<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB


 (MARK ONE)
[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
                    For the fiscal year ended June 30, 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: 0-29050

                            TOMORROW'S MORNING, INC.
                            ------------------------
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

          CALIFORNIA                                             95-4379805
(STATE OR OTHER JURISDICTION OF                               (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)

        269 SOUTH BEVERLY DRIVE, BEVERLY HILLS, CALIFORNIA   90212
           (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)        (ZIP CODE)

                    ISSUER'S TELEPHONE NUMBER: (310) 440-2778

         SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
       Title of Each Class      Name of Each Exchange On Which Registered
       -------------------      -----------------------------------------
                None                              None

         SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
                           Common Stock, no par value
                           --------------------------
                                (TITLE OF CLASS)


Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
                    Yes      [X]                No [ ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of issuer'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. [ ]

Issuer's revenues for its most recent fiscal year (ended June 30, 2000) were
$-0-.

The aggregate market value of the 2,656,584 shares of common stock held by
non-affiliates of the issuer, based upon the average bid and asked price of such
stock on October 5, 2000, as reported by the OTC Bulletin Board, was
approximately $913,000. While shares of Common Stock held by each officer,
director and person who owns 5% or more of the outstanding Common Stock have
been excluded from such calculation, such determination of affiliate status is
not necessarily conclusive for other purposes. The number of outstanding shares
of the issuer's Common Stock on October 5, 2000 was 5,095,372.

DOCUMENTS INCORPORATED BY REFERENCE                           NONE
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):  [ ] YES    [X] NO



<PAGE>

                                     PART I

Item 1. Description of Business

THE FOLLOWING DISCUSSION CONTAINS TREND INFORMATION AND OTHER FORWARD-LOOKING
STATEMENTS THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THE ACTUAL RESULTS
OF TOMORROW'S MORNING, INC. (THE "COMPANY") COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY INCLUDE, BUT ARE NOT LIMITED TO, THOSE IDENTIFIED
IN "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - OVERVIEW".

COMPANY BACKGROUND AND PHILOSOPHY. The Company was founded to develop and
publish a weekly newspaper for children ages 8 to 14 called TOMORROW'S MORNING
(the "Newspaper") and engage in various other publishing, video, electronic,
multimedia and merchandising lines based on the Newspaper. The Company's
philosophy can be summarized in the fusion of three concepts: (i) doing well by
doing good, (ii) developing multiple, synergistic sales through existing and
newly developing marketing channels and (iii) addressing a major market
need/opportunity. The Company's goal is to enhance the education and world-view
of children in the United States while simultaneously building a profitable,
multi-product business.

The Company believes that there is a clear need for a children's weekly
newspaper and innovative multimedia products in the United States. Given the
evidence that American children are not very well-informed or knowledgeable
about the world, and that newspaper readership is dramatically declining
(especially among the younger age groups), the Newspaper is based on the premise
that an independent, authoritative paper written for children can make a
difference. In June 1990, the Times Mirror Center for the People and the Press
published a survey entitled "The American Media: Who Reads, Who Watches, Who
Listens, Who Cares." Its various studies revealed that young Americans, 18 to
30, know less and care less about news and public affairs than any other
generation of Americans in the past 50 years. By getting to children earlier
(when they're 8 to 14), the Newspaper can help to change that.

The Company has also studied a substantial body of research on moral development
during preadolescence. Since news and current affairs are absent or remote in
the lives of most 8- to 14-year olds, connections must be made to their personal
concerns. In the Company's opinion, children in this age group begin to develop
communal attitudes of empathy and reciprocity, and providing news information at
this stage can truly create a sense of shared experience. As they move from
self-absorption to caring and compassion for others, the Newspaper is there as a
conduit for them to experience with other children. Given the increase in a
child's cognitive capabilities during this developmental period, the Newspaper
and its proposed family of products are in a position to not only establish
"brand loyalty," but also to help children really learn about the world.

The Company believes the main reason for the current growth in children's
magazines is the growing number of well-educated parents and grandparents who
want to give every advantage to their children and grandchildren. As a result,
the Newspaper and the product lines to be derived from it are designed to fill
that need. At the same time, by promoting the Newspaper and its planned CD-ROM
spin-offs as an interactive enterprise between parent and child, the Company can
address what is considered by teachers to be the most serious school problem:
parents' low involvement in their children's education.

The Company believes that the Newspaper, its READING PARTNERS PROGRAM
Adopt-a-School Program, its SCOOP(TM) journalism game now being developed, its
potential TV show(s), its on-line interactive publishing activities, and its
proposed ancillary publishing (such as supplemental educational materials,
calendars, posters, playing cards and games), as described below, will also
address what it believes to be another fundamental need in the marketplace: that
society needs children who are socially competent, who know how to learn and
have confidence in their learning ability.

The Company was incorporated in California in June 1992. The Company's principal
executive office is located at 269 South Beverly Drive, Beverly Hills,
California 90212, and its telephone number is (310) 440-2778.

                                        2


<PAGE>

PRIOR AND DEVELOPING BUSINESS.

