, 1997              -0-  $       -0-   2,798,000    $ 2,798   $  506,252  $  (142,937)   $   366,113

Shares Issued (Note 3)          -0-          -0-     265,000        265          ---          ---            265

Reg. D Offerings:

  Common Stock
   (Notes 1b & 7)               -0-          -0-     450,000        450      449,550          ---        450,000

  Preferred - Series A
   (Note 8)                  20,000       50,000         ---        ---          ---          ---         50,000

  Offering Costs                ---          ---         ---        ---      (81,387)         ---        (81,387)

Dividends on Preferred
 (Note 8)                       ---          ---         ---        ---          ---       (6,000)        (6,000)

Net (Loss)
 December 31, 1998              ---          ---         ---        ---          ---     (286,076)      (286,076)
                           --------  -----------   ---------    -------   ----------  ------------   -----------
Balance at
 December 31, 1998           20,000       50,000   3,513,000      3,513      874,415      (435,013)      492,915

Shares Issued (Note 3)          ---          ---     768,300        769      167,569           ---       168,338

Acquisition of SSP
 (Note 2)                       ---          ---   1,000,000      1,000          ---           ---         1,000

Reg. D Offerings:

  Common Stock
   (Notes 1b & 7)               ---          ---         ---        ---      667,204           ---       667,204

  Preferred - Series A
   (Note 8)                 452,400    1,131,000         ---        ---          ---           ---     1,131,000

  Offering Costs                ---          ---         ---        ---     (123,087)          ---      (123,087)

Conversion of Preferred
 (Note 8)                  (472,400)  (1,181,000)    472,400        472    1,180,528         6,002         6,002

Net (Loss)
 December 31, 1999              ---          ---         ---        ---          ---    (1,525,313)   (1,525,313)
                           --------  -----------   ---------    -------   ----------  ------------   -----------
Balance at
 December 31, 1999              -0-  $       -0-   5,753,700    $ 5,754   $2,766,629  $ (1,954,324)  $   818,059
                           ========  ===========   =========    =======   ==========  ============   ===========

</TABLE>



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



                                      F-7
<PAGE>




                             1st NET TECHNOLOGIES, INC.
                                 and Subsidiaries
                         Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                         Twelve Months Ended:
                                                                      December 31,  December 31,
                                                                          1999         1998
                                                                      -----------   -----------
<S>                                                                   <C>           <C>
Increase (Decrease) In Cash And Cash Equivalents:

Cash flows from OPERATING Activities:
    Net (Loss)                                                        $(1,525,313)  $  (286,076)
                                                                      -----------   -----------
  Adjustments to Reconcile Net (Loss)
  to Net Cash (Used) By OPERATING Activities:
    Transactions not requiring cash:
    Depreciation and Amortization (Notes 1i, 1j & 5                       212,194        27,457
    Issuance of Stock for Services  (Notes 1b & 3)                            668           265
    Issuance of Stock to Acquire SSP Management                             1,000           -0-
    Minority Interest in Subsidiaries Acquisition (Notes 1b & 2)           65,506           342
    Provision for Doubtful Accounts (Note 1f)                               2,714        20,285
    Unrealized (Gains) Loss on Marketable Securities (Note 1e)         (1,049,568)       11,013
    Changes in operating assets and liabilities net of effects
    from purchase of Mariah. SSP Management and CTG:
      Decrease in Accounts Receivables, Marketable
      Securities, and Other Current Assets                                104,667      (157,701)
    Increase in Accounts Payable and Accrued Liabilities                  403,044        29,320
                                                                      -----------   -----------
    Total Adjustments                                                    (259,775)      (69,019)
                                                                      -----------   -----------
    NET CASH (USED) BY OPERATING ACTIVITIES                            (1,785,088)     (355,095)
                                                                      -----------   -----------
Cash Flows from INVESTING Activities:
    Unrealized Loss and Deposit Paid for Auto Purchase (Note 3)           162,600       137,400
    Investment in Restricted Stocks (Note 3)                             (220,000)          -0-
    Purchases of Property and Equipment (Notes 1i & 5)                   (469,904)     (127,224)
    Acquisition of Goodwill in SSP Management (Note 2)                   (134,445)          -0-
    Payments for Organizational Costs (Notes 1j & 5)                       (2,031)       (9,142)
    Payments for Intangible Assets (Notes 1j & 2)                        (406,620)      (10,000)
    Payments for Proprietary Technology                                  (279,980)          -0-
    Payments for Research and Development (Note 1i)                           -0-       (28,491)
                                                                      -----------   -----------
    NET CASH (USED) BY INVESTING ACTIVITIES                            (1,350,380)      (37,457)
                                                                      -----------   -----------
Cash Flows from FINANCING Activities:
    Principal Payments on Capital Lease Obligations (Note 5)              (39,808)      (11,170)
    Proceeds from Acquisition of Capital Lease Obligations (Note 5)       259,666           -0-
    Credits from Acquisition of Children's Technology Group (Note 2)      663,836           -0-
    Proceeds from Issuance of Long Term Notes Payable                     403,972           -0-
    Proceeds from Issuance of Preferred Stock (Notes 1b, 2 & 7)         1,131,000       450,000
    Proceeds from Issuance of Common Stock for Services (Notes 1b & 3)    167,670           -0-
    Proceeds from Issuance of Common Stock (Notes 1b & 8)                 667,204        50,000
    Costs Associated with Stock Offerings                                (123,087)      (81,387)
                                                                      -----------   -----------
    NET CASH PROVIDED BY FINANCING ACTIVITIES                           3,130,453       407,443
                                                                      -----------   -----------
    NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                     (5,015)       14,891

