U.S. SECURITIES AND EXCHANGE COMMISSION

                         Washington, D.C.  20594

                                FORM 10-KSB/A

                               AMENDMENT NO. 2

(Mark One)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR
[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 OR THE TRANSITION PERIOD FROM __________ TO __________

                       Commission file number 0-27145


                         1st Net Technologies, Inc.
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

           Colorado                               33-0756798
-------------------------------       ------------------------------------
(State or other jurisdiction of       (I.R.S. Employer Identification No.)
 incorporation or organization)


11423 West Bernardo Court, San Diego, California             92127
------------------------------------------------           ----------
    (Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code:  (858)  675-4449


Securities registered under Section 12(b) and/or 12(g) of the Exchange Act:

                     Common Stock, $.001 par value
                     -----------------------------
                            (Title of Class)

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

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-K 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

The aggregate market value as of November 7, 2000 of voting stock held by non-
affiliates of the Registrant was $2,080,000 based upon the average of the
closing bid and asked prices on the Over-the-Counter market as of that date.

As of December 31, 1999, 5,753,700 shares of Registrant's Common Stock, $.001
par value, were issued and outstanding.

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                              TABLE OF CONTENTS

                                                                       PAGE
                                                                       ----
COVER PAGE


TABLE OF CONTENTS                                                         2


PART I

  ITEM 1.  DESCRIPTION OF BUSINESS                                        3

  ITEM 2.  DESCRIPTION OF PROPERTY                                       12

  ITEM 3.  LEGAL PROCEEDINGS                                             13

  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS           13


PART II

  ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
          SHAREHOLDER MATTERS                                            14

  ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS                 14

  ITEM 7.  FINANCIAL STATEMENTS                                          22

  ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS                 22


PART III

  ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
           PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT    23

  ITEM 10. EXECUTIVE COMPENSATION                                        25

  ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
           AND MANAGEMENT                                                27

  ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                27

  ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                              29






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                                PART I

Item 1.  Description of Business

THIS ANNUAL REPORT ON FORM 10-KSB CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES.  THESE STATEMENTS RELATE TO THE COMPANY'S
FUTURE PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS AND MAY BE IDENTIFIED BY
WORDS LIKE "BELIEVE," "EXPECT," "MAY," "WILL," "SHOULD," "SEEK," OR
"ANTICIPATE," AND SIMILAR EXPRESSIONS.  OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THIS BUSINESS SECTION
AND UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" BELOW.

     1st Net Technologies, Inc., a Colorado corporation (with our
subsidiaries, "1st Net," "the Company" 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, only two of which are currently active:

     In May 1999, we acquired a controlling interest in The Children's
Technology Group, Inc. ("CTG") (formerly Tummybusters, Inc.), a Nevada
corporation (for the details of this transaction, please see footnote 3 of our
Financial Statements which is located on page F-16 of this document). The
business model of CTG is to build a safe and enjoyable Internet community for
children on-line.  Prior to its acquisition by 1st Net, James R. Watson, Jr.
and Gregory D. Writer, Jr. served as members of the boards of directors of
both CTG and 1st Net.

     In August 1998, we acquired a controlling interest in Mariah
Communications, Inc. ("Mariah"), a Colorado corporation(for the details of
this transaction, please see footnote 3 of our Financial Statements which is
located on page F-16 of this document).  In connection with this transaction,
Mariah obtained all of our rights to certain internet protocol (IP) telephony
technology.  Since that time, Mariah has attempted to develop this technology
into a commercially viable internet protocol switch capable of allowing a user
to make a voice telephone call from a personal computer so that Mariah could
introduce this product into the marketplace.  This product has not yet been
successfully developed.

     In 1999, Mariah made a cash investment of $220,000 in Last Mile
Communications, Inc. ("Last Mile").  This investment has since been converted
into 400,000 shares of Last Mile common stock, which represents less than 5%
of Last Mile's currently issued and outstanding shares.  Last Mile is an
unaffiliated privately-held company that is engaged in the wireless Internet
access business, whose CEO, David Santa Maria, is the former CEO of Mariah.
The remaining assets of Mariah consist mainly of Last Mile's common stock
acquired in this transaction.  Prior to its acquisition by 1st Net, James H.
Watson, Jr. and Gregory D. Writer, Jr. served as members of the boards of
directors of both Mariah and 1st Net.

     In January 1999, we acquired a 100% interest in SSP Management Corp., a
Colorado corporation ("SSP"), from a private company that is considered a
related party. SSP was wholly owned by Entrepreneur Investments, LLC ("EI")
whose sole shareholder, James H. Watson, Jr., was a member of 1st Net's Board

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of Directors (for the details of this transaction, please see footnote 3 of
our Financial Statements which is located on page F-16 of this document).
Through our acquisition of that company, we built several investment-oriented
Internet Web sites and on-line newsletter publications.  In December 1999, we
made a strategic decision that EnvoyMail would be a better long term business
focus for us and we decided to divest ourselves of the SSP types of clients
and services and, where applicable, to sell our information-based assets to
companies whose long-term business objective is to participate in that
business.  Accordingly, we completed the sale of some of our online
newsletters to other unrelated companies in February and August 2000 and this
subsidiary is no longer active.


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 Email administration and database
management software product called "EnvoyMail."  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).


INFORMATIONAL/E-COMMERCE WEB SITES

     We have been and continue to be engaged in various types of Internet Web
site development projects that have required a rapid Web site building cycle,
a combination of content and transaction processing capability, interactivity,
and personalization.

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
EnvoyMail Version 1.0, which is a full-featured, Web-based E-mailing and
database management system. The term "full-featured" refers to the
functionality and flexibility of the EnvoyMail product.  We believe that
EnvoyMail is different from traditional list serve mail systems.  With
traditional systems, the client has little flexibility to adjust the areas of
demographic content it can capture from its user (e.g., age, city, zip code,
etc.) without substantial time and expense.  With EnvoyMail, we designed it to
be more flexible and thus more full-featured for customers so that they can
adjust and more custom fit the product to their specific need and situation.

     EnvoyMail offers our customers valuable Web-based E-mail information
management tools. EnvoyMail 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 emails sent through our system.


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     We began commercially deploying the EnvoyMail service at the end of the
first quarter of 2000.  We currently have 11 paying customers who have signed
up to use the service at a current average charge of approximately $340 per
customer per month, for a current aggregate of approximately $3,700 per month.
Since the payment model we employ is "pay as-you-use," the amount that we
charge to our customers each month depends upon the level of service each
customer purchases.  We currently estimate that it will require gross income
of approximately $50,000 per month for us to reach a point where our revenues
will exceed the expenses incurred by us to offer this service.  Accordingly,
our sales staff has submitted proposals to several much larger potential users
of our service who, given their current usage levels in the email marketing
area, would bill out at levels of approximately $5,000 to $10,000 or more per
month.  There can be no assurance that any of these proposals will be accepted
or that this service will ever be profitable.  We anticipate that future
ongoing development revisions will be financed through revenues derived from
the sale of the service and through normal operating capital available us.


COMMUNITY-BASED WEB BROWSERS

     In association with our majority-owned subsidiary CTG, 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 his/her
           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
           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.

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

     In May 1999, we granted CTG 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 CTG.  We determined through
negotiations between CTG's and 1st Net's management and Boards of Directors
that this was fair consideration to be paid for the licenses.  Based on an
earlier private placement of CTG shares at $2.00 per share, this would give
the licenses a total valuation of $8,000,000.  However, due to the
relationship between the two companies (i.e., the existence of common
management and directors) and the fact that the technology was still in
process at the time of its license and subsequent acquisition by CTG, there
was no accounting value assigned to either the license of the technology or to
its subsequent purchase by CTG.


INTERNET TELEPHONY

     Through our majority-owned subsidiary Mariah, 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 line, is known generally as internet protocol telephony, or
"IP Telephony." 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.


     The Company presently does not have plans to invest any more capital in
this portion of its business and may attempt to sell its Mariah business to a
third party if a viable purchaser can be found. Mariah does not have any
commitments concerning additional financing and none are currently being
sought. Without financing, or some alternative source of funding, Mariah will
not be able to finance the future development of the Mariah IP gateway.

     In September 1999, Mariah received a convertible promissory note from
Last Mile Communications, Inc. 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, we own and maintain
several Internet Web sites, which have financially related themes and content.
These sites present to individual opt-in investors information about publicly-
traded companies that generally have not yet attracted significant attention
on Wall Street or among institutional money managers. Membership to our online
Web sites and publications is free for all subscribers.

     In December 1999, we made a strategic decision to divest ourselves of the
types of clients serviced by SSP and, where applicable, sell our information-
based assets to companies whose long-term business objective is to participate
in the investor information business.  Accordingly, in February we sold one
newsletter called "otc journal.com" and its database to an unaffiliated party
in exchange for a promissory note in the principal amount of approximately



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$750,000.  In August, our two remaining newsletters and their respective
databases were sold to a different unaffiliated party for an aggregate of
$115,000 in cash and promissory notes for the remainder of the approximately
$1.5 million aggregate purchase price.  As the result of these transactions,
SSP no longer owns any newsletters.


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.  This creates an audience that 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.

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.1st Nettech.com, allows users to
get information about the products and services that we offer as well as the
ability to download and purchase certain products through links that reach to
our subsidiary companies' Web sites.

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     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.

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 were payable
through August 2000.

MARKETING ACTIVITIES

     Since our inception, we have invested in a broad range of marketing
activities to generate demand, gain corporate brand identity, 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 email, 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
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. The Company
received no compensation in connection with this assignment.

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.

     Effective January 14, 2000 the Company entered into a new agreement
("Technology Purchase and Rescission Agreement") with Spirit 32 that
superceded and rescinded the prior Acquisition Agreement, dated January 21,
1999, between the Company and Spirit 32.

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     As part of the January 14, 2000 Agreement, the Company agreed to acquire
all of Spirit 32's rights, title and interest in the Mariah internet protocol
telecomputing project, the Mindwalker Series Browsers, the Crayon Crawler
Browser, the Spirit 32 Voice Mailer and all the trade names associated with
the names "CrayonCrawler," "Mindwalker" and "Mariah."  The sale was closed on
February 14, 2000.  At closing, the Company delivered 250,000 shares of its
restricted Common Stock together with cash in the amount of $100,000 and
Spirit 32 transferred all its rights to and interest in the assets listed
above.


     Our subsidiary, Mariah Communications, Inc., through a pre-existing
arrangement with Spirit 32 Development, has been in the development of a PC
gateway for telecommunications through an IP telephony switch, which
eliminates the need for 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 significant development costs in the production of
EnvoyMail.  Further enhancement of EnvoyMail continues currently.


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, 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 will not 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
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

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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 its
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.

     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.


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     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
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.

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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
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 such legislation will not add significant additional costs
to 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.



EMPLOYEES

     As of October 20, 2000, the Company and its subsidiaries employed 39
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.

     The Company and its subsidiaries presently maintain their executive and
administrative offices at 11423 West Bernardo Court, San Diego, California

                                    12
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92127.  The space is approximately 8,000 square feet. The space is leased from
EI.  EI is controlled by James H. Watson, Jr., our Chief Executive Officer,
Chairman and a Director of 1st Net and CTG. CTG signed a three year lease from
March 1, 2000 to February 28, 2003 at a monthly rate of $7,380, increasing to
$8,610 in 2001 and $9,594 in 2002.  1st Net signed a three year lease from
March 1, 2000 to February 28, 2003 at a monthly rate of $4,920, increasing to
$5,740 in 2001 and $6,395 in 2002.

     Our property and equipment as of December 31, 1999, including equipment
under capital leases, consists of the following:

  Office Furniture and Fixtures and Equipment............... $ 243,319
  Computer Equipment and Peripherals........................   152,299
  Tradeshow Displays .......................................    52,001
  Leasehold Improvements....................................    22,954
  Vehicle...................................................    27,219
  Other.....................................................    15,988
                                                              --------
          Total.............................................   513,780

  Less Accumulated Depreciation.............................   (71,249)
                                                              --------
          Net Property and Equipment........................  $442,531
                                                              ========

     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........................................................  $255,759
2001........................................................   343,042
2002........................................................   364,245
2003........................................................   189,974
2004........................................................    47,180
                                                            ----------
          Total.............................................$1,200,200
                                                            ==========


ITEM 3.  Legal Proceedings.


The Securities and Exchange Commission (the "Commission") had been
investigating the business affairs of our wholly-owned subsidiary, SSP
Management, Inc. ("SSP").  By letter dated October 31, 2000, the Commission
advised SSP that the investigation had terminated and that, at this time, no
further enforcement recommendation is anticipated.


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

     There has been no submission of matters to a vote of security holders
during the fiscal year ended December 31, 1999.


                                    13
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<PAGE>
                               PART II

ITEM 5.  Market for Common Equity and Related Shareholder 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.

     To date, we have issued no dividends and do not anticipate issuing
dividends until we receive revenues in an amount which management determines
to be sufficient.

     The number of record holders of the Company's $.001 par value Common
Stock at September 30, 2000, was approximately 1,500.


ITEM 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

     This discussion may contain forward-looking statements that involve risks
and uncertainties. Our actual results may differ materially from the results
discussed in such forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in "Risks and
Uncertainties" below. We undertake no obligation to release publicly the
results of any revisions to these forward-looking statements to reflect events
or circumstances arising after the date hereof.

OVERVIEW

     1st Net derives its revenue from services provided to the Internet and
multi-media industries.  Also, 1st Net and our majority owned subsidiary CTG
have developed certain proprietary technologies that management feels will in
the future increase our overall capability to generate revenue and add value
for our shareholders.  The Company maintains three subsidiary corporations.
Our historical financial information contained in this registration statement
is that of 1st Net Technologies, Inc. and its subsidiary corporations on a
consolidated basis.


RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999

     Revenue

     Revenue is recognized when earned.  The Company's revenue recognition
policies are in compliance with all applicable accounting regulations,
including American Institute of Certified Public Accountants (AICPA) Statement
of Position (SOP) 97-2, Software Revenue Recognition, and SOP 98-9,
Modification of SOP 97-2, with Respect to Certain Transactions.  Revenues from
technology consulting, user fees and marketing services are recognized ratably
over the contract period in accordance with the period in which the services
are performed. Revenues attributable to undelivered elements, including

                                14
<PAGE>

<PAGE>
technical support, are recognized ratably on a straight-line basis over the
contract period.


     The Company's revenues from technology consulting, user fees and
marketing services during the 1999 increased $850,193 or 93.4% from the prior
year.  The increase was primarily attributable to increases in revenue for SSP
of $651,871 or 125% over the 1998 level.  CTG contributed revenue of $65,209
in 1999 versus no revenue in 1998.  Because the Company made a strategic
decision late in 1999 to redirect its efforts away from the business of SSP,
revenue levels in 2000 will be significantly lower.  Included in revenues in
1999 were stocks received for services totaling $348,798 compared to $328,140
in 1998. The Company recognized related party revenues totaling $501,121 and
$173,294 during the years ended December 31, 1999 and 1998, respectively.