NEWSPAPER PUBLICATION. Due to a lack of funds, with the exception of two issues
which were published in mid-May 1998, the Company stopped publishing the
Newspaper in paper format on December 22, 1997, although electronic publication
continued at the Company's Web site until March 14, 1998. Founded in 1992, the
Newspaper was a weekly four-page, full-color home/school delivery newspaper
published expressly for children between 8- and 14-years old. Recognizing what
it believes to be a previously unaddressed niche, the Newspaper provided the
news to its targeted audience in a unique fashion, at once serious and
informative, fun, "cool" and irreverent. The Newspaper's unique "voice" and
format have been well- received, and it has been the subject of articles in THE
NEW YORK TIMES, LOS ANGELES TIMES, ROCKY MOUNTAIN NEWS, WASHINGTON POST,
CLEVELAND PLAIN DEALER, CHILD, PARENTING, FAMILY LIFE, SCHOOL LIBRARY JOURNAL,
THE DALLAS MORNING NEWS and John Naisbitt's TREND LETTER. It also received
national recognition in the Columbia University MEDIA STUDIES JOURNAL, and its
graphic format was cited in DESIGNING FOR CHILDREN, by Steven Heller, senior art
director of THE NEW YORK TIMES. In addition, the "Kidstocks" section of the
Newspaper received "Distinguished Achievement Awards" for 1996 and 1997 from the
Educational Press Association of America, an independent association of some
2,500 educational periodicals and interested individuals that promotes the
interests of educational communication. The Newspaper was also the winner of a
1996 "Parents' Choice Group Magazine Award" from PARENTS' CHOICE, a non-profit
consumer guide which annually, through groups of parents, children, teachers,
librarians, psychologists with advice from pediatricians, safety experts and
others who care about children, selects the year's top children's toys, books,
videos, computer programs, audios, magazines, TV programs and rock/pop music.

The Newspaper had formed an eight-person Advisory Board composed of the
following persons:

         DR. GERALD LESSER - Bigelow Professor of Education and Developmental
         Psychology, Harvard University; Chairman of the Board of Advisors for
         the Children's Television Workshop.

         PEGGY CHARREN - Founder and former president of Action for Children's
         Television (ACT); Visiting Scholar in Education at Harvard University's
         Graduate School of Education.

         DR. CAROL D. BERKOWITZ - Director, Pediatric Clinic and Group Practice,
         Harbor/ UCLA Medical Center and Professor of Clinical Pediatrics, UCLA
         School of Medicine.

         GARRY MARSHALL - Writer, director.

         SUSIE BUFFETT - Activist for children's education opportunities.

         BEATRICE D'IRUBE - Founder and Publisher of Le Journal des Enfants.

         GEORGE FOREMAN - World Heavyweight Champ, actor, children's rights
         advocate.

         HECTOR ELIZONDO - Actor, human rights activist.

>From time to time, the Newspaper has called upon members of the Advisory Board
for counsel in their specific areas of expertise and experience.

Using the Macintosh Desktop Publishing system, the Newspaper was written and
designed weekly at the Company's offices in Los Angeles. Its weekly edition was
printed in Silver Spring, Maryland and its biweekly classroom edition was
printed in various locations. The editorial and art of each issue of the
Newspaper, plus special features for on-line readers, remain available at the
Company's site on the World Wide Web (http://www.morning.com). The Company has
also published "special editions" of the Newspaper. "Special editions" of the
Newspaper were either editions of the regular paper, but emblazoned with a
client company's logo (i.e., "Brought to you by . . ."), or, more generally, a
single-theme or topic "insert" of two to four pages, underwritten by a client
company or organization, in either case with distribution through the Company's
channels and/or the client's own distribution channels. In the past, the Company
has produced special editions for Patagonia, The Body Shop and MCA/Universal
Home Video.

The Company contracted with Starbright Graphics, Inc. (a shareholder of the
Company) as its agent for printing both the home and classroom editions of the
Newspaper, plus ancillary materials such as the classroom teacher's guide,
promotional flyers, subscriber correspondence and subscription cards. The home
and classroom editions were produced in the same format, but on different
schedules. Material published in the home edition was selected for inclusion in
the classroom edition, which consisted of a series of 16 issues. The terms of
the Company's relationship with Starbright Graphics, Inc. specify that
Starbright Graphics, Inc. has a right of first refusal to provide printing
services for the Company for so long as it is a shareholder.

                                        3

<PAGE>

The Newspaper's paid circulation has been a blend of home and school
subscriptions. The Newspaper has been sold through home subscriptions at the
rate of $16.17 for a 33-week "introductory" subscription and $24.95 for a full
year subscription. School subscriptions were $2.90 per student for 16 issues
during the September to June school year. Subscriptions have also been sold
through the Company's READING PARTNERS PROGRAM, which established school or
class sponsorships (at the rate of $350 per class for a 40-week school year,
plus teacher's guide) whereby an individual, group or company "adopted" a class
or school and underwrote the cost of delivery of the Newspaper for the school
year. Starting from zero in 1992, at its peak, the Company had approximately
400,000 subscribers. As of its last publication, the Newspaper was being
distributed to 100,000 subscribers in all 50 states, plus Canada, Mexico and
abroad. At that time, over 90% of the Newspaper's circulation was to schools.
Sales of the Newspaper and certain custom-published Newspaper inserts have been
essentially the sole source of the Company's revenues since inception. To the
extent that sales of the Newspaper have been directed at schools, such business
was seasonal, with most sales taking place between September and June.
Seasonality was not believed to be a factor with non-school sales.

Bloomberg Financial Markets, a leading financial news network and publisher
("Bloomberg"), sponsored the Newspaper's "Kidstocks" column in print and
on-line, with reciprocal links between Bloomberg's and the Company's websites.
The Newspaper also featured a special Internet column by Yahooligans!(TM),
possibly the largest, most well-known and most-visited directory of children's
resources on the World Wide Web, in both the print and on-line versions of the
Newspaper.