    Cash and cash equivalents at the beginning of the year                 17,888         2,997
                                                                      -----------   -----------
    CASH AND CASH EQUIVALENTS AT END OF YEAR                          $    12,873   $    17,888
                                                                      ===========   ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
                                      F-8
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                     Consolidated Statements of Cash Flows
                                (Continued)
               Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                                                         Twelve Months Ended:
                                                                      December 31,  December 31,
                                                                          1999         1998
                                                                      -----------   -----------
<S>                                                                   <C>           <C>
Supplemental Disclosures of Cash Flow Information:
    Cash Paid During the Year for:
       Interest                                                       $    21,719   $     2,930
                                                                      -----------   -----------
       Income Taxes                                                   $     3,200   $     1,600
                                                                      ===========   ===========
</TABLE>

Acquisition Note:  In connection with the acquisition of 97.12% of the common
stock of Mariah Communications, Inc. (Mariah), the Company acquired assets
with a book value of $34,821 (including cash of $1,766) and assumed
liabilities of $32,420, for consideration of granting exclusive proprietary
technology rights to IP Telephony Technology, with a book value of $75,000
(see also Note 2).

Acquisition Note:  In connection with the acquisition of approximately 86% of
the common stock of The Children's Technology Group, Inc. (CTG), the Company
acquired net assets with a book value of $1,249,963 (including a balance of
$465,650 in cash), in exchange for the Company's "Mindwalker Technology".
This resulted in deferred credits from the acquisition, totaling $679,843 (see
also Note 2).

Acquisition Note:  In connection with the acquisition of 100% of the common
stock of SSP Management Corp. (SSP), the Company acquired net assets with a
book value of $4,457 (including a nominal balance of cash), for consideration
of 1,000,000 common shares of the Company's stock and relief of debt for
existing accounts receivable and loan receivable balances.  This resulted in
an excess of purchase price over book value of net assets totaling $134,445,
which was recorded as goodwill.

Leases Note:  During 1999 and 1998, the Company incurred capital lease
obligations of $318,883 and $53,668, respectively, in connection with lease
agreements to acquire equipment.

Related Party Note:  During 1999, the Company received net $591,680 and repaid
$299,708 to related parties in relation to short term and long term loans.
During 1998, the Company received net $30,226 and repaid $27,900 to related
parties in relation to short term loans.  In addition, as discussed further in
Note 3, the Company had sales with related parties.

Non Cash Financing Note:  In the year ended December 31, 1998, the Company
issued warrants with the preferred stock offering which are associated with
the $50,000 financing activity listed above.  In the year ended December 31,
1999, the Company had a Regulation D offering for additional preferred stock
totaling $1,131,000 (with associated offering costs of $123,087) for which
additional warrants were issued (see also Note 8).

Sales Note:  During 1999 and 1998, the Company recorded revenues of $1,044,932
and $328,140, respectively, that were paid in customers' stock.


The accompanying notes are an integral part of the consolidated financial
statements.
                                      F-9
<PAGE>


                          1st NET TECHNOLOGIES, INC.
                               and Subsidiaries
                 Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(1)  Summary of Significant Accounting Policies

     (a)     Nature of Business

     1st Net Technologies, Inc. ("The Company"), was originally organized as
Snow Eagle Investments, Inc. under the laws of the State of Colorado, on May
14, 1990.  In April 1997, the Company initiated operations with the purchase
of certain assets, and tradename of an internet shopping mall doing business
as 1st NetZing Mall (NetZing).  Subsequent to the acquisition of NetZing, the
Company changed its name to 1st Net Technologies, Inc.

     The Company is primarily in the Internet commerce and services business,
specializing in Internet services to publicly traded companies and high net
worth investors, offering a diverse range of goods and services. Those
services include "due diligence web sites", custom database systems
management, investment opportunity profiling, information resourcing, and
developing and supporting technological development to control and monitor
information.

    On August 15, 1998, the Company acquired a controlling interest in Mariah
Communications, Inc. (Mariah) (formerly, MC32, Inc.) (See Note 2).
Accordingly, the accompanying consolidated financial statements of the Company
include the results of operations, financial position and cash flows of
Mariah.  This majority owned Subsidiary is in a related Internet commerce
activity, developing Internet protocol telephony technologies, wherein voice
is converted into data and then reassembled once received after transmission
on the Internet.