     Operating Expenses

     Operating expenses consist of product development, marketing and
administrative expenses.  Operating expenses that arose from all other sources
than the issuance of stock for cash increased $4,334,877 or 261.3% to
$5,993,623 from the prior year's level of $1,658,746. Significant items in the
total of these types of operating expenses in 1999 included: 1) personnel
related costs totaling $2,011,493; 2) outside services and consulting totaling
$921,543; 3) professional fees totaling $615,604; 4) losses from disposals of
property and equipment totaling $102,480; and 5) expenditures for technology
development totaling $730,546.

     Included in the total of operating expenses for 1999 of $8,425,023 were
charges related to the issuance or future issuance of stock for employees and
outsiders totaling $2,431,400.  This compared to similar charges totaling
$264,735 in 1998.  These charges were the result of issuing shares of Common
Stock to employees and outsiders for compensation and services provided to the
Company.


     Other Income and Expense

     The bulk of the $919,518 realized gain from the sale of investments came
from the sale of two of the Company's investments.  This was offset in part by
the write-down of the Company's investment in LaForza Automobiles, Inc.
("LaForza") (See ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS for
more description of LaForza) totaling $162,600 ($137,400 in 1998).  Interest
expense increased 19.1% in 1999 to $21,719 while other income was up $6,894 to
$8,924 for 1999.


LIQUIDITY AND CAPITAL RESOURCES

     Our greatest need for cash is payment of salaries and benefits to our
employees and fees to our outside consultants. Through September 30, 2000, we
expended significant effort and committed substantial resources toward the
continued development of CTG's Crayon Crawler and 1st Net's EnvoyMail product
lines.  Management believes that these investments will begin showing a return
to the Company in the future in the form of increased revenues.  However, we
are unable to predict with any degree of certainty the future results of our
operations, and accordingly, make no assurance as to future cash flows from
these products.



                                    15
<PAGE>

<PAGE>
     During the first quarter of 2000, SSP concluded a sale of its newsletter
OTCjournal.com for a $200,000 note receivable and 10% of the gross noncash
compensation the buyer realizes from the operation of OTCjournal.com through
June 2002.  In the event that the Company does not realize a minimum
of$750,000 from the sale of OTCjournal.com through June 2002, the buyer is
required to pay the Company $750,000 less all proceeds previously received in
connection with OTCjournal.com.  The first two payments in connection with the
note receivable of $50,000 are due in January and June 2001.




     In May 2000, CTG sold 2,000,000 shares of preferred stock and warrants to
purchase Common Stock to an unrelated investor for net proceeds totaling
$3,593,525.  Additionally, 1st Net realized proceeds totaling $114,570 from
the sale of 42,356 shares of CTG during January 2000.  Management believes
that CTG will have to raise $4.5 million in net cash proceeds in the first
quarter of 2001 in order to have sufficient capital to advance the business in
accordance with its plans through the end of 2001.  This funding will allow it
to sharply increase its selling and marketing expenditures and expand product
development efforts to enhance existing products and add new ones.

     At September 30, 2000, the Company had cash and net working capital of
$1,690,176 and $742,239, respectively.  CTG's portion of this cash totaled
$1,625,637 at September 30, 2000 and 1st Net owned 59.8% of the outstanding
common and preferred stock of CTG as of that date.  On a going forward basis,
1st Net and its 100% owned subsidiary SSP continue to maintain several
holdings of restricted and marketable securities. It is impossible however to
ascertain the actual value that will be eventually realized by the Company
when these securities are sold.  Management believes that proceeds from the
sale of investments held in addition to cash payments to be received from the
transactions described above, will be sufficient to make up projected
shortfalls from the results of its operations through the next twelve months.


RISKS AND UNCERTAINTIES


     The risks and uncertainties described below are those that we currently
deem to be material and that we believe are specific to our Company and our
industry.  If any of these or other risks actually occurs, the trading price
of our Common Stock could decline.  We have a history of losses and absent the
realized gains on securities held and sold and the sale of assets during the
first quarter of 2000, we would have suffered a significantly greater loss
than the $1,011,897 incurred year to date.  Also, because we expect our
operating expenses to increase in the future, we may never be profitable.  We
had an accumulated deficit of $8,298,498 at September 30, 2000.  We incurred
net losses of $5,767,253 and $666,894 for the years ended December 31, 1999
and 1998, respectively, and will have a significant net loss for the year
ended December 31, 2000.  We expect to continue to incur significant net
losses until we are able to generate sufficient revenues from 1st Net's
EnvoyMail product and/or CTG's community based Web browser-related products
and services.  While we are unable to predict accurately our future operating
expenses, we currently expect these expenses to increase substantially, as we,
among other things:



                                    16
<PAGE>

<PAGE>
     *  expand our selling and marketing activities;

     *  increase our development efforts to upgrade existing and develop new
        products and technologies;

     *  upgrade our operational and financial systems, procedures and
        controls; and

     *  hire additional necessary personnel.


     Some of the risks and uncertainties in connection with the Company's
business include the following:

If we fail to generate revenues or achieve profitability, we will not succeed.

     We will need to significantly increase our revenues to achieve and
maintain profitability.  If we fail to generate significant revenues from
software licensing of 1st Net's EnvoyMail or from subscription fees to CTG's
community based browsers and related sales of merchandise and advertising
revenues, we will continue to experience losses indefinitely.  We may not be
able to achieve or maintain profitability.  We also may fail to accurately
estimate and assess our increased operating expenses as we grow.  If our
operating expenses exceed our expectations, our financial performance will be
adversely affected, which could cause the price of our Common Stock to
decline.  We are an early-stage company with an unproven business model, which
makes it difficult to evaluate our current business and future prospects.  We
have only a limited operating history upon which to base an evaluation of our
current business and future prospects.


We do not know if there is a viable market for our existing products and
services.

     We only recently began focusing on the EnvoyMail product.  Also, CTG is
still in the early stages of procuring distribution agreements for its
community Web browsers.  As a result, the revenue and income potential of our
business and our market are unproven. Because of our limited operating history
and because the markets for the Company's products are relatively new and
rapidly evolving, we have limited insight into trends that may emerge and
affect our business.  We may make errors in predicting and reacting to
relevant business trends, which could harm our business.


We are much less likely to succeed than a business with an established
operating history.

     You should consider an investment in our stock in light of the risks,
uncertainties and difficulties frequently encountered by early-stage companies
in new and rapidly evolving markets such as ours.  We may not be able to
successfully address any or all of these risks.  Failure to adequately do so
could cause our business, results of operations and financial condition to
suffer.  Our future financial performance also will depend, in part, on our
ability to diversify our offerings by successfully developing, introducing and
gaining customer acceptance of new products and enhanced versions of existing
products.  We cannot assure you, however, that we will be successful in
achieving market acceptance of any new products that we develop or of enhanced
versions of existing products.  Any failure or delay in diversifying our
existing offerings could harm our business, results of operations and
financial condition.

                                    17
<PAGE>

<PAGE>
     The market for CTG's community based browsers is emerging and if we are
not successful in promoting the benefits to children of our products, our
growth may be limited.  In addition, there may be a time-limited opportunity
to achieve and maintain a significant share of the market for children safe
Internet communities due to the emerging nature of this market and the
substantial resources available to our existing and potential competitors.


Because we don't have an established operating history, we are not sure if our
product distribution methods will work.

     We currently sell our products both indirectly and directly.  We intend
to primarily market 1st Net's EnvoyMail product directly with a sales force
built internally.  Due to the new nature of the product, its market potential
is uncertain.  Also, if 1st Net is not able to attract and retain effective
members of its sales force, its prospects for realizing profits from the
licensing of EnvoyMail will be diminished.

     For CTG's community based Web browsers, we intend to rely on distribution
agreements with large consumer product companies that will include our Web
browser with their product.  We will custom brand the software according to
the specifications of our distribution partners.  We will depend heavily on
our distribution partners to get our software in the hands of the targeted
consumer market.  We will need to enter into new relationships to increase our
current and future market share and revenue.  We cannot assure you that we
will be able to enter into new relationships, or that any new relationships
will be available on commercially reasonable terms.  If we are unable to enter
into new relationships, we would not have a viable and cost effective channel
to reach our target market and our operating results could suffer.  Our
reliance on our distribution partners could result in reduced revenue growth
because we have little control over them.  None of these parties is obligated
to continue distributing our products.


Our competitors may keep us from being successful.

     We face increasing competition from better-established companies that may
have significantly greater resources, which could prevent us from increasing
revenue or achieving profitability. The market for our products is intensely
competitive and is likely to become even more so in the future.  Increased
competition could result in pricing pressures, reduced sales, reduced margins
or the failure of either EnvoyMail or our community based browsers to achieve
or maintain more widespread market acceptance, any of which would have a
material adverse effect on our business, results of operations and financial
condition.

     Many of our current and potential competitors could enjoy substantial
competitive advantages, such as:

     *  greater corporate name recognition and larger marketing budgets and
        resources;
     *  established marketing relationships and access to larger customer
        bases; and
     *  substantially greater financial, technical and other resources.

     As a result, they may be able to respond more quickly and effectively
than we can to new or changing opportunities, technologies, standards or
customer requirements.  Also, such competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies, make

                                    18
<PAGE>

<PAGE>
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.  For all of the foregoing reasons, we may not
be able to compete successfully against our current and future competitors.


In order to be successful we will need to grow, and problems associated with
growth may eventually cause us to fail.

     Our future success will depend in part upon the ability of our senior
management to manage growth effectively. This will require us to hire and
train additional personnel to manage our expanding operations. In addition, we
will be required to continue to improve our operational, financial and
management controls and our reporting systems and procedures.  If we fail to
successfully manage our growth, we will be unable to execute our business
plan.  If we acquire any companies or technologies in the future, they could
prove difficult to integrate, disrupt our business, dilute shareholder value
and adversely affect our operating results.  We may acquire or make
investments in complementary companies, services and technologies in the
future.  As a result, if we fail to properly evaluate and execute acquisitions
or investments, our business and prospects may be seriously harmed.


If we lose our key personnel, it will be very difficult to find any suitable
replacements.

     We are dependent on our employees and management, and the loss of any key
member of this team may prevent us from implementing our business plan in a
timely manner.  Our success depends largely upon the continued services of our
executive officers and other key management and development personnel.  We are
also substantially dependent on the continued services of our existing
engineering personnel and our outside development partners because of the
complexity of our products and technologies.  We do not have employment
agreements with a majority of our executive officers, key management or
development personnel and, therefore, they could terminate their employment
with us at any time without penalty.  We do not maintain key person life
insurance policies on any of our employees.  The loss of one or more of our
key employees could seriously harm our business, results of operations and
financial condition. We cannot assure you that in such an event we would be
able to recruit personnel to replace these individuals in a timely manner, or
at all, on acceptable terms.


If we don't adequately protect our technology, it is much less likely that we
will be able to succeed.

     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


                                    19
<PAGE>

<PAGE>
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.

     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.


If we have to go to court and litigate for any reason, it will be time
consuming and expensive.

     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 MS
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.


If we need to obtain or protect licenses for our business, it will be
expensive.

     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

                                    20
<PAGE>

<PAGE>
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
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.


We are not sure of the scope or the impact on us of all of the laws, rules and
regulations that are likely to affect our business in the future.


     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,
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.


                                    21
<PAGE>

<PAGE>
     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
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.

     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 be
required to register under the Investment Company Act of 1940 (the "Act"). 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.  On August 17, 2000, our Board of Directors adopted a resolution to
take this action.  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 under the Act which would significantly
increase out regulatory burdens and professional fees.

ITEM 7.  Financial Statements

     Financial Statements are included on Pages F-1 through F-47.

ITEM 8.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure.

     Our independent accounting firm, Bewley, Argy & Company, San Diego,
California, resigned in July, 1999.  Bewly, Argy & Company's report on our
1997 financial statements and audit report on our 1998 financial statements
did not contain an adverse opinion or disclaimer of opinion, or modification
of the type required to be disclosed in this Item 3.  The decision to change
accountants was approved by the board of directors. There have been no
disagreements with Bewly, Argy & Company and management of the type required
to be reported under this Item 3 since the date of Bewly, Argy & Company's
engagement.



                                    22
<PAGE>

<PAGE>
     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 of 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.     38       President, Chairman, Chief Executive
                                         Officer and Director

     Scott B. Baker           32       Senior Vice President Sales and
                                         Marketing and Director



                                  23
<PAGE>
<PAGE>
     Scott Quattromani        31       Secretary, Treasurer, Chief
                                         Financial Officer, Chief
                                         Operations Officer and Director
     Steve Weingartner        45       Chief Technology Officer


     There is no family relationship between any Director or Executive Officer
of the Company.

     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., 38, has served as our President since December 2000
and 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, CTG. In addition, Mr. Watson currently serves in the capacity of
CEO of 1st Net's subsidiary, Mariah Communications, Inc.  Mr. Watson serves 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.

     Scott B. Baker, 32, is Senior Vice President/Director of Sales and
Marketing of 1st Net Technologies, Inc. He is responsible for the strategic
direction of the Company's sales and marketing efforts.  He has been employed
by us since June 19, 2000.  Mr. Baker was an original founder of 1st Net
Technologies, LLC. before that company was sold to an investor group in 1996.
Under his direction, 1st Net {LLC} helped build one of the first Internet
shopping malls.  He was employed by 1st Net Technologies, LLC from October
1995 to April 1997. From May 5, 1997 until approximately June 18, 2000, Mr.
Baker was the Internet Marketing Strategist for MicroAge Technology Services,
a Fortune 500 computer company.  Mr. Baker originally joined MicroAge working
for ECadvantage. There he was a consultant helping MicroAge's national
branches integrate their electronic commerce solutions. Over the years, Mr.
Baker has also served in the capacity of expert witness in the accident
reconstruction industry. He has worked directly with attorneys and government
entities to offer expert advice on how automobile collisions occurred. Mr.
Baker holds a B.S. Degree in Business and Marketing from San Diego State
University.