At this time, the Company plans to resume publication of the Newspaper at such
time, if any, as it obtains the necessary funding. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

BUSINESS IN DEVELOPMENT. The Company has been developing a CD-ROM journalism
game called SCOOP(TM), an innovative learning system that will be interactive
and synergistic with the Newspaper and the Company's other potential products,
including on-line services, books and TV show(s). SCOOP(TM) calls upon its
players to take on progressively more complex investigative reporting
assignments, as they move up the ladder of an imaginary newspaper - from cub
reporter to city desk to foreign bureau to Pulitzer Prize. The game is being
created under the direction of Robit Hairman, who produced "The Brief History of
Time" CD-ROM. Ben Bradlee, formerly Editor of THE WASHINGTON POST, plays the
"Editor" in SCOOP(TM). Within a personal computer screen environment, players
navigate, investigate, interview, conduct research and file stories using a
natural language engine that will allow the players to "speak" with the
characters. The game will run on either PC or Macintosh platforms, and is
designed to interact via the Internet with the Company's website and server for
research, content updates and publishing of stories. It is designed to be
synergistic with the Newspaper in the sense that it will use the TOMORROW'S
MORNING theme as its context, share content and formatting with the Newspaper,
and will be aimed at the same audience. As of September 1, 1999, the game has
been designed, most of the stories have been outlined (and some are largely
complete), the "look and feel" has been created, 3-D environments have been
developed, a demonstration program has been completed, original characters have
been created and Ben Bradlee has been filmed in the "Editor" role. However,
development of the game has been suspended until additional funds become
available. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

POTENTIAL FUTURE PRODUCTS AND SERVICES. The Company has established its own site
on the World Wide Web, where it has electronically posted the Newspaper and
where it intends to provide a whole range of activities, services, games,
features, content and interactive elements if and when sufficient funding
becomes available. The Company plans to use its website to offer an archive of
articles, artwork and features from past Newspaper issues, plus supplemental
resources, accessed via a "search engine" according to topic and keywords. In
addition, it is planning to enable children to engage in real-time games
together across the Internet, collaborate on creative story-writing, post local
news stories, view and contribute to an on-line art gallery, create and send
electronic postcards and animations to each other, and receive automated e-mail
greetings on special occasions. The Company also plans to host special on-line
interview sessions with celebrities and journalists. The website may also
feature a TOMORROW'S MORNING on-line store, where children and parents can order
subscriptions to the Newspaper, other products created by the Company and
additional products.

Additional products and revenue-generating items may include follow-on
CD-ROM/Internet games (eventually comprising a family of products based on the
general approach of the first, but specializing in specific subject areas),
books, additional TV shows (such as a specific "news to kids" show), sponsored
one-minute interstitial news "flashes" televised between shows on Saturday
mornings, licensing of "TOMORROW'S MORNING" characters, and a series of
corporate-sponsored Newspaper inserts with varied distribution channels and
target audiences. Based on an assessment of demand, the Company may also create
a separate version of the Newspaper for the lower elementary age group
(tentatively named "TOMORROW'S DAWN").

The foregoing notwithstanding, there can be no assurance that any additional
products or services will be developed.

                                        4


<PAGE>

MARKETING STRATEGY. The Company has marketed the Newspaper through advertising,
telemarketing and direct mail solicitations to school teachers in the upper
elementary and middle school grades. It also markets to corporations and
foundations with an interest in sponsoring distribution of the Newspaper to
schools, and utilizes catalog agents for public library sales. For sales of home
subscriptions, it has marketed through American Express credit card magazine
offers, READER'S DIGEST school marketing programs, its website, and public
relations and referrals. If and when publication resumes, the Company intends to
continue to aggressively market the Newspaper to various target audiences
through a number of means. The Company also may in the future launch targeted
direct mail and telemarketing campaigns to venues where children gather, such as
family-practice doctors' offices, orthodontists' and dentists' offices,
pediatric wards, and after-school "day-care" programs. It may also in the future
create differentiated "home" and "school" editions, with the home editions
marketed via direct mail to targeted demographic areas, and home or school
editions marketed to "home schoolers."

The Company has, from time to time, received sponsorship for the Newspaper from
major corporations, individuals and foundations. The Company will continue to
seek to develop strategic alliances with a number of high-profile companies (in
various industries), foundations and individuals around the country, based in
many cases on long-standing relationships with the Company that have been
maturing over the course of the Company's operating history. Such alliances may
be collaborative, with both parties underwriting the cost and sharing the
revenues from activities jointly entered into, such as the creation of new
supplemental educational materials or a CD-ROM game. They may also be
contractual, as with publishing and distribution projects (such as the Company
has done for Patagonia and MCA/Universal Home Video), with the Company being
paid a fee for creation, printing and distribution. In addition, these alliances
may be in the form of sponsorships, whereby one or several companies, or a
combination of companies and non-profit organizations, sponsor delivery of the
Newspaper to schools, such as is currently being undertaken by Amblin/DreamWorks
SKG for schools in selected areas around the country. There can, however, be no
assurance that any such alliances will continue to be developed.

If and when adequate funding becomes available, the Company plans to add staff
and develop and launch additional, synergistic products (as described above),
with the objective of achieving multiple potential sales to each of its
customers.

The Company may also engage in discussions with major technology and
entertainment companies to explore development and marketing synergies for
SCOOP(TM). When development is completed, the Company will seek to market this
product through various channels, including retail distribution through major
national outlets, mail order companies and in a demo version bundled with other
products.