     On January 19, 1999, the Company acquired 100% of the outstanding common
stock of SSP Management Corp. (SSP), an entity which provides internet public
relations and internet newsletters.  This company was acquired in exchange for
1,000,000 common shares in the Company (See Note 2). Accordingly, the
accompanying consolidated financial statements of the Company include the
results of operations, financial position and cash flows of SSP.

     On May 1, 1999, the Company acquired a controlling interest in The
Children's Technology Group, Inc. (CTG), (formerly Tummybusters, Inc.).
Accordingly, the accompanying consolidated financial statements of the Company
include the results of operations, financial position and cash flows of CTG
(See Note 2).  This company was acquired in exchange for the exclusive
licensing and marketing rights to the Crayon Crawler Web Browser suite of
modules, and proprietary technology for the Mindwalker.

     All three acquired entities had shareholders in common with the Company
or the Company's management (See also Notes 2 & 3).







                                      F-10
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(1)  Summary of Significant Accounting Policies (Continued)

     (a)     Nature of Business (Continued)

     The accompanying financial statements of the Company have been prepared
in conformity with generally accepted accounting principles, which
contemplates continuation of the Company as a going concern.  However, the
Company has incurred net losses during 1997, 1998, and 1999 resulting in a
retained deficit of $2,174,324.  In view of this matter, realization of a
portion of the assets in the accompanying financial statement is dependent
upon continued operations of the Company and upon the Company's ability to
raise funds through debt or equity offerings.  These factors raise substantial
doubt about the Company's ability to continue as a going concern although
management believes that actions presently being taken and current revenues
being generated will provide the opportunity for the Company to continue as a
going concern.

     (b)     Capitalization

     The Company was initially capitalized by the issuance of 1,800,000 shares
of its common stock, at $0.001 per share, totaling $1,800, to an officer (whom
has subsequently resigned), in exchange for services related to organizing the
Company.  In June, 1997 the Company circulated a self written confidential
offering memorandum, resulting in the issuance of 598,000 common shares, for a
total of $149,500, less offering costs of $42,250.  On October 28, 1997, an
additional 400,000 common shares were issued under Regulation D, Rule 504 of
the Securities Act of 1933 and California Code 25102(f) to a single investor
for $400,000.

     On October 12, 1998, the Company issued an additional 450,000 common
shares under Regulation D, Rule 504 to investors for $450,000, less offering
costs of $81,387.  As of December 31, 1998, the Company circulated an
additional self written confidential offering memorandum under Regulation D,
Rules 501 through 508 of the Securities Act of 1933 and California Code
25102(f), resulting in the issuance of 20,000 shares of Series A Preferred
Stock, for a total of $50,000.  This offering was subscribed in full by March
11, 1999 resulting in an aggregate issuance of 472,400 shares of Series A
Preferred Stock and 236,200 warrants, totaling $1,181,000, less offering costs
of 123,087 (See also Notes 6 & 8).  All warrants were exercised during the
year ended December 31, 1999, resulting in a conversion of all preferred
shares into common shares.

     (c)     Cash and Cash Equivalents

     For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents.  There were no cash equivalents as of
December 31, 1999 and 1998.



                                     F-11
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                               and Subsidiaries
                   Notes to consolidated financial statements
                       As of December 31, 1999 and 1998

(1)  Summary of Significant Accounting Policies (Continued)

     (d)     Principles of Consolidation, Basis of Accounting and New
             Accounting Pronouncements

     The accompanying consolidated financial statements include the accounts
of the Company and of its majority owned subsidiaries, Mariah, SSP and CTG.
These acquisition have been reported as purchase business combinations and
were all recorded at book value because the acquisitions were not at arm's
length.  Inter-company transactions and balances have been eliminated in
consolidation.  All transactions are recorded on the accrual basis, at
historical cost.

     The company has adopted Statements of Financial Accounting Standards No.
130 "Reporting Comprehensive Income" and No. 131 "Disclosures About Segments
of an Enterprise and Related Information".  Adoption of these pronouncements
did not materially affect the financial statements.

     (e)     Marketable Securities

     Marketable securities consists of equity securities, or the rights to
obtain equity securities (options), in common stock traded in major market
listings, and for stock in some companies who are traded over-the-counter.
All equity securities are considered "trading" under the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities".  Accordingly, unrealized gains and
losses on the equity securities are reflected in operations.

     (f)     Revenues and Accounts Receivable

     Revenues are recorded on the accrual basis.  Accounts receivable are
recorded at realizable value, net of reasonable and adequate reserves for
potential uncollectible amounts.

     (g)     Related Parties

     On February 23, 1999, the Financial Accounting Standards Board (FASB)
issued a news release proposing a new Statement updating FASB Statement 94,
that would require a controlling entity to consolidate all entities that it
controls, unless control is temporary, even when control exists in forms other
than a majority voting interest.

     The proposed Statement would be effective for financial statements for
annual periods beginning after December 15, 1999, although earlier application
is encouraged.  The Company has not yet elected to adopt application of this
standard and the affect of such accounting treatment is indeterminable.  The
application of this standard could have a material impact on the user's
conclusions as to the Company's financial position and results of operations
and cash flows.  As reported in the auditors' opinion, the Company  is
affiliated with other companies in the same line of business, all of which are
controlled by a common control group, with the ability to influence the volume
of business done by each company.  See also, Note 3 for further discussion on
related parties.

