THE FINANCIAL STATEMENTS CONTAINED IN THIS ANNUAL REPORT HAVE NOT BEEN AUDITED
 IN COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB



<PAGE>






[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000.

[_]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.


                          Commission File Number 0-7349

                                 eNote.com Inc.
                     (Name of small business issuer in its charter)

Delaware                                                59-345315
(State or other jurisdiction                  (IRS Employer Identification No.)
of incorporation or organization)
or organization)

188 Allen Brook Lane, Williston, Vermont                   05495
(Address of principal executive offices)                 (Zip Code)

Issuer's telephone number:                              (802) 288-9000

Securities registered under Section 12(b) of the Exchange Act:

Title of Classes                      Name of Each Exchange on Which Registered
----------------                     ------------------------------------------

Common Stock, par value $.01 per share.                 Not applicable.

Securities registered under Section 12(g) of the Exchange Act: None.

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]          No [X]

     Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

     The issuer had no revenue for its most recent fiscal year.

     As of October 1, 2001, the Issuer had 4,399,874 shares of Common Stock,
$.01 par value, outstanding. On that date, the aggregate market value of the
Common Stock held by non-affiliates of the Issuer was $4,399 (based on the
average of the reported high and low sales prices on the what is commonly known
as the "Grey Market").

                      DOCUMENTS INCORPORATED BY REFERENCE



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


<PAGE>



                                     PART I


         Our results can materially differ from those forecasted or expressed in
the forward-looking statements contained in this Report. This Report contains
forward-looking statements that are not historical facts, but rather are based
on our current expectations, estimates and projections about eNote's industry
and our beliefs and assumptions. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions are
intended to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to some risks, uncertainties
and other factors, many of which are beyond our control, are difficult to
predict and could cause actual results to differ materially from those expressed
or forecasted in the forward-looking statements. We caution you not to place
undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this Report. We are not obligated to
update these statements or publicly release the result of any revisions to them
to reflect events or circumstances after the date of this Report or to reflect
the occurrence of unanticipated events.

Item 1.  Description of Business.

Corporate Background Information.


         We are a Delaware corporation that was formerly known as Webcor
Electronics, Inc ("Webcor"). Webcor conducted an initial public offering in May
1982 pursuant to a Form S-1 Registration Statement under the Securities Act of
1933 (the "Securities Act"). In connection with an application to list its
Common Stock on the NASDAQ system, Webcor also registered its Common Stock
pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange
Act"). As a result of a 1989 bankruptcy proceeding, Webcor became an inactive
shell that had no assets, liabilities or business activities. Webcor remained
inactive until March 11, 1997, when its stockholders approved a plan of
reorganization proposed by Capston Network Company of Clearwater, Florida
("Capston"). This plan of reorganization authorized Capston to seek a suitable
business combination opportunity for Webcor, authorized a series of changes in
Webcor's corporate structure, and granted stock to Capston and others for
services rendered in connection with the implementation of the plan of
reorganization. After investigating a number of opportunities, Capston
negotiated an agreement with the stockholders of Navis Technologies, Ltd.
("Navis") in March of 1999 whereby Webcor acquired Navis in a business
combination transaction that was structured as a reverse takeover (the "Navis
Transaction"). Promptly after the Navis Transaction, we sold 5,000,000 shares of
Convertible Preferred Stock ("Preferred Stock") and 2,000,000 Common Stock
Purchase Warrants ("Warrants") to Friedlander Capital Management Corp.
("Friedlander") for $5,000,000 in cash (the "Friedlander Transaction").

         After the Navis Transaction, we continued the operations of Navis,
which focused exclusively on the development of the TVemail(TM) System, under
our new name eNote.com Inc. The TVemail(TM) System is designed to function as a
low cost Internet alternative for customers who want access to e-mail and other
limited online services, but want to avoid the cost and complexity of a personal
computer ("PC") or network computer ("NC") based system. Between April 1999 and
July 2000, we actively expanded our operations and a working prototype of the
TVemail(TM) System was completed. During that period of time the Company was not
generating revenue and we funded operations primarily with the capital received
in the Friedlander Transaction and the sale of equity in an offshore private
placement for approximately $4,963,878 in cash (the "Offshore Transaction").
Commencing in August 2000, as a result of a lack of additional capital to fund
ongoing operations, the Company rapidly scaled back operations, decreased its
number of employees and slowed development of the TVemail(TM) System. From
August 2000 through December 31, 2000, the Company's operations were reduced to
a minimum and the Company's Board of Directors and majority stockholder,
Friedlander, evaluated the TVemail(TM) System and the best strategic plan in
order to commercialize the technology developed in connection with the
TVemail(TM) System.

         On December 31, 2000, the Company had reduced the number of full-time
employees employed by the Company to 9. In addition to an overall reduction in
employees, the Company's management team was significantly reduced by the
departure of several key executives, whom, with one exception, the Company has
not replaced. These departures include Daniel Peterson, Vice President of
Business Development, John R. Varsames, President and Chief Executive Officer
(who was replaced for a limited period of time by George Horton), George Horton,
President and Chief Executive Officer, Mark Boucher, Vice President of Finance,
Erik Lundberg, Vice President of Information Technology, Richard Schaaf, Vice
President of Market Deployment, and Michael T. Grennan, Chief Financial Officer.
Mr. Grennan rejoined the Company as Vice President and Chief Financial Officer
on December 26, 2000 and he is currently the only executive officer employed by
the Company.

         Commencing in August of 2000, our operations have been funded almost
entirely by Friedlander through the issuance of additional convertible debt and
equity securities.
<PAGE>

Business Overview.

         Originally, the TVemail(TM) System was developed to provide low cost
e-mail and Internet service to the consumer market as a whole. It was determined
that there was a demand for a product to provide email and limited internet
services to those groups and individuals that are currently not served or are
under served by computers and the Internet. It was thought that this low cost
combination of television viewed e-mail and limited online services would appeal
to a large segment of the potential market and help transform advertising,
electronic commerce and information delivery for the consumer mass market.

         As a result of limited capital resources, development issues and other
barriers to entry, we concluded that it was not feasible for the Company to
initially commercialize the TVemail(TM) System in the mass consumer market.
Instead a strategic decision was made in the fourth quarter of 2000 to
capitalize on the developed technology used in the TVemail(TM) System and
strategically market such technology to certain narrowly defined niche markets.
The initial niche market that we are targeting is hospital neonatal intensive
care units ("NICUs"). We believe the TVemail(TM) System is a good communications
system to facilitate electronic communication between an NICU and the families
of critically ill children under their care. The system can be easily integrated
into current hospital networks, provide daily status reports, images and useful
content and can allow families to email questions to NICU staff on a regular
basis.

The TVemail(TM) System.

         TVemail(TM) is a low cost, easy-to-use information appliance that
allows the user access to email and content such as news and information,
without the need for a PC or any Internet related know-how. The small set-top
unit uses the television as a display system and connects to a dedicated ISP via
a standard phone line. The system allows instant access to the "mailbox" content
without the difficulty and delay associated with current PC-based solutions. The
appliance is automatically programmed to download email and content on a
predetermined schedule, or, the user can manually implement a dial-up, which
retrieves email and content from the server immediately. The experience is meant
to be as simple as watching television or checking an answering machine.

         The TVemail(TM) system has been designed to address the issues and
hurdles not yet addressed by other means of accessing the Internet. This
email-based solution has the potential to replace other, more complicated
technologies as the premier method to reach users for information, advertising,
and communication. By utilizing internal memory, a user can work off-line with
the dedicated content and information provided by the sponsoring organization
involved with the distribution of the TVemail(TM) appliance. This enables an
organization to have electronic communication, via the Internet, with all
members independent of the member's access to a PC or ability to use one.

         Checking for messages on the TVemail(TM) service is just a matter of
turning on the television. By using the EZ Color(TM) graphical user interface
and wireless keyboard, navigation through the TVemail(TM) menus is simple.
Color-coded, on screen commands correspond with four colored keys on the
keyboard.

Technical Overview.

         The TVemail(TM) System is comprised of two principal elements: an
in-home terminal, including an infra-red ("IR") receiver, IR keyboard and
accessories (the "Client Hardware"), and our back-end server systems (the
"Server Systems"). Initial design, engineering and "proof of concept" phases on
both the Client Hardware and the Server Systems were completed during 1999.
Fully operational versions of the Client Hardware and the Server Systems were
deployed on a preliminary test basis during the fourth quarter of 1999. These
preliminary trials substantiated our technology and the engineering and design
of the Client Hardware and the Server Systems. During the first and second
quarter of the calendar year 2000, we conducted more extensive full-scale pilot
programs to evaluate the TVemail(TM) System and refined the technology up until
the Company scaled back operations in the third quarter of 2000.

Client Hardware.

        Our current version of Client Hardware offers the following features:

        o  A proprietary low-cost network appliance and wireless keyboard;
        o  A blinking LED indicator prompts the user to check messages;
        o  A color-coded graphical user interface to guide the user through
           e-mail and other content functions;
        o  On demand send and receive e-mail functions;
        o  Up to 5 password protected user mailboxes per subscriber;
        o  Storage capacity for up to 250 e-mail messages;
        o  Customized address books for each user; and
        o  Simple text input for e-mail.

         The TVemail(TM) Client Hardware has been designed to satisfy the user's
requirements while maintaining an efficient telephone and server usage profile
that maximizes the return on the service provider's investment. Since the user
cannot be online while creating an e-mail message or fax, the modem is utilized
only during prearranged dial-ups, or when the user initiates a manual
connection. The Client Hardware can be configured to poll the server to send and
receive e-mail and other content between four and twelve times per day depending
on user preferences. Individual units can be configured to dial during different
time windows so the call load can be distributed throughout the day and
concentrated during non-peak usage times.

Server System.

         Our Server System has been designed to be modular, flexible, and
compatible with most relational database products. These features will
facilitate reporting, scheduling and batch processing, and permit us to send
targeted advertising, mass mailings, and surveys to our customers based on their
particular location or other demographic information. Additional services such
as custom news, stock quotes, games, online banking, and other content will use
separate servers to ensure the integrity of the TVemail(TM) System and prevent
system crashes in the event that a particular feature goes offline.

Business Strategy.

         Throughout 1999 and the first two quarters of 2000, our business
objective was to transform advertising, commerce and information delivery for
the consumer mass market through the TVemail(TM) System which combines the
convenience of television with e-mail and limited online services. In the long
term this remains our overall business objective, however, for the foreseeable
future we intend to focus on narrowly defined markets, initially in the health
and managed care industries and eventually broaden our market to include the
consumer mass market through direct sales.

Health and Managed Care Industries.


         We plan on initially offering our TVemail(TM) appliance through
distribution channels developed with specific medical organizations such as
hospitals, long term care facilities and private care facilities. The
participating organizations will consist of both public and private sector
groups, which will benefit from the ability to electronically communicate with
100% of their patients or members, independent of their knowledge of how-to-use
a PC or their ownership of one. We call this strategy our "e-Care program." Our
"e-Care program" will provide participating medical organizations with a cost
effective and efficient means of providing information to its user group such as
status reports, educational material, appointment schedules and reminders,
images, group announcements and many other types of information. Alternatively,
for commercial companies such as brand-name retailers and pharmaceutical
companies, it can provide a means to significantly expand the scope of their
product offerings to targeted end-users.


         An important component of the success of the e-Care program is the
requirement that the end-user be motivated to use the system. Therefore, to
accomplish this, an assessment was made to determine the most important
information that could be transmitted to a target audience. Based on a
determination of a typical household's valuation of alternative information and
the objective of securing a dedicated and loyal user base, eNote determined that
the parent-child relationship was the most compelling aspect that demands a
regular flow of information and commands a high level of priority.

Neonatal Intensive e-Care Program.

         eNote.com will supply participating NICUs with a pre-agreed number of
TVemailTM units determined by the number of patients currently under care, plus
additional units based on yearly admissions for future distribution. The
TVemail(TM) systems will be distributed, at no charge, to the parents of
neonatal children complete with a limited amount of service, generally 12
months. The NICUs will subsidize the cost of the system and service in full,
prior to distribution. Charitable organizations and fundraising events provide,
on a yearly basis, money, which is dedicated to programs that benefit NICUs.
Sources of funding would, among others, include: internal budgets, The March of
Dimes and The Children's Miracle Network. Because the TVemail(TM) system is
inexpensive and the benefits are substantial, eNote believes funds will be
readily available to support the program.

         During the course of the day, doctors, nurses and support staff will
email status reports, including photo images, at regular intervals to the
parents. In addition, meaningful and useful content will be delivered, designed
to educate and inform parents. Parents will then have the opportunity to email
the doctors and nurses with specific questions about their child. This
controlled distribution of information will allow doctors and nurses to track
communications accurately, maintain their daily schedules and provide a higher
level of service and satisfaction for the parents. The value provided to all
parties is so significant that the hospital is willing to cover both the initial
cost of the hardware and the on-going operating cost of the system managed by
eNote.

         We expect that the benefits to Neonatal Intensive Care Units would
include:

        o  Increases quality of care - provides competitive edge
        o  Integrates easily with current healthcare networks
        o  No specialized equipment or software needed at medical facility
        o  Provides traceable, consistent communications with parents
        o  Improves internal efficiencies
        o  Provides "virtual visits" to NICU- may reduce physical visits to NICU
        o  Provides educational platform for greater parental involvement
        o  Affordable

         We expect the benefits to families would include:

        o  Simple,intuitive device-no computer or Internet experience necessary.
        o  Short learning curve - Color-Coded navigation.
        o  Provides consistent communication-images and status reports can be
           delivered daily.
        o  Reduced stress and anxiety / increases comfort - greater sense of
           connectedness to their child and the process of neonatal care.
        o  Provides educational content - dedicated information can be delivered
           daily providing answers to commonly asked questions, explanation of
           procedures and information related to care for the child once
           discharged from the hospital.
        o  System resides in the family room - information is easily retrieved
           and shared with other family members.
        o  Hassle free operation - automatically sends and receives email and
           information.

         We expect that once this program demonstrates the value to both the
"provider" and the "user" of the information, it can be easily expanded to other
parent-child relationships be it prenatal care, post natal questions or other
patient-hospital information and communication requirements. In all cases, the
deployment and operations costs are covered by the hospital while eNote also
benefits from the commercial application directly associated with electronic
access to this customer base.

         In association with the neonatal intensive care units at Fletcher Allen
Medical Center in Burlington, Vermont and Mary Hitchcock Hospital in Hanover,
New Hampshire, eNote has deployed, on a test basis, TVemail(TM) units to select
families in the greater Northern Vermont, New Hampshire and upstate New York
area. Early results are very positive and discussions are underway to extend and
increase the size and scope of the test.