Where opportunities and resources allow, the Company may consider expansion
through acquisition of appropriate products and/or companies in related markets
in order to accelerate growth and/or secure its competitive position.

MATERIAL CONTRACTS AND SUPPLIERS. The Newspaper's circulation management,
subscriber "fulfillment" (i.e., preparation of mailing labels, order processing,
etc.) and billing have been provided by Starbright Graphics, Inc. in New York
and Specialized Fulfillment Services in Ohio. Such services have been terminated
due to lack of payment and/or termination of Newspaper publication.

During its publication, the Newspaper was written and designed weekly at the
Company's offices. The home delivery editions were being printed at Presstar in
Silver Spring, Maryland, and the classroom editions were printed at Nielsen Ohio
Valley Litho, in Florence, Kentucky, with oversight by Starbright Graphics, Inc.
as the Company's agent (which has a right of first refusal to provide printing
services for the Company for so long as it is a shareholder of the Company). The
materials used to print the Newspaper (paper and ink) are readily available from
a variety of sources, with the only variable being price, which can be volatile
as to paper.

The SCOOP(TM) journalism game, is being developed for the Company by Robit
Hairman under a Software Development Agreement. Upon completion of the game, Mr.
Hairman will receive a 33% royalty on "product revenues" (as defined in the
agreement) after reimbursement of Company costs, repayment of capital investment
and a priority payment to the Company and/or other parties providing the capital
investment. Should the Company desire to develop a new version of the game, Mr.
Hairman has a right of first refusal to provide his full-time development
services on terms no less favorable than in the original agreement. Should Mr.
Hairman desire not to participate in the development of a new version of the
game (as defined in the agreement), he will receive royalties on that version at
one-half the rate he was receiving on the preceding version. In no event will
Mr. Hairman receive royalties with respect to the game if he fails to provide
maintenance services as specified in the agreement for three years after its
completion. Under the terms of the agreement, the Company can terminate Mr.

                                        5


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Hairman's services "for cause" without further obligation to him. The agreement
can also be terminated by the Company without "cause" prior to completion of a
"Beta" testing version, but only if game development is discontinued altogether
and Mr. Hairman is paid for work performed up to the termination date. As
specified in the agreement, the Company owns all title and proprietary rights in
the game that are developed or created by Mr. Hairman or his subcontractors. The
principal materials and components to be used in the Company's proposed CD-ROM
title(s) include computer media, packaging and user manuals. Manufacturing
involves the duplication of computer media and user manuals, assembly of
components, sample testing the product and final packaging. The Company will
rely upon third parties to manufacture components of its CD-ROM products and
assemble completed packages in accordance with the Company's specifications. The
Company believes that there is an adequate supply of and source for the raw
materials used in such products and that multiple sources are available for
manufacturing and assembling such products.

PROPRIETARY RIGHTS, TRADEMARKS AND COPYRIGHTS. The copyright laws of the United
States and most foreign countries grant legal protection to "original works of
authorship" and provide substantial civil and criminal sanctions for
unauthorized duplication and publication of items such as the Newspaper, CD-ROM
titles, books and television shows. The Company plans to take all appropriate
measures to secure copyright protection for its products under the laws of all
applicable jurisdictions.

The Company holds registered trademarks for the name "Tomorrow's Morning" and
its logo. SCOOP(TM), NEWSFLASH(TM), KIDTERNET(TM), and BORN TO READ(TM) are also
trademarks of the Company. The domain names MORNING.COM, TOMORROWSMORNING.COM,
SCOOPGAME.COM, SCOOPVILLE.COM, BLINDJOE.COM and SCOOPCLUB.COM have been
registered with Network Solutions, Inc., the Internet domain naming authority.

COMPETITION. For the 8- to 14-year old age group comprising its target market,
the Company's principal print publishing competitors marketing direct to schools
include THE WEEKLY READER, the SCHOLASTIC group of magazines, and TIME FOR KIDS.
Those products are published by companies much larger than the Company, with
significantly greater financial, marketing and other resources. In general,
these three large publications compete "head-to-head" for subscribers and market
share.

In terms of weekly home-delivery, while there are presently no direct
competitors, growth of existing or new products may impede the Company's growth
in its target market. Indirect competitors (nearly all monthlies) competing for
sales in the home market for 8- to 14-year olds include SPORTS ILLUSTRATED FOR
KIDS (sports), NICKELODEON (general humor), NATIONAL GEOGRAPHIC WORLD, DISNEY
ADVENTURES, COBBLESTONE (literature), AMERICAN GIRL, ZILLIONS (consumer
information), and many others, covering a wide variety of subjects. While it is
unlikely that any of these will either commence weekly delivery or change to
incorporate current news, such moves could encroach on the Newspaper's potential
audience.

Despite recent high growth rates of subscribership to on-line services and
Internet service providers in general, the Company's current and pending
activities on the World Wide Web face increasing competition from the addition
of more child-oriented content providers or expansion of existing competitors
for the attention of children in the Company's target age group. In electronic
format, the Newspaper currently competes with DISNEY ADVENTURES, TIME, NATIONAL
GEOGRAPHIC WORLD and others.