     Scott Quattromani, 31, joined 1st Net in November 2000 and serves as our
Secretary, Treasurer, Chief Financial Officer, and Chief Operations Officer,
and as a member of the Board of Directors.  He oversees 1st Net's corporate,
transactional, and securities needs and manages our intellectual property
portfolio.  After serving four years in the U.S. Navy's Special Warfare

                                   24
<PAGE>
<PAGE>
Community, he graduated summa cum laude with a Bachelor of Arts Degree in
Government and Political Science from George Mason University in 1995 and
earned his law degree from the University of San Diego School of Law in 1997,
and LLM in Taxation from the University of San Diego School of Law in 1998.
As a BIA Fellow, he also completed extensive coursework in financial analysis
at the University of San Diego School of Business, and was awarded the Ernest
W. Hahn Scholarship, the Home Builders Council Scholarship, and the Burnham
Foundation Scholarship.  Mr. Quattromani began his legal career as a tax
consultant with Ernst & Young LLP, and later as an associate with Procopio
Cory Hargreaves & Savitch LLP, San Diego's premiere business and technology
law firm.  Mr. Quattromani was first admitted into the practice of law in
California in 1998 and is also licensed to appear before the U.S. District
Court, Southern District of California and the United States Tax Court.

     Steve Weingartner, 45, became our Chief Technology Officer in December,
2000.  He is responsible for converting the client needs and marketing wants
into reality.  He sees EnvoyMail as the place to provide our customers with a
secure low cost tool to help them communicate with their customers.  Steve has
one goal, and that is to make Envoy Mail the best Web-based mass e-mail
marketing tool available.  From 1996 to early 2000 Steve was the Information
Systems Manager for Asset Recovery Networks in San Diego as the IS Manager
providing implementation, training and internal technical support for their
Great Plains manufacturing software.  He has experience in both IT management
and application development.  In addition to IT, Steve has had many years of
business experience mostly in manufacturing.  Steve Weingartner holds a BSBA
in Management Science from Chapman University.


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.


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 paid
compensation to executives. We reimburse our officers and directors for any
reasonable out-of-pocket expenses incurred on our behalf.









                                25
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                            SUMMARY COMPENSATION TABLE

                              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>


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.

FUTURE OPTION GRANTS

     During 1999, the Company announced its intention to issue options to
employees to purchase Common Stock at an exercise price of $5.00 per share,
subject to the future approval of the Company's Board of Directors.  There are
272,000 shares of Common Stock that would be subject to this future option
grant.  The vesting period for the options to be granted will vary based on
the terms of employment of the recipients at the time the options are
announced, but in no event will such period exceed three years from the time
of the announcement of the options in 1999.  None of the options to be granted
will be issued to officers or directors.

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

                                   26
<PAGE>

<PAGE>
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.  Per the terms of Mr. Kimball's contract, options to purchase 25,000
shares at $5.00 per share are exercisable through their expiration date of
November 30, 2000.

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management.

     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 February 28, 2001 (at which date there were
6,082,292 shares issued and outstanding), 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.

Name and Address of          Amount of       Percent of
Beneficial Owner(a)        Class (Shares)      Class      Title of Class
-------------------        --------------    ---------    --------------
Entrepreneur Investments,
 LLC/James H. Watson, Jr.       691,000      11.36%      Common Stock
 Chief Executive Officer
 and Chairman (b)

Scott Baker                       1,000          0%      Common Stock

Scott Quattromani                20,000       0.32%      Common Stock

Steve Weingartner                     0          0%      Common Stock

All Officers and Directors
 as a Group                     712,000      11.70%      Common Stock


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

(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) Includes 33,500 shares owned of record by James H. Watson and 657,500
shares owned of record by Entrepreneur Investments, LLC.  James H. Watson is
the sole owner of Entrepreneur Investments, LLC.

     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

                                   27
<PAGE>


<PAGE>
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.  Further, the net market value of these shares
declined to $60,000 in the quarter ended March 31, 2000, resulting in
unrealized losses of $40,000.  Because management deemed the reductions in the
net market values outlined previously to be of a permanent nature, the Company
wrote the cost of the shares down to the new market values at the dates shown
in question and charged the write-downs to operations in the respective
periods.


     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, of which
$448,862 was eliminated in consolidation.

     We issued 265,000 shares of our Common Stock to employees during 1998 as
bonuses for the 1997 year. 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.


     EI currently owns approximately 11.4% of our outstanding shares and is
our largest percentage owner.  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, revenues from one unrelated customer totaled $970,500 which
represented 56.7% of our revenues. Further, in 1999 and 1998, approximately
20.4% and 32.8%, 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.

     During the years ended December 31, 1999 and 1998, we subleased office
space from EI for total rent payments of $89,823 and $18,501, respectively.


                                    28
<PAGE>





     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 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.

     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.

     Reports on Form 8-K

     No current reports on Form 8-K were filed during the fiscal year ended
December 31, 1999.

     Exhibits

     The Exhibits listed below in the Index to Exhibits are filed as part of
this report.

Index to Exhibits:

Exhibit Number               Description

  3.1       Articles Of Amendment And Restatement Of 1st Net
            Technologies, Inc. Filed On December 11, 1998 (1)

  3.2       Amended And Restated Bylaws Of 1st Net Technologies, Inc.
            Dated June 24, 1999 (1)

  4.3       Specimen Of 1st Net Technologies, Inc.'s Common Stock
            Certificate (1)

  4.4       Warrant Agreement Dated April 1, 1999  By And Between 1st
            Net Technologies, Inc. And No Fear, Inc. (1)

  4.5       Warrant Agreement Dated April 1, 1999  By And Between 1st Net
            Technologies, Inc. And Eric Baker (1)

  4.6       1st Net Technologies, Inc.'s Series "A" Preferred Warrant
            Agreement (1)

  4.7       Warrant Agreement By And Between 1st Net Technologies, Inc.
            And Children's Technology Group Dated April 19, 1999 (1)

  4.8       1st Net Technologies, Inc.'s 1999 Incentive Stock Option
            Plan (1)

                                   29
<PAGE>

<PAGE>
  4.9       1st Net Technologies, Inc.'s 1999 Non-Qualified Stock Option
            Plan Dated January 4, 1999 (1)

 10.1       Investment Banking Agreement Dated As Of March 1, 1998 By
            And Between 1st Net Technologies, Inc. And Entrepreneur
            Investments, LLC (1)

 10.2       Internet Marketing And Joint Venture Agreement By And Between
            1st Net Technologies, Inc. And Nicklebys.com, Inc. Dated
            January 14, 1999 (1)

 10.3       Web Site Development, Service And Revenue Sharing Agreement
            By And Between 1st Net Technologies, Inc. And No Fear,
            Inc. Dated April 1, 1999 (1)

 10.4       Profit Sharing Agreement By And Between 1st Net Technologies,
            Inc. And Netsol USA, Inc. Dated July 6, 1999 (1)

 10.5       Stock Acquisition Agreement By And Between 1st Net
            Technologies, Inc. And MC32, Inc. Dated As Of August 15,
            1998 (1)

 10.6       Stock Acquisition Agreement By And Between 1st Net
            Technologies, Inc. And Spirit 32 Development Corporation
            Dated As Of January 22, 1999 (1)

 10.7       Stock Acquisition Agreement By And Between 1st Net
            Technologies, Inc. And SSP Management Corporation
            Dated As Of January 26, 1999 (1)

 10.8       Technology License Agreement By And Between 1st Net
            Technologies, Inc. And  Children's Technology Group, Inc.
            Dated As Of April 19, 1999 (1)

 10.9       Technology License Agreement By And Between 1st Net
            Technologies, Inc. And Children's Technology Group, Inc.
            Dated As Of May 1, 1999 (1)

10.10       Employment Agreement By And Between 1st Net Technologies,
            Inc. And Lawrence K. Kimball Dated April 19, 1999 (1)

10.11       Outside Director's Agreement By And Between 1st Net
            Technologies, Inc. And Steven J. Santamaria Dated May 1,
            1999 (1)

10.12       Standard Industrial/Commercial Multi-Tenant Lease By And
            Between 1st Net Technologies, Inc. And Entreprenuer
            Investments, LLC Dated June 1, 1998 (1)

10.13       Stock Option Agreement Dated January 10, 1999 By And Between
            1st Net Technologies, Inc. And Gregory D. Writer, Jr.,
            Entrepreneur Investments, LLC, Clifford J. Smith And
            Jeffrey Chatfield (1)

10.14       Consulting Agreement By and Between 1st Net Technologies,
            Inc. and Mariah Communications, Inc. Dated As Of August 15,
            1998 (1)

                                   30
<PAGE>
<PAGE>
10.15       Internet Web Site Development Agreement Dated November 9,
            1998 By And Between 1st Net Technologies, Inc., And La Jolla
            Fresh Squeezed Coffee, Inc. (1)

10.16       Mariah Communications, Inc. Asset Purchase and Sale Agreement
            dated September 21, 1999 (1)

10.17       SSP Management Corp. Asset Purchase Agreement dated
            February 23, 2000 (1)

10.18       Spirit 32 Development Corporation Technology Purchase and
            Rescission Agreement dated January 14, 2000 (1)

10.19       Children's Technology Group, Inc. Technology Purchase
            Agreement dated March 22, 2000 (1)

10.20       Standard Internet Web Site Development Agreement (1)

11          Statement Re: Computation of Per Share Earnings (1)

16.1        Cordovano and Harvey, P.C. letter (1)

16.2        Bewley, Argy & Company letter (1)

21          Subsidiaries Of 1st Net Technologies, Inc. (1)


(1)   Incorporated by reference to the Registrant's Form 10SB, as amended.



























                                   31
<PAGE>




<PAGE>
                         INDEX TO FINANCIAL STATEMENTS

                                                                    Page
1ST NET TECHNOLOGIES, INC.

Years ended December 31, 1999 and 1998:

  Auditors' report .............................................    F-2
  Consolidated balance sheets ..................................    F-3
  Consolidated statements of operations ........................    F-4
  Consolidated statements of changes in stockholders' equity ...    F-5
  Consolidated statements of cash flows ........................    F-7
  Notes to consolidated financial statements ...................    F-9

Three months and nine months ended September 30, 2000 and 1999:

  Consolidated balance sheets (unaudited) ......................    F-23
  Consolidated statements of operations (unaudited) ............    F-24
  Consolidated Statements of cash flows (unaudited) ............    F-25
  Notes to Consolidated Financial Statements (unaudited) .......    F-26

THE CHILDREN'S TECHNOLOGY GROUP, INC. F.K.A. TUMMY BUSTERS, INC.

  Independent Auditors' Report..................................    F-31
  Balance Sheet as of April 30, 1999............................    F-32
  Statement of Operations for the period from July 30,
   1998 (Date of Inception)through April 30, 1999...............    F-33
  Statement of Stockholders' Equity for the period from
   July 30, 1998 (Date of Inception) through April 30, 1999.....    F-34
  Statement of Cash Flows for the period from July 30,
   1998 (Date of Inception) through April 30, 1999 .............    F-35
  Notes to the Financial Statements ............................    F-36

SSP MANAGEMENT CORP.

  Independent Auditors' Report .................................    F-41
  Balance Sheet as of December 31, 1998 ........................    F-42
  Statement of Operations for the year ended December 31, 1998..    F-43
  Statement of Stockholder's Equity for the year ended
   December 31, 1998 ...........................................    F-44
  Statement of Cash Flows for the year ended December 31, 1998..    F-45
  Notes to the Financial Statements ............................    F-46














                                     F-1
<PAGE>


<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 the related consolidated statements of operations, shareholders'
equity and cash flows for the years ended December 31, 1999 and 1998.  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
the consolidated results of their operations and their cash flows for the
years ended December 31, 1999 and 1998, 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 the
notes to the financial statements, 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 during the three years ended December 31, 1999.  As of December 31,
1999, the Company has an accumulated deficit of $7,314,699.  In view of this
matter, realization of a portion of some of the recorded amounts 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 notes to the financial statements).
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.

As discussed in Note 3 to the accompanying consolidated financial statements,
the Company has restated its financial statements for the periods included
herein.


/s/ Argy & Company
Argy & Company
Fountain Valley, California
January 22, 2001
                                    F-2
<PAGE>


<PAGE>
1st NET TECHNOLOGIES, INC.
  and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, 1999

ASSETS

Current assets:
  Cash                                                    $    12,873
  Accounts receivable, net of allowance for
    doubtful accounts of $22,999                               67,498
  Marketable securities                                     1,158,366
                                                          -----------
     Total current assets                                   1,238,737

Investment in LaForza Automobiles, Inc.                       100,000
Investment in Last Mile Communication Corporation             220,000

Property and equipment, at cost net of accumulated
  depreciation and amortization of $71,249                    442,531

Other assets                                                   15,926
                                                          -----------
                                                          $ 2,017,194
                                                          ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities                $   706,019
  Notes payable                                                68,000
  Notes payable and amounts due to related parties            335,972
  Current portion of capital lease obligations                 66,095
  Accrued personnel costs                                     285,652
  Income taxes payable                                          2,400
                                                          -----------
     Total current liabilities                              1,464,138

Long term portion of capital lease obligations                246,476
                                                          -----------
     Total liabilities                                      1,710,614

Commitments and contingencies

Minority interests in subsidiaries                             39,778

Stockholders' equity:
  Preferred stock, $.001 par value, 10,000,000 shares
   authorized, no shares issued and outstanding                     -
  Common stock, $.001 par value, 40,000,000 shares
   authorized, 5,753,700 shares issued and outstanding          5,754
  Common stock warrants                                       275,272
  Additional paid in capital                                6,631,411
  Accumulated deficit                                      (7,314,699)
  Accumulated other comprehensive income                      669,064
                                                          -----------
     Total stockholders' equity                               266,802
                                                          -----------
                                                          $ 2,017,194
                                                          ===========
See accompanying notes.

                                    F-3
<PAGE>
<PAGE>
1st NET TECHNOLOGIES, INC.
  and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS

                                                   For the years ended
                                               December 31,    December 31,
                                                  1999             1998
                                               ------------    ------------
Revenues:
 Technology consulting, user fees and
  marketing services including related
  party revenues totaling $501,121 and
  $173,294 in 1999 and 1998, respectively      $  1,760,113     $   909,920

Operating expenses:
 Stock based employee compensation                1,785,900         264,735
 Stock and warrant based compensation for
  consulting services                               645,500               -
 Other operating expenses                         5,993,623       1,658,746
                                               ------------    ------------
                                                  8,425,023       1,923,481
                                               ------------    ------------
Loss from operations                             (6,664,910)     (1,013,561)

Other income and expense:
 Realized gain on investments sold                  919,518         407,175
 Unrealized loss on decline of restricted
  stock investment                                 (162,600)       (137,400)
 Interest expense                                   (21,719)        (18,238)
 Other income                                         8,924           2,030
                                               ------------    ------------
Loss before provision for income taxes
 and minority interest in loss of subsidiaries   (5,920,787)       (759,994)

Provision for income taxes                            4,000           1,600
                                               ------------    ------------
Loss before provision for minority interest
 in undistributed loss of subsidiaries           (5,924,787)       (761,594)

Minority interest in undistributed loss
 of subsidiaries                                    157,534          94,700
                                               ------------    ------------
Net loss                                       $ (5,767,253)   $   (666,894)
                                               ============    ============

Loss per share:
 Net loss                                      $ (5,767,253)   $   (666,894)
 Preferred dividends                                      -          (6,000)
 Beneficial conversion feature of preferred
  stock issued accounted for as a dividend
  on preferred stock                               (698,247)              -
                                               ------------    ------------
     Net loss applicable to common
      shareholders                               (6,465,500)       (672,894)

     Basic and diluted loss per share          $      (1.17)   $      (0.21)
                                               ============    ============

Weighted average common shares outstanding:
 Basic and diluted                                5,513,752       3,188,685
                                               ============    ============

See accompanying notes.