         There are three principal phases to market the TVemail(TM) system to
the neonatal intensive care market and direct to consumers:

     o Phase one - Product Development and testing: Product Development has been
ongoing  since July of 1999.  The  TVemail(TM)  appliance is operating  with the
basic  feature  sets of text based  email,  attachment  processing  and  content
delivery (news, weather,  sports and dedicated medical information).  The system
has undergone extensive internal testing resulting in modifications to code, GUI
enhancements and attachment processing.

     o Phase Two - Field  Testing and Data  analysis:  In  conjunction  with the
Fletcher  Allen Neonatal  Intensive  Care unit in  Burlington,  VT, a pilot test
program has been underway since  September  2000.  Approximately  25 TVemail(TM)
systems have been deployed to participating  families in Northern  Vermont,  New
Hampshire and upstate New York. Families have been receiving, status reports and
images sent directly  from the neonatal  unit nursing  staff and doctors.  Early
reports are  extremely  positive,  with  families  reporting a greater  sense of
involvement  and  connectedness  to their  child.  In  addition,  families  have
described  the system as easy to use and  reported  positive  impacts on several
areas: anxiety,  sibling's involvement,  communication with extended family, and
ease with the breast milk pumping experience. The doctors and nursing staff have
reported an increase in efficiency  and  timesavings  associated  with using the
TVemail(TM)system.  eNote  expects to  increase  the size and scope of the field
test to include other New England based  neonatal units to further verify market
interest and gather additional data. Data and feedback gathered during the field
test will be used to further enhance final product  functionality  and to refine
the e-Care program  guidelines.  Enhancements will be made to the GUI (Graphical
User Interface) the software code, and back-end support systems.

     o Phase 3 - Product  Launch:  If we are successful in obtaining  sufficient
capital resources,  we expect to begin commercial  deployment of the TVemail(TM)
system to interested  general consumers by the first quarter of 2002. A database
of  interested  parties has been  maintained  and contact  will be made prior to
distribution  to  determine  current  interest  in  the  product.  This  initial
distribution will allow for real world analysis of system functionality prior to
distribution in the medical  environment.  A modest  advertising budget has been
determined  for 2002 to test target  audiences  and further  the  deployment  to
non-medical consumers.

         First deployments of the e-Care program are expected in early 2002
after completion of the pilot test program and data analysis is completed. It is
expected that first system deployment will occur at the Fletcher Allen Neonatal
facility, followed by other New England based hospitals. The Fletcher Allen
facility has agreed to assist in the ongoing development of the system and
provide vital contacts within the neonatal community both in the U.S. and
abroad.

Future Markets.

         Beyond the deployment of the e-Care program designed around the
parent-child relationship, eNote has determined there is a market for the
TVemailTM appliance in long-term care environments. Independent living
communities, rehabilitation centers, and general hospital applications exist
which could benefit from the communication capabilities TVemail(TM) has to
offer.

         eNote has not found any significant evidence that Internet appliances
have entered the medical marketplace. Many companies exist that provide customer
relationship management software to hospitals and private practices around the
country, however, it is all PC based. In order for the end-user to take
advantage of such software, it precipitates the need for a home PC, plus the
necessary training to use the software.

         Another barrier is cost. Large-scale implementation of CRM software and
equipment is very costly and requires extensive research and allocation of
internal resources in order to implement changes to current hospital systems.

Direct to Consumer Sales.

         If we are successful in obtaining sufficient capital resources, we
expect to sell TVemail(TM) systems directly to consumers via a toll free number
beginning in 2002. A modest direct advertising campaign will be initiated in
early 2002 to test various market segments and media effectiveness. We
anticipate employing the services of an advertising agency, which specializes in
reaching the specific demographic groups most likely to be interested in
TVemail(TM). A larger, more comprehensive campaign would then be launched in
2003 to reach gift givers during holiday periods such as Mother's Day, Father's
Day and Christmas. In addition, our web site will provide product information
and ordering instructions to those individuals (currently on-line) who want to
give the TVemail(TM) system as a gift to relatives and friends.

         We expect to advertise the TVemail(TM) appliance to consumers via print
and broadcast media in select markets serving the 60+ demographic. Logical
market areas will be targeted where a larger proportion of this demographic
reside.

Research and Development.

         Since 1996, first as Navis and then as eNote, we have been actively
involved in the design, development and testing of components, embedded software
and server systems necessary for the effective deployment of the TVemail(TM)
System. Substantially all of our Client Hardware and Server Systems are in the
final Beta prototype stage. Substantially all of our development activities
through December 31, 2000 were financed by capital contributions from the
founder of Navis, subordinated third-party debt that was converted into equity
in connection with the Navis Transaction, the Friedlander Transaction and the
Overseas Transaction.

         During 1999, the Company spent approximately $600,000 on product
development. This increased to $2,557,171 for 2000. However, in 2001 it is
anticipated that the Company's development costs will decrease substantially.

Government Regulation.

         We could become subject to burdensome government regulation which
affects our ability to offer our service or which affects demand for our
service. We are subject to varying degrees of federal, state, local and foreign
regulation as well as laws enacted by the U.S. Congress and other governments.
The Federal Communications Commission (the "FCC") has established regulations
that among things set licensure, installation and equipment standards for
communications systems. A number of these regulations apply to the TVemail(TM)
System and compliance with existing and future regulations may increase our cost
of providing the TVemail(TM) service, or otherwise damage the competitive
position of the TVemail(TM) service. We are currently in the process of
obtaining all required FCC approvals for the TVemail(TM) System. As of December
31, 2000, we had not received any formal approvals and the failure to obtain any
required approvals could delay or prevent the rollout of the TVemail System.

         It is also anticipated that due to the increasing popularity and use of
the Internet, it will be subject to increased attention and regulation. These
laws and regulations may regulate issues such as user privacy, defamation,
network access, pricing, taxation, content, quality of products and services and
intellectual property ownership and infringement. These laws and regulations
could expose us to liability, materially increase our cost of providing our
service, and decrease the growth and acceptance of the Internet in general and
access to the Internet over cable systems.

         We anticipate that the costs and effects of compliance with federal,
state and local environmental laws will not be material.

Service Marks, Patents and Proprietary Technology.

         We have filed federal trademark applications to register the trademarks
"TVemail," "eNote.com," "EZ Color," and "Simply Communicate" in the United
States. These applications are currently pending. We also have registered a
series of domain names with Internic, Inc. and Network Solutions, Inc. We
license certain software to be incorporated into our products and certain
development tools for internal use in product design. We believe that an
inability to effectively protect its intellectual property could have a material
adverse effect on our financial condition and results of operations. See
"Management's Discussion and Analysis or Plan of Operation-Certain Trends and
Uncertainties-The Company Depends on its Intellectual Property, Which May Be
Difficult and Costly to Protect." and "Management's Discussion and Analysis or
Plan of Operation-Certain Trends and Uncertainties-Technology Licensed From
Third Parties."

Competition.

         The competitive market for e-mail, online service access and Internet
appliances may limit demand or pricing for the TVemail(TM) System. We expect to
experience intense competition from established online service providers such as
America Online, Inc., Prodigy Communications Corporation and Microsoft
Corporation's WebTV as well as the suppliers of Internet appliances such as
Sony. Many companies provide e-mail and online service access and other
services, which provide functionality superior to those included in the
TVemail(TM) System. As a result of this competition, demand for the TVemail(TM)
System may suffer, we may be restricted in the service rates we can charge for
the TVemail(TM) System and our business, financial condition and results of
operations may be adversely affected. Many of our competitors have significantly
greater financial, technical, marketing, distribution, customer support and
other resources than we do. Furthermore, many of our competitors have
significantly greater experience, better name recognition, more compelling
content and easier access to consumers, advertisers and online service providers
than we do.

Employees.

         As of December 31, 2000, we had 9 full-time employees (including 1
executive officer) and one part-time employee. We are not subject to any
collective bargaining agreements and we consider our relations with employees to
be good.

Item 2.  Description of Property.

         We currently sublease approximately 2,000 square feet of office space
in Williston, Vermont from Hanley-Wood, LLC pursuant to a Sublease Agreement
dated as of February 26, 2001, which provides for rental payments of $2,305 per
moth. As of April 2001, either party may terminate the Sublease Agreement upon
30 days prior written notice to the other. If the Company expands its
operations, our current premises would be inadequate and it is likely that we
would have to seek additional, non-contiguous property to supplement our current
office space. We believe that we can lease additional properties as the need
arises, although there can be no assurance that any such additional space will
be obtained by us on acceptable terms, or at all.

Item 3.  Legal Proceedings.

     The  Company is a  defendant  in an action  entitled  Dennis C.  Wallach v.
eNote.com  Inc.  filed on April 2, 2001 in the Superior  Court of Delaware,  New
Castle  County.  Plaintiff  is  seeking  damages of $27,587  plus  interest  and
issuance of a stock option for 25,000  shares for services  rendered.  eNote has
filed an Answer and Counterclaim.

     The Company is a defendant in an action  entitled David Wilson  Associates,
Inc. v eNote.com Inc. filed on March 16, 2001 in Dedham District  Court,  Dedham
Massachusetts.  Plaintiff  sought  damages in the  amount of  $3,200.  A default
judgment in the amount of $3,200 has been entered in favor of Plaintiff.

     The Company is a defendant in an action  entitled  Globtek v eNote.com Inc.
filed on  March  29,  2001 in  Chittenden  Superior  Court,  Chittenden  County,
Vermont.  Plaintiff  alleges  an  account  due in the  amount of $356,  521 plus
interest. eNote has filed an Answer and Counterclaim.

     The Company is a defendant in an action entitled Pca v eNote.com Inc. filed
on April 13, 2001 in Chittenden  Superior  Court,  Chittenden  County,  Vermont.
Defendant has entered into a Stipulation  to Judgment in the amount of $5,471.91
plus  interest  at the rate of 12% per annum.  Plaintiff  has agreed to withhold
execution  of the Judgment  subject to the payment of $744 per month  commencing
June 15, 2001. Defendant has not made the September 15th payment.

     The Company is a defendant in action entitled Reptron  Electronics,  Inc. v
eNote.com Inc. filed on June 8, 2001 in Chittenden  Superior  Court,  Chittenden
County, Vermont. Plaintiff alleges an amount due for goods sold in the amount of
$259,543 plus interest. eNote has filed an Answer and Counterclaim.

     The  Company is a  defendant  in action  entitled  Sejin  America,  Inc. v.
eNote.com  Inc.  filed on  September  17,  2001 in  Chittenden  Superior  Court,
Chittenden  County,  Vermont.  Plaintiff alleges an amount due for goods sold in
the amount of $42,800 plus interest. eNote has filed an Answer and Counterclaim.

     The Company is a defendant in an action entitled PC Connection v. eNote.com
Inc. filed on August 20, 2001 in Chittenden  Superior Court,  Chittenden County,
Vermont.  Plaintiff  alleges an account  due in the  amount of  $42,234.71  plus
interest. eNote has filed an Answer.
Item 4.  Submission of Matters to a Vote of Security Holders.

         Not Applicable.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

Market Information.

         Between April 5, 1999 and December 31, 2000, the Company's Common Stock
traded on the OTC Bulletin Board(R) (the "OTCBB") under the trading symbol ENOT.
Prior to March 31, 1999, the Common Stock had been thinly and sporadically
traded for years under the trading symbol WBET. In late May 2001 the Company's
Common Stock was delisted from the OTC Bulletin Board and is currently traded on
what is known as the "Grey Market." The "Grey Market" is the trading of a
security that is not listed on any stock exchange or quoted on the Pink Sheets
or the OTCBB. Grey Market trades are reported to the NASD so that investors can
track price and volume amounts. The following quotations were provided by the
National Quotation Bureau, LLC, and do not represent actual transactions; these
quotations do not reflect dealer markups, markdowns or commissions.

                                        Low Bid              High Ask
Year ended December 31, 1999
    First quarter                       $0.106               $1.62
    Second quarter                      $2.25                $10.125
    Third quarter                       $3.688               $7.125
    Fourth quarter                      $2.938               $4.125


Year ended December 31, 2000
    First quarter                       $3.500               $6.750
    Second quarter                      $1.750               $6.875
    Third quarter                       $1.187               $3.250
    Fourth quarter                      $0.187               $2.625


The High Ask Price in 1999 was $10.125 versus 2000 where it was $6.875. The Low
Bid Price in 1999 was $.105 verses 2000 where it was $.187.


Holders.

         At December 31, 2000, the Company's Common Stock was held by 215
holders of record.

Dividends.

         We have not paid, and currently have no intention to pay, any cash
dividends on our Common Stock. Any decision to declare dividends in the future
will be made by our Board of Directors and will depend upon the Company's future
earnings, capital requirements, financial condition and other factors deemed
relevant by our Board of Directors.

Recent Sales of Unregistered Securities.


         During the nine months ended September 30, 2000, we have received and
accepted subscriptions for 826,660 shares of Common Stock at a purchase price of
$6.00 per share and 413,330 Common Stock Purchase Warrants with an exercise
price of $0.01 per share. For the nine months ended September 30, 2000 the
Company had received an aggregate of $4,963,878 in connection with such
placement. The Common Stock and Common Stock Purchase Warrants were issued in
transactions exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended, and Regulation S promulgated thereunder.


         On August 17, 2000, the Company borrowed $250,000 from Friedlander
pursuant to an 8% Secured Convertible Note originally due December 2, 2000 and
subsequently extended to December 31, 2001 and convertible into Common Stock at
the ratio of $2.50 of principal for each share of Common Stock. The Company also
issued a Warrant to acquire 2,000,000 shares of Common Stock of the Company at a
price of $2.50 per share, subsequently decreased to $.18 per share, at any time
on or prior to August 17, 2002, subsequently extended to August 17, 2003.


         On August 31, 2000, the Company borrowed $250,000 from eNote
International.com Ltd. pursuant to an 8% Secured Convertible Note due December
2, 2000 and convertible into Common Stock at the ratio of $2.50 of principal for
each share of Common Stock. The Company is currently in default in its payment
obligations to eNote International.com Ltd pursuant to the terms of this Note.
The Company also issued a Warrant to acquire 2,000,000 shares of Common Stock of
the Company at a price of $2.50 per share at any time on or prior to August 31,
2002.


         On September 11, 2000, the Company borrowed $100,000 from Friedlander
pursuant to an 8% Secured Convertible Note originally due December 2, 2000 and
subsequently extended to December 31, 2001 and convertible into Common Stock at
the ratio of $2.50 of principal for each share of Common Stock. The Company also
issued a Warrant to acquire 800,000 shares of Common Stock at a price of $2.50
per share, subsequently decreased to $.18 per share, at any time on or prior to
September 11, 2002, subsequently extended to September 11, 2003.


         On September 14, 2000, the Company borrowed $150,000 from Friedlander
pursuant to an 8% Secured Note originally due October 14, 2000 and subsequently
extended to December 31, 2001 and secured by all the Company's inventory.


         On September 28, 2000, the Company borrowed $150,000 from Friedlander
pursuant to an 8% Secured Note originally due October 14, 2000 and subsequently
extended to December 31, 2001 and secured by all the Company's inventory.


         On October 12, 2000, the Company borrowed $150,000 from Friedlander
pursuant to an 8% Secured Convertible Note due originally due December 2, 2000
and subsequently extended to December 31, 2001 and convertible into Common Stock
at the ratio of $1.50 of principal for each share of Common Stock. The Company
also issued a Warrant to acquire 2,000,000 shares of Common Stock at a price of
$1.50 per share, subsequently decreased to $.18 per share, at any time on or
prior to October 12, 2002, subsequently extended to October 12, 2003.