     The balance of related party loans receivable and payable are from
various affiliated entities, are interest free and have no fixed terms of
repayment.
                                   F-12
<PAGE>


                          1st NET TECHNOLOGIES, INC.
                               and Subsidiaries
                     Notes to consolidated financial statements
                         As of December 31, 1999 and 1998


(1)  Summary of Significant Accounting Policies (Continued)

     (h)     Deposits and Other Assets

     This balance consists primarily of equipment and premises security
deposits.

     (i)     Property and Equipment, Research and Development, Organizational
             Expenditures and Trademarks

     Property and equipment is stated at cost and is depreciated using the
straight line method over their estimated useful lives, currently five years,
with a mid-year convention in the year of acquisition.  In accordance with
FASB - 86 requirements, the Company has established the technological
feasibility of their internet web site directory, and accordingly all costs
incurred for the planning, product design, detail program design and
establishing technical feasibility are capitalized as research and
development, and are amortized upon enhancement completion on a project by
project basis, using the straight line method, over their expected useful
lives.  Additionally, periodic evaluations of unamortized research and
development costs are made to determine the net realizable value on the
Company's balance sheet.  Any resulting write downs are charged to periodic
operations.  Trademarks are amortized using the straight line method, over two
years.  Organizational expenditures for the Company were paid as completed,
totaling $15,624, as of December 31, 1999, and have been fully expensed
through the end of this year.  Betterment's and improvements are capitalized
and depreciated over their estimated useful lives, while repairs and
maintenance costs are expensed when incurred.  The Company adopted the
provision of FASB No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be disposed of which did not have a material
impact on the Company's financial position, results of operations or
liquidity.

     (j)     Intangible Assets and Change in Accounting Estimate

     Intangible assets, resulting from the differences between acquisition
purchase price and the fair value  (or net book value, in the case of related
parties) of net assets acquired are being amortized using the straight line
method, over 15 years.  Capitalized Trade Name and Website, and Database
intangibles are being amortized using the straight line method, over 2 years.
Net amortization expense for the years ended December 31, 1999 and 1998 were
$63,433 and $9,323, respectively.

     (k)     Income Taxes

     The Company has applied FASB 109, Accounting for Income Taxes (SFAS 109),
to all operations since inception, for all periods disclosed in this financial
examination.





                                      F-13
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(1)  Summary of Significant Accounting Policies (Continued)

     (k)     Income Taxes (Continued)

     SFAS 109 "Accounting for Income Taxes" requires the liability method in
accounting for income taxes.  Deferred tax assets and liabilities arise from
the difference between the tax basis of an asset or liability and its reported
amount on the financial statements.  Deferred tax amounts are determined by
using the tax rates expected to be in effect when the taxes will actually be
paid or refunds received, as provided under currently enacted laws.  Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.  Income tax expense or benefit is the tax
payable or refundable, respectively, for the period, plus or minus the change
during the period, in deferred tax assets and liabilities.  The Company has
experienced operating losses during its period of existence, and future
profitability cannot be assured, resulting in reserves for the valuation
allowance of the entire amount of the determined deferred tax assets (See also
Note 6).

     (l)     Long-Term Debt and Long Term Notes Payable

     Long-term debt of $246,476 and $26,620 as of December 31, 1999 and 1998,
respectively, represents the amount of capital lease obligations due in
periods beyond December 31, 1999, and is, accordingly, stated net of the
current portion of $66,095 and $15,878, respectively.  Long term notes payable
of $68,000 represents two notes, with no stated interest rate and no due
dates.

     (m)     Transactions in Capital Stock

     All securities issued by the Company have not been registered under the
Securities Act of 1933, as amended.  They may not be sold, offered for sale,
transferred, pledged or hypothecated, in the absence of a registration
statement in effect with respect to the securities under such act, or an
opinion of counsel or other evidence satisfactory to the Company that such
registration is not required, or unless sold pursuant to Rule 144 under such
act.  The Company's free trading stock is currently involved in limited
trading on the OTC: Pink Sheets under the symbol FNTT.  The trading price at
December 31, 1999 was $1.63,  and as of the date of this report was trading at
$1.13 in limited transactions.  This activity does not however illustrate an
established "market" for the Company's stock as described in FASB 123
(Accounting for Stock Based Compensation) or for establishing fair value in
the acquisitions involving issuance of the Company's stock.