                                       F-4
<PAGE>
<PAGE>
1st NET TECHNOLOGIES, INC.
  and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                            Accumu-
                                                                                            mulated
                                                                   Addi-                     Other
                                      Number             Common    tional                   Compre-      Total
                      Number of         of               Stock     Paid-In    Accumulated   hensive   stockholders'
                Shares      Amount    Shares    Amount  Warrants   Capital      Deficit      (loss)      equity
              ---------  ----------  ---------  ------  --------  ----------  -----------   --------  ------------
<S>           <C>        <C>         <C>        <C>     <C>       <C>         <C>           <C>       <C>
Balance at
December 31,
1997                  -  $        -  2,798,000  $2,798  $      -  $  506,252  $ (176,305)   $      -  $    332,745

Shares issued
to employees          -           -    265,000     265         -     264,735           -           -       265,000

Common stock of
1st Net issued
to investors          -           -    450,000     450         -      368,163          -           -       368,613

Series A pre-
ferred shares
and warrants
issued to
investors        20,000      49,352          -       -       648            -          -           -        50,000

Common stock
of Mariah issued
in exchange for
technology             -           -         -       -          -       4,000          -           -         4,000

Common stock
of Mariah issued
to investors           -           -         -       -          -      94,700          -           -        94,700

Dividends on
preferred
stock                  -           -         -       -          -           -     (6,000)          -        (6,000)

Comprehensive
loss
  Net loss             -           -         -       -          -           -   (666,894)          -      (666,894)
  Unrealized
   loss on
   investments
   held for
   sale               -           -         -       -          -           -           -    (27,070)       (27,070)
              ---------  ----------  ---------  ------  --------  ----------  -----------   --------  ------------
Balance at
December 31,
1998             20,000      49,352  3,513,000   3,513       648   1,237,850     (849,199)  (27,070)       415,094

Shares issued
to employees          -           -    595,300     596         -   1,785,304            -         -      1,785,900

Common stock
issued in exchange
for services          -           -    173,000     173         -     518,827            -         -        519,000

Common stock of
Mariah issued
to investors          -           -          -       -         -     760,000            -         -        760,000

Common stock of
CTG issued
to investors          -           -          -       -         -     750,764            -         -        750,764


                                                           F-5
<PAGE>

<PAGE>
Common stock of
1st Net issued
in exchange for
SSP                   -           -  1,000,000   1,000         -           -            -          -         1,000

Series A pre-
ferred shares
and warrants
issued to
investors       452,400     831,539          -       -   176,374     698,274     (698,247)         -     1,007,913

Common stock
warrants
issued in
exchange for
services               -          -          -       -    98,250           -            -          -        98,250

Conversion
of preferred
stock to
common stock    (472,400)  (880,891)   472,400     472         -     880,419            -          -             -

Comprehensive
loss
 Net loss              -          -          -       -         -           -   (5,767,253)         -    (5,767,253)
 Unrealized
  gain on
  investments
  held for sale        -          -          -       -         -           -            -    696,134       696,134
              ---------  ----------  ---------  ------  --------  ----------  -----------   --------  ------------
Balance at
December 31,
1999                  -  $        -  5,753,700  $5,754  $275,272  $6,631,411  $(7,314,699)  $669,064  $    266,802
              =========  ==========  =========  ======  ========  ==========  ===========   ========  ============

</TABLE>























See accompanying notes.





                                      F-6
<PAGE>


<PAGE>
1st NET TECHNOLOGIES, INC.
  and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   For the years ended
                                               December 31,    December 31,
                                                  1999             1998
Operating activities                           ------------    -------------
  Net loss                                     $(5,767,253)    $   (666,894)
  Adjustments to reconcile net income
   to net cash flows from operating activities:
    Depreciation and amortization                  115,447           20,877
    Changes in minority interests in
     subsidiaries                                   39,778                -
    Loss on disposal of property and equipment     102,480                -
    Stock based employee compensation            1,785,900          265,000
    Stock and warrant based compensation for
     consulting services                           645,500                -
    Realized gain on investments sold             (919,518)        (407,175)
    Unrealized loss on decline of restricted
     stock investment                              162,600          137,400
    Revenues received in the form of stock        (348,798)        (328,140)
    Changes in operating assets and liabilities:
     Accounts receivable                           (52,348)         (15,010)
     Other assets                                    5,530             (474)
     Accounts payable and accrued liabilities      506,995          160,511
     Accrued personnel costs                       232,507           46,710
     Deferred revenues                             (58,500)               -
     Income taxes payable                                -            2,400
     Other liabilities                             (10,000)          10,000
                                               ------------    -------------
Net cash flows from operating activities        (3,559,680)        (774,795)

Investing activities
 Additions to property and equipment              (162,636)        (136,458)
 Investment in Last Mile Communication
  Corporation                                     (220,000)               -
 Sales of marketable securities                    941,939          664,822
 Changes in loans receivable                       330,882         (330,882)
                                               ------------    -------------
Net cash flows from investing activities           890,185          197,482

Financing activities
 Repayments of capital lease obligations           (39,808)         (11,170)
 Additions to notes payable                        429,245          366,467
 Repayments of notes payable                      (244,542)        (275,498)
 Net proceeds from issuance of common stock
  by CTG                                           750,764                -
 Net proceeds from issuance of common stock              -          368,613
 Net proceeds from issuance of common stock
  by Mariah                                        760,000           94,700
 Net proceeds from issuance of preferred
  stock and warrants                             1,007,913           50,000
                                               ------------    -------------
Net cash flows from financing activities         2,663,572          593,112
                                               ------------    -------------
Increase (decrease )in cash                         (5,923)          15,799
Cash at beginning of period                         18,796            2,997
                                               ------------    -------------
Cash at end of period                          $    12,873     $     18,796
                                               ============    =============

                                        F-7
<PAGE>
<PAGE>
Supplemental disclosures of cash flow
 information:
  Cash paid (refunded) during the year for:
   Interest                                    $    21,719     $     18,238
                                               ============    =============
   Income taxes                                $     4,000     $          -
                                               ============    =============




See accompanying notes.


Supplemental disclosures of noncash activities:

The Company granted exclusive proprietary technology rights to IP Telephony
Technology that had no recorded accounting value in connection with the
acquisition of Mariah during 1998.

The Company acquired net assets of $7,687 in connection with the acquisition
of SSP Management Corp in exchange for 1,000,000 shares of common stock in
January 1999.

The Company acquired the net assets of Children's Technology Group, Inc.
totaling $705,657 in exchange for a license to in-process proprietary
technology that had no recorded accounting value in May 1999.

The Company incurred capital lease obligations totaling $309,881 and $53,668
in connection with lease agreements to acquire equipment during the years
ended December 31, 1999 and 1998, respectively.

The Company recorded revenues totaling $348,798 and $328,140 for services
performed in exchange for clients' stocks during the year ended December 31,
1999 and 1998, respectively.

The Company accounted for the beneficial conversion feature of preferred stock
issued in 1999 as a preferred dividend totaling $698,247.






















                                   F-8
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


1.  Organization

1st Net Technologies, Inc. ("the Company" or "1st Net") is primarily in the
Internet commerce and services business.  These financial statements include
the following subsidiaries:

     -    Mariah Communications, Inc. ("Mariah") is in the business of
          developing Internet protocol telephony technologies.  It was
          acquired in August 1998 in exchange for technology owned by 1st
          Net.  At December 31, 1999, the Company owned approximately 87.8%
          of Mariah's common stock.

     -    SSP Management Corp. ("SSP") provides Internet public relations
          and Internet newsletters.  It was acquired in January 1999 in
          exchange for 1,000,000 common shares of 1st Net.  At December 31,
          1999, SSP remains wholly owned by 1st Net.

     -    Children's Technology Group, Inc. ("CTG") is in the business of
          creating Internet communities for children.  CTG was acquired in
          May 1999 in exchange for the licensing rights to certain
          technologies.  At December 31, 1999, the Company owned
          approximately 86.4% of CTG's outstanding stock.

All three of the Company's subsidiaries had shareholders and management in
common with the Company of the Company's management prior to their
acquisition.

2.  Significant accounting policies

The Company's financial statements have been prepared in conformity with
generally accepted accounting principles.

Going concern

The Company's financial statements have been prepared under the assumption it
will continue as a going concern.  However, the Company has incurred net
losses throughout its entire history resulting in an accumulated deficit of
$7,314,699 at December 31, 1999.  Realization of a portion of the Company's
assets in the accompanying financial statements is dependent upon the
continued operation of the Company.  In order to continue operations, the
Company must raise additional funds either through incurring new debt, raising
new equity or liquidating investment securities held.  These factors raise
substantial doubt about the Company's ability to continue as a going concern.
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.






                                    F-9
<PAGE>


<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


Cash and cash equivalents

The Company considers all liquid interest-earning investments with original
maturities of three months or less to be cash equivalents.  There were no cash
equivalents at December 31, 1999 or 1998.

Principles of consolidation

The financial statements include the accounts of 1st Net and its three
subsidiaries.  Because all three of the Company's subsidiaries had
shareholders and management in common with 1st Net prior to their acquisition,
the Company has accounted for them in a manner similar to pooling-of-interests
accounting.  The accompanying financial statements have been prepared on a
consolidated basis as if common control was established as of the inception of
the three subsidiaries during the year ended December 31, 1998.  Significant
intercompany transactions and balances have been eliminated in consolidation.

Estimates and assumptions

Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. Examples include provisions for bad debts and the value of
securities received in exchange for services. Actual results may differ from
these estimates.

Revenue recognition

Revenue is recognized when earned.  The Company's revenue recognition policies
are in compliance with all applicable accounting regulations, including
American Institute of Certified Public Accountants (AICPA) Statement of
Position (SOP) 97-2, Software Revenue Recognition, and SOP 98-9, Modification
of SOP 97-2, With Respect to Certain Transactions.  Revenues from technology
consulting, user fees and marketing services are recognized ratably over the
contract period in accordance with period in which the services are performed.
Revenues attributable to undelivered elements, including technical support are
recognized ratably on a straight-line basis over the contract period.

Computer software costs

Computer software costs are expensed as incurred.  Statement of Financial
Accounting Standards (SFAS) 86, Accounting for the Costs of Computer Software
to Be Sold, Leased, or Otherwise Marketed, does not materially affect the
Company.  In March 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1 Accounting for Costs of Computer
Software Developed or Obtained for Internal Use (SOP 98-1).  This standard
requires companies to capitalize qualifying computer software costs, which are
incurred during the application development stage and amortize them over the
software's estimated useful life.  The Company adopted SOP 98-1 effective
January 1, 1999 with no material effect on the financial statements.



                                    F-10
<PAGE>



<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


Marketable and restricted securities

Marketable securities consist primarily of stock received for services
performed on behalf of clients.  Publicly traded equity securities are
classified as available for sale and are recorded at market using the specific
identification method.  Unrealized gains and losses are reflected in other
comprehensive income.  Restricted securities are recorded at cost.  Restricted
shares of LaForza Automobiles, Inc. declined in value from their original book
basis of $400,000 to $262,600 and $100,000 at December 31, 1998 and 1999,
respectively.  Because management believed these declines to be of an other
than temporary nature, the investment was written down to its new values as of
these dates and the losses of $137,400 and $162,600 were recorded in
operations in 1998 and 1999, respectively.

The Company realized gross proceeds of $941,939 and $664,377 from the sales of
available-for-sale securities during 1999 and 1998, respectively.  Gross
realized gains and losses included in operations for 1999 were $972,918 and
$53,400, respectively ($380,231 and $48,471 for 1998).

Property and equipment

Property and equipment consists primarily of office equipment and furniture,
is stated at cost and is depreciated using the straight-line method over the
estimated useful lives of the assets of three to five years.  Expenditures for
maintenance and repairs are expensed; expenditures for renewals and
improvements are generally capitalized.  Upon sale or retirement of an asset,
the related costs and accumulated depreciation are removed from the accounts
and any gain or loss is recognized.  When events or changes in circumstances
indicate that assets may be impaired, an evaluation is performed comparing the
estimated future undiscounted cash flows associated with the asset to the
asset's carrying amount to determine if a write-down to market value or
discounted cash flow value is required.

Property and equipment consists of the following at December 31, 1999:

          Office furniture and equipment     $     243,319
          Computer equipment                       152,299
          Leasehold improvements                    22,954
          Automobiles                               27,219
          Tradeshow accessories                     52,000
          Other                                     15,989
                                             -------------
                                                   513,780
          Less accumulated depreciation            (71,249)
                                             -------------
                                             $     442,531
                                             =============



                                    F-11
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


Capital lease property

Capital lease property and equipment at December 31, 1999 totaled $264,529 net
of accumulated amortization of $23,205.

Fair value of financial instruments

The Company estimates the fair value of its monetary assets and liabilities
based upon existing interest rates related to such assets and liabilities
compared to current rates of interest for instruments with a similar nature
and degree of risk.  The Company estimates that the carrying value of its
monetary assets and liabilities approximates their fair value as of December
31, 1999.

Advertising costs

Advertising costs are expensed as incurred.  Advertising expenses totaled
$300,927 and $199,164 in 1999 and 1998, respectively.

Concentration of credit risk

The Company sells its services to customers in the United States.  The Company
maintains a reserve for potential credit losses and historically such losses
have been within management's estimates.  In 1999, revenues from one unrelated
major customer totaled $970,500, which represented 56.7% of total revenues.

Comprehensive income

The Company has adopted SFAS No. 130, Reporting Comprehensive Income, which
requires that all components of comprehensive income, including net income, be
reported in the financial statements in the period in which they are
recognized.  Comprehensive income is defined as the change in equity during a
period from transactions and other events and circumstances from non-owner
sources.  Net income (loss) and other comprehensive income, including
unrealized gains and losses on investments held for sale, shall be reported
net of their related tax effect, to arrive at comprehensive income (loss).
Accumulated other comprehensive income (loss) totaled $696,134 and $(27,070)
in 1999 and 1998, respectively.