         On October 26, 2000, the Company borrowed $150,000 from Friedlander
pursuant to an 8% Secured Convertible Note originally due December 2, 2000 and
subsequently extended to December 31, 2001 and convertible into Common Stock at
the ratio of $1.00 of principal for each share of Common Stock. The Company also
issued a Warrant to acquire 3,000,000 shares of Common Stock at a price of $1.00
per share, subsequently decreased to $.18 per share, at any time on or prior to
October 26, 2002, subsequently extended to October 26, 2003.


         On November 9, 2000, the Company borrowed $100,000 from Friedlander
pursuant to an 8% Secured Convertible Note originally due December 2, 2000 and
subsequently extended to December 31, 2001 and convertible into Common Stock at
the ratio of $0.75 of principal for each share of Common Stock. The Company also
issued a Warrant to acquire 2,666,667 shares of Common Stock at a price of $0.75
per share, subsequently decreased to $.18 per share, at any time on or prior to
November 9, 2002, subsequently extended to November 3, 2003.


         On November 22, 2000, the Company borrowed $120,000 from Friedlander
pursuant to an 8% Secured Convertible Note originally due December 2, 2000 and
subsequently extended to December 31, 2001 and convertible into Common Stock at
the ratio of $.50 of principal for each share of Common Stock. The Company also
issued a Warrant to acquire 1,200,000 shares of Common Stock at a price of $.50
per share, subsequently decreased to $.18 per share, at any time on or prior to
November 22, 2002, subsequently extended to November 22, 2003.


         On December 7, 2000, the Company borrowed $110,000 from Friedlander
pursuant to an 8% Secured Convertible Note due March 1, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.375 of principal for each share of Common Stock. The Company also issued a
Warrant to acquire 825,000 shares of Common Stock at a price of $.375 per share,
subsequently decreased to $.18 per share, at any time on or prior to December 7,
2003.


         On December 20, 2000 the Company borrowed $50,000 from Friedlander
pursuant to an 8% Secured Convertible Note due March 1, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.18 principal for each share of Common Stock. The Company also issued a Warrant
to acquire 5,555,556 shares of Common Stock at a price of $.18 per share at any
time on or prior to December 20, 2003.


         On January 4, 2001 the Company borrowed $50,000 from Friedlander
pursuant to an 8% Secured Convertible Note due March 1, 2001 and subsequently
extended to December 31, 2001 convertible into Common Stock at the ratio of $.44
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 2,272,727 shares of Common Stock at a price of $.44 per share at any
time on or prior to January 4, 2004.


         On January 19, 2001 the Company borrowed $44,000 from Friedlander
pursuant to an 8% Secured Convertible Note due March 1, 2001 and subsequently
extended to December 31, 2001 convertible into Common Stock at the ratio of $.31
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 2,816,000 shares of Common Stock at a price of $.31 per share at any
time on or prior to January 19, 2004.


         On February 2, 2001 the Company borrowed $41,000 from Friedlander
pursuant to an 8% Secured Convertible Note due March 1, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.28 principal for each share of Common Stock. The Company also issued a Warrant
to acquire 2,928,571 shares of Common Stock at a price of $.28 per share at any
time on or prior to February 2, 2004.


         On February 15, 2001 the Company borrowed $46,000 from Friedlander
pursuant to an 8% Secured Convertible Note due March 1, 2001 and subsequently
extended to December 31, 2001 convertible into Common Stock at the ratio of $.31
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 2,967,742 shares of Common Stock at a price of $.31 per share at any
time on or prior to February 15, 2004.


         On March 1, 2001 the Company borrowed $38,000 from Friedlander pursuant
to an 8% Secured Convertible Note due July 1, 2001 and subsequently extended to
December 31, 2001 convertible into Common Stock at the ratio of $.18 principal
for each share of Common Stock. The Company also issued a Warrant to acquire
4,222,222 shares of Common Stock at a price of $.18 per share at any time on or
prior to March 1, 2004.


         On March 15, 2001 the Company borrowed $37,000 from Friedlander
pursuant to an 8% Secured Convertible Note due July 1, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.16 principal for each share of Common Stock. The Company also issued a Warrant
to acquire 4,625,000 shares of Common Stock at a price of $.16 per share at any
time on or prior to March 15, 2004.


         On March 29, 2001 the Company borrowed $21,100 from Friedlander
pursuant to an 8% Secured Convertible Note due March 29, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.16 principal for each share of Common Stock. The Company also issued a Warrant
to acquire 2,637,500 shares of Common Stock at a price of $.16 per share at any
time on or prior to March 29, 2004.


         On April 12, 2001 the Company borrowed $40,000 from Friedlander
pursuant to an 8% Secured Convertible Note due July 1, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.08 principal for each share of Common Stock. The Company also issued a Warrant
to acquire 10,000,000 shares of Common Stock at a price of $.08 per share at any
time on or prior to April 12, 2004.


         On April 26, 2001 the Company borrowed $43,000 from Friedlander
pursuant to an 8% Secured Convertible Note due July 1, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.02 principal for each share of Common Stock. The Company also issued a Warrant
to acquire 43,000,000 shares of Common Stock at a price of $.02 per share at any
time on or prior to April 26, 2004.


         On May 10, 2001 the Company borrowed $40,000 from Friedlander pursuant
to an 8% Secured Convertible Note due July 1, 2001 and subsequently extended to
December 31, 2001 and convertible into Common Stock at the ratio of $.08
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 10,000,000 shares of Common Stock at a price of $.08 per share at any
time on or prior to May 10, 2004.


         On May 24, 2001 the Company borrowed $23,000 from Friedlander pursuant
to an 8% Secured Convertible Note due July 1, 2001 and subsequently extended to
December 31, 2001 and convertible into Common Stock at the ratio of $.08
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 5,750,000 shares of Common Stock at a price of $.08 per share at any
time on or prior to May 24, 2004.


         On June 7, 2001 the Company borrowed $40,000 from Friedlander pursuant
to an 8% Secured Convertible Note due July 1, 2001 and subsequently extended to
December 31, 2001 and convertible into Common Stock at the ratio of $.08
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 5,333,333 shares of Common Stock at a price of $.08 per share at any
time on or prior to June 7, 2004.


         On June 21, 2001 the Company borrowed $40,000 from Friedlander pursuant
to an 8% Secured Convertible Note due July 1, 2001 and subsequently extended to
December 31, 2001 and convertible into Common Stock at the ratio of $.01
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 80,000,000 shares of Common Stock at a price of $.01 per share at any
time on or prior to June 21, 2004.


         On July 5, 2001 the Company borrowed $40,000 from Friedlander pursuant
to an 8% Secured Convertible Note due December 1, 2001 and subsequently extended
to December 31, 2001 and convertible into Common Stock at the ratio of $.05
principal for each share of Common Stock. The Company also issued a Warrant to
acquire 16,000,000 shares of Common Stock at a price of $.05 per share at any
time on or prior to July 5, 2004.


         On July 19, 2001 the Company borrowed $38,000 from Friedlander pursuant
to an 8% Secured Convertible Note due December 31, 2001 and subsequently
extended to December 31, 2001 and convertible into Common Stock at the ratio of
$.01 principal for each share of Common Stock. The Company also issued a Warrant
to acquire 76,000,000 shares of Common Stock at a price of $.01 per share at any
time on or prior to July 19, 2004.


         On August 2, 2001 the Company borrowed $38,000 from Friedlander
pursuant to an 8% Secured Convertible Note due December 31, 2001 and convertible
into Common Stock at the ratio of $.01 principal for each share of Common Stock.
The Company also issued a Warrant to acquire 76,000,000 shares of Common Stock
at a price of $.01 per share at any time on or prior to August 2, 2004.


         On August 16, 2001 the Company borrowed $30,000 from Friedlander
pursuant to an 8% Secured Convertible Note due December 31, 2001 and convertible
into Common Stock at the ratio of $.05 principal for each share of Common Stock.
The Company also issued a Warrant to acquire 12,000,000 shares of Common Stock
at a price of $.05 per share at any time on or prior to August 16, 2004.


         On September 5, 2001 the Company borrowed $20,000 from Friedlander
pursuant to an 8% Secured Convertible Note due December 31, 2001 and convertible
into Common Stock at the ratio of $.01 principal for each share of Common Stock.
The Company also issued a Warrant to acquire 40,000,000 shares of Common Stock
at a price of $.01 per share at any time on or prior to September 5, 2004.


         On September 13, 2001 the Company borrowed $30,000 from Friedlander
pursuant to an 8% Secured Convertible Note due December 31, 2001 and convertible
into Common Stock at the ratio of $.01 principal for each share of Common Stock.
The Company also issued a Warrant to acquire 60,000,000 shares of Common Stock
at a price of $.01 per share at any time on or prior to September 13, 2004.


         On September 28, 2001 the Company borrowed $15,000 from Friedlander
pursuant to an 8% Secured Convertible Note due December 31, 2001 and convertible
into Common Stock at the ratio of $.01 principal for each share of Common Stock.
The Company also issued a Warrant to acquire 30,000,000 shares of Common Stock
at a price of $.01 per share at any time on or prior to September 28, 2004.


         The Notes and Warrants were issued in transactions exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.


Item 6.  Management's Discussion and Analysis or Plan of Operation.

Forward-Looking Statements

         When used in this Report, press releases and elsewhere by eNote.com
Inc. (the "Company") and its management from time to time, the words "believes,"
"anticipates," "intends" and "expects" and similar expressions are intended to
identify forward-looking statements that involve a number of risks and
uncertainties. Additionally, statements contained in this discussion that are
not historical are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act,
including statements regarding expectations, beliefs, intentions or strategies
regarding the future. The Company intends that all forward-looking statements be
subject to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements reflect the Company's views
as of the date they are made with respect to future events and financial
performance, but are subject to many risks and uncertainties, which could cause
the actual results of the Company to differ materially from any future results
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially or adversely include, without
limitation, lack of further ongoing funding by Friedlander or the failure to
develop a market for the Company's TVemail(TM) System, as well as the other
risks described under the caption "Management's Discussion and Analysis or Plan
of Operation--Certain Trends and Uncertainties." The Company does not undertake
to update forward-looking statements.

Management's Discussion and Analysis of Financial Condition and Results of
Operation

         Our financial condition and results from operations dramatically
changed in July 2000. From April 1999 through July 2000, the Company was rapidly
increasing operations, hiring employees and developing the TVemail(TM) System.
This growth and product development was funded primarily through the Friedlander
Transaction on April 6, 1999 and the Offshore Transaction conducted in the
second and third quarters of 2000. These transactions resulted in an aggregate
investment in the Company of approximately $9,963,878. As a result of our
increasing operating expenses, lack of additional capital resources and lack of
revenue, we were forced to rapidly decrease our operations and revise our
business strategy in the last quarter of 2000. As a result, we believe that our
results from operations for 1999 are not comparable to the results from
operations for 2000 and the Company's anticipated financial condition and
results from operations going forward.

         Total operating expenses increased from $690,050 in 1999 to $7,915,809
in 2000. This increase was a result of the Company's rapid growth and increased
operations related to the development of the TVemail(TM) System. As a result of
the rapid decrease in operations occurring in the last quarter of 2000, the
Company expects the Company's operating expenses for 2001 to be more closely
analogous to the operating expenses in 1999.

         We originally intended to commence full-scale commercial deployment of
the TVemail(TM) System in the United States near the end of the second quarter
of 2000. As a result of lack of capital resources and the rapid decrease in our
operations, we currently expect to commence limited commercial deployment in the
first quarter of 2002. This schedule is subject to many risks and uncertainties,
including those set forth below under the caption "Certain Trends and
Uncertainties," and the Company's progress towards commercial deployment of the
TVemail(TM) system may be made at a significantly slower rate, through different
avenues, or not at all.


         During the year ending December 31, 2000, the Company spent a
substantial portion of its working capital on product development efforts
related to the TVemail(TM) System. We believe that the TVemail System is
substantially ready to be used in limited commercial markets and that no
substantial further development costs need to be incurred prior to
commercialization of TVemail(TM) Service prior to its commercialization,
however, there can be no assurance that unanticipated technical obstacles or
changes in strategy or other factors will not cause actual research and
development expenses to differ materially from the Company's expectations. In
addition, the Company will likely need a substantial capital investment in order
to fund third-party manufacturing costs associated with any wide-spread
commercialization of the TVemail(TM) System.


         During the year ended December 31, 2000, we significantly increased our
number of employees to 61 full time employees and 2 part time employee by
mid-year, however, by December 31, 2000 as a result of a decrease in operations,
the Company only employed 9 full time employees and 1 part time employees.
Currently the Company has 7 employees and does not expect to hire a significant
number of additional employees until after the projected commercial launch of
TVemail(TM) System in the first quarter of 2002 or 2002. However, there can be
no assurance that we will be able to launch the TVemail(TM) System or that lack
of qualified applicants, changes in strategy or lack of funds will prevent us
from hiring additional employees.

         During the year ended December 31, 2000 we did not generate any revenue
from operations. We do not anticipate generating any revenue until the
TVemail(TM) System is successfully launched and there can be no assurance that
we will be able to launch the TVemail(TM) System or generate any revenue.

         The Company does not plan to purchase any material computer equipment,
lab equipment or development tools in 2001. The Company's capital outlay could
be material, if the Company decides to handle certain functions, such as
manufacturing, marketing or customer service in-house as opposed to contracting
them out.

Liquidity and Capital Resources


         We have funded our business through the issuance of debt and equity. We
raised $5,000,000 through the Friedlander Transaction on April 6, 1999. On March
13, 2000, we raised an additional $500,000 through the issuance of a one-year
ten percent-subordinated convertible debenture in an offshore transaction to
Seafont, Pty. Ltd., an Australian corporation. This debenture is convertible
into shares of Common Stock at an initial conversion rate equal to one share for
each $7 of principal converted.


         Also, during the first and second quarters of 2000, we raised
approximately $4,963,878 through the sale of approximately 825,000 shares of the
Company's Common Stock and approximately 413,000 Common Stock Purchase Warrants
with an exercise price of $.01 per share in an offshore private placement to
various European entities.

         During the first, second and third quarters of 2000, the Company
expended substantially all of its working capital to cover its operating costs,
including development costs related to the TVemail(TM) System. Beginning in
August 2000, the Company did not have sufficient capital to continue operations.
On August 17, 2000, the Company borrowed $250,000 from Friedlander and on August
31, 2000, the Company borrowed $250,000 from eNote International. Since that
time on going operations have been funded entirely by Friedlander through the
purchase of additional secured short term 8% notes and warrants to acquire
additional shares of the Company's Common Stock. Friedlander has repeatedly
extended the maturity dates of such notes, however, in the event Friedlander
refused to extend such maturity dates, Friedlander, as a secured creditor could
likely take possession of the Company's remaining assets with no assets
remaining for distribution to the Company's shareholders.