Competition among CD-ROM titles is intense, and involves many large, established
companies. The technologies to (i) produce and distribute in a timely fashion
high quality time-sensitive printed material using desktop publishing techniques
and (ii) distribute and make graphic and text information accessible through
speedy and universal on-line services, have allowed for CD-ROM games with links
to interactive on-line, and on-screen, multimedia sources of content. While the
Company believes that this will give its CD-ROM game(s) a distinct competitive
advantage by being innovative as a learning system, with unique content,
multimedia synergies and marketing programs, competition for shelf space is
intense. As a result, there can be no guarantee that the Company's product(s)
will be successful in gaining prominent and sufficient shelf space in the retail
market.

Despite the need of TV networks for "FCC friendly" (i.e., quality) children's
programming, the children's TV market is intensely competitive. As a result,
there can be no guarantee that the Company will succeed in getting (and keeping)
its show(s) on the air.

At this time, it is difficult to predict the extent and nature of the
competition which will be faced by the Company's other proposed product lines
(e.g., ancillary publishing and merchandising). However, in certain of those
lines (such as merchandising) competition tends to be intense.

PERSONNEL. The Company presently has one employee, who works full-time as the
Company's sole officer. In addition, the Company has from time to time retained
various advisors and consultants.


ITEM 2. DESCRIPTION OF PROPERTY

Due to its lack of funds, the Company operates out of the home of its President.
No rent is charged for that use. At such time, if ever, as the Company obtains
sufficient funding, it is expected that it will lease office space in a suitable
location in the Los Angeles area.

ITEM 3. LEGAL PROCEEDINGS

With respect to a previously reported action by Starbright Graphics, Inc., on
April 3, 2000 the plaintiff was granted a summary judgement in the amount of
$876,992 (including interest) with respect to the Company.

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

There were no matters submitted to a vote of security holders during fiscal
2000.

                                        6


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                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

STOCK MARKET AND OTHER INFORMATION. The Company's Common Stock has been quoted
on the OTC Bulletin Board under the symbol "TOMM," since June 2, 1998. Prior to
that, beginning four days after the completion of the Company's initial public
offering in March 1997 until February 10, 1998, the Company's Common Stock was
traded on the Nasdaq SmallCap Market. Prior to the initial public offering,
there was no public trading market for the Company's equity securities.

The following table sets forth the quarterly high and low bids for the Company's
Common Stock since public trading began, with prices from March 17, 1997 to
February 10, 1998 as reported by the Nasdaq SmallCap Market and since June 2,
1998 as reported by on the OTC Bulletin Board:

           FISCAL YEAR 1999                                HIGH *         LOW *
                                                           ----           ---
           First Quarter...............................   $1.5625       $0.5625
           Second Quarter..............................   $0.625        $0.125
           Third Quarter...............................   $0.1875       $0.125
           Fourth Quarter..............................   $0.125        $0.0625


           FISCAL YEAR 2000                                HIGH *         LOW *
                                                           ----           ---
           First Quarter...............................   $0.14          $0.04
           Second Quarter..............................   $0.0625        $0.04
           Third Quarter...............................   $0.625         $0.07
           Fourth Quarter .............................   $0.375         $0.0625

-----------------
      *    These quotations reflect inter-dealer prices, without retail mark-up,
           mark-down or commission, and may not represent actual transactions.

HOLDERS OF RECORD. As of June 30, 2000, there were 51 holders of record of the
Company's Common Stock.

DIVIDENDS. The Company has never paid any cash dividends on its Common Stock. It
presently intends to retain earnings and capital for use in its business and
does not expect to pay any dividends in the foreseeable future. Any payment of
cash dividends in the future on the Common Stock will be dependent on the
Company's financial condition, results of operations, current and anticipated
cash requirements, plans for expansion, restrictions under debt obligations, as
well as other factors that the Board of Directors deems relevant.

RECENT SALES OF UNREGISTERED SECURITIES. On May 18, 2000, the Company issued
options for 34,500 shares of Common Stock to James R. Rosbe, a Company director,
as partial consideration for providing consulting services. The options have an
exercise price of $0.1275 per share and are exercisable until May 17, 2002.
Based on Mr. Rosbe's access to Company information and investment
sophistication, the options were issued in reliance on the exemption provided in
Section 4(2) of the Securities Act of 1933 because no public offering was
involved.

On May 18, 2000, the Company issued options for 44,500 shares of Common Stock to
David S. Hamilton, Company counsel, as partial consideration for providing legal
services. The options have an exercise price of $0.1275 per share and are
exercisable until May 17, 2002. Based on Mr. Hamilton's access to Company
information and investment sophistication, the options were issued in reliance
on the exemption provided in Section 4(2) of the Securities Act of 1933 because
no public offering was involved.

On June 12, 2000, the Company issued 10,000 shares of Common Stock to Steven
Raft for accounting services. Based on Mr. Raft's access to information as a
former officer of the Company and his level of investment sophistication, the
shares were issued in reliance on the exemption provided in Section 4(2) of the
Securities Act of 1933 because no public offering was involved.

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

THE FOLLOWING DISCUSSION CONTAINS TREND INFORMATION AND OTHER FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 THAT INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY INCLUDE, BUT ARE NOT LIMITED TO, THOSE IDENTIFIED
BELOW IN "OVERVIEW."