                                      F-14
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998

(1)  Summary of Significant Accounting Policies (Continued)

     (n)     Earnings Per Share

     In February 1997, the FASB issued Statement of Financial Accounting
Standard No. 128, "Earnings Per Share" (SFAS 128).  SFAS 128 specifies the
computation, presentation, and disclosure requirements of earnings per share
and supersedes Accounting Principles Board Opinion 5, "Earnings Per Share".
SFAS 128 requires dual presentation of basic and, where applicable, diluted
earnings per share.  Basic earnings per share, which excludes the impact of
common stock equivalents, replaces primary earnings per share.  Diluted
earnings per share which utilizes the average market price per share or ending
market price per share when applying the treasury stock method in determining
common stock equivalents, replaces fully-diluted earnings per share.  SFAS 128
is effective for the Company in 1999 and 1998.  In the years ended December
31, 1999, and 1998, this adoption of SFAS 128 has not been presented in the
presentation of Diluted earnings per share for those periods, due to the anti-
dilutive effect of losses in both periods.  Basic earnings per share have been
computed using the weighted average number of common shares and common share
equivalents outstanding.

(2)     Acquisitions

Acquisition of 1st NetZing Mall

     On April 7, 1997, the Company acquired certain assets which included the
tradename, trademarks, clients and programming code of an internet shopping
mall known as 1st NetZing Mall, for $10,000 in cash and a promissory note
payable to the seller for $10,000, for a total purchase price of $20,000.  At
December 31, 1997, the promissory note was paid in full.  The transaction was
recorded as a purchase in accordance with Accounting Principles Board Opinion
No. 16.  Upon determining the fair value of tangible and intangible assets
acquired, the full purchase price was allocated to the acquisition of the
tradename, trademarks, and technology associated with the internet shopping
mall.  The $20,000 was recorded as an intangible asset, and is being amortized
over two years, on a straight-line basis.

Acquisition of Mariah

     On August 15, 1998, Mariah's board of director's approved the issuance of
4,000,000 shares of common stock of Mariah, to 1st Net Technologies
(representing 97.12% of the outstanding common stock), in a business
combination accounted for as a purchase, in accordance with the terms of
Accounting Principles Board Opinion No. 16, with an effective date of December
31, 1998.  The price paid was $75,000 (the net book value of the technology
rights).  The results of operations of Mariah are included in the accompanying
consolidated financial statements since the date of acquisition.  The total
net book value (approximated to equal fair value) of the net assets of Mariah
at December 31, 1998, amounted to $11,799.  The excess purchase price was
accordingly allocated to goodwill, with a subsequent reduction in full due to
the Company's interest in Mariah's losses.  As of December 31, 1998 Mariah
incurred net losses of $86,901.  As a result, the Company recorded a reduction
of Mariah's non-current assets acquired on a prorated basis by the amount of
goodwill.

                                      F-15
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(2) Acquisitions (Continued)

Acquisition of SSP

     On January 19, 1999, SSP's board of directors approved the acquisition by
the Company of 100% of the outstanding common stock of SSP, in exchange for
1,000,000 (.001 par value) shares of the Company's stock and relief of debt
amounting to $137,903, in a business combination accounted for as a purchase,
in accordance with the terms of Accounting Principles Board Opinion No. 16.
The results of operations of SSP are included in the accompanying consolidated
financial statements since the date of acquisition.  The total net book value
of SSP at January 19, 1999, amounted to $4,457.  The excess purchase price
($134,445) was accordingly allocated to goodwill.

Acquisition of CTG

     On May 1, 1999, CTG's board of directors approved the acquisition by the
Company of 86.39% of the outstanding common stock of CTG, and the issuance of
4,000,000 of CTG's common stock to the Company, in exchange for the exclusive
licensing and marketing rights to the Crayon Crawler Web Browser suite of
modules.  Accordingly, the accompanying consolidated financial statements of
the Company include the results of operations, financial position and cash
flows of CTG since the date of acquisition. The total net book value acquired
at May 1, 1999 amounted to $1,249,963.  The excess of this book value over
purchase price ($679,843) has been allocated to deferred credits from
acquisition of CTG.

Acquisition of SP32

     On January 22, 1999, the Company entered into an agreement to purchase
all of the issued and outstanding stock of Spirit32 Development Corporation in
exchange for 450,000 shares of the Company's common stock.  The acquisition
was never completed and was formally rescinded in total on February 11, 2000,
retroactively.  Accordingly, the results of operations of Spirit32 have not
been included in the accompanying consolidated financial statements.

     Following is a summary of the financial position of the Company and its
subsidiaries at December 31, 1999, without the consolidating and eliminating
adjustments:












                                      F-16
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(2)  Acquisitions (Continued)

<TABLE>
<CAPTION>
                                1st Net     Mariah       SSP        CTG       Combined
                             -----------  ---------  ----------  ---------  -----------
<S>                          <C>          <C>        <C>         <C>        <C>

Current assets               $    34,722  $   2,076  $1,150,917  $  51,022  $ 1,238,737
Property and equipment, net      472,235     46,544      15,251     50,521      584,551
Other assets                   2,556,079    245,844     175,877    420,093    3,397,893
                             -----------  ---------  ----------  ---------  -----------
                             $ 3,063,036  $ 294,464  $1,342,045  $ 521,636  $ 5,221,181
                             ===========  =========  ==========  =========  ===========