     The  Company's  current  capital  resources  are  insufficient  to continue
operations and the Company's continued  operations are currently contingent upon
ongoing capital investment by Friedlander.  The Company has significant  overdue
accounts  payable.There  can be no assurances that  Friedlander will continue to
fund the Company's  operations or fund the  commercially  launch its TVemail(TM)
System.  In order for the  Company,  to raise  additional  equity  capital  from
investors  other than  Friedlander,  the Company  believes that current debt and
equity holders, including without limitation,  Friedlander,  eNote International
and Seafont,  Pty. Ltd.,  would have to agree to surrender or terminate  certain
debt  or  equity  positions  in the  Company,  including  without  limitation  a
substantial portion of the 427,241,985  warrants that are issued and outstanding
to acquire shares of the Company's Common Stock. There can be no assurances that
such holders will surrender or terminate such positions.

Certain Trends and Uncertainties

         In addition to the other information contained in this Report on Form
10-KSB, the following factors should be considered carefully.

               RISKS RELATING TO THE COMPANY'S NEED FOR ADDITIONAL
                               FINANCIAL RESOURCES

Need for Additional Funds

         Our existing capital is insufficient to continue our current operations
for any substantial period of time without additional investment by Friedlander
or otherwise. If for any reason Friedlander ceased funding our current level of
operations it is likely that Company would not be able to raise any additional
capital or be able to continue as going concern. In addition, in order for us to
begin continued mass production of the Client Hardware or to initiate widespread
sales and marketing efforts relating to the TVemail(TM) service, we anticipate
that we will have to raise substantial additional funds. We currently are
seeking additional funding through public or private financings, which may
include debt or equity financings. Adequate funds for these purposes, whether
obtained through financial markets or collaborative or other arrangements with
corporate partners, existing shareholders or from other sources, may not be
available when needed or on terms acceptable to the Company. Insufficient funds
may require us to license to third parties our technology to commercialize
products or technologies that the Company would otherwise seek to develop
itself; to sell ourselves to a third party; to cease operations; or to declare
bankruptcy.

         If we raise additional funds through the issuance of debt securities,
the holders of the debt securities will have a claim to the Company's assets
that will be prior to any claim of the stockholders. Interest on any debt
securities could increase our costs and negatively impact our operating results.
If we raise additional funds through the issuance of preferred stock, the terms
of such preferred stock may provide that the holders of such preferred stock are
entitled to receive dividends and/or distributions upon liquidation prior to the
holders of Common Stock. Furthermore, any such preferred stock may have class
voting rights, conversion features and/or antidilution protections of which the
Common Stock does not have the benefit. If we raise additional funds through the
issuance of Common Stock or securities convertible into or exchangeable for
Common Stock, the percentage ownership of the Company's then-existing
stockholders will decrease. In addition, any such convertible or exchangeable
securities may have rights, preferences and privileges more favorable to the
holders than those of the Common Stock.

Subordination of Common Stock to Preferred Stock; Risk of Dilution;
Anti-Dilution Adjustments.

         In the event of the liquidation, dissolution or winding up of the
Company, the Common Stock is expressly subordinate to the $5 million preference
of the 5 million outstanding shares of Preferred Stock. The conversion rate of
the Preferred Stock is subject to adjustment, among other things, upon issuances
of Common Stock or securities convertible into Common Stock or rights to
purchase Common Stock that have not been expressly approved in writing by a
majority in interest of the holders of Preferred Stock or their elected
representatives. As of December 31, 2000, each share of Preferred Stock was
convertible into 1 share of Common Stock.

           RISKS RELATING TO THE COMPANY'S OPERATIONS AND TECHNOLOGIES

Limited Operating History; Recent Shift in Business Strategy.

         Immediately prior to the acquisition of Navis on April 5, 1999, the
Company had no business operations. Navis itself was founded in June 1996 and
until the fourth quarter of 1998 supplied infrared protocol and advanced input
devices to NC manufacturers and provided contract engineering and consulting
services. However, Navis' revenues from operations never exceeded $703,000 in
any given year. During 1998, Navis shifted its business emphasis to focus
entirely on the development of the TVemail(TM) service. We have yet to launch
the TVemail(TM) service commercially or to receive any revenue from such
service. As a result, we have only a limited operating history and there is
little historical information on which to evaluate our business and prospects.
Our revenue, if any, for the foreseeable future is almost entirely dependent on
successfully bringing the TVemail(TM) service to market. There can be no
assurance that we will be successful in implementing any of our business
strategies.

The Company Depends on its Intellectual Property, Which May Be Difficult and
Costly to Protect.

         Our intellectual property includes proprietary and confidential
information that is not currently subject to patent, trademark or similar
protection. The Company has filed federal trademark applications to register the
trademarks "TVemail," "eNote.com," "EZ Color," and "Simply Communicate,"
however, the Company may not be able to secure significant protection for these
trademarks. If our competitors or others adopt product or service names similar
to the names listed above that we anticipate using, it may impede our ability to
build brand identity and customer loyalty. We rely primarily on secrecy to
protect technology. No assurance can be given that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to the our trade secrets, or that the we can effectively
protect its rights to its unpatented trade secrets.

         The validity, enforceability and scope of protection of certain
proprietary rights in Internet-related businesses are uncertain and still
evolving. If unauthorized third parties are able to copy our service or our
business model or to use our confidential information to develop competing
services, we could lose customers and our business could be negatively impacted.
We may not be able to effectively police unauthorized use of our technology
because such policing is difficult and expensive. In particular, the global
nature of the Internet makes it difficult to control the ultimate destination or
security of software or other data transmitted. Furthermore, the laws of other
countries may not adequately protect our intellectual property.

         Our business activities and the TVemail(TM) service may infringe upon
the proprietary rights of others. In addition, other parties may assert
infringement claims against the Company. Any such claims and any resulting
litigation could subject us to significant liability for damages and could also
result in invalidation of our proprietary rights. We could be required to enter
into costly and burdensome royalty and licensing agreements. These agreements
may not be available on acceptable terms, or may not be available at all. We may
also need to file lawsuits to defend the validity of our intellectual property
rights and trade secrets, or to determine the validity and scope of the
proprietary rights of others. Litigation is expensive and time-consuming and
could divert management's attention away from our business.

Technology Licensed From Third Parties.

         We have entered into agreements with, and have licensed certain
technology from, third parties. The Company has relied on scientific, technical,
commercial and other data supplied and disclosed by others in entering into
these agreements and will rely on such data in support of development of certain
products. Furthermore, we believe that we will license additional technologies
from third parties in the future. Although we have no reason to believe that
this information contains errors of omission or fact, there can be no assurance
that there are no errors of omission or fact that would materially affect the
commercial viability of these products.


Rapid Technological Change, Customer Demands and Intense Competition.

         The e-mail service market is characterized by rapidly changing
technology, customer demands and intense competition. If we cannot keep pace
with these changes, our TVemail(TM) service could become uncompetitive and its
business could suffer. If we are not successful in developing and marketing
enhancements to the TVemail(TM) service or new services that respond to
technological change or customer demands, our business may be materially and
adversely effected.

         The competitive market for e-mail and online service access may limit
demand or pricing for the TVemail(TM) system. We expect to experience intense
competition from established online service providers such as America Online,
Inc., Prodigy Communications Corporation and Microsoft Corporation's WebTV(TM)
as well as competition from Internet appliance manufactures such as Sony. Many
companies provide e-mail and online service access and other services, which
provide functionality superior to those included in the TVemail(TM) system. As a
result of this competition, demand for the TVemail(TM) system may suffer, we may
be restricted in the service rates we can charge for the TVemail(TM) system and
our business, financial condition and results of operations may be adversely
affected. Many of our competitors have significantly greater financial,
technical, marketing, distribution, customer support and other resources than we
does. Furthermore, many of our competitors have significantly greater
experience, better name recognition, more compelling content and easier access
to consumers, advertisers and online service providers than we do.

Management of Growth.

         Our ability to implement our business plan successfully in a new and
rapidly-evolving market will require effective planning and growth management.
If we cannot manage our anticipated growth effectively, our business and
financial results may suffer. We plan on expanding our existing operations
substantially. Although we anticipate out sourcing manufacturing and procurement
and limited components of marketing and technical services, we may be forced to
expand our manufacturing, sales and marketing and technical support. We expect
that we will need to manage and broaden multiple relationships with customers,
on line providers and other third parties. We also expect that we will need to
expand our financial systems, procedures and controls and will need to augment,
train and manage our workforce, particularly our information technology staff.
As a result, our management and operating systems may be strained by any growth
and the Company may be unable to timely complete necessary improvements to its
operating systems, procedures and controls to support future operations.

Capacity Constraints May Impede Revenue Growth and Profitability.

         We believe that satisfactory performance, reliability and availability
of our TVemail(TM) appliances and Server Systems infrastructure will be critical
to the Company's reputation and ability to attract customers and maintain
adequate customer service levels. Any significant or prolonged capacity
constraints could delay or prevent customers from sending or gaining access to
their documents or other data or services. Such constraints could decrease our
ability to acquire and retain customers and prevent us from achieving the
necessary growth in revenue to achieve profitability. If the amount of traffic
increases substantially and we experience capacity constraints, we may need to
spend significant amounts to expand and upgrade our technology and network
infrastructure. Furthermore, we may be unable to predict the rate or timing of
any increases in the use of its services in order to respond in a timely manner.

Systems Failures and Business Interruptions Which Would Harm our Business.

         Our success will depend in part on the efficient and reliable operation
of TVemail(TM) service sufficient to accommodate a large number of subscribers.
We intend to locate our Server Systems at multiple sites with redundant
functions in order to reduce the risks of system failure, however, the Server
Systems are vulnerable to damage from fire, power loss, telecommunications
failures, break-ins and other events, which could lead to: interruptions or
delays in our service; loss of data; or the inability to accept, transmit and
confirm customer documents and data. Our business may be materially adversely
effected if its service is interrupted. Although we intend to implement network
security measures, our systems may be vulnerable to computer viruses, electronic
break-ins, attempts by third parties deliberately to exceed the capacity of the
systems and similar disruptions, any of which could have a material adverse
effect on our business.

               RISKS RELATING TO THE INTERNET AND ONLINE COMMERCE

Privacy Concerns May Discourage Customers From Using The Company's Services.

         Concerns over the security of online transactions and the privacy of
users may inhibit the growth of the Internet as a means of delivering documents
and data. We may need to incur significant expenses and use significant
resources to protect against the threat of security breaches or to alleviate
problems caused by such breaches. We plan to rely on encryption and
authentication technology to provide secure transmission of confidential
information. If our security measures do not prevent security breaches, we could
suffer operating losses, damage to its reputation, litigation and possible
liability. Advances in computer capabilities, new discoveries in the field of
cryptography or other developments may result in a compromise or breach of our
encryption and authentication technology and could enable an outside party to
steal proprietary information or interrupt its operations.


Government Regulation and Legal Uncertainties Relating to the Internet Could
Harm our Business.

         Changes in the regulatory environment could negatively impact our
ability to generate revenues and increase our expenses. The Internet is largely
unregulated and the laws governing the Internet remain unsettled, even in areas
where there has been some legislative action. It may take years to determine
whether and how existing laws such as those governing intellectual property,
privacy and taxation apply to the Internet. In addition, because of increasing
popularity and use of the internet, any number of laws and regulations may be
adopted with respect to the internet or other online services covering issues
such as: user privacy; security; pricing; content; copyrights; distribution;
taxation; and characteristics and quality of services. Such regulations could
impose additional costs or interdicts on our activities, which could have a
material adverse effect.

If the Internet Infrastructure Fails, Our Business May Suffer.

         We cannot be certain that the infrastructure or complementary services
necessary to maintain the Internet as a useful, convenient or secure means of
transferring documents and data will continue to develop. The Internet
infrastructure may not support the demands that growth may place on it, and the
performance and reliability of the Internet may decline, which could have a
material adverse effect on our business.

The Company Depends on Third-Party Providers of Internet and Telecommunications
Service.

         Our operations depend on third parties for Internet access and
telecommunications. Frequent or prolonged interruptions of these services could
result in significant losses of revenues. These types of occurrences could also
cause users to perceive our products as not functioning properly and therefore
encourage them to use other methods to deliver and receive information. We have
limited control over these third parties and there can be no assurance that we
will be able to maintain relationships with them on acceptable commercial terms.
Nor can there be any assurance that the quality of services that they provide
will remain at the levels needed to enable us to conduct our business
effectively. Each of these third parties has likely experienced outages in the
past, and could experience outages, delays and other difficulties due to system
failures unrelated to the Company's systems.

Costs of Transmitting Documents and Data Could Increase.

         The cost of transmitting documents and data over the Internet could
increase, and the Company may not be able to increase its prices to cover such
rising costs. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet and on-line service providers in
a manner similar to long distance telephone carriers and to impose access fees
on such providers. Also, foreign laws and state tax laws and regulations
relating to the provision of services over the Internet are still developing. If
individual states impose taxes on services provided over the Internet, our cost
of providing TVemail(TM) and other services may increase.

Item 7.  Financial Statements.

         See Consolidated Financial Statements beginning on Page F-1.

PLEASE NOTE THAT DUE TO THE LACK OF CAPITAL RESOURCES AVAILABLE TO THE COMPANY
THE FINANCIAL STATEMENTS INCLUDED HEREWITH HAVE NOT BEEN AUDITED IN ACCORDANCE
WITH THE REQUIREMENTS OF THE EXCHANGE ACT OF 1934, AS AMENDED.

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


         On September 22, 1999, we engaged Deloitte & Touche LLP, New York, New
York, as independent auditors, to audit our financial statements for the year
ended December 31, 1999 and, consequently, ended the engagement of Want & Ender,
CPA, P.C., New York, New York. Such actions were approved by our Board of
Directors as of November 11, 1999. Want &Ender neither resigned nor declined to
stand for re-election. None of Want & Ender's reports on the financial
statements of the Company for either of the two years ended December 31, 1998
and December 31, 1997 contained an adverse opinion or disclaimer of opinion, or
was modified as to uncertainty, audit scope, or accounting principles. We had no
disagreements with Want & Ender on any matter of accounting principles or
practices, financial statements disclosure, or auditing scope or procedure which
could have caused them to make reference to the subject matter of such
disagreement in connection with their report.


         Due to lack of capital resources we have not been able to pay Deloitte
& Touche LLP for its services rendered in connection with among things the audit
of our financial statements for the year ended December 31, 1999. As a result
Deloitte & Touche LLP is no longer performing services for the Company and no
independent accounting firm has audited, reviewed or been involved in any
capacity with the preparation of the Company's financial statements for the year
ended December 31, 2000 which are included herein.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;Compliance
with Section 16(a) of the Exchange Act.


                        EXECUTIVE OFFICERS AND DIRECTORS

         The following table sets forth certain information regarding the
directors and executive officers of the Company.