                                        7


<PAGE>

OVERVIEW. From inception in June 1992 to June 30, 2000, the Company has incurred
an aggregate of $15,759,868 in operating losses. For the fiscal year ended June
30, 2000, there were no revenues and the Company experienced a net loss of
$801,504, as compared to revenues of $3,144 and a net loss of $604,930 for the
fiscal year ended June 30, 1999. The Company continues to sustain substantial
losses, which continue to threaten its ability to continue as a going concern.
In the long run, the Company's future depends on: (i) finding a strategic
partner, (ii) the development of complementary products; (iii) completion and
successful marketing of the SCOOP(TM) journalism game; (iv) the formation of
joint-marketing alliances for corporate sponsorship of schools through the
Company's READING PARTNERS PROGRAM and/or the sale of advertising space in the
Newspaper should publication resume; (v) getting one or more television shows,
or interstitial news "flashes", on the air; and (vi) expansion into ancillary
publishing and merchandising through redirecting the Company's content and/or
licensing the Company's characters and identity. However, as discussed below in
"Liquidity and Capital Resources," because virtually all available cash has been
exhausted due to continuing losses, the Company requires an immediate infusion
of working capital to remain in operation. There can, however, be no guarantee
that the Company will be able to obtain such working capital.

RESULTS OF OPERATIONS.

YEARS ENDED JUNE 30, 2000 AND JUNE 30, 1999. There were no revenues for the
fiscal year ended June 30, 2000, compared to $3,144 for fiscal 1999. This
decrease was the result of suspended operations throughout the fiscal year.
Costs and expenses increased to $699,204 during the year ended June 30, 2000
from $512,234 for the year ended June 30, 1999. This approximately 36.5% change
was due to interest assessed on a judgement related to printing expense. See
"Item 3. Legal Proceedings."

Interest expense for fiscal 2000 was $76,225, as compared to $71,160 for fiscal
1999. This approximately 7.1% increase is attributable to increased borrowings.

For fiscal 2000, the Company experienced a net loss of $801,504, an
approximately 32.5% increase from the $604,930 net loss sustained in fiscal
1999. This change in net loss was primarily due to the factors described above
with respect to costs and expenses.

YEARS ENDED JUNE 30, 1999 AND JUNE 30, 1998. Revenues for the fiscal year ended
June 30, 1999 were $3,144, compared to $218,983 for fiscal 1998. This
approximately 99% decrease was primarily the result of final suspension of
Newspaper publication in May 1998. Costs and expenses decreased to $512,234
during the year ended June 30, 1999 from $4,431,874 for the year ended June 30,
1998. This approximately 88% change was primarily due to staff reductions and
other expense cutbacks upon suspension of Newspaper operations.

Interest expense for fiscal 1999 was $71,160, as compared to $11,460 for fiscal
1998. This approximately 620% increase is attributable to increased borrowings
after the IPO proceeds were exhausted.

For fiscal 1999, the Company experienced a net loss of $604,930, an
approximately 90% decrease from the $6,273,378 net loss sustained in fiscal
1998. This change in net loss was primarily due to the factors described above
with respect to costs and expenses, partially offset by the increase in interest
expense.

LIQUIDITY AND CAPITAL RESOURCES. To date, the Company's primary capital needs
have been to fund the development and growth of the Newspaper and the research
and development of synergistic children's media products. Since inception, sales
of the Newspaper and certain custom-published Newspaper inserts have been
essentially the sole source of Company revenue. To the extent that sales of the
Newspaper were directed at schools, such business was seasonal, with most sales
taking place between September and June. Seasonality was not believed to be a
factor with non-school sales.

As of June 30, 2000, the Company had current assets of only $46,629. As a result
of its lack of working capital, the Company has also been unable to meet its
financial obligations to its lenders and other creditors, including its landlord
and the vendor which has printed the Newspaper. In order to resume its proposed
business activities, the Company must immediately raise approximately $500,000
to $1 million in funds through private debt or equity offerings. While the
Company continues to engage in discussions with prospective financing sources,
there can be no guarantee that such funding will become available on terms
favorable to the Company or its shareholders, if at all. Until such near-term
funding is obtained, all of the Company's operations will remain at minimal
levels.

                                        8


<PAGE>

As to long-term funding requirements, the Company continues to pursue
opportunities for a private equity offering of up to $5 million. In addition,
the Company continues to investigate other approaches to obtaining long-term
operating funds while also maximizing shareholder value. To date, those
approaches have included a possible merger with the appropriate entity or a sale
of the Company or its assets. There can be no guarantee that any of the
Company's long-term funding efforts will be successful or, if successful, that
they will result in a transaction on terms favorable to the Company or its
shareholders. Even if the near-term funds described above are obtained, unless
long-term funds also become available, the Company will be required to curtail
its future operations, which would have a material adverse effect on the
Company's business, operating results and financial condition.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS. In March 1998, the American Institute
of Certified Public Accountants ("AICPA") issued Statement of Position No. 98-1,
"Accounting for Costs of Computer Software Developed or Obtained for Internal
Use" which provides guidance on accounting for the costs of computer software
developed or obtained for internal use. SOP 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. The Company does
not anticipate that the adoption of this statement will have a material effect
on its financial statements.

In April 1998, the AICPA issued SOP No. 98-5 "Reporting on the Costs of Start-Up
Activities." This standard requires companies to expense the costs of start-up
activities and organization costs as incurred. In general, SOP 98-5 is effective
for fiscal years beginning after December 15, 1998. The Company does not
anticipate that the adoption of this statement will have a material effect on
its financial statements.

In June 1998, the United States Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
effective for fiscal years beginning after June 15, 1999. The Company
anticipates that due to its limited use of derivative instruments, the adoption
of SFAS No. 133 will not have a material effect on its financial statements.