Current liabilities          $   756,190  $(103,705) $    5,441  $  22,461  $   680,387
Long term debt & Credits       1,308,787        -0-      (8,000)       -0-    1,300,787
Shareholders' equity             998,059    398,169   1,344,604    499,175    3,240,007
                             -----------  ---------  ----------  ---------  -----------
                             $ 3,063,036  $ 294,464  $1,342,045  $ 521,636  $ 5,221,181
                             ===========  =========  ==========  =========  ===========

</TABLE>

Included in consolidated results of operations for the year ended December 31,
1999 are the following results of the previously separate companies for the
period:

<TABLE>
<CAPTION>
                                1st Net     Mariah       SSP        CTG       Combined
                             -----------  ---------  ----------  ---------  -----------
<S>                          <C>          <C>        <C>         <C>        <C>

Net sales                    $ 1,447,339  $     -0-  $1,815,779  $  65,209  $ 3,328,387
                             ===========  =========  ==========  =========  ===========

Net income (loss)            $(1,937,766) $(301,148) $1,340,147  $(626,545) $(1,525,313)
                             ===========  =========  ==========  =========  ===========

</TABLE>

     The following pro forma information illustrates the Company's unaudited
financial position as of December 31, 1999 and 1998, assuming that all
acquisitions occurred as of the beginning of each period presented, after
giving effect to proforma adjustments.  The proforma adjustments represent
amortization of goodwill, product license and renewals, trademarks and
tradenames, and customer lists.  The proforma adjustments also include
adjustments to common stock shares issued and outstanding, that relate to the
acquisition of subsidiaries, as if they had occurred as of the beginning of
each period presented.  The proforma financial information is presented for
informational purposes only and may not necessarily be indicative of the
operating results that would have occurred had these acquisitions been
consummated as of the beginning of each period presented, nor is it indicative
of future operating results.

                                      F-17
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(2)  Acquisitions (Continued)


                Unaudited Pro Forma Consolidated & Condensed
                 Balance Sheets as of 12/31/99 and 12/31/98

                                          12/31/99        12/31/98
                                        -----------     -----------

     Current assets                     $ 1,238,737     $ 1,426,032
     Property and equipment, net            535,283         230,777
     Other assets                         1,075,054         301,188
                                        -----------     -----------
                                        $ 2,849,074     $ 1,957,997
                                        ===========     ===========

     Current liabilities                $   680,387     $   242,789
     Long Term Debt & Deferred Credits    1,270,030          26,620
     Minority Interest                       65,848         233,308
     Shareholders' equity                   832,809       1,455,280
                                        -----------     -----------
                                        $ 2,849,074     $ 1,957,997
                                        ===========     ===========


                Unaudited Pro Forma Consolidated, Condensed
        & Combined Results of Operations as of 12/31/99 and 12/31/98

                                          12/31/99         12/31/98
                                        -----------     -----------

     Sales                              $ 3,328,387     $ 1,319,733
                                        ===========     ===========
     Net (Loss)                         $(1,552,563)    $  (347,611)
                                        ===========     ===========
     Net (Loss) per common share        $      (.34)    $      (.11)
                                        ===========     ===========


(3)  Related Party Transactions & Significant Customers

     On November 5, 1997, the Company entered into an agreement to purchase
eight automobiles from LaForza Automobiles, Inc. ("LaForza") (formerly
Celebrity Networks, Inc.) for which the Company paid $400,000.  The vehicles
were to be delivered to the Company beginning no later than March 30, 1998,
with final delivery no later than August 30, 1998.  Management had intended to
resell the vehicles, but in 1998, the Company renegotiated the terms of the
purchase, and received 200,000 shares of LaForza common stock instead of the
automobiles.  The net market value of these shares as of December 31, 1998 had
declined to $262,600 from their value of $400,000 as of December 31, 1997, and
resulted in the recording of unrealized losses of $137,400 during 1998.
Likewise, the net market value of these shares declined in 1999 to $100,000,
resulting in unrealized losses of $162,600.

                                      F-18
<PAGE>




                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(3)  Related Party Transactions & Significant Customers (Continued)

     Additionally, in 1999, Mariah invested $220,000 in restricted shares of
the Last Mile Communications Corporation, whose C.E.O. and chairman of the
board, formerly held the same positions in Mariah.

     In 1999, the Company had aggregate related party sales of $1,276,121 of
which $775,000 was eliminated in consolidation.  There were no related party
receivables as of December 31, 1999.

     In 1998, the Company had sales to related parties amounting to $622,156.
In addition, the accounts receivable balance of  $134,467 was all due from
related parties, with approximately $119,000 attributable to SSP, which was
acquired subsequent to December 31, 1998.  (See also Note 2)

     The Company issued 265,000 shares of common stock to employees during
1998 as bonuses for the 1997 year.  Since the stock is restricted for a one
year period and their is no established market for the shares, the issuance of
shares was recorded at par for a total of $265.  The Company issued 595,300
additional shares of common stock to management and key employees during 1999,
as incentives and bonuses for the 1998 year, and 173,000 shares as payment for
services.  These shares issued are likewise restricted for a one year period,
with no established market for trading and, accordingly, the issuance of such
shares were recorded at par.