         Name                       Age     Positions
         Michael T. Grennan         47      Director, Secretary, Treasurer and
                                            Chief Financial Officer
         Leopold Abraham II         73      Director

         The following information is furnished for each of the directors and
executive officers of the Company:

         Michael T. Grennan is a Certified Public Accountant who initially
served as the Secretary, Treasurer and Chief Financial Officer of the Company
from April 1999 until August 2000 and as a director of the Company from November
1999 until August 2000. In November 2000, Mr. Grennan rejoined the Company and
currently serves as a Director, the Secretary, Treasurer and Chief Financial
Officer. His term as a Director of the Company expires at the Annual Meeting of
Stockholders in 2002. Prior to joining the Company, Mr. Grennan worked for seven
years as a self-employed business and financial consultant. Previously, Mr.
Grennan worked for 14 years in public accounting, first on the audit staff of
Coopers & Lybrand, and then as a staff member, manager and partner of the
accounting firm of Urbach, Kahn, and Werlin, PC.

     Leopold  Abraham II became a director of the  Company in November  1999 and
his term expires at the Annual  Meeting of  Stockholders  in 2002.  Mr.  Abraham
served as  Chairman  and Chief  Executive  Officer of  Associated  Merchandising
Corporation,  a retail merchandising and sourcing organization,  from 1977 until
his  retirement in 1993.  Since  retiring  from  Associated  Merchandising,  Mr.
Abraham was a director of Liz  Claiborne,  Inc. from 1993 to 1998, R.G.Barry
Corp., a manufacturer  of comfort footwear, from 1993 to 2000 and Galey & Lord,
Inc., a  manufacturer  of textile  products, from 1993 to 2000.  He currently
serves on the boards of directors of; Signet Group, plc, an operator of retail
jewelry stores in the United States and the United Kingdom (since 1994)and the
Smith Barney Funds Board (since 1994).

                      LITIGATION INVOLVING CONTROL PERSON

     Mr. Burton G. Friedlander is deemed a control person of the Company arising
from his  indirect  ownership  of a  majority  of the voting  securities  of the
Company. On May 31, 2001, the Securities and Exchange Commission ('SEC') filed a
Complaint in the United States  District Court,  Southern  District of New York,
against Burton G.  Friedlander and certain entities managed or under the control
of Mr. Friedlander,  including Friedlander  International  Limited,  Friedlander
Management   Limited,   Friedlander   Capital   Management   Corporation,   Opal
International  Fund  and  Friedlander  Limited  Partnership  (collectively,  the
'Friedlander  Entities').   The  Complaint  alleges  that  Friedlander  and  the
Friedlander Entities violated Section 17(a) of the Securities Act, Section 10b-5
of the  Exchange  Act  and  Section  206 of the  Investment  Advisors  Act.  The
Complaint seeks permanent  injunctive  relief,  disgorgement  and civil monetary
penalities.  The SEC sought preliminary injunctive relief and the appointment of
a receiver which was opposed by Mr. Friedlander and the Friedlander Entities and
denied by the Court on June 29,  2001.  On or about  October  8,  2001,  the SEC
renewed its motion for  preliminary  injunctive  relief and the appointment of a
receiver. The Company has been informed by Mr. Friedlander's  attorneys that Mr.
Friedlander  and  the  Friedlander  Entities  are  aggressively   defending  the
litigation,  are opposing  the SEC's  renewed  motion,  and have been granted an
extension of time to answer the Complaint.

     The terms of settlement or an adverse result against Friedlander and/or the
Friedlander Entities in such litigation,  or any related litigation,  may have a
material  adverse  effect on the ability of Friedlander  and/or the  Friedlander
Entities to continue to fund the Company's operations.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     For the year ended  December  31,  2000,  the  following  persons  who were
directors,  officers,  or beneficial owners of more than 10% of the Common Stock
during such year,  failed to file on a timely basis reports  required by Section
16(a) of the Exchange Act during such year or any prior fiscal year.  Charles W.
Quatt became a Director on March 17, 2000, but has yet to file the required Form
3  or  the  required  Form  4  in  connection   with  a  transaction   involving
non-qualified  stock options made pursuant to the 1999  Non-Employee  Directors'
Stock Option Plan.  George Horton,  the Company's acting Chief Executive Officer
and  President of the Company  during most of the last quarter of 2000 failed to
file the required Form 3. John Varsames, a former officer of the Company, failed
to file a Form 4 or Form 5 in  connection  with a  repurchase  of  approximately
6,680,000 shares of the Company's Common Stock by the Company.  Friedlander, the
beneficial  owner of more than 10% of the Common Stock failed to file reports on
Form 4's in connection  with the issuance of certain debt and equity  securities
of  the  Company  as  more  fully  described  in the  section  titled  sales  of
unregistered  securities.  Each of the  following  current or former  directors,
officers,  or  beneficial  owners of more than 10% of the Common Stock failed to
file a Form 5 for the  year  ending  December  31,  2000 or  provide  a  written
representation  to the Company that no Form 5 was  required:  Friedlander,  John
Varsames,  George Horton, Eric Lundberg, Mark Boucher, Daniel Peterson,  Michael
Grennan,  Charles W. Quatt, Stanley M. Blau,  James Bowman and Victor
Reichenstein.

Item 10.  Executive Compensation.

                             EXECUTIVE COMPENSATION

         The following table sets forth the compensation paid or accrued for
services rendered in 2000 by each Chief Executive Officer, and the other
executive officer of the Company (the "Named Executive Officers"). Prior to
April 1999, the Company did not have any operations and Sally A. Fonner served
as the sole executive officer until her resignation on April 5, 1999. Ms. Fonner
received no compensation other than the following which was paid to Capston
Network Company in connection with a plan of reorganization approved by the
Company's stockholders (i) 181,389 shares of the Company's Common Stock and (ii)
$150,000 in cash. Ms. Fonner is an affiliate of Capston Network Company. Each
Chief Executive Officer, John R. Varsames and George Horton have resigned and as
of December 31, 2000 the only executive officer of the Company was Michael T.
Grennan, the Secretary, Treasurer and Chief Financial Officer.



<PAGE>


                                                               Long Term
                                  Annual Compensation        Compensation
                            ------------------------------ ------------------
                                                                         All
                                            Other Annual  Shares Under  Other
Name and                    Salary   Bonus  Compensation  Option Awards  Comp.
Principal Position   Year      ($)     ($)      ($)                       ($)
-------------------- ---- --------- ------- ------------- ------------- --------
John R. Varsames     2000   183,803            ------          n/a      198,779
President and Chief  1999   114,944  ------    ------
Executive            1998   127,076  ------    ------
Officer(1)(2)

George Horton        2000         0  ------    ------          n/a
President and Chief
Executive Officer(3)

Michael T. Grennan   2000    90,685  ------    ------          n/a
Secretary, Treasurer 1999    93,877  ------    ------          n/a
and Chief Financial
Officer(4)



(1)  John R. Varsames was appointed President and Chief Executive Officer of the
     Company on April 5, 1999. The salary reflected for 1999 is the actual
     amount paid to Mr. Varsames for his service from the time he was appointed
     through December 31, 1999. The Compensation reflected for 1998 was the
     compensation received by Mr. Varsames in his capacity as the President and
     Chief Executive Officer of Navis Technologies, Inc. Mr. Varsames resigned
     as an officer of the Company on September 26, 2001 and the salary reflected
     for 2000 is the actual amount paid to Mr. Varsames for his service in 2000
     up until the date of his resignation.

(2)  The amount set forth in the column titled "all other compensation," is the
     cash value of property received by Mr. Varsames, in connection with his
     resignation on September 26, 2001, which consisted of certain computer
     equipment, the assets of the Company's subsidiary WebaATM.Com, Inc., and
     all the Company's equity interest in its subsidiary SoulutionNet Ltd.

(3)  George  Horton  was the  successor  to John R.  Varsames.  The  salary
     reflected  for 2000 is the actual amount paid to Mr. Horton for his service
     from the time he was appointed  through the date of his resignation on
     approximately November 25, 2001.

(4)  Michael  T.  Grennan  was  appointed  Secretary,  Treasurer  and Chief
     Financial  Officer on April 5, 1999. The salary reflected for 1999 is the
     actual amount paid to Mr.Grennan for his service from the time he was
     appointed through December 31, 1999.

         None of the named executive officers held or were issued options to
acquire shares of the Company's Common Stock during the year ending December 31,
2000.

                              DIRECTOR COMPENSATION

         Each director of the Company who is not an employee of the Company is
reimbursed for reasonable out-of-pocket expenses incurred in attending meetings.
In addition, non-employee directors are entitled to certain option grants. Under
the 1999 Director Plan each non-employee director receives (i) upon first being
elected to the board an option for 20,000 shares which vests over one year and
(ii) annually, at the time of the annual meeting, an option for 5,000 shares
which vests over one year. Pursuant to the 1999 Director Plan, options vest upon
any change-in-control of the Company.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

                            STOCK OWNERSHIP OF DIRECTORS,
                  EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS

         The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock and Preferred Stock as of September 14,
2001 by (a) each director of the Company, (b) each of the executive officers
named in the Summary Compensation Table above, (c) all directors and executive
officers as a group and (d) each person known to the Company to own beneficially
5% or more of its Common Stock. Except as otherwise indicated, each such person
has sole investment and voting power with respect to the shares shown as being
beneficially owned by such person, based on information provided to the Company.

                         Number of                 Number of Shares
                         Shares of                        of          Percent of
                       Common Stock  Percent of    Preferred Stock   Outstanding
                       Beneficially  Outstanding      Beneficially     Preferred
          Name            Owned      Common Stock        Owned           Stock
          -----           -----      ------------        -----         ---------
Michael T. Grennan      250,000(1)          5.36%         --                0%
Leopold Abraham II       11,000(2)           *            --                0%
Executive Officers and
Directors as a Group (8
persons)                 261,000            5.60%          --               0%
Burton G. Friedlander 548,328,184(3)(4)(5)  99.2%(6)     5,000,000          100%

* less than 1%

(1)      Mr. Grennan's reported holdings do not include 2,000 shares that are
         held by his father, as to which he disclaims beneficial ownership.
(2)      Includes 10,000 shares which may be acquired within sixty days after
         April 26, 2000 by exercise of stock options by non-employee directors
         pursuant to grants made under 1999 Non-Employee Directors' Stock Option
         Plan provided that such plan is approved by the Company's stockholders.
(3)      Includes 5,000,000 shares of Common Stock issuable upon conversion of
         5,000,000 shares of Preferred Stock, 25,833,528 shares of Common Stock
         issuable upon conversion of immediately convertible notes and
         519,241,985 shares upon exercise of immediately exercisable warrants.
(4)      Mr. Friedlander exercises voting and investment control over shares of
         Common Stock, Warrants and Preferred Stock held by Friedlander
         International Limited ("FIL") and Friedlander Limited Partnership
         ("FLP") through their investment manager, Friedlander Capital
         Management Corp. ("FCMC") of which Mr. Friedlander is the sole
         Stockholder.
(5)      Information as to Mr. Friedlander, FIL, FLP and FCMC is based on a
         Statement on Schedule 13D filed by Mr. Friedlander and FCMC with the
         Commission on July 15, 1999, a Form 4 for June 1999 provided by Mr.
         Friedlander and FCMC, and a review of the Company's ledger of issued
         and outstanding convertible notes and warrants. The Company assumes no
         responsibility for the accuracy of such information.
(6)      Based as a percentage of all issued and outstanding shares of Common
         Stock plus all shares of Common Stock issuable upon the conversion or
         exercise of all securities convertible into or exercisable for shares
         of Common Stock.

Item 12.  Certain Relationships and Related Transactions.

        On April 5, 1999, the Company acquired Navis in a transaction whereby
the stockholders of Navis exchanged all of their Navis stock for 8,000,000
shares of newly issued Common Stock (or approximately 80% of the Company's then
outstanding Common Stock), and Navis became a wholly-owned subsidiary of the
Company. Pursuant to the Navis transaction, Mr. Varsames became the beneficial
owner of approximately 71% of the Company's then outstanding Common Stock, was
appointed President and Chief Executive Officer of the Company, and acquired the
contractual right to designate individuals for appointment to the Board. Mr.
Varsames shares beneficial ownership of 7,080,000 shares of Common Stock with
his wife, Heidi A. Varsames. Prior to the Navis Transaction, Mr. Varsames was
not a director, officer or stockholder of, or otherwise related to, the Company.

     On April 6, 1999,  the Company  entered into the  Friedlander  Transaction,
pursuant to which Friedlander purchased Preferred Stock and Warrants convertible
into  and  exercisable  for,   respectively,   approximately  41%  of  the  then
outstanding  Common Stock and was granted the contractual right to designate two
individuals for appointment to the Board. Prior to the Friedlander  Transaction,
neither  Friedlander nor Mr. Friedlander was a director,  officer or stockholder
of, or otherwise related to, the Company.  Mr.  Friedlander  designated Mr. Blau
and Mr. Abraham as Directors, each of whom was appointed in November 1999.

        In connection with the Navis Transaction and Friedlander Transaction,
the Company agreed to issue 1,460,000 shares of Common Stock to certain
consultants and advisors, including 540,000 shares of Common Stock that were
issued to persons designated by Capston, 270,000 shares of Common Stock that
were issued to legal counsel for the parties and 650,000 shares of Common Stock
that were issued to certain financial consultants as finders' fees. Ms. Fonner
was so designated by Capston to receive 180,600 of such 540,000 shares of Common
Stock. George W. Schiele received 600,000 of the 650,000 shares of Common Stock
issued as finders' fees. Mr. Schiele transferred 250,000 of the 600,000 shares
to Mr. Friedlander. Mr. Friedlander was recruited by Mr. Schiele to perform
services for the Company and thereby became entitled to 250,000 shares based on
a Statement on Schedule 13G filed on July 1, 1999 by Mr. Schiele. In addition to
the above mentioned stock compensation, upon the closing of the Navis
Transaction, Navis paid $250,000 (the "Cash Compensation") in cash to Capston,
$100,000 of which Capston, in turn, paid to Mr. Schiele and another individual
($50,000 each) who acted as finders in connection with the Navis Transaction,
and the remaining $150,000 was retained by Capston. An oral agreement (the "Cash
Condition Agreement") between Capston and Navis provided that Capston's $150,000
portion of the Cash Compensation is subject to repayment in the event that the
Common Stock fails to trade at or above $5.00 per share on a national securities
exchange or in the National Association of Securities Dealers' SmallCap Market
for at least 45 consecutive trading days within the six months immediately
following the closing of the Navis Transaction. The Cash Condition Agreement was
later modified to provide that the relevant time period for such trading would
be the four months immediately following the filing of the Report on Form 10-KSB
for the fiscal year ending March 31, 1999, rather than the six months
immediately following the Navis Transaction.

        Between April 7, 1998 and March 23, 1999, Navis issued 15 separate 12%
Promissory Notes (the "Varsames Notes") to Mr. Varsames in an aggregate
principal amount of approximately $223,647. The Varsames Notes have all been
cancelled.

Ms.Fonner and Capston agreed to reimburse the Company $150,000
(the "Reimbursement")for legal fees incurred by the Company. The Reimbursement
has yet to be received by the Company.

        Between August 17, 2000 and September 28, 2001, in consideration for
approximately $2,449,100, the Company issued 8% Subordinated Convertible Notes
in an aggregate principal amount of approximately $2,449,100 which are
convertible into 25,833,528 shares of Common Stock and Warrants to acquire
519,241,985 shares of Common Stock at an aggregate exercise price equal to
$25,186,000 to Friedlander, and other entities controlled or managed by
Friedlander, including without limitation FIL and FIP.