                                        9


<PAGE>

ITEM 7.    FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

Financial Statements:                                                     PAGE
                                                                          ----

      Independent Auditor's Report                                         11

      Balance Sheet                                                        12

      Statements of Operations                                             13

      Statement of Shareholders' Equity (Deficit)                          14

      Statements of Cash Flows                                             18

      Notes to Financial Statements                                        20

                                       10



<PAGE>





                          INDEPENDENT AUDITORS' REPORT



Board of Directors
Tomorrow's Morning, Inc.
Beverly Hills, California


We have audited the accompanying balance sheet of Tomorrow's Morning, Inc., (a
development stage enterprise) as of June 30, 2000, and the related statements of
operations, shareholders' equity (deficit) and cash flows for the two years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The statements of shareholders' equity for the
period from inception to June 30, 1997 were audited by other auditors whose
report dated August 25, 1997 expressed an unqualified opinion on those
statements.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tomorrow's Morning, Inc. as of
June 30, 2000, and the results of its operations and its cash flows for the two
years then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company
has negative working capital, a shareholders' deficit, has experienced recurring
losses and has had negative cash flows from operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans with respect to these matters are described in Note 1 to the
financial statements. These financial statements do not include any adjustments
that might result from the outcome of these uncertainties.





/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
October 5, 2000

                                       11



<PAGE>
<TABLE>

                                   TOMORROW'S MORNING, INC.
                               (A DEVELOPMENT STAGE ENTERPRISE)

                                BALANCE SHEET - JUNE 30, 2000


<CAPTION>

                                           ASSETS

<S>                                                            <C>              <C>
CURRENT ASSETS:
  Cash and cash equivalents                                    $      1,499
  Loan receivable, officer-shareholder                               12,059
  Software development costs                                         25,696
  Prepaid expenses                                                    7,375
                                                               -------------

          Total current assets                                                  $     46,629

Fixed assets, net of accumulated depreciation of $62,454                              51,868
                                                                                -------------

                                                                                $     98,497
                                                                                =============

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Accounts payable and accrued expenses                        $  2,207,306
  Current maturities of contracts payable                            13,737
  Loans payable, related parties                                    589,298
                                                               -------------

          Total current liabilities                                             $  2,810,341

CONTRACTS PAYABLE, less current maturities                                             3,288

SHAREHOLDERS' DEFICIT:
  Preferred stock; no par value, 1,000,000 shares
    authorized, no shares issued and outstanding                          -
  Common stock; no par value, 10,000,000 shares
    authorized, 5,095,372 shares issued and outstanding          13,044,736
  Deficit accumulated during development stage                  (15,759,868)
                                                               -------------

          Total shareholders' deficit                                             (2,715,132)
                                                                                -------------

                                                                                $     98,497
                                                                                =============



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

                                                  12
</TABLE>




<PAGE>

<TABLE>

                                      TOMORROW'S MORNING, INC.
                                  (A DEVELOPMENT STAGE ENTERPRISE)

                                      STATEMENTS OF OPERATIONS



<CAPTION>

                                                                          From inception on
                                           Year ended      Year ended     June 30, 1992 to
                                         June 30, 2000    June 30, 1999    June 30, 2000
                                         -------------    -------------    -------------

<S>                                      <C>              <C>              <C>
REVENUE:
  SUBSCRIPTIONS                          $          -     $      3,144     $    552,845

  EDITORIAL, PRODUCTION AND
   DISTRIBUTION COST                                -              906        3,313,352
                                         -------------    -------------    -------------

GROSS MARGIN                                        -            2,238       (2,760,507)

OPERATING EXPENSES                            699,204          511,328        9,595,034

RESEARCH AND DEVELOPMENT                            -                -          840,376
                                         -------------    -------------    -------------

LOSS FROM OPERATIONS                         (699,204)        (509,090)     (13,195,917)

NONCASH OPTION COMPENSATION AND
  CONSULTING FEES                                   -                -       (2,026,204)
LEGAL SETTLEMENT                                    -                -          (30,000)
DEPRECIATION                                  (26,080)         (27,784)         (90,830)
OTHER EXPENSES, NET                                 -                -          (20,091)
INTEREST EXPENSE                              (76,225)         (71,160)        (460,864)
INTEREST INCOME                                   805            3,104           69,638
                                         -------------    -------------    -------------

LOSS BEFORE INCOME TAXES                     (800,704)        (604,930)     (15,754,268)

INCOME TAXES                                     (800)               -           (5,600)
                                         -------------    -------------    -------------

NET LOSS                                 $   (801,504)    $   (604,930)    $(15,759,868)
                                         =============    =============    =============

NET LOSS PER SHARE, basic and diluted    $       (.19)    $       (.18)
                                         =============    =============

WEIGHTED AVERAGE SHARES OUTSTANDING,
    basic and diluted                       4,126,714        3,296,701
                                         =============    =============





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

                                                  13
</TABLE>



<PAGE>

<TABLE>

                                                     TOMORROW'S MORNING, INC.
                                               (A DEVELOPMENT STAGE ENTERPRISE)