     EI is the largest percentage owner in the Company (see Note 4) and also
owns a majority interest in Probook, Inc.  The sole shareholder of EI also
serves on the board of Mariah.  The Company and/or EI also have officers or
directors in common with various other entities.

     In 1999, sales to one unrelated customer totaled $970,500 which
represented 28% of the Company's sales.  In 1998, sales to one customer, SSP,
which was subsequently acquired, accounted for approximately 42% of the
Company's total revenues.  Further, in 1999 and 1998, approximately 69.6% and
31%, respectively, of the Company's revenue was in the form of common stock
received, including the realized and unrealized gains on such stocks, as
payment for services.

(4)  Certain Beneficial Owners and Management

     The following is a list of the officers and directors of the Company,
along with all other shareholders owning directly or indirectly at least 5% of
the Company's shares as of December 31, 1999.  There were no salaries greater
than $100,000 paid to any one employee during the 1999 year.







                                      F-19
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998



(4)  Certain Beneficial Owners and Management (Continued)


     Shareholder/Position/Title                      Shares Held   Ownership
     --------------------------                      -----------   ---------

EI/James H. Watson Jr.-CEO & Chairman of the Board     2,140,500     37.2%
Clifford J. Smith-President                              300,000      5.2
Jeffrey Chatfield-V.P. Investor Relations                 75,000      1.3
Neville P. Billimoria-V.P. Marketing & Communications     31,000      0.5
Cede & Co.- Investment broker in trust for
  investors at large                                   1,771,053     30.8
                                                       ---------    -----
        Total listed                                   4,317,553     75.0%
                                                       =========    =====
        Total shares authorized, issued & outstanding  5,753,700    100.0%
                                                       =========    =====

(5)  Property and Equipment

     Property and equipment consists of the following as of December 31,

                                                     1999         1998
                                                  ----------   ----------

     Office Furniture and Fixtures & Equipment    $  217,933    $   5,641
     Office Equipment - Capitalized Leases           291,407       27,080
     Leasehold Improvements                           22,954       22,954
     Vehicle - Capitalized Lease                      27,219       27,219
     Radio Equipment                                   4,243        4,178
     Computer Equipment - Capitalized Leases          38,898       26,588
     Computer Equipment and Peripherals               50,546       85,562
                                                  ----------   ----------
          Total                                      653,200      199,222
          Less Accumulated Depreciation             (117,917)     (23,246)
                                                  ----------   ----------
               Net Property and Equipment         $  535,283   $  175,976
                                                  ==========   ==========

     Proprietary technology of $279,980 represents funds expended by the
Company to Spirit 32 (see also Notes 2 and 6) in connection with obtaining the
exclusive rights, all of the tradenames and copyrights associated with the
Crayon Crawler Browser.









                                      F-20
<PAGE>




                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(6)  Liabilities, Commitments & Contingencies, Subsequent Events, & Off
     Balance Sheet Risk

     Demand Notes Payable & Customer Deposits

     Demand notes, non-related parties, consisted of the following
     at December 31
                                                    1999          1998
                                                  ----------   ----------
       Notes payable (2), no stated interest,
         unsecured                                $      -0-   $    5,000
       Customer Deposits                                 -0-        5,000
                                                  ----------   ----------
           Total Demand Notes Payable &
             Customer Deposits                    $      -0-   $   10,000
                                                  ==========   ==========


     Deferred Revenues

     On November 5, 1997, the Company received, in advance, payment for an
eighteen month consulting contract with LaForza, beginning August 13, 1997.
Payment was in the form of an option, fully exercisable at $.50 per share, to
purchase 150,000 free-trading shares of LaForza Automobiles, Inc.  During the
period August 13, 1997 through December 31, 1997, the Company exercised 50,000
of the options, for which it sold the shares for approximately $56,745.  The
LaForza common stock is thinly traded, over-the-counter.  The determination of
the value of the options, in management's opinion, was more readily
determinable than the value of the services to be provided.  Therefore, based
on the cash proceeds from the sale of the common stock received from the
exercise of the options, the 150,000 options have been valued at $133,470.
During the years ended December 31, 1998 and 1997, approximately sixty-seven
and twenty-five percent of the consulting contract was completed for each
year, respectively.  Accordingly, the Company has recorded revenue of $89,425
and $33,368, respectively for those years, and has deferred the remaining
$11,122 until the earnings process has been completed.

     Income Taxes

     As of December 31, 1999 and 1998, the Company had income taxes payable to
the State of California Franchise Tax Board totaling $2,400.

     At December 31, 1999, deferred taxes consisted of a net tax assets due to
federal and state  net operating loss carryforwards of $1,934,518 and
$966,459, respectively, which were fully offset by valuation allowances since
there is no assurance of recovery.  The net operating loss carryforwards will
expire beginning in 2012.