        In connection with the resignation of Mr. Varsames on September 26, 2001
as the Chief Executive Officer, President and a Director of the Company, the
Company repurchased 6,680,000 shares of its Common Stock in consideration for a
general release by the Company and certain of its significant shareholders of
all claims against Mr. Varsames, certain computer hardware, the assets of the
Company's subsidiary WebATM, Inc. and the Company's equity interests in its
subsidiary SolutionNet Ltd.

Item 13.  Exhibits and Reports on Form 8-K

(a)  Exhibits:
                                  EXHIBIT TABLE

                                  EXHIBIT TABLE


          Exhibit No.      Description

          3(a)             Amended and Restated Certificate of Incorporation
                           (incorporated by reference as Exhibit 3(a) to the
                           Company's Form 10-KSB filed September 22, 1999).

          3(b)             Amended By-laws (incorporated by reference as Exhibit
                           3(b) to the Company's Form 10-KSB filed September 22,
                           1999).

           4.1             Certificate of Powers, Designations, Preferences and
                           Rights of the Convertible Preferred Stock, par value
                           $.01 per share, of the Company (incorporated by
                           reference as Exhibit 4.1 to the Company's Form 8-K
                           filed April 20, 1999).

           4.2             Common Stock Purchase Warrant dated April 6, 1999
                           between the Company and Friedlander International
                           Limited (incorporated by reference as Exhibit 4.1 to
                           the Company's Form 8-K filed April 20, 1999).

           4.3             10% Subordinated Convertible Debenture to Seafont
                           Pty. Ltd due March 13, 2001 in principal amount of
                           $500,000 (incorporated by reference as Exhibit 4.24
                           to the Company's Form 10-KSB filed April 28, 2000).

           4.4             Form of 8% Subordinated Convertible Note issued to
                           Friedlander Capital Management Corp. in a series of
                           transactions from August 17, 2000 through September
                           28, 2001 (incorporated by reference as Exhibit 4.1 to
                           the Company's Form 8-K filed September 1, 2000).

           4.5             Form of Warrant to purchase shares of Common Stock
                           issued to Friedlander Capital Management Corp. in a
                           series of transactions from August 17, 2000 through
                           September 28, 2001(incorporated by reference as
                           Exhibit 4.2 to the Company's Form 8-K filed September
                           1, 2000).

           4.6             $250,000 8% Subordinated Secured Convertible Note
                           dated August 31, 2000 due December 2, 2000 to eNote
                           International.com Ltd (incorporated by reference as
                           Exhibit 4.3 to the Company's Form 8-K filed September
                           1, 2000).

           4.7             Warrant dated August 31, 2000 to acquire 2,000,000
                           shares of eNote.com Inc. Common Stock to eNote
                           International.com Ltd (incorporated by reference as
                           Exhibit 4.4 to the Company's Form 8-K filed September
                           1, 2000).

           4.8             Form of Security Agreement dated August 17, 2000
                           between the Company, Friedlander and eNote
                           International.com Ltd (incorporated by reference as
                           Exhibit 4.5 to the Company's Form 8-K filed
                           September 1, 2000).

           4.9             Letter Agreement dated as of December 20, 2000
                           between the Company and Friedlander Capital
                           Management Corp. extending the expiration date of
                           Warrants issued between August 17, 2000 and November
                           22, 2000 until the third anniversary of each such
                           Warrant's respective issue date (incorporated by
                           reference as Exhibit 4.48 to the Company's Form
                           10-QSB filed December 29, 2001)

           4.10            Letter Agreement dated as of December 31,2000 between
                           the Company and Friedlander Capital Management Corp.
                           adjusting the Warrant exercise price to $.18 with
                           respect to Warrants issued between August 17, 2000
                           and December 20, 2000.

           4.11            Letter Agreement dated as of October 4, 2001 between
                           the Company and Friedlander Capital Management Corp.
                           extending the maturity dates of the 8% Subordinated
                           Convertible Notes to December 31, 2001.

          10.1             Reorganization Agreement, dated April 5, 1999,
                           between and among the Company, Navis Technologies
                           Limited, and the stockholders of Navis Technologies
                           Limited (incorporated by reference as Exhibit 10.1 to
                           the Company's Form 8-K filed April 20, 1999).

          10.2             Purchase and Sale Agreement, dated April 6, 1999,
                           between the Company and Friedlander International
                           Limited (incorporated by reference as Exhibit 10.2 to
                           the Company's Form 8-K filed April 20, 1999).

          10.3             Plan of Reorganization and Proposed Operations
                           (incorporated by reference as Exhibit 10.3 to the
                           Company's Proxy Statement filed April 27, 1998, which
                           was attached to the Company's Form 10-KSB September
                           22, 1999).

          10.4             Lease Agreement by and between Airmouse House, Ltd.
                           Partnership, and the Company with respect to certain
                           premises in Williston, Vermont (incorporated by
                           reference as Exhibit 10.4 to the Company's Form
                           10-KSB filed September 22, 1999).

          10.5             Sublease Agreement, dated June 15, 1999, between the
                           Company and NYBOR Corporation with respect to a
                           portion of the Company's leased premises in Williston
                           Vermont (incorporated by reference as Exhibit 10.5 to
                           the Company's Form 10-KSB filed September 22, 1999).

          10.6             Agreement of Lease between 866 U.N. Plaza Associates
                           LLC and the Company with respect to a portion of the
                           3rd Floor at 866 U.N. Plaza, New York, New York
                           (incorporated by reference as Exhibit 10.6 to the
                           Company's Form 10-KSB filed September 22, 1999).

          10.7             Stock Purchase Agreement by and among James D.
                           Richards, III and Martine Richards, the Company
                           and SolutioNet, Ltd., dated August 6, 1999
                           incorporated by reference as Exhibit 10.7 to the
                           Company's Form 10-KSB filed September 22, 1999).

          10.8             Consulting Agreement dated as of August 6, 1999
                           between SolutioNet, Ltd. and James D. Richards,
                           III (incorporated by reference as Exhibit 10.8 to the
                           Company's Form 10-KSB filed September 22,1999).

          10.9             Shareholders' Agreement, dated as of August 6, 1999,
                           by and among James D. Richards, III and Martine
                           Richards, the Company and SolutioNet, Ltd.
                           (incorporated by reference as Exhibit 10.9 to the
                           Company's Form 10-KSB filed September 22, 1999).

          10.10            Asset Purchase Agreement dated as of August 13, 1999,
                           by and between WebATM.com, Inc. and Gary Cronin
                           (incorporated by reference as Exhibit 10.10 to the
                           Company's Form 10-KSB filed September 22, 1999).

          10.11            Letter Agreement dated as of August 26, 1999, between
                           Capston Network Company and the Company (incorporated
                           by reference as Exhibit 10.11 to the Company's Form
                           10-KSB filed September 22, 1999).

          10.12            1997 Incentive Stock Plan (incorporated by reference
                           as Exhibit 10.12 to the Company's Form 10-KSB filed
                           September 22, 1999).

          10.13            Agreement dated December 30, 1999 between Navinet and
                           the Company (incorporated by reference as Exhibit
                           10.13 to the Company's Form 10-KSB filed April 28,
                           2000).

          10.14            1999 Non-Employee Director Plan (incorporated by
                           reference as Exhibit 10.14 to the Company's Form
                           10-KSB filed April 28, 2000).

          10.15            Note (Debenture) Purchase Agreement dated March 13,
                           2000 by and between Seafont Pty. Ltd. and the Company
                           (incorporated by reference as Exhibit 10.15 to the
                           Company's Form 10-KSB filed April 28, 2000).

          10.16            Form of Common Stock Purchase Agreement for
                           March/April 2000 European Stock Placement
                           (incorporated by reference as Exhibit 10.16 to the
                           Company's Form 10-KSB filed April 28, 2000).

          10.17            2000 Stock Incentive Plan (incorporated by reference
                           as Exhibit 10.17 to the Company's Form 10-KSB filed
                           April 28, 2000).

          10.18            Joint Venture Agreement dated as of March 24, 2000
                           between Seafont Pty. Ltd and the Company
                           (incorporated by reference as Exhibit 10.18 to the
                           Company's Form 10-KSB filed April 28, 2000).

          10.19            Service and Private Label Agreement dated as of March
                           20, 2000 between the Company and CoolEmail.com, Inc.
                           (incorporated by reference as Exhibit 10.19 to the
                           Company's Form 10-KSB filed April 28, 2000).

          10.20            Memorandum of Understanding dated as of March 24,2000
                           between the Company and Cesky Telecom a.s.
                           (incorporated by reference as Exhibit 10.20 to the
                           Company's Form 10-KSB filed April 28, 2000).

          10.21            Joint Venture Agreement dated as of May 18, 2000
                           between Sienna Invest Limited and the Company
                           (incorporated by reference as Exhibit 10.21 to the
                           Company's Form 10-QSB filed December 29, 2000).


          10.22            Separation Agreement dated as of September 26, 2000
                           between the John R. Varsames and the Company
                           (incorporated by reference as Exhibit 10.22 to the
                           Company's Form 10-QSB filed December 29, 2000).

          24.1             Power of Attorney by Directors in favor of Michael T.
                           Grennan.


          (b) Reports on Form 8-K.

         On October 11, 2000 the Company filed a Report on Form 8-K reporting
under Item 1 a change in control of the Company. On September 26, 2000 the
Company and John Varsames, a former President, CEO and director of the Company,
entered into a transaction (the "Transaction") in which Varsames transferred
6,680,000 shares of the Company's Common Stock to the Company in exchange for
(i) all of the assets of the Company's wholly-owned subsidiary WebATM, Inc and
(ii) subject to the rights of James D. Richards and Martine Richards, the
Company's 55% equity interest in SolutioNet Ltd. As a result of the Transaction,
Burton G. Friedlander, a significant stockholder of the Company, had his
percentage of voting control increased from approximately 34% to 57%.

         Under Item 2 the Company reported the transfer of all assets of its
subsidiary WebATM, Inc. and, subject to the rights of James D. Richards and
Martine Richards, the transfer of all of its equity interests in SolutionNet
Ltd. to Varsames in consideration for the 6,680,000 shares of the Company's
Common Stock transferred to the Company as part of the aforementioned
Transaction. Under Item 5 the Company referred to its press release dated
September 28, 2000 which announced the appointment of Erik Lundberg as Vice
President of Information Technology, Rick Schaaf as Vice President of Market
Development and Mark Boucher as Vice President of Finance. In addition, the
press release announced the resignation of John Varsames from the Board of
Directors of the Company and described the aforementioned Transaction.


<PAGE>


SIGNATURES

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


eNOTE.COM INC.


Date:  October 4, 2001                By: /s/ MICHAEL T. GRENNAN
                                      ---------------------------
                                      Michael T. Grennan
                                      Vice President and Chief Executive Officer


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



Date:  October 4, 2001                By: /s/ MICHAEL T. GRENNAN
                                      -------------------------------
                                      Michael T. Grennan
                                      Vice President and Chief Executive Officer
                                      Director (Principal Executive Officer)


Date:  October 4, 2001                By:  /s/ MICHAEL T. GRENNAN
                                      ------------------------------
                                      Michael T.  Grennan
                                      Treasurer, Secretary and Chief Financial
                                      Officer, Director (Principal Financial
                                      Officer and Principal Accounting Officer)


Date:  October 4, 2001                 _____*_______________________

Majority of Board of Directors
                                       Leopold Abraham II, Director

                                       *By: /s/ MICHAEL T. GRENNAN
                                       -----------------------
                                       Michael T. Grennan, Attorney-in-fact


<PAGE>
                                 eNote.com Inc.
                           Consolidated Balance Sheets
                                    unaudited

                                          December 31, 2000   December 31, 1999

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

        ASSETS
Current Assets
   Cash and cash equivalents               $         7,742    $          324,392
   Inventories, net of reserve of                   43,015               814,773
     $977,119 and $0, respectively
   Prepaid expenses and other current assets        30,597                36,206
                                         ---------------------------------------
Total current assets                                81,354             1,175,371

Property and equipment, net                        556,052               615,541
Intangibles, net                                   232,451               375,914
Investment in eNote International-                    -                       -
   a joint venture
Security deposits                          #         9,690               124,242
                                           -------------------------------------
   Total assets                            $       879,546     $       2,291,068
                                           =====================================


     LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
   Accounts payable and accrued expenses          1,070,037              660,937
   Notes payable-stockholder                          -                    7,045
   Convertible debentures, net of unamortized
     discount of $366,040 and $0, respectively    1,413,960               80,000
   Capital lease obligation                         100,616                 -
   Short-term notes                                  55,000                 -
   Other current liabilities                            -                 50,000
                                            ------------------------------------

     Total current liabilities                    2,639,614              797,982
                                            ------------------------------------

Stockholders' equity (deficit)
Convertible preferred stock, $1.00 par
    value, 5,000,000 shares authorized,
    issued and outstanding                        5,000,000            5,000,000
Common stock, $0.01 par value, 25,000,000
    shares authorized, 11,339,461 and
    10,049,491 issued at December 31, 2000
    and December 31, 1999, respectively              113,395             100,495
Common stock warrants                              1,297,930             740,000
Treasury stock (6,680,000 shares of common stock)    (53,897)                -
Due from related party                              (150,000)          (150,000)
Unearned compensation                                   -              (109,263)
Additional paid-in capital                         5,262,190             537,358
Accumulated deficit                              (13,229,686)        (4,625,504)
                                            ------------------------------------

   Total stockholders' equity (deficit)           (1,760,068)          1,493,086
                                            ------------------------------------
Total liabilities and stockholders'
   equity (deficit)                          $       879,546           2,291,068
                                            ====================================


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

<PAGE>


                                 eNote.com Inc.
                      Consolidated Statements of Operations
                 For the years ended December 31, 2000 and 1999
                                    unaudited


                                         December 31, 2000     December 31, 1999

Net revenue                             $       -              $           -
                                         ------------------    -----------------

Operating expenses:
   Sales and marketing                              625,781               40,898
   Product development                            2,557,171              188,179
   General and administrative                     2,684,695              442,008
     (including  $304,553 of stock based
     compensation for the year ended December
     31, 2000, and none in 1999.)
   Depreciation and amortization                    661,138               18,965
   Loss on sale of fixed assets                      65,991
   Loss on sale of inventory                      1,321,033                    -
                                         -------------------    ----------------
Total operating expenses                          7,915,809              690,050
                                         -------------------    ----------------

Loss from operations                             (7,915,809)           (690,050)
Minority interest in SolutioNet
Share of loss in eNote International               (500,000)                   -
Interest and other income, net                       37,040               32,723
Interest expense (including $191,890 related
   to amortization of discounts related to
   detachable warrants issued with debt in
   the twelve months ended December 31, 2000)      (225,412)             (4,685)
                                         --------------------   ----------------
Net loss                                  $      (8,604,182)    $      (662,012)
Preferred Stock Dividend                              -                        -
                                         --------------------   ----------------
Net loss applicable to common shareholders $     (8,604,182)    $      (662,012)
                                         ====================   ================
Basic net loss per common share            $          (0.79)    $         (0.07)