                                        STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

<CAPTION>

                                                                                                           Deficit
                                                                                                         accumulated
                                                                           Common stock                    during          Total
                                                     Common stock          subscriptions    Treasury     development   shareholders'
                                                Shares         Amount       receivable       stock           stage        deficit
                                             ------------   ------------   ------------   ------------   ------------   ------------
<S>                                          <C>            <C>            <C>            <C>            <C>            <C>
June 30, 1992 (date of inception) to
  June 30, 1993 capital contribution -
  compensation                                         -    $   100,000    $         -    $         -    $         -    $   100,000
Issuance of common stock                           9,080         25,000              -              -              -         25,000
Issuance of common stock                          90,800         50,000              -              -              -         50,000
Issuance of common stock                         406,330         78,900              -              -              -         78,900
Issuance of common stock                          46,762         50,000              -              -              -         50,000
Issuance of common stock                          17,252         75,000              -              -              -         75,000
Common stock subscribed                                -              -         50,000              -              -         50,000
Net loss for the year ended June 30,
  1993, as restated                                    -              -              -              -       (540,430)      (540,430)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 1993                         570,224        378,900         50,000              -       (540,430)      (111,530)

Capital contribution - compensation                    -        100,000              -              -              -        100,000
Stock option compensation                              -        292,000              -              -              -        292,000
Capital contribution                                   -         51,100              -              -              -         51,100
Issuance of common stock                          17,252         50,000        (50,000)             -              -              -
Issuance of common stock                          34,958         50,000              -              -              -         50,000
Issuance of common stock                          38,136        110,000              -              -              -        110,000
Issuance of common stock                           1,816          7,500              -              -              -          7,500
Issuance of common stock                         145,280        275,000        (50,000)             -              -        225,000
Common stock repurchased and cancelled            (9,080)       (25,000)             -              -              -        (25,000)
Issuance of common stock based on
  anti-dilutive agreements                        35,866              -              -              -              -              -
Net loss for the year ended June 30,
  1994, as restated                                    -              -              -              -       (911,611)      (911,611)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 1994                         834,452      1,289,500        (50,000)             -     (1,452,041)      (212,541)


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

                                                                              14
</TABLE>



<PAGE>

<TABLE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

             STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT), CONTINUED
<CAPTION>
                                                                                                           Deficit
                                                                                                         accumulated
                                                                           Common stock                    during          Total
                                                     Common stock          subscriptions    Treasury     development   shareholders'
                                                Shares         Amount       receivable       stock           stage        deficit
                                             ------------   ------------   ------------   ------------   ------------   ------------
<S>                                          <C>            <C>            <C>            <C>            <C>            <C>
Capital contribution - compensation                    -        200,000              -              -              -        200,000
Common stock subscribed                                -              -        250,000              -              -        250,000
Issuance of common stock for services             45,400          2,000              -              -              -          2,000
Issuance of common stock                          61,290        125,000              -              -              -        125,000
Issuance of common stock                          15,890         50,000              -              -              -         50,000
Issuance of common stock                          11,804         50,000              -              -              -         50,000
Commitment to purchase common stock                    -              -              -        (65,000)             -        (65,000)
Net loss for the year ended June 30,
  1995, as restated                                    -              -              -              -     (1,015,040)    (1,015,040)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 1995                         968,836      1,716,500        200,000        (65,000)    (2,467,081)      (615,581)

Capital contribution - compensation                    -        250,000              -             -               -        250,000
Stock option compensation                              -        751,290              -             -               -        751,290
Issuance of common stock                          49,032        200,000       (200,000)            -               -              -
Issuance of common stock                          54,026        216,703              -             -               -        216,703
Conversion of 6% convertible notes                45,400         91,500              -             -               -         91,500
Stock issuance costs                                   -        (37,193)             -             -               -        (37,193)
Common stock repurchased and cancelled           (90,800)       (50,000)             -        65,000         (15,000)             -
Debt issuance costs                                    -        130,000              -             -               -        130,000
Shareholder loans                                      -              -              -             -         (27,575)       (27,575)
Net loss for the year ended June 30,
  1996, as restated                                    -              -              -              -     (2,642,296)    (2,642,296)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 1996                       1,026,494      3,268,800             -               -     (5,151,952)    (1,883,152)


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

                                                                              15
</TABLE>



<PAGE>

<TABLE>

                                                     TOMORROW'S MORNING, INC.
                                                 (A DEVELOPMENT STAGE ENTERPRISE)

                                      STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT), CONTINUED
<CAPTION>
                                                                                                           Deficit
                                                                                                         accumulated
                                                                           Common stock                    during          Total
                                                     Common stock          subscriptions    Treasury     development   shareholders'
                                                Shares         Amount       receivable       stock           stage        deficit
                                             ------------   ------------   ------------   ------------   ------------   ------------
<S>                                          <C>            <C>            <C>            <C>            <C>            <C>

Issuance of common stock                       1,167,277      5,347,724              -              -              -      5,347,724
Stock issuance costs                                   -       (304,528)             -              -              -       (304,528)
Conversion of 6% convertible notes               105,144        262,500              -              -              -        262,500
Conversion of 7% convertible notes               432,083      1,080,207              -              -              -      1,080,207
Debt issuance costs                                    -       (202,589)             -              -              -       (202,589)
Capital contribution - compensation                    -        166,667              -              -              -        166,667
Shareholder loans                                      -              -              -              -        (69,377)       (69,377)
Stock option compensation                              -        733,400              -              -              -        733,400
Issuance of common stock for services             55,000        132,500              -              -              -        132,500
Net loss for the year ended June 30, 1997              -              -              -              -     (2,955,679)    (2,955,679)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 1997                       2,785,998     10,484,681              -              -     (8,177,008)     2,307,673

Stock option compensation                              -      1,935,374              -              -              -      1,935,374
Repayments - shareholder loans                         -              -              -              -          7,227          7,227
Reclassification - shareholder loans                   -              -              -              -         89,725         89,725
Stock issued