Earnings per share

Earnings per share is computed in accordance with SFAS No. 128, Earnings Per
Share and SEC Staff Accounting Bulletin (or SAB) No. 98.  Under the provisions
of SFAS No. 128, basic earnings per share is computed by dividing the net loss
for the period by the weighted average number of common shares outstanding
during the period.  Diluted earnings per share is computed by dividing the net
loss for the period by the weighted average number of common and common
equivalent shares outstanding during the period.  Under the provisions of SAB
No. 98, common shares issued for nominal consideration are included in the per
share calculations as if they were outstanding for all periods presented.


                                    F-12
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


Weighted average shares outstanding of 5,513,752 and 3,188,685 for the years
ended December 31, 1999 and 1998, respectively includes common stock
outstanding.  Potentially dilutive securities include options, warrants and
preferred stock that were excluded from basic and diluted earnings per share
because of their anti-dilutive effect.  Anti-dilutive securities outstanding
totaled 336,200 and 10,000 at December 31, 1999 and 1998, respectively.

The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB 25"), and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under SFAS No. 123, Accounting
for Stock-Based Compensation, requires the use of option valuation models that
were not developed for use in valuing employee stock options.  Under APB 25,
when the exercise price of the Company's employee stock options is not less
than the deemed fair value for the underlying stock on the date of grant, no
compensation expense is recognized.  At the time stock options were granted,
the Company believed that the exercise price was at a price not less than the
fair value of the underlying common stock.

Recently issued accounting standards

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and reporting
standards for derivative instruments and hedging activities.  The Statement
will require the recognition of all derivatives on the Company's balance sheet
at fair value.  The Financing Accounting Standards Board has subsequently
delayed implementation of the standard for the financial years beginning after
June 15, 2000.  The Company expects to adopt the new Statement effective
January 1, 2001.  The impact on the Company's financial statements is not
expected to be material.

Reclassifications

Certain reclassifications have been made to conform prior years' data to the
current period presentation.

3.  Restatement of financial statements

Subsequent to the filing of registration statements on Form 10-SB with the SEC
that included the Company's audited financial statements, the Company became
aware of a number of items within its financial statements that required
revision.  These items primarily consisted of the following.

     -    In connection with the recognition of revenues for a consulting
          contract entered into in August 1997, the Company has revised its
          financial statements to defer the recognition of revenue until the
          completion of the contract term in February 1999.



                                    F-13
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


     -    The Company adjusted its financial statements to expense certain
          intangible technology assets improperly capitalized during the
          years ended December 31, 1998 and 1999.

     -    The Company corrected errors in connection with improperly
          accounting for the acquisition of SSP, Mariah and CTG under the
          purchase accounting method.  Because these companies had officers
          and directors in common prior to their acquisition by 1st Net, the
          Company has adjusted its financial statements to account for the
          acquisitions in a manner similar to a pooling of interests.
          Additionally, the Company has added the results of the separate
          subsidiaries' operations from their inception to its financial
          results included herein.

     -    The Company previously incorrectly included unrealized gains and
          losses from marketable securities held for sale in the results of
          its operations.  The financial statements included herein have
          been modified to reflect these gains and losses in comprehensive
          income (loss) and to remove them from the results of 1st Net's
          operations.

     -    The Company wrote off property and equipment previously included
          in the balance sheet at December 31, 1999 with a net carrying
          value totaling $102,408.  Subsequent to the issuance of the
          financial statements, the Company discovered that the physical
          disposal of this property and equipment was not recorded in its
          accounting records.

     -    The Company recognized expense for stock and warrants issued to
          employees and others for services provided to 1st Net during the
          years ended December 31, 1998 and 1999, at the fair market value
          of the stock issued.  Previously, these stock and warrant
          issuances were recorded at a nominal value.

     -    The Company recorded previously unaccrued bonuses and commissions
          as a liability as of December 31, 1999.

     -    The Company reclassified amounts totaling $351,773 from gains on
          the sale of securities to revenues from technology consulting,
          user fees and marketing services for the year ended December 31,
          1999.  These revenues were previously misclassified.







                                    F-14
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


Accordingly, the Company's financial statements have been restated as follows.

<TABLE>
<CAPTION>
                                                  1999                      1998
                                        As reported   Restated    As reported   Restated
                                       ------------------------------------------------
<S>                                    <C>           <C>          <C>        <C>
Statement of operations data

Technology consulting, user fees and
  marketing services revenues          $ 1,360,962    $ 1,760,113    $ 929,905   $  909,920
Stock based compensation expense                 -      1,785,900            -      264,735
Stock based payments to outsiders                -        645,500            -            -
Operating expenses                       4,920,302      5,993,623    1,190,147    1,658,746
Loss from operations                    (3,559,340)    (6,664,910)    (260,242)  (1,013,561)
Realized gain on investments sold        1,271,291        919,518      124,354      407,175
Unrealized gain (loss) on investments
  held                                     533,534       (162,600)    (149,013)    (137,400)
Interest expense                            21,719         21,719        2,930       18,238
Other income                                 8,924          8,924          853        2,030
Provision for income taxes                   3,200          4,000        1,600        1,600
Minority interest in undistributed
  loss of subsidiaries                     245,197        157,534        2,502       94,700
Net loss                                (1,525,313)    (5,767,253)    (286,076)    (652,884)
Basic and diluted loss per share      $      (0.33)   $     (1.17)   $   (0.09)  $    (0.21)

</TABLE>


                                                          1999
                                               As reported     Restated
                                               ------------------------
     Balance sheet data

     Property and equipment, net                  535,283       442,531
     Proprietary technology, net                  279,980             -
     Intangible assets, net                       333,666             -
     Goodwill, net                                125,482             -
     Accounts payable and accrued liabilities     394,245       706,019
     Accrued personnel costs                      217,647       285,652
     Deferred credits, net                        634,332          -
     Minority interests in subsidiaries            65,848        39,778
     Common stock warrants                              -       275,272
     Additional paid in capital                 2,766,629     6,631,411
     Accumulated deficit                       (1,954,324)   (7,314,699)
     Accumulated other comprehensive income             -       669,064





                                    F-15
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


4.  Acquisitions and proposed acquisition of subsidiaries

Mariah

At its inception in August 1998, Mariah issued all of its outstanding common
stock totaling 4,000,000 shares to 1st Net in exchange for certain in-process
technology research and development owned by 1st Net.  Additionally, the
Company issued options to purchase 1,500,000 shares of common stock to
Entrepreneur Investments, LLC for services rendered in Mariah's formation.
The options are exercisable at $.10 per share and expire on August 15, 2001.

Mariah had shareholders and management in common with 1st Net at the time of
its formation and acquisition by 1st Net.  The acquisition was accounted for
in a manner similar to a pooling-of-interests and the results of Mariah's
operations from its inception are included in the accompanying financial
statements of the Company.  Mariah had no revenues in either 1999 or 1998 and
a net loss of $446,018 and $86,901 in 1999 and 1998, respectively.

Mariah subsequently sold stock to outside investors for proceeds totaling
$854,700 (net of offering costs) and the Company owns approximately 87.8% of
Mariah's outstanding shares at December 31, 1999.  Minority interest in
subsidiaries totaling $39,778 in the accompanying balance sheet at December
31, 1999 represents the outside ownership of Mariah's equity as of that date.

In 1999, Mariah received a note receivable from Last Mile Communications
Corporation ("Last Mile") in exchange for $220,000 cash.  The note was
subsequently converted into the restricted shares of Last Mile.  Last Mile's
chief executive officer and chairman of the board of directors formerly held
the same position with Mariah.  In March 2000, Mariah subsequently sold
substantially all of its operating assets to Last Mile in exchange for Last
Mile's assumption of future expense commitments.  Mariah retained the rights
to its IP telephony technology.

SSP

In January 1999, the Company acquired 100% of the outstanding shares of SSP in
exchange for 1,000,000 shares of the 1st Net stock.  SSP had shareholders and
management in common with 1st Net prior to the acquisition.  The transaction
was accounted for in a manner similar to a pooling-of-interests and the
results of SSP's operations from its inception in 1998 are included in the
accompanying financial statements of the Company.  SSP continues to be wholly
owned by 1st Net as of December 31, 1999.  SSP had revenues and net income of
$1,175,386 and $566,921 in 1999 ($523,515 and $22,947 in 1998).

CTG

In May 1999, the Company obtained 4,000,000 shares or approximately 86.4% of
CTG's common stock in exchange for technology marketing and licensing rights
on in-process technology research and development. CTG had shareholders and
management in common with 1st Net prior to the acquisition.  The transaction
was accounted for in a manner similar to a pooling-of-interests and CTG's

                                    F-16
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


results from its commencement of operations in 1999 are included in the
accompanying financial statements of the Company.  Revenues and net loss in
1999 totaled $65,209 and $822,295, respectively.  1st Net continues to own
approximately 86.4% of CTG as of December 31, 1999.  In March 2000, 1st Net
received an additional 35,000 shares of CTG in lieu of unpaid royalties owed
by CTG to 1st Net.  There is no minority interest in CTG shown on the
accompanying balance sheet at December 31, 1999 because CTG has a net equity
deficit as of that date totaling $226,569.

Spirit 32 Development Corporation

In January 1999, the Company entered into an agreement to purchase in the
future all of the issued and outstanding stock of Spirit 32 Development
Corporation ("SP32") in exchange for 450,000 shares of 1st Net's common stock.
The acquisition was not consummated and was formally rescinded in February
2000.  The rescission agreement released the Company and SP32 from any
liability that may have arisen under the terms of the original agreement for
1st Net to acquire SP32, including funds previously advanced by 1st Net for
the licensing and development of in-process technology.

Included in the rescission agreement, SP32 sold all of its rights, title and
interest in technology being developed by both Mariah and CTG.  The release
also included trade names in connection with the technology.  At the close of
the rescission agreement, 1st Net delivered 250,000 shares of its restricted
common stock to SP32 together with cash totaling $100,000.  In March 2000, 1st
Net sold the technology obtained from SP32 in exchange for 250,000 shares of
CTG common stock.

5.  Related party transactions, major customers and noncash revenues

The Company recognized related party revenues totaling $501,121 and $173,294
during the years ended December 31, 1999 and 1998, respectively.  There were
no related party accounts receivable at December 31, 1999.

Entrepreneur Investments, LLP ("EI") is a large percentage stockholder of 1st
Net.  The sole shareholder of EI is also 1st Net's Chief Executive Officer and
serves on the Board of Directors of both 1st Net and Mariah.  EI owns the
building in which both 1st Net and CTG are housed.  Rent expense totaled
$89,823 and $18,501 for the years ended December 31, 1999 and 1998,
respectively.  Additionally, the Company had borrowings outstanding from EI
totaling $284,800 and $5,000 at December 31, 1999 and 1998, respectively.
Borrowings from EI are generally non-interest bearing unless so stated at the
time funds are advanced.  There was no interest expense from EI borrowings in
either 1999 or 1998.

At December 31, 1999, SSP had certain holdings of corporate securities that
were obtained in connection with past services provided by the Company.  SSP
has agreed to pay a former independent contractor of the Company a commission
of 8% of the proceeds realized by SSP from the future sale of these
securities.  Included in accounts payable at December 31, 1999 is $90,151 for
the estimated amount due to this individual based on the value of SSP
marketable securities at that date.

                                    F-17
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


Sales and issuances of preferred and common stock

The Company issued 595,300 and 265,000 restricted shares of common stock to
employees during the years ended December 31, 1999 and 1998, respectively and
173,000 restricted shares to outsiders for services rendered to the Company.
Additionally, the Company committed to issue 46,907 common shares to employees
in 2000 for services performed in 1999.  The Company recognized compensation
expense for the shares issued and to be issued of $1,785,900 and $264,735 for
the years ended December 31, 1999 and 1998, respectively and $645,500 for
shares issued and to be issued to outsiders for services rendered to the
Company.  The compensation expense recognized was calculated based on the most
recent trading price of the common stock for stock issuances in 2000 and 1999,
or on the basis of the most recent sale of shares to outsiders for stock
issued in 1998.

1st Net sold 450,000 shares of restricted common stock to outside investors
during the year ended December 31, 1998 for net proceeds totaling $368,613.
In connection with the acquisition of SSP, 1st Net issued 1,000,000 shares of
its common stock to the shareholders of SSP.  The shares were issued in
January 1999 when the shares closed on the OTC market at $3.00, giving a total
value for the transaction of $3,000,000.

1st Net sold 452,400 and 20,000 shares of its Series A preferred stock to
outside investors during 1999 and 1998, respectively.  The Company's Series A
preferred stock was convertible into an equivalent number of shares of common
stock and had voting rights equal to the number of shares of common stock into
which it was convertible.  The shares were entitled to participate in any
dividends issued to common stockholders and had cumulative rights to
dividends at the rate of $.30 per share payable in either cash or shares of
common or preferred stock.  The Series A preferred shares had a preference in
liquidation of any unpaid dividends plus $2.50 per share over other 1st Net
stockholders.

The preferred shares automatically converted to common stock during the
quarter ended March 31, 1999 when the Company's share price reached $3 per
share.  Dividends accrued in the prior year were never paid.  The Series A
preferred shares were sold with warrants to purchase additional shares of
common stock at $5 per share, exercisable immediately.  The warrants expire on
the early of the one-year anniversary of an underwritten public offering of
the Company's shares or October 31, 2002.  There were 236,200 and 10,000
warrants outstanding at December 31, 1999 and 1998, respectively.

The warrants sold with the preferred shares had estimated values ranging from
$.02 to $1.21 at the time of their issuance during 1998 and 1999 (as
determined through the use of an option pricing model with reference to the
price of the Company's publicly traded common stock).  Because the preferred
stock was sold in units consisting of two shares of preferred stock and one
warrant, this gave the preferred stock an effective price ranging from $1.90
to $2.49 per share.  Given the preferred shares' conversion ratio into common
stock and given that the Company's common stock was trading during the same
period at a range of between $.50 and $4.44 per share, purchasers of the
preferred stock received a beneficial conversion feature.  The Company
accounted for the beneficial conversion feature as if the holders of preferred
stock received a dividend on their preferred shares.  Because all of the
preferred stock was converted prior to March 31, 1999, the Company recorded a
charge to accumulated  deficit totaling $698,247 in the first quarter of 1999
(none of the 1998 issuances contained a beneficial conversion feature).

                                    F-18
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


Mariah sold 437,000 and 118,600 shares of common stock to outsiders during
1999 and 1998, respectively for net proceeds totaling $760,000 and $94,700,
respectively.  In 1999, CTG sold 630,000 shares of its common stock to
outsiders for net proceeds totaling $750,764.

The Company agreed to issue warrants to purchase 525,000 shares of common
stock at $3.00 per share to four employees, subject to the approval of the
Company's Board of Directors.  When the issuance of the warrants are approved
by the Board of Directors, they will be immediately vested and will expire
five years from the date of Board approval.