Weighted average common shares outstanding       10,926,438           10,049,491

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

<PAGE>

                                 eNote.com Inc.
                      Consolidated Statements of Cash Flows
                 For the years ended December 31, 2000 and 1999
                                                            2000            1999
                                                       -------------------------
Cash flows from operating activities:
   Net loss                                             (8,604,182) $(1,598,459)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization
                                                           661,138        25,333
     Reserve for obsolete inventory                        977,119             -
     Loss on disposal of fixed assets                       65,991             -
     Share of loss in eNote International-
      a joint venture                                      500,000             -
     Amortization of Discount related to detachable
     warrants issued with debt                             191,890             -
     Stock-based compensation                              304,553             -
     Changes in assets and liabilities:
       Decrease in accounts receivable                        -           18,158
       Inventory                                          (205,361)    (826,448)
       Prepaid expenses and other current assets             5,609     (101,420)
       Due from related party                                 -        (150,000)
       Decrease in security deposits                       114,553             -
       Increase in accounts payable and accrued expenses   409,100       274,229
       Decrease in notes payable - stockholder              (7,045)     (71,036)
       Increase in other current liabilities               (50,000)            -
                                                       -------------------------
Net cash used in operating activities                   (5,636,635)  (2,429,643)
                                                       -------------------------

Cash flows from investing activities:
   Investment in joint venture                            (500,000)           -
   Investment in Solutionet                                   -        (250,000)
   Investment in WebATM                                       -         (50,000)
   Intangibles                                             (86,113)    (118,611)
   Property and equipment                                 (410,155)    (480,245)
                                                       -------------------------
   Net cash used in investing activites                   (996,268)    (898,856)
                                                       -------------------------

Cash flows from financing activities:
   Proceeds from issuance of convertible debentures      1,780,000       80,000
   Proceeds from isuance of short-term notes               300,000
   Payment of convertible debenture                        (80,000)    (121,036)
   Payment of short-term notes                            (245,000)
   Proceeds from issuance of convertible preferred
     stock and common stock warrants                          -       5,000,000
   Proceeds from issuance of common stock and warrants   4,561,253           -
                                                       -------------------------
Net cash provided by financing activities                6,316,253    4,958,964
                                                       -------------------------
Net increase/(decrease) in cash and cash equivalents      (316,650)   1,630,465
Cash and cash equivalents at beginning of the period       324,392      (56,382)
                                                       -------------------------
Cash and cash equivalents at the end of the period     $     7,742 $  1,574,083
                                                       =========================

Supplemental disclosure of noncash financing activities
   Conversion of convertible notes                     $                 400,000
   Stock issued to consultants                                -        1,460,000
                                                       -------------------------

   Total noncash financing activities                  $      -    $   1,860,000
                                                       =========================

Preferred stock dividend                               $      -    $     740,000
                                                       =========================
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>

eNote.com Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.       ORGANIZATION

eNote.com  Inc. ( the 'Company') (formerly  Webcor Electronics, Inc.), is a
successor of Navis Technologies, Inc.('Navis'). The Company was organized in
1971 under the laws of Delaware and was a public  shell. In April 5, 1999, the
Company acquired all of the outstanding  shares of Common stock of Navis ('Navis
Acquisition') by issuing 7.6 million of it shares of Common stock.
Simultaneaously,  the Company changed its name from Webcor Electronics,  Inc. to
eNote.com Inc. Naxis was  incorporated  on August 13, 1996 under the laws of the
State of Delaware.

In connection with the Navis  Acquisition,  the Company sold 5 million shares of
convertible  preferred stock, par value $.01 per share (the 'Preferred  Stock'),
and  warrants  to  purchase  2 million  shares of  Common  stock to  Friedlander
International  Limited  ('Friedlander') for $5 million in cash (the 'Friedlander
Transaction'). The Preferred Stock has a liquidation preference of $1 per share,
or $5  million in the  aggregate,  and is  convertible  into  Common  stock on a
one-for-one  share basis.  The warrants have an exercise  price of $1 per share.
The  warrants  were valued at $.37 per share using the  Black-Scholes  valuation
model.  Because the Preferred Stock is convertible  immediately and the warrants
vested  immediately,  a dividend of  $740,000  was  recognized.  Since the Navis
Acquisiton and the Friedlander Transaction were subsequently  interrelated,  the
costs incurred in connection with these  transactions have been accounted for as
a reduction of additional paid-in capital.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION - The consolidated  financial statements include the
accounts  of the  Company  and  its  subsidiary.  All  significant  intercompany
balances and transactions have been eliminated in consolidation.

REVERSE  MERGER  METHOD  OF  ACCOUNTING  -  Following  the  Navis   Acquisition,
management  of  Navis  became  the   management  of  the  Company.   The  former
stockholders  of Navis  owned  approximately  80% of the  outstanding  shares of
Common stock of the Company immediately following the Navis Acquisition.

In  accordance  with  generally  accepted  accounting   principles,   the  Navis
Acquisition  was  accounted  for as a  reverse  merger.  As a  result,  Navis is
considered  to be the acquiring  entity and the Company the acquired  entity for
accounting purposes, even though the Company is the acquirer for legal purposes.
The historical  financial  information of Navis became the historical  financial
information of the Company and historical  stockholders' equity and earnings per
share prior to the merger have been retroactively  reinstated for the equivalent
number of shares received in the merger. The financial statements  subsequent to
the Navis  Acquisition  include:  (1) the  balance  shet with the net results of
Navis at  historical  costs;  (2) the  results of  operations  of Navis for 1999
through the date of the acquisition and the results of operations of the Company
after the acquisition date.

CASH  EQUIVALENTS  - For the purpose of  statements  of cash flows,  the Company
considers all short term, highly liquid investments with an original maturity of
three months or less to be cash equivalents.

INVENTORY  -  Inventories  are  stated  at the  lower of cost,  determined  on a
first-in, first-out basis, or market.

REVENUE  RECOGNITION  - The Company is in the  development  stage of its product
TVemail. The Company expects to launch its product late during 2001. The Company
had no revenue in 2000. Prior to the Navis Acquisition, Navis was engaged in the
sale of  electronic  devices from its  inception  until its  development  of the
TVemail  product.  As a result the Company is not considered to be a development
stage enterprise.

The Company  expects to derive its revenue  primarily from monthly  service fees
and from the sale of TVemail units

RESEARCH AND DEVLOPMENT COSTS - Computer software costs of TVemail developed for
the  internal  use of the  Company  are  capitalized  during the period that the
software is being  developed.  Any cots  incurred in the  preliminary  stages of
development and in the operating stages of the software are immediately expensed
to research and development. Amortization of the capitalized software costs will
begin when the software is ready for its intended use and will be amortized over
the expected life of the software.  During 2000 the TVemail  software was in the
testing stage and accordingly, the Company has not begun the amortization of the
capitalized software costs.

FAIR VALUE OF  FINANCIAL  INSTRUMENTS  - The  Company's  financial  instruments,
including cash equivalents,  accounts receivable,  accounts payable,  debentures
and notes  payable  are  carried at cost,  which  approximates  their fair value
because of the short-term maturity of these instruments.

Statement of Financial  Accounting  Standards  ('SFAS') No. 133,  accounting for
derivative  instruments  and hedging  activities,  was newly issued in June 1998
with an effective date for fiscal years  beginning after June 15, 2000. SFAS No.
133 requires  that all  derivative  financial  instruments  be recognized in the
financial  statements  and measured at fair value  regardless  of the purpose or
intent for holding  them.  The Company has not adopted SFAS No. 133 but does not
believe that there will be a material effect on the financial statements.

PROPERTY AND EQUIPMENT - Property and equipment are stated at cost. Depreciation
is recorded on the double  declining  method over the estimated  useful lives of
the related assets.  The Company  depreciated  furniture and equipment over five
years. Leasehold improvements are capitalized and amortized on the straight-line
basis  over  the  shorter  of  their  useful  life  or the  term  of the  lease.
Maintenance and repairs are expensed as incurred.  When property or equipment is
retired or otherwise disposed of, related costs and accumulated depreciation are
removed  from  the  accounts  and any  resulting  gain or  loss is  included  in
operations.

INTANGIBLES - Intangible assets are amortized using the straight-line method and
consists of the following:

TYPE OF INTANGIBLE                          AMORT. PERIOD

Goodwill                                    3 years
Patents and Trademarks                      5 years
Convenant not to compete                    3 years
Domain names                                5 years
Acquired websites                           2 years

USE OF ESTIMATES - The  preparation of financial  statements in accordance  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.

STOCK-BASED  COMPENSATION - Stock-based  compensation  is recognized  using the
intrinsic value method prescribed in Accounting Principles Board ('APB') Opinion
No. 25, accounting for stock issued to employees,  and related  interpretations.
Accordingly,  compensation  expense for stock options is measured as the excess,
if any, of the fair value of the  Company's  stock at the date of the grant over
the amount  over the  amount an  employee  must pay to acquire  the stock and is
amortized  over the vesting  period.  The  Company  has  adopted the  disclosure
provisions  of SFAS No. 123,  ACCOUNTING  FOR  STOCK-BASED  COMPENSATION,  which
requires the Company to disclose the pro forma  effects on earnings and earnings
per share as if SFAS No. 123 had been adopted.

COMPREHENSIVE  INCOME - The Company has adopted the  provisions of SFAS No. 130,
reporting comprehensive income. SFAS No. 130 establishes standards for reporting
and  presenting  comprehensive  income  and  its  components  in  the  financial
statements.  Comprehensive income includes all changes in equity during a period
except for those resulting from investments by and  distributions to owners.  To
date, no elements of income exist other than net loss.

SEGMENTS - The Company has adopted the  provisions of SFAS No. 131,  disclosures
about  segments  of  an  enterprise  and  related  information.   SFAS  No.  131
establishes  standards  for  companies  to report  information  about  operating
segments in annual  financial  statements.  It also  establishes  standards  for
related  disclosures  about  products and services,  geographic  areas and major
customers.  The  Company  did not have  revenue  in 1999 or 2000,  therefore  no
disclosure is made.


3.       EQUITY AND DEBT TRANSACTIONS

On March 13, 2000 the Company  completed a private  placement of a one year, 10%
Subordinated  Convertible  Debenture in the  principal  amount of $500,000.  The
debenture is convertible  into shares of Common Stock of the Company at the rate
of $7.00 per share and may be redeemed at any time by the Company by the payment
of all outstanding  principal and accrued  interest.  The proceeds were used for
general corporate purposes and funding ongoing product development.

In addition,  during the first and second  quarters of 2000 in connection with a
Common  Stock  offering,  the Company  received and  accepted  subscriptions  to
purchase an aggregate  of 826,660  shares of its Common Stock at $6.00 per share
(the 'Shares'), with warrants attached which allowed for the purchase of 413,330
additional shares at an exercise price of $0.01 per share (the 'Warrants').  The
Warrants are immediately  exercisable.  For the year ended December 31, 2000 the
Company  had  received  an  aggregate  of  $4,963,878  in  connection  with such
placement  as payment in full for 826,660 of the Shares and the  exercise  price
for  413,330  of the  Warrants,  which  were  exercised  at $0.01 per share upon
issuance.  The  Company  paid a  placement  fee  of  $500,000  to its  financial
consultants in relation to the offering.

On March 24, 2000 the Company  entered into a joint  venture  agreement  with an
investor to create an Australian  corporation to  distribute,  market and sell a
localized  version of the  TVemail System in Australia  and New  Zealand.  The
Company will have a 50% equity  interest  but will hold a majority  representing
voting control. The terms of the agreement require a $250,000 investment in such
entity by the Company.

On May 18, 2000 the Company  entered into a joint venture  agreement with Sienna
Invest Limited to create a British Virgin Islands  corporation to seek strategic
opportunities and enter into business relationships to market and distribute the
TVemail System  throughout  parts of Europe,  the Middle East and North Africa.
Pursuant  to the terms of the joint  venture  agreement  each party  contributed
$500,000 in  consideration  for a 50%  ownership  interest in the jointly  owned
entity. The company uses the equity method of accounting. The Company's share of
loss in eNote  International,  a joint venture, is based on an estimate of eNote
International's  financial  statements  for the year ended  December  31,  2000.
Actual  financial  statements  were not made  available  to the Company by eNote
International prior to the date of this filing.

On August 17, 2000, the Company borrowed  $250,000 from Friedlander  pursuant to
an 8% Secured  Convertible Note originally due December 2, 2000 and subsequently
extended to December 31, 2001 and convertible  into Common Stock at the ratio of
$2.50 of  principal  for each share of Common  Stock.  The Company also issued a
Warrant to acquire 2,000,000 shares of Common Stock of the Company at a price of
$2.50 per share,  subsequently  decreased  to $.18 per share,  at any time on or
prior to August 17, 2002, subsequently extended to August 17, 2003.

On August 31, 2000, the Company borrowed  $250,000 from eNote  International.com
Ltd.  pursuant  to an 8%  Secured  Convertible  Note due  December  2,  2000 and
convertible  into Common Stock at the ratio of $2.50 of principal for each share
of Common Stock. The Company is currently in default in its payment  obligations
to eNote  International.com  Ltd pursuant to the terms of this Note. The Company
also issued a Warrant to acquire 2,000,000 shares of Common Stock of the Company
at a price of $2.50 per share at any time on or prior to August 31, 2002.

On September 11, 2000, the Company borrowed  $100,000 from Friedlander  pursuant
to  an  8%  Secured  Convertible  Note  originally  due  December  2,  2000  and
subsequently  extended to December 31, 2001 and convertible into Common Stock at
the ratio of $2.50 of principal for each share of Common Stock. The Company also
issued a Warrant to acquire  800,000  shares of Common Stock at a price of $2.50
per share,  subsequently decreased to $.18 per share, at any time on or prior to
September 11, 2002, subsequently extended to September 11, 2003.

On September 14, 2000, the Company borrowed  $150,000 from Friedlander  pursuant
to an 8% Secured Note originally due October 14, 2000 and subsequently  extended
to December 31, 2001 and secured by all the Company's inventory.

On September 28, 2000, the Company borrowed  $150,000 from Friedlander  pursuant
to an 8% Secured Note originally due October 14, 2000 and subsequently  extended
to December 31, 2001 and secured by all the Company's inventory.

On October 12, 2000, the Company borrowed $150,000 from Friedlander  pursuant to
an 8%  Secured  Convertible  Note  due  originally  due  December  2,  2000  and
subsequently  extended to December 31, 2001 and convertible into Common Stock at
the ratio of $1.50 of principal for each share of Common Stock. The Company also
issued a Warrant to acquire 2,000,000 shares of Common Stock at a price of $1.50
per share,  subsequently decreased to $.18 per share, at any time on or prior to
October 12, 2002, subsequently extended to October 12, 2003.

On October 26, 2000, the Company borrowed $150,000 from Friedlander  pursuant to
an 8% Secured  Convertible Note originally due December 2, 2000 and subsequently
extended to December 31, 2001 and convertible  into Common Stock at the ratio of
$1.00 of  principal  for each share of Common  Stock.  The Company also issued a
Warrant  to  acquire  3,000,000  shares of Common  Stock at a price of $1.00 per
share,  subsequently  decreased  to $.18 per  share,  at any time on or prior to
October 26, 2002, subsequently extended to October 26, 2003.