                                      F-21
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(6)  Liabilities, Commitments & Contingencies, Subsequent Events, & Off
     Balance Sheet Risk (Continued)


     A reconciliation of the U. S. statutory federal income tax rate to the
effective tax rate is as follows:

                                                        1999        1998
                                                      ---------   ---------

     U. S. federal statutory graduated rate           $  34.00%   $  34.00%
     State income tax rate, net of federal benefit        9.30%       9.30%
     Net operating loss for which no tax benefit is
       currently available                              (43.30%)    (43.30%)
                                                      ---------   ---------
                                                      $     -0-   $     -0-
                                                      =========   =========

     Commitments & Contingencies

     The future minimum annual aggregate rental payments required under both
capital and operating leases that have initial or remaining non-cancelable
lease terms in excess of one year are as follows:

     Years Ending December 31,

                 2000             $   216,928
                 2001                 186,494
                 2002                 185,254
                 2003                 135,878
                 2004                  42,404
                 Thereafter               -0-
                                  -----------
                 Total            $   766,958
                                  ===========

     The Company is currently involved in litigation with three former
employees regarding wrongful termination and is under investigation of the
United States Securities and Exchange Commission for potential violations of
securities laws.  The outcome of either litigation is indeterminable; however,
management is confident that these matters will be settled favorably and no
reserve has been established for loss contingencies due to either of these
legal matters in the accompanying financial statements.








                                      F-22
<PAGE>



                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(6)  Liabilities, Commitments & Contingencies, Subsequent Events, & Off
     Balance Sheet Risk (Continued)

     Subsequent Events

     As discussed in Note 2, the Company signed an agreement on February 11,
2000, retroactively rescinding the stock purchase agreement associated with
the acquisition of Spirit 32.  Additionally, the agreement stipulated the
terms for the purchase of the Mindwalker Series, the Crayon Crawler Browser
(including the server software and source code), and the Spirit 32 Voice
Mailer, along with all of the tradenames and copyrights associated with such
technologies for $100,000 and 250,000 shares of the Company's common stock.

     On February 23, 2000, SSP signed a contract for the sale of property
known as OTCjournal.com, being a database with approximately 75,000
subscribers, URL, and associated hardware for a minimum purchase price of
$750,000 based upon a ten percent royalty on sales and a note for $200,000
payable in four equal installments on 1/02/2001, 6/1/2001, 1/2/2002, and
6/1/2002.

     Off Balance Sheet Risk

     As of December 31, 1999 and 1998, the Company maintained no cash accounts
in excess of the $100,000 federally insured limits.  Additionally, the Company
is primarily involved in Internet services, which is a rapidly growing
industry with many unknown affects.  Due to the limited operating history of
the Company, there is no assurance that the Company will be able to raise
sufficient equity capital or generate profits to sustain its existence.

     The Company could also be affected by the inability to establish a market
for their shares of stock.  The Company has many related parties and could be
subject to a conflict of interest with the directors.  Last, the Company has
issued shares to employees and principal founders for no cash consideration,
and may issue additional shares of common stock or preferred stock in the
future, resulting in the dilution in the underlying book value and earnings
per share.

(7)  Common Stock

     The Company is authorized to issue 50,000,000 common shares with a $0.001
par value.  Each common share is entitled to one vote and there are no other
preferences.  No dividends have been paid by the Company since inception.









                                      F-23
<PAGE>




                          1st NET TECHNOLOGIES, INC.
                              and Subsidiaries
                  Notes to consolidated financial statements
                       As of December 31, 1999 and 1998


(8)  Preferred Stock

     The Company is authorized to issue 10,000,000, $0.001 par value preferred
shares, with varying voting rights and other preferences.  As of December 31,
1998, the Company had issued 20,000 shares of its Series A - $2.50
participating, convertible, voting, cumulative preferred stock.  During 1999,
this total increased to 472,400 shares.  The Series A preferred stock is not
subject to discretionary redemption by the Company, has equal voting to common
shares, and is automatically converted into common shares when the Company's
stock price reaches $5.00.  This threshold was achieved during the 1999 year,
and all of the preferred shares as of December 31, 1999, have been converted
into common.

     The preferred stock offering was sold in $5.00 units.  Each unit
consisting of two shares of the Series A,  preferred stocks, and one warrant
to purchase one share of common stock of the Company at $5.00 per share,
exercisable immediately, and expiring upon the one year anniversary date of
the closing of an underwritten public offering.  If not expired or exercised
prior thereto, the warrants automatically shall expire on October 31, 2002.
As of December 31, 1998, preferred dividends at $.30 per share were accrued,
resulting in dividends payable of $6,000.





























                                      F-24
<PAGE>



                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunder duly authorized.

                                 1ST NET TECHNOLOGIES, INC.



Dated:  June 7, 2000             By: /s/ James H. Watson, Jr.
                                     James H. Watson, Jr., Principal Executive
Officer and Principal Accounting Officer of the Registrant


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:

      SIGNATURE                          TITLE                   DATE



/s/ James H. Watson, Jr.           Chairman, Chief Executive   June 7, 2000
James H. Watson, Jr.               Officer and Director



/s/ Clifford J. Smith              President and Director      June 7, 2000
Clifford J. Smith