During 1999, the Company agreed to issue options to purchase common shares to
employees at the rate of $5.00 per share, subject to the approval of the
Company's Board of Directors.  The options have a ten-year term and vest over
three years.  At December 31, 1999, the Company had 352,000 stock options
issued and outstanding.  The vesting period for some of the options was
accelerated over a period less than three years based on the terms of
employment of the recipients.  At December 31, 1999, there were 86,667 options
exercisable.

As provided for under SFAS 123, the Company has provided the required
additional pro forma disclosures.  In accordance with the intrinsic value
method followed by APB 25, no compensation expense has been recognized in the
consolidated statement of operations in connection with the granting of stock
options.  Had compensation cost been recognized in accordance with the fair
value method called for by SFAS 123, the Company's net loss in 1999 would have
increased $179,520 to $5,946,733.

The fair value of the options issued in 1999 was estimated using the Black-
Scholes option pricing model with the following weighted average assumptions
used for grants: dividend yield - 0%; expected volatility - 80%; risk-free
investment rate - 6%; and an expected life of seven years.  The compensation
cost as generated by the Black-Scholes model may not be indicative of the
future benefit, if any, that may be realized by the option holders.  The fair
value of the option grant was $.51 per share.

The Company issued 75,000 warrants to a client during 1999 in connection with
a service agreement.  The warrants have an exercise price of $3.50 per share
and expire March 31, 2001.  The Company recorded a charge of $98,750 to
operations in 1999 in connection with the issuance of the warrants.

7.  Notes payable

The Company's notes payable, notes payable due to related parties and amounts
due to related parties outstanding at December 31, 1999 consist of the
following:










                                    F-19
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


     Demand notes payable to and amounts payable from EI,
       unsecured and non-interest bearing, varying or no
       stated maturity dates                                     $  284,800
     Amounts advanced from Grey Mare, LLC, unsecured,
       non-interest bearing, no stated maturity date,
       repaid in full during the quarter ended March 31, 2000        40,000
     Amounts advanced by employee, unsecured, non-interest
       bearing, no stated maturity date, repaid in full
       August 2000                                                   11,172
                                                                 ----------
     Notes payable and amounts due to related parties               335,972
     Note payable to an individual, unsecured and bearing
       interest at 10%, interest only payments due annually
       in August, no stated maturity date                            50,000
     Note payable to a customer, unsecured and bearing
       interest at 10%, repayment to be made in the form of
       services, repaid in full August 2000                          18,000
                                                                 ----------
     Notes payable                                                   68,000
                                                                 ----------
                                                                 $  403,972
                                                                 ==========

8.  Commitments

Both 1st Net and CTG rent their facilities from EI under operating leases
through February 2003.  The lease contracts call for increases in monthly rent
in March 2001 and March 2002.  The future minimum annual aggregate rental
payments required under both capital and operating leases as of December 31
are as follows.

                                      Operating       Capital
                                     ----------     -----------

          2000                       $  154,200     $   101,559
          2001                          259,756          83,286
          2002                          282,996          81,249
          2003                          112,608          77,366
          2004                                -          47,180
                                     ----------     -----------
                                        809,560         390,640
     Less interest portion of
       capital lease obligations                        (78,069)
     Less current portion of
       capital lease obligations                        (66,095)

                                                    $   246,476
                                                    ===========


                                    F-20
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


9.  Income taxes

At December 31, 1999, the Company has federal and California net operating
loss carryforwards of approximately $6,100,000.  The federal and California
net operating loss carryforwards will begin to expire in 2012, unless
previously utilized.  Pursuant to Sections 382 and 383 of the Internal Revenue
Code, annual use of the Company's net operating loss and credit carryforwards
may be limited in the event of a cumulative change in ownership of more than
50% occurs within a three year testing period.

The Company's provision for income taxes for the years ended December 31, 1999
and 1998 consist of minimum franchise taxes levied by the state of California.

The components of the Company's deferred tax assets as of December 31, 1999
and 1998 are shown below.  A valuation allowance has been recognized to offset
the deferred tax assets as realization of such assets is uncertain.

                                         December 31, 1999  December 31, 1998
                                         -----------------  -----------------
Deferred tax assets:
  Net operating loss carryforwards         $  2,440,000        $   320,000

  Valuation allowance for deferred
    tax assets                               (2,440,000)          (320,000)
                                           ------------        -----------
  Net deferred tax assets                  $          -        $         -
                                           ============        ===========

A reconciliation of the statutory tax rates to the Company's provision for
income tax expense is as follows:

                                             Years ended
                                             -----------
                                  December 31, 1999  December 31, 1998
                                  -----------------  -----------------

Federal income tax rate                (35.0)%           (35.0)%
State income tax rate, net of
  federal benefit                       (5.9)             (5.9)
Valuation allowance                     40.9              40.7
                                       -----             -----
                                           - %            (0.2)%









                                    F-21
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements


10.  Contingencies

The Company is currently involved in disputes with several former employees
concerning compensation and termination decisions.  Although the outcome of
these disputes is indeterminable, management is confident that these matters
will be settled favorably.  No reserves have been established in connection
with these disputes in the accompanying financial statements.

11.  Subsequent event

On February 23, 2000, SSP sold a newsletter published by the Company along
with certain related assets to Marketbyte, L.L.C. ("Marketbyte") in exchange
for a note receivable totaling $200,000 and 10% of any future consideration
received by Marketbyte in connection with the newsletter through June 2, 2002.
Under the sale agreement, in the event that the consideration received from
Marketbyte by the Company through June 2, 2002 does not equal or exceed
$750,000, Marketbyte will be required to pay the Company the difference
between $750,000 and the consideration previously paid to the Company in
connection with the newsletter.

On May 19, 2000, CTG sold 2,000,000 shares of Series A convertible preferred
stock at a cost of $2.00 per share to an unrelated investor.  The preferred
shares are convertible into an equal number of shares of common stock and
automatically convert upon the earlier of a firmly underwritten public
offering of the Company's common stock with total proceeds of at least
$5,000,000 or the date at which the public price per common share is equal to
or greater than $4.00 (as adjusted).  The Series A preferred stock contains no
provisions for mandatory dividends except as declared at the discretion of the
Board of Directors.  The Series A preferred shares have voting rights in
proportion to the number of common shares into which they are convertible and
carry a liquidation preference of $2.00 per share plus any declared but unpaid
dividends.

The preferred shares included unregistered warrants to purchase an additional
1,000,000 shares of common stock at $4.00 per share.  The warrants expire on
the earlier of May 19, 2003 or one year after the closing of a firmly
underwritten public offering of not less than $5,000,000.  The proceeds of the
preferred stock and warrant sale totaled $3,593,525, net of offering costs and
commissions.












                                   F-22
<PAGE>

<PAGE>
1st NET TECHNOLOGIES, INC.
  and Subsidiaries
CONSOLIDATED BALANCE SHEETS
UNAUDITED

<TABLE>
<CAPTION>
                                                             September 30,
                                                                 2000
<S>                                                          <C>
ASSETS

Current assets:
   Cash                                                       $  1,690,176
   Accounts receivable, net of allowance for
     doubtful accounts                                              28,349
   Marketable securities                                            59,406
   Current portion of notes receivable                              93,336
   Other current assets                                             18,907
                                                              ------------
   Total current assets                                          1,890,174

Investment in LaForza Automobiles, Inc.                             60,000
Investment in Last Mile Communication Corporation                  220,000
Notes receivable                                                   523,583

Property and equipment, at cost net of accumulated
   Depreciation                                                    357,734

Other assets                                                        19,342
                                                              ------------
                                                              $  3,070,833
                                                              ============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued liabilities                   $    567,240
   Notes payable                                                    50,000
   Notes payable and amounts due to related parties                 19,800
   Current portion of capital lease obligations                     70,585
   Accrued personnel costs                                         387,560
   Deferred revenues                                                48,750
   Income taxes payable                                              4,000
                                                              ------------
   Total current liabilities                                     1,147,935

Long term portion of capital lease obligations                     201,785
                                                              ------------
   Total liabilities                                             1,349,720

Commitments and contingencies

Minority interests in subsidiaries                                 572,010

Stockholders' equity:
   Preferred stock                                                       -
   Common stock                                                      6,063
   Common stock warrants                                           275,272
   Additional paid in capital                                    9,138,608
   Accumulated deficit                                          (8,326,596)
   Accumulated other comprehensive income                           55,756
                                                              ------------
   Total stockholders' equity                                    1,149,103
                                                              ------------
                                                              $  3,070,833
                                                              ============
</TABLE>

See accompanying notes.
                                        F-23
<PAGE>
1st NET TECHNOLOGIES, INC.
  and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

<TABLE>
<CAPTION>
                                                     For the threee months ended    For the nine months ended
                                                     September 30,  September 30,  September 30,  September 30,
                                                        2000           1999           2000           1999
                                                    -------------  -------------  -------------  -------------
<S>                                                 <C>            <C>            <C>            <C>

Revenues:
  Technology consulting, user fees and
    marketing services                               $    64,886    $   212,755    $   218,229    $ 1,241,133

Operating expenses                                     1,413,782      1,461,718      3,975,893      8,461,990

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

Loss from operations                                  (1,348,896)    (1,248,963)    (3,757,664)    (7,220,857)

Other income and expense:

  Realized gain on investments sold                       54,285        244,227      1,209,107        643,550
  Writedown of restricted security                             -              -        (40,000)             -
  Interest expense                                       (11,217)        (4,299)       (64,536)       (14,958)
  Gain on sale of assets                                 100,000              -        635,255              -
  Other income                                            46,894              -        100,556              -

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

Loss before provision for income taxes and minority
  interest in loss of subsidiaries                    (1,158,934)    (1,009,035)    (1,917,282)    (6,592,265)

Provision for income taxes                                     -              -          5,902            800

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

Loss before provision for minority interest
  in undistributed loss of subsidiaries               (1,158,934)    (1,009,035)    (1,923,184)    (6,593,065)

Minority interest in undistributed loss of
  subsidiaries                                           388,910         32,400        911,287        157,048

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

Net loss                                            $   (770,024)   $  (976,635)   $(1,011,897)   $(6,436,017)

Beneficial conversion feature of preferred
  stock issued, accounted for as a dividend
  on preferred stock                                           -              -              -       (698,247)
---------------------------------------------------------------------------------------------------------------

Net loss applicable to common stockholders          $   (770,024)   $  (976,635)   $(1,011,897)   $(7,134,264)
===============================================================================================================

Loss per share:
  Basic and diluted                                 $      (0.13)   $     (0.17)   $     (0.17)   $     (1.31)

Weighted average common shares outstanding:
  Basic and diluted                                    6,010,069      5,753,700      5,987,545      5,432,891

===============================================================================================================


</TABLE>

See accompanying notes.


                                    F-24
<PAGE>

<PAGE>
1st NET TECHNOLOGIES, INC.
  and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED

<TABLE>
<CAPTION>
                                                      For the three months ended     For the nine months ended
                                                     September 30,  September 30,  September 30,  September 30,
                                                        2000           1999           2000           1999
                                                     -------------  -------------  -------------  -------------
<S>                                                  <C>            <C>            <C>            <C>
Operating activities
Net loss                                             $  (770,024)   $  (976,635)   $(1,011,897)   $(6,436,017)
Adjustments to reconcile net loss to net cash
flows from operating activities:
  Depreciation and amortization                           32,286         28,503         89,831         85,438
  Changes in minority interests in subsidiaries         (388,910)       (32,400)      (911,287)        (6,098)
  Gain on sale of assets                                (100,000)             -       (635,255)            -
  Realized gain on investments sold                      (54,285)      (244,227)    (1,209,107)      (643,550)
  Writedown of restricted security                             -              -         40,000              -
  Reduction of note payable in exchange for services      (5,090)             -        (18,000)             -
  Stock based employee compensation                            -              -              -      1,785,900
  Stock based payments for services and technology             -              -        282,500         98,250
  Interest income from accretion of note receivable      (22,328)             -        (52,023)             -
  Changes in operating assets and liabilities:
    Accounts receivable                                   (3,139)        53,222         39,149        (61,843)
    Other assets                                          10,956       (111,289)       (26,007)      (171,032)
    Accounts payable and accrued liabilities              47,467        616,684        (88,551)     1,091,906
    Accrued personnel costs                             (127,710)        64,013        151,908        114,783
    Deferred revenues                                     48,750              -         48,750              -
    Income taxes payable                                       -            800          1,600          4,000

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

Net cash flows from operating activities              (1,332,027)      (601,329)    (3,298,389)    (4,138,263)

Investing activities
Additions to property and equipment                      (41,029)       (74,348)       (51,180)      (229,989)
Changes in marketable securities                          52,280        (13,681)     1,694,759      1,750,414
Repayments of notes and loans receivable                  85,000              -         85,000        330,882

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

Net cash flows from investing activities                  96,251        (88,029)     1,728,579      1,851,307

Financing activities
Repayments of capital lease obligations                  (19,229)       (18,617)       (55,240)       (23,496)
Repayments of notes payable                              (47,656)             -       (316,172)      (219,269)
Net proceeds from issuance of common stock of Mariah           -              -              -        760,000
Net proceeds from issuance of common stock by CTG              -              -         25,000        750,764
Net proceeds from issuance of CTG preferred stock
 and warrants                                                  -              -      3,593,525              -
Net proceeds from issuance of preferred stock and
 warrants                                                      -              -              -      1,007,913

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

Net cash flows from financing activities                 (66,885)       (18,617)     3,247,113      2,275,912

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

Increase in cash                                      (1,302,661)      (707,975)     1,677,303        (11,044)

Cash at beginning of period                            2,992,837        715,727         12,873         18,796

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

Cash at end of period                                $ 1,690,176    $     7,752    $ 1,690,176    $     7,752

===============================================================================================================

</TABLE>

See accompanying notes.
                                     F-25
<PAGE>
<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements
(unaudited)


1.  Organization

1st Net Technologies, Inc. ("the Company") is primarily in the Internet
commerce and services business.

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.  Realization of a portion of
the assets in the accompanying financial statement is dependent upon future
profitable operations of the Company, or the realization of sufficient funds
from the sales of investment securities held or upon the Company's ability to
raise funds through future debt or equity offerings.  Management believes that
actions presently being taken will provide the opportunity for the Company to
continue as a going concern and has therefore prepared the financial
statements accordingly.

2.  Basis of presentation

The accompanying consolidated financial statements include the accounts of the
Company and its majority owned subsidiaries, Mariah Communications, Inc.
("Mariah"), SSP Management Corp. ("SSP") and Children's Technology Group, Inc.
("CTG").  These acquisitions have been accounted for in a manner similar to a
pooling-of-interests because the Company and the acquired companies had
shareholders and management in common prior to the acquisition.  Intercompany
transactions and balances have been eliminated in consolidation.