On November 9, 2000, the Company borrowed $100,000 from Friedlander  pursuant to
an 8% Secured  Convertible Note originally due December 2, 2000 and subsequently
extended to December 31, 2001 and convertible  into Common Stock at the ratio of
$0.75 of  principal  for each share of Common  Stock.  The Company also issued a
Warrant  to  acquire  2,666,667  shares of Common  Stock at a price of $0.75 per
share,  subsequently  decreased  to $.18 per  share,  at any time on or prior to
November 9, 2002, subsequently extended to November 3, 2003.

On November 22, 2000, the Company borrowed $120,000 from Friedlander pursuant to
an 8% Secured  Convertible Note originally due December 2, 2000 and subsequently
extended to December 31, 2001 and convertible  into Common Stock at the ratio of
$.50 of  principal  for each share of Common  Stock.  The Company  also issued a
Warrant  to  acquire  1,200,000  shares of  Common  Stock at a price of $.50 per
share,  subsequently  decreased  to $.18 per  share,  at any time on or prior to
November 22, 2002, subsequently extended to November 22, 2003.

On December 7, 2000, the Company borrowed $110,000 from Friedlander  pursuant to
an 8% Secured  Convertible Note due March 1, 2001 and  subsequently  extended to
December  31, 2001 and  convertible  into Common  Stock at the ratio of $.375 of
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  825,000  shares  of  Common  Stock  at a  price  of  $.375  per  share,
subsequently decreased to $.18 per share, at any time on or prior to December 7,
2003.

On December 20, 2000 the Company borrowed  $50,000 from Friedlander  pursuant to
an 8% Secured  Convertible Note due March 1, 2001 and  subsequently  extended to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.18
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  5,555,556  shares of  Common  Stock at a price of $.18 per share at any
time on or prior to December 20, 2003.

On January 4, 2001 the Company borrowed $50,000 from Friedlander  pursuant to an
8%  Secured  Convertible  Note due March 1, 2001 and  subsequently  extended  to
December 31, 2001  convertible  into Common Stock at the ratio of $.44 principal
for each share of Common  Stock.  The  Company  also issued a Warrant to acquire
2,272,727  shares of Common Stock at a price of $.44 per share at any time on or
prior to January 4, 2004.

On January 19, 2001 the Company borrowed $44,000 from Friedlander pursuant to an
8%  Secured  Convertible  Note due March 1, 2001 and  subsequently  extended  to
December 31, 2001  convertible  into Common Stock at the ratio of $.31 principal
for each share of Common  Stock.  The  Company  also issued a Warrant to acquire
2,816,000  shares of Common Stock at a price of $.31 per share at any time on or
prior to January 19, 2004.

On February 2, 2001 the Company borrowed $41,000 from Friedlander pursuant to an
8%  Secured  Convertible  Note due March 1, 2001 and  subsequently  extended  to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.28
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  2,928,571  shares of  Common  Stock at a price of $.28 per share at any
time on or prior to February 2, 2004.

On February 15, 2001 the Company borrowed  $46,000 from Friedlander  pursuant to
an 8% Secured  Convertible Note due March 1, 2001 and  subsequently  extended to
December 31, 2001  convertible  into Common Stock at the ratio of $.31 principal
for each share of Common  Stock.  The  Company  also issued a Warrant to acquire
2,967,742  shares of Common Stock at a price of $.31 per share at any time on or
prior to February 15, 2004.

On March 1, 2001 the Company borrowed $38,000 from Friedlander pursuant to an 8%
Secured Convertible Note due July 1, 2001 and subsequently  extended to December
31, 2001  convertible  into Common Stock at the ratio of $.18 principal for each
share of Common  Stock.  The Company also issued a Warrant to acquire  4,222,222
shares of  Common  Stock at a price of $.18 per share at any time on or prior to
March 1, 2004.

On March 15, 2001 the Company borrowed  $37,000 from Friedlander  pursuant to an
8%  Secured  Convertible  Note due July 1,  2001 and  subsequently  extended  to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.16
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  4,625,000  shares of  Common  Stock at a price of $.16 per share at any
time on or prior to March 15, 2004.

On March 29, 2001 the Company borrowed  $21,100 from Friedlander  pursuant to an
8% Secured  Convertible  Note due March 29,  2001 and  subsequently  extended to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.16
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  2,637,500  shares of  Common  Stock at a price of $.16 per share at any
time on or prior to March 29, 2004.

On April 12, 2001 the Company borrowed  $40,000 from Friedlander  pursuant to an
8%  Secured  Convertible  Note due July 1,  2001 and  subsequently  extended  to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.08
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  10,000,000  shares of Common  Stock at a price of $.08 per share at any
time on or prior to April 12, 2004.

On April 26, 2001 the Company borrowed  $43,000 from Friedlander  pursuant to an
8%  Secured  Convertible  Note due July 1,  2001 and  subsequently  extended  to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.02
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  43,000,000  shares of Common  Stock at a price of $.02 per share at any
time on or prior to April 26, 2004.

On May 10, 2001 the Company borrowed $40,000 from Friedlander  pursuant to an 8%
Secured Convertible Note due July 1, 2001 and subsequently  extended to December
31, 2001 and  convertible  into Common Stock at the ratio of $.08  principal for
each  share of Common  Stock.  The  Company  also  issued a Warrant  to  acquire
10,000,000 shares of Common Stock at a price of $.08 per share at any time on or
prior to May 10, 2004.

On May 24, 2001 the Company borrowed $23,000 from Friedlander  pursuant to an 8%
Secured Convertible Note due July 1, 2001 and subsequently  extended to December
31, 2001 and  convertible  into Common Stock at the ratio of $.08  principal for
each  share of Common  Stock.  The  Company  also  issued a Warrant  to  acquire
5,750,000  shares of Common Stock at a price of $.08 per share at any time on or
prior to May 24, 2004.

On June 7, 2001 the Company borrowed $40,000 from Friedlander  pursuant to an 8%
Secured Convertible Note due July 1, 2001 and subsequently  extended to December
31, 2001 and  convertible  into Common Stock at the ratio of $.08  principal for
each  share of Common  Stock.  The  Company  also  issued a Warrant  to  acquire
5,333,333  shares of Common Stock at a price of $.08 per share at any time on or
prior to June 7, 2004.

On June 21, 2001 the Company borrowed $40,000 from Friedlander pursuant to an 8%
Secured Convertible Note due July 1, 2001 and subsequently  extended to December
31, 2001 and  convertible  into Common Stock at the ratio of $.01  principal for
each  share of Common  Stock.  The  Company  also  issued a Warrant  to  acquire
80,000,000 shares of Common Stock at a price of $.01 per share at any time on or
prior to June 21, 2004.

On July 5, 2001 the Company borrowed $40,000 from Friedlander  pursuant to an 8%
Secured  Convertible  Note due  December  1, 2001 and  subsequently  extended to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.05
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  16,000,000  shares of Common  Stock at a price of $.05 per share at any
time on or prior to July 5, 2004.

On July 19, 2001 the Company borrowed $38,000 from Friedlander pursuant to an 8%
Secured  Convertible  Note due  December 31, 2001 and  subsequently  extended to
December  31,  2001 and  convertible  into  Common  Stock  at the  ratio of $.01
principal for each share of Common  Stock.  The Company also issued a Warrant to
acquire  76,000,000  shares of Common  Stock at a price of $.01 per share at any
time on or prior to July 19, 2004.

On August 2, 2001 the Company borrowed  $38,000 from Friedlander  pursuant to an
8% Secured  Convertible  Note due December 31, 2001 and convertible  into Common
Stock at the ratio of $.01 principal for each share of Common Stock. The Company
also issued a Warrant to acquire 76,000,000 shares of Common Stock at a price of
$.01 per share at any time on or prior to August 2, 2004.

On August 16, 2001 the Company borrowed $30,000 from Friedlander  pursuant to an
8% Secured  Convertible  Note due December 31, 2001 and convertible  into Common
Stock at the ratio of $.05 principal for each share of Common Stock. The Company
also issued a Warrant to acquire 12,000,000 shares of Common Stock at a price of
$.05 per share at any time on or prior to August 16, 2004.

On September 5, 2001 the Company borrowed  $20,000 from Friedlander  pursuant to
an 8% Secured Convertible Note due December 31, 2001 and convertible into Common
Stock at the ratio of $.01 principal for each share of Common Stock. The Company
also issued a Warrant to acquire 40,000,000 shares of Common Stock at a price of
$.01 per share at any time on or prior to September 5, 2004.

On September 13, 2001 the Company borrowed $30,000 from Friedlander  pursuant to
an 8% Secured Convertible Note due December 31, 2001 and convertible into Common
Stock at the ratio of $.01 principal for each share of Common Stock. The Company
also issued a Warrant to acquire 60,000,000 shares of Common Stock at a price of
$.01 per share at any time on or prior to September 13, 2004.

On September 28, 2001 the Company borrowed $15,000 from Friedlander  pursuant to
an 8% Secured Convertible Note due December 31, 2001 and convertible into Common
Stock at the ratio of $.01 principal for each share of Common Stock. The Company
also issued a Warrant to acquire 30,000,000 shares of Common Stock at a price of
$.01 per share at any time on or prior to September 28, 2004.

4.       CAPITAL LEASES

During September 2000, the company received  computer  equipment under a capital
lease  expiring  September  2003. The assets and  liabilities  under the capital
lease  are  recorded  at the lower of the  present  value of the  minimum  lease
payments of the  assets.  The assets  will be  depreciated  over the lease term.
Lease payments were to begin in October 2000, however,  the Company has received
an  extension  of the lease  commencement  in return for payment of  $2500/month
through August of 2001, at which time further  negotiations  between the Company
and the  lease  holder  will  result  in new  lease  terms.  There  has  been no
depreciation recorded for the year ended December 31, 2000.

5.       TREASURY STOCK

On September  26, 2000,  the Company  entered  into a  transaction  with John R.
Varsames('Varsames'),  its former President and Chief Executive  Officer whereby
Varsames transferred  6,680,000 shares of Common Stock in exchange for a general
release by the Company and certain of its significant shareholders of all claims
against Mr.  Varsames,  certain computer  hardware,  the assets of the Company's
subsidiary  WebATM,  Inc. and the Company's  equity  interests in its subsidiary
SolutionNet Ltd.

6.       STOCK OPTIONS AND EMPLOYEE BENEFIT PLAN

On April 9, 1997, the Company established a Stock Option Plan (the '1997 Plan').
The  plan  provides  for the  grant of (i)  non-qualified  stock  options,  (ii)
incentive  stock  options,  (iii)  shares of  restricted  stock,  (iv) shares of
phantom  stock,  and (v) stock bonuses  (collectively  'Incentive  Awards').  In
addition,  the  Incentive  Stock Plan permits the grant of cash bonuses  payable
when a  participant  is required  to  recognize  income for  federal  income tax
purposes in  connection  with the vesting of shares of  restricted  stock or the
grant of a stock bonus. Full-time employees of the Company and its subsidiaries,
including  officers  and  directors,  will be  eligible  to  participate  in the
Incentive Stock Plan. The Incentive Stock Plan is administered by a Compensation
Committee of the Board of Directors (the 'Committee'), which will consist of two
or more  directors,  each of whom shall be a  'disinterested  person' within the
meaning  of Rule  16b-3 (c ) (2)  under  Section  16 of the  Exchange  Act.  The
Committee will determine which employees receive grants of Incentive Awards, the
type of Incentive Awards and bonuses granted and the number of shares subject to
each Incentive  Award.  The Incentive Stock Plan does not prescribe any specific
factors to be  considered  by the  Committee  in  determining  who is to receive
Incentive  Awards  and the  amount of such  awards.  The total  number of shares
available for grants can not exceed 1% of the total number of shares outstanding
on the date of the grant with certain limited exceptions. Options outstanding at
December  31, 2000 have  exercise  prices  between  $.88 and $3.88.  All options
outstanding  vested  fully with the change of control that  occurred  during the
year.

The following table summarizes common stock option plan activity:
                                                                Weighted Average
                                                  Options         Exercise Price

Outstanding at December 31, 1999                  ---0---
         Granted                                   95,226            $1.18
         Canceled                                 ---0---
         Exercised                                ---0---
Outstanding at December 31, 2000                   95,226            $1.18
         Granted
         Canceled
         Exercised
                                                  224,451
                                                  =======            =====



EMPLOYEE  BENEFIT  PLANS - On July 19, 1999 the Board of Directors  approved the
Company's  401 K plan  ('401K  Plan').  The 401K  Plan was  established  for the
purpose of providing  retirement  benefits to eligible  employees  and to enable
employees  to to  supplement  their  retirement  by election to have the Company
contribute  amounts to the 401K Plan in lieu of  payments to such  employees  in
cash.  The 401K Plan is intended to satisfy the  provisions of section 401(K) of
the  Internal  Revenue  Code of 1986,  as amended.  During  2000,  there were no
contributions made by the Company.

7.       NET LOSS PER COMMON SHARE

Net loss per common  share for the twelve  months  ended  December  31, 2000 and
based on the  weighted  average  number of shares  of Common  Stock  outstanding
during the period. Potentially dilutive securities include options, warrants and
convertible  preferred stock; however, such securities have not been included in
the calculations of loss per common share as their effect would be antidilutive.
Therefore, diluted net loss per share is not presented.

8.       PROPERTY AND EQUIPMENT

Property and equipment, net at December 31, 2000 and 1999 consists of the
following:

                                                 2000                   1999
Computer equipment and software                $529,439                $209,921
Research equipment                              192,513                 119,915
Office equipment                                275,845                 262,543
Leasehold improvement                           152,315                 121,185
                                              1,150,112                 713,564
Less accumulated depreciation and
      amortization                              594,060                   98,023
                                              ---------                ---------

Property and equipment, net                    $556,052                 $615,541



Depreciation and amortization  expense for the years ended December 31, 2000 and
1999 were $661,138 and $76,615, respectively.

9.       INTANGIBLE ASSETS

As of  December  31,  2000  and  1999,  intangible  assets,  net of  accumulated
amortization, consists of the following:


                                                 2000                    1999
Goodwill                                       $245,875                $245,875
Patents and trademarks                           53,359                  81,148
Domain names                                     11,246                  16,500
Covenants not to compete                              0                  20,000
Website                                               0                  50,000
Product development costs                        40,520                        0
                                                351,001                  413,523
Less accumulated amortization                   118,550                   37,609
                                               --------                 --------

Intangible assets, net                         $232,451                 $375,914


10.      LEASING ARRANGEMENTS

     We currently  sublease  approximately  2,000 square feet of office space in
Williston,  Vermont from Hanley-Wood, LLC pursuant to a Sublease Agreement dated
as of February 26, 2001,  which provides for rental payments of $2,305 per moth.
As of April 2001, either party may terminate the Sublease Agreement upon 30 days
prior  written  notice to the other.  All other  lease  agreements  to which the
Company was a party have been assigned or terminated.