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles for interim financial statements and
with the instructions to Form 10-QSB and Item 310(b) of Regulation SB.
Accordingly, certain information or footnote disclosures normally included in
complete financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission.  In the opinion of
management, the statements include all adjustments necessary, which are of a
normal and recurring nature, for the fair presentation of the results of the
interim periods presented.

These financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31, 1999,
included in 1st Net Technologies, Inc.'s Form 10-KSB reported to the
Securities and Exchange Commission.  Operating results for the three and nine
months ended September 30, 2000 are not necessarily indicative of the results
which may be expected for any other interim period or for the year ended
December 31, 2000.  Certain reclassifications have been made to conform prior
years' data to the current period presentation.










                                     F-26
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements
(unaudited)


3.  Earnings per share

Earnings per share is computed in accordance with SFAS No. 128, Earnings Per
Share.  Under the provisions of SFAS No. 128, basic earnings per share is
computed by dividing the net income or loss for the period by the weighted
average number of common shares outstanding during the period.  Diluted net
income or loss per share is computed by dividing the net income for the period
by the weighted average number of common and common equivalent shares
outstanding during the period.  All of the Company's common stock equivalents
totaling 336,200 and 311,200 were antidilutive for the three and nine months
ended September 30, 2000 and 1999, respectively.

4.  Warrants, stock options and employee stock grant

There are 236,200 warrants outstanding to purchase shares of common stock at
$5.00 per share.  The warrants expire at the earlier of one year subsequent to
the closing of an underwritten public offering of the Company's common stock
or October 21, 2002.

There are 75,000 warrants outstanding to purchase common stock outstanding
with an exercise price of $3.50 per share.  The warrants expire March 31,
2001.

The Company agreed to issue warrants to purchase 525,000 shares of common
stock at $3.00 per share to four employees, subject to the approval of the
Company's Board of Directors.  When the issuance of the warrants is approved
by the Board of Directors, they will be immediately vested and will expire
five years from the date of Board approval.

During 1999, the Company announced its intention to issue options to employees
to purchase common stock at an exercise price of $5.00 per share, subject to
the future approval of the Company's Board of Directors.  There are 272,000
shares of common stock that would be subject to this future option grant.  The
vesting period for the options to be granted will vary based on the terms of
employment of the recipients at the time the options were announced, but in no
event will exceed three years from the time of the announcement of the options
in 1999.  None of the options to be granted will be issued to officers or
directors.













                                   F-27
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements
(unaudited)


In December 1999, the Company announced the issuance of shares of common stock
to employees.  In August 2000, the Company's Board of Directors approved the
issuance of 58,592 shares.  The shares were distributed in September 2000.
The Company recorded compensation expense of $53,005 during the year ended
December 31, 1999, related to the future issuance of the shares.

5.  Technology Purchase Agreement

In January 1999, the Company entered into an agreement to purchase in the
future all of the issued and outstanding stock of Spirit 32 Development
Corporation ("SP32") in exchange for 450,000 shares of 1st Net's common stock.
The acquisition was not consummated and was formally rescinded in February
2000.  The rescission agreement released the Company and SP32 from any
liability that may have arisen under the terms of the original agreement for
1st Net to acquire SP32, including funds previously advanced by 1st Net for
the licensing and development of in-process technology.

Included in the rescission agreement, SP32 sold all of its rights, title and
interest in technology being developed by both Mariah and CTG.  The release
also included trade names in connection with the technology.  At the close of
the rescission agreement, 1st Net delivered 250,000 shares of its restricted
common stock to SSP together with cash totaling $100,000.  The Company
recorded a charge to operations totaling $382,500 in connection with this
transaction, as the technology being obtained was in-process research and
development at the time of the rescission agreement.  In March 2000, 1st Net
sold the rights to certain of the technology obtained from SP32, namely the
Crayon Crawler Browser and the Mindwalker Series, to CTG in exchange for
250,000 shares of CTG common stock.

6.  Asset sales

In 1999, Mariah received a note receivable from Last Mile Communications
Corporation ("Last Mile") in exchange for $220,000 cash.  The note was
subsequently converted into the restricted shares of Last Mile.  Last Mile's
Chief Executive Officer and Chairman of the Board of Directors formerly held
the same position with Mariah.  In March 2000, Mariah subsequently sold
substantially all of its operating assets to Last Mile in exchange for Last
Mile's assumption of future expense commitments.  Mariah retained the rights
to its IP telephony technology.

On February 23, 2000, SSP sold a newsletter published by the Company along
with certain related assets to Marketbyte, L.L.C. ("Marketbyte") in exchange
for a note receivable totaling $200,000 and 10% of any future consideration
received by Marketbyte in connection with the newsletter through June 2, 2002.
Under the sale agreement, in the event that the consideration received from
Marketbyte by the Company through June 2, 2002 does not equal or exceed









                                   F-28
<PAGE>

<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements
(unaudited)


$750,000, Marketbyte will be required to pay the Company the difference
between $750,000 and the consideration previously paid to the Company in
connection with the newsletter.  Accordingly, the transaction has been
recorded as a current and long-term note receivable due from Marketbyte
totaling $601,919, and is included in  the accompanying balance sheet at
September 30, 2000.  The difference between the recorded value at September
30, 2000 and the face value of $750,000 is due to discounting future cash
flows under the note at 15%.  The Company recorded a gain from the sale of the
newsletter less the related assets sold totaling $535,255 for the three months
ended March 31, 2000.

In July 2000, SSP agreed to sell its SmallCapDigest.com and
InvestmentOpportunity.com Internet newsletters, including their Web sites,
opt-in databases, and URL's, to Millennium Financial Publishing, LLC
("Millennium"), an unrelated business.  The Company is scheduled to receive
consideration totaling $1,500,000 as follows: 1) $100,000 was paid to SSP at
signing; 2) monthly installments ranging from $15,000 to $20,000 through
December 1, 2001 totaling $325,000; 3) $325,000 due on or before January 1,
2002; 4) 25% of all stock consideration paid to the buyer by its client
companies until the total stock consideration totals $750,000; and 5) cash
totaling up to $750,000 to the extent the stock consideration does not have a
total value (as defined) equal to $750,000.  The Company realized a gain from
the sale of the newsletters totaling $100,000 in the third quarter that
represented the cash received to date.  The Company will recognize additional
gains from the sale of the newsletters as the proceeds are received on the
notes receivable from the buyer.  The Company has chosen to recognize the gain
on sale of the newsletter in accordance with the installment method due to
uncertainties in connection with the receipt of future payments from the
buyer.  Currently, the Company and Millennium are disputing the payment terms
of the transaction and there exists a substantial risk that the two parties
will not be able to come to a mutual agreement concerning the ultimate
consideration for the newsletters.

7.  Related party transactions and significant sales

Entrepreneur Investments, L.L.C. ("EI") is one of the largest percentage
shareholders in the Company.  The sole shareholder of EI serves as the
Company's Chief Executive Officer.  The Company has officers and directors in
common with various other entities in related and unrelated businesses.
During the three and nine months ended September 30, 2000 and 1999, the
Company subleased office space from EI for total rent and utilities expenses
of $48,560, $28,667, $121,311 and $78,794, respectively.  The Company also had
borrowings outstanding from EI totaling $19,800 at September 30, 2000.  The
Company paid interest on the borrowings to EI totaling $35,000 during the nine
months ended September 30, 2000.

At September 30, 2000, SSP had certain holdings of corporate securities that
were obtained in connection with past services provided by the Company.  SSP
has agreed to pay a former independent contractor of the Company a commission
of 8% of the proceeds realized by SSP from the future sale of these
securities.

During the three and nine months ended September 30, 1999 the Company had
revenues from related parties totaling $192,500 and $312,500, respectively.


                                   F-29
<PAGE>
<PAGE>
1st Net Technologies, Inc.
  and Subsidiaries
Notes to consolidated financial statements
(unaudited)


8.  Sale of CTG preferred stock

On May 19, 2000, CTG sold 2,000,000 shares of Series A convertible preferred
stock at a cost of $2.00 per share to an unrelated investor.  The preferred
shares are convertible into an equal number of shares of common stock and
automatically convert upon the earlier of a firmly underwritten public
offering of the Company's common stock with total proceeds of at least
$5,000,000 or the date at which the public price per common share is equal to
or greater than $4.00 (as adjusted).  The Series A preferred stock contains no
provisions for mandatory dividends except as declared at the discretion of the
Board of Directors.  The Series A preferred shares have voting rights in
proportion to the number of common shares into which they are convertible and
carry a liquidation preference of $2.00 per share plus any declared but unpaid
dividends.

The preferred shares included unregistered warrants to purchase an additional
1,000,000 shares of common stock at $4.00 per share.  The warrants expire on
the earlier of May 19, 2003 or one year after the closing of a firmly
underwritten public offering of not less than $5,000,000.  The proceeds of the
preferred stock and warrant sale totaled $3,593,525, net of offering costs and
commissions.

































                                  F-30
<PAGE>

<PAGE>
                      INDEPENDENT AUDITORS' REPORT

The Board of Directors
The Children's Technology Group, Inc.

We have audited the accompanying balance sheet of The Children's Technology
Group, Inc. f.k.a. Tummy Busters, Inc. (a development stage company) (the
"Company") as of April 30, 1999, and the related statements of operations,
stockholders' equity and cash flows for the period from July 30, 1998 (date of
inception) through April 30, 1999.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of April 30,
1999, and the results of its operations and its cash flows for the period from
July 30, 1998 (date of inception) through April 30, 1999 in conformity with
generally accepted accounting principles.

As discussed in Note 1, the Company has been in the development stage since
its inception on July 30, 1998.  Realization of a major portion of the assets
is dependent upon the Company's ability to raise funds through debt or equity
offerings, and the success of future operations.  These factors raise
substantial doubt about the Company's ability to continue as a going concern.


                                   /s/ Argy & Company

                                   Argy & Company


Fountain Valley, California
May 31, 2000
















                                   F-31
<PAGE>



<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)


                               BALANCE SHEET

                               April 30, 1999

                                  ASSETS

Cash                                                    $ 465,650

Computer equipment                                          1,007

Licenses                                                  400,000

Other assets                                               15,000
                                                        ---------

     Total assets                                       $ 881,657
                                                        =========

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Accrued liabilities                                   $ 176,000
                                                        ---------

Stockholders' equity:
  Common stock, $0.001 par value; 50,000,000
   shares authorized; 630,000 shares issued
   and outstanding                                            630
  Additional paid-in capital                              753,484
  Deficit accumulated during the development stage        (48,457)
                                                        ---------

     Total stockholders' equity                           705,657
                                                        ---------
     Total liabilities and stockholders' equity         $ 881,657
                                                        =========













See independent auditors' report and accompanying notes to financial
statements.

                                   F-32
<PAGE>




<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                           STATEMENT OF OPERATIONS

             For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999



Selling, general and administrative expenses            $ 47,657

Provision for taxes                                          800
                                                        --------

Net loss                                                $(48,457)
                                                        ========



































See independent auditors' report and accompanying notes to financial
statements.


                                   F-33
<PAGE>



<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                     STATEMENT OF STOCKHOLDERS' EQUITY

            For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999

<TABLE>
<CAPTION>
                                                                     Deficit
                                                                   Accumulated
                                                     Additional      During the     Total
                                     Common Stock     Paid-in       Development  Stockholders'
                                   Shares    Amount   Capital          Stage        Equity
                                  --------   ------  ----------    ------------  -------------
<S>                               <C>        <C>     <C>           <C>           <C>
Balances, July 30, 1998                  -    $  -    $      -       $      -      $      -

Issuance of common stock to
founders on August 30, 1998        870,000     870       2,480              -         3,350

Common stock issued in connec-
tion with a private placement
for $0.40 per share dated
August 10, 1998:
   December 1998                    77,750      78      31,022              -        31,100
   January 1999                      5,500       5       2,195              -         2,200
   February 1999                    79,250      79      31,621              -        31,700

Common stock issued in connec-
tion with a private placement
for $2.00 per share dated March 3,
1999, net of offering costs        467,500     468     685,296              -       685,764

Surrender of common stock from
founders on April 22, 1999        (870,000)   (870)        870              -             -

Net loss                                 -       -           -        (48,457)      (48,457)
                                  --------    -----   ---------      --------     ---------

Balances, April 30, 1999           630,000    $ 630   $ 753,484      $(48,457)    $ 705,657
                                  ========    =====   =========      ========     =========
</TABLE>













See independent auditors' report and accompanying notes to financial
statements.

                                   F-34

<PAGE>



<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                           STATEMENT OF CASH FLOWS

            For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999

Cash flows from operating activities:
   Net loss                                                    $  (48,457)
   Increase in accrued liability                                   20,000
                                                               ----------

   Net cash used in operating activities                          (28,457)

Cash flows from investing activities:
   Purchases of computer equipment                                 (1,007)
   Purchases of licenses                                         (400,000)
   Other assets                                                   (15,000)
                                                               ----------

   Net cash used in investing activities                         (416,007)
                                                               ----------

Cash flows provided by financing activities:
   Net proceeds from issuance of stock, net
    of offering costs of $93,236                                  910,114
                                                               ----------

Net increase in cash                                              465,650

Cash at beginning of period                                             -
                                                               ----------

Cash at end of period                                          $  465,650
                                                               ==========

Supplemental disclosure of cash flow information -
  Cash paid during period for:
    Interest                                                   $        -
                                                               ==========
    Income and franchise taxes                                 $        -
                                                               ==========

Supplemental disclosure of non-cash investing and financing activities:

     During the current period ended April 30, 1999, the Company issued
     warrants to purchase 4,000,000 shares of common stock to a third
     party, in connection with a license agreement (see Notes 2 and 3).


See independent auditors' report and accompanying notes to financial
statements.




                                   F-35
<PAGE>



<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                        NOTES TO FINANCIAL STATEMENTS

            For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Organization and Operations

The Children's Technology Group, Inc. f.k.a. Tummy Busters, Inc. (a
development stage company) (the "Company"), a Nevada corporation, was
incorporated on July 30, 1998. The Company has been in the development stage
since its formation and is primarily engaged in raising capital, obtaining
financing, advertising and promoting the Company, and administrative
functions.  The Company intends to develop and operate online communities for
children.

Basis of Presentation

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern, which contemplates, among other things, the
realization of assets and satisfaction of liabilities in the normal course of
business.  The Company's losses from operations through April 30, 1999 and
lack of operational history, among other matters, raise substantial doubt
about its ability to continue as a going concern.  The Company intends to fund
operations through debt and equity financing arrangements which management
believes will be sufficient to fund its capital expenditures, working capital
requirements and other cash requirements for the fiscal year ending December
31, 1999.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period.  Significant estimates made by management include the realizability of
mergers of other long-lived assets.  Actual results could differ from those
estimates.

Risks and Uncertainties

The Company is a start up company subject to the substantial business risks
and uncertainties inherent to such an entity, including the potential risk of
business failure.

Computer Equipment

Computer equipment is stated at cost.  Depreciation is computed using the
straight-line method over the useful life of 3 years.



                                   F-36
<PAGE>



<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                        NOTES TO FINANCIAL STATEMENTS

            For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
(CONTINUED)

Betterments, renewals, and extraordinary repairs that extend the lives of the
assets are capitalized; other repairs and maintenance charges are expensed as
incurred.  The cost and related accumulated depreciation applicable to assets
retired are removed from the accounts, and the gain or loss on disposition is
recognized in current operations.

Licenses and Other Assets

Licenses and other assets are stated at cost. Amortization is computed using
the straight-line method over the estimated useful lives of the related
agreements ranging from 3 to 10 years.

Long Lived Assets

During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of,"
which requires that long-lived assets and certain identifiable intangibles to
be held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.  In accordance with the provisions of SFAS No. 121, the
Company regularly reviews long-lived assets  for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may
not be recoverable.  Based on its analysis, the Company believes that no
impairment of the carrying value of its long-lived assets existed at April 30,
1999.

Common Stock - Reverse Stock Splits

In April 1999, the Company's board of directors approved a one-for-four
reverse stock split.  Par value remained at $0.001 per share.  All references
throughout these financial statements to number of shares, per share amounts,
stock option data and market prices of the Company's common stock have been
restated to reflect the reverse stock split.











                                   F-37
<PAGE>




<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                        NOTES TO FINANCIAL STATEMENTS

            For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
(CONTINUED)

Stock-Based Compensation

During 1995, the FASB issued Statement of Financial Accounting Standards No.
123 ("SFAS 123"), "Accounting for Stock-Based Compensation," which defines a
fair value based method of accounting for stock-based compensation.  However,
SFAS 123 allows an entity to continue to measure compensation cost related to
stock and stock options issued to employees using the intrinsic method of
accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB
25"), "Accounting for Stock Issued to Employees."  Entities electing to remain
with the accounting method of APB 25 must make pro forma disclosures of net
income (loss), as if the fair value method of accounting defined in SFAS 123
had been applied.  The Company has elected to account for its stock-based
compensation to employees under APB 25.

Revenue Recognition

The Company will recognize revenue during the month in which services are
provided.

Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").  Under SFAS
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. A valuation
allowance is provided for significant deferred tax assets when it is more
likely than not that such assets will not be recovered.

NOTE 2 - LICENSES

In April 1999, the Company entered into an exclusive license agreement with
1st Net Technologies, Inc. ("1st Net") whereby 1st Net granted to the Company
a worldwide exclusive license to use the Crayon Crawler web browser and
community software programs for $400,000 in cash and a 5% royalty on related
sales (not less than $25,000 per month). The license agreement expires April
2002.






                                   F-38
<PAGE>



<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                        NOTES TO FINANCIAL STATEMENTS

            For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999

NOTE 2 - LICENSES

In April 1999, the Company entered into a non-exclusive license agreement with
1st Net whereby 1st Net granted to the Company a worldwide non-exclusive
license agreement to use the Mindwalker Series web browser and community
software programs in exchange for a warrant to purchase 4,000,000 shares of
the Company's common stock, a 5% royalty on related sales and an exclusive
license to the Company's R-Site Web site.  The license agreement expires April
2002.

NOTE 3 - WARRANTS

From time to time, the Company issues warrants pursuant to various agreements.
Under the terms of a license agreement (see Note 2), the Company granted 1st
Net, a related party (see Note 7), a warrant to purchase 4,000,000 shares of
the Company's stock at an exercise price of $.10 per share.  The warrants
vested on the date of grant and were exercised subsequent to the period ended
April 30, 1999 (see Note 6).

NOTE 4 - STOCKHOLDERS' EQUITY

In August 1998, the Company issued to its founder 870,000 shares of common
stock for $3,350.  These shares were subsequently surrendered to the Company
on April 22, 1999.

In August 1998, the Company issued 162,500 shares of its common stock for
$65,000 in cash.

In March 1999, the Company issued 467,500 shares of its common stock for
$685,764 in cash, net of offering costs of $249,236.

NOTE 5 - INCOME TAXES

The provision for income taxes for the period ended April 30, 1999 consists of
minimum state taxes only.

Significant reconciling items between the Company's reported income tax
provision and the benefit computed by applying the U.S. Federal income tax
rate of 34% to loss before provision for income taxes result primarily from
changes in the valuation allowance for deferred tax assets and state income
taxes.







                                   F-39

<PAGE>



<PAGE>
                     THE CHILDREN'S TECHNOLOGY GROUP, INC.
                          f.k.a. Tummy Busters, Inc.
                        (A Development Stage Company)

                        NOTES TO FINANCIAL STATEMENTS

            For the Period From July 30, 1998 (Date of Inception)
                           Through April 30, 1999

NOTE 5 - INCOME TAXES

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at April 30, 1999 are presented below:

          Deferred tax assets:
             Net operating loss carryforwards             $ 16,500
             Less valuation allowance                      (16,500)
                                                          --------
                Net deferred tax assets                   $      -
                                                          ========


NOTE 6 - SUBSEQUENT EVENTS

In May 1999, 1st Net exercised its warrant to purchase 4,000,000 shares of
common stock at $0.10 per share in connection with a license agreement (see
Notes 2 and 3) and acquired an 86% interest in the Company.

NOTE 7 - RELATED PARTY TRANSACTIONS

As previously discussed in Note 3, the Company granted 1st Net, a warrant to
purchase 4,000,000 shares of the Company's stock at an exercise price of $.10
per share.  At the date of grant, the officers and directors of the Company
were also officers and directors of 1st Net.























                                   F-40
<PAGE>


<PAGE>
                           INDEPENDENT AUDITORS' REPORT



The Board of Directors
SSP Management Corp.

We have audited the accompanying balance sheet of SSP Management Corp. (the
"Company") as of December 31, 1998, and the related statements of operations,
stockholder's equity and cash flows for the year then ended.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December
31, 1998, and the results of its operations and its cash flows for the year
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
2, the Company and its affiliates have engaged in significant transactions
with each other.



                                   /s/ Argy & Company

                                   Argy & Company


Fountain Valley, California
September 21, 2000














                                     F-41
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                                 BALANCE SHEET

                               December 31, 1998


                                    ASSETS

Current assets:
  Cash                                                      $     908
  Marketable securities                                        16,736
  Loan receivable                                              20,000
  Related party loan receivable                               300,242
                                                            ---------

     Total current assets                                     337,886

Office equipment, net of accumulated depreciation               3,774
                                                            ---------

     Total assets                                           $ 341,660
                                                            =========

                     LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
  Accounts payable                                          $  20,000
  Accounts payable - related party                            119,317
  Income taxes payable                                            800
  Short term loan payable                                     162,173
  Short term related party loan payable                        31,683
                                                            ---------

     Total current liabilities                                333,973

Stockholder's equity:
  Common stock, $0.001 par value; 10,000,000 shares
   authorized; 1,000,000 shares issued and outstanding          1,000

  Retained earnings                                             6,687
                                                            ---------

     Total stockholder's equity                                 7,687
                                                            ---------

     Total liabilities and stockholder's equity             $ 341,660
                                                            =========




See independent auditors' report and accompanying notes to financial
statements.



                                     F-42
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                            STATEMENT OF OPERATIONS

                      For the Year Ended December 31, 1998

Consulting income                                            $  523,515

Operating expenses:
  Advertising                                                   240,290
  Depreciation                                                      943
  Internet expenses                                             326,703
  Other                                                          17,785
  Outside services                                               95,203
  Professional fees                                              12,919
                                                             ----------

     Total operating expenses                                   693,843
                                                             ----------

Net (loss) from operations                                     (170,328)

Other income (expense)
 Realized gains on sale of marketable securities                207,406
 Unrealized losses on marketable securities                     (15,457)
 Interest income                                                  1,174
 Interest expense                                               (15,308)
                                                             ----------

Net income before tax                                             7,487

Provision for taxes                                                (800)
                                                             ----------

Net income                                                   $    6,687
                                                             ==========



















See independent auditors' report and accompanying notes to financial
statements.


                                     F-43
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                        STATEMENT OF STOCKHOLDERS' EQUITY

                       For the Year Ended December 31, 1998


<TABLE>
<CAPTION>
                                                                     Deficit
                                                                   Accumulated
                                                     Additional      During the     Total
                                     Common Stock     Paid-in       Development  Stockholders'
                                   Shares    Amount   Capital          Stage        Equity
                                  --------   ------  ----------    ------------  -------------
<S>                               <C>        <C>     <C>           <C>           <C>

Balances, January 1, 1998                -   $    -   $    -         $    -         $    -

Issuance of common stock
to founder                       1,000,000    1,000        -              -          1,000

Net income                               -        -        -          6,687          6,687
                                 ---------   ------    -----         ------         ------

Balances, December 31, 1998      1,000,000   $1,000    $   -         $6,687         $7,687
                                 =========   ======    =====         ======         ======

</TABLE>


























See independent auditors' report and accompanying notes to financial
statements.


                                     F-44
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                            STATEMENT OF CASH FLOWS

Cash flows from operating activities:
   Net income                                                $   6,687
   Adjustments to reconcile net income to net cash
    provided by operations:
     Transactions not requiring cash:
      Depreciation                                                 943
     Changes in operating assets and liabilities:
      Increase in marketable securities                        (16,736)
      Increase in loan receivable                              (20,000)
      Increase in short term related party loan
       receivables                                            (300,242)
      Increase in accounts payable                             139,317
      Increase in income taxes payable                             800
      Increase in short term loans payable                     162,173
      Increase in short term related party loans                31,683
                                                             ---------
     Total adjustments                                          (2,062)
                                                             ---------
     Net cash provided by operating activities                   4,625
                                                             ---------
Cash flows from investing activities:
  Purchase of office equipment                                  (4,717)
                                                             ---------
     Net cash (used) in investing activities                    (4,717)
                                                             ---------
Cash flows provided by financing activities:
  Net proceeds from sale of common stock                         1,000
                                                             ---------
     Net cash provided by investing activities                   1,000
                                                             ---------
Net increase in cash                                               908
Cash at beginning of period                                          -
                                                             ---------
Cash at end of period                                        $     908
                                                             =========

Supplemental disclosure of cash flow information -
  Cash paid during period for:
   Interest                                                  $  15,308
                                                             =========
   Income and franchise taxes                                $       -
                                                             =========






See independent auditors' report and accompanying notes to financial
statements.



                                     F-45
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                          NOTES TO FINANCIAL STATEMENTS

                       For the Year Ended December 31, 1998

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Organization and Operations

SSP Management Corp. (the "Company"), a Colorado corporation, was incorporated
on November 18, 1997, although it had no activities until the 1998 calendar
year.  The Company was formed for the primary business purpose of providing
Internet public relations and Internet newsletters.

The Company was acquired by 1st Net Technologies, Inc. (1st Net) in January of
1999 and had only one immaterial transaction in the 1999 year prior to the
date of acquisition.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period.  Significant estimates made by management include the realizability of
long-lived assets.  Actual results could differ from those estimates.

Risks and Uncertainties

The Company is a start up company subject to the substantial business risks
and uncertainties inherent to such an entity, including the potential risk of
business failure.

Cash Equivalents

For purposes of the statement 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, 1998.

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.

Office Equipment

Office equipment is stated at cost.  Depreciation is computed using the
straight-line method over the useful life of five years.

                                     F-46
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                          NOTES TO FINANCIAL STATEMENTS

                       For the Year Ended December 31, 1998

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
(CONTINUED)

Betterments, renewals, and extraordinary repairs that extend the lives of the
assets are capitalized; other repairs and maintenance charges are expensed as
incurred.  The cost and related accumulated depreciation applicable to assets
retired are removed from the accounts, and the gain or loss on disposition is
recognized in current operations.

Long Lived Assets

During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of,"
which requires that long-lived assets and certain identifiable intangibles to
be held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.  In accordance with the provisions of SFAS No. 121, the
Company regularly reviews long-lived assets  for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may
not be recoverable.  Based on its analysis, the Company believes that no
impairment of the carrying value of its long-lived assets existed at December
31, 1998.

Revenue Recognition

Revenues are recorded on the accrual basis.

Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").  Under SFAS
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. A valuation
allowance is provided for significant deferred tax assets when it is more
likely than not that such assets will not be recovered.

NOTE 2 - RELATED PARTIES AND SIGNIFICANT CUSTOMERS

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.




                                     F-47
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                          NOTES TO FINANCIAL STATEMENTS

                       For the Year Ended December 31, 1998

NOTE 2 - RELATED PARTIES AND SIGNIFICANT CUSTOMERS (CONTINUED)

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.

The balance of related party loans receivable and payable are from various
affiliated entities, are interest free and have no fixed terms of repayment.

The sole shareholder of the Company as of December 31, 1998, is also 1st Net's
majority shareholder.

Four unrelated customers of the Company constituted 97.7% of the total
consulting revenues in 1998.

NOTE 3 - COMMITMENTS & CONTINGENCIES

The Company is currently involved in litigation with the United States
Securities and Exchange Commission for potential violations of securities
laws.  The outcome of the 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 legal matters in the accompanying
financial statements.

NOTE 4 - STOCKHOLDER'S EQUITY

The Company issued 1,000,000 shares of common stock to Entrepreneur
Investments, LLC during 1998.

NOTE 5 - INCOME TAXES

The provision for income taxes for the period ended December 31, 1999 consists
of minimum state taxes only.  As of December 31, 1998, the Company had income
taxes payable to the State of California Franchise Tax Board totaling $800.

At December 31, 1998, deferred taxes consisted of a net tax assets due to
federal and state net operating loss carryforwards of $3,275 and $1,237,
respectively, which were fully offset by valuation allowances.  The net
operating loss carryforwards will expire beginning in 2013.



                                     F-48
<PAGE>




<PAGE>
                              SSP MANAGEMENT CORP.

                          NOTES TO FINANCIAL STATEMENTS

                       For the Year Ended December 31, 1998

NOTE 6 - SUBSEQUENT EVENTS

In January of 1999, the Company was acquired by 1st Net in an acquisition
recorded as a pooling.

















































                                    F-49
<PAGE>



<PAGE>
                                  SIGNATURES

     In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this Amendment to Form 10KSB to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: March 13, 2001
                                    1ST NET TECHNOLOGIES, INC.,
                                    a Colorado corporation




                                 By: /s/ James H. Watson, Jr.
                                     James H. Watson, Jr.,
                                     President, Chairman and
                                       Chief Executive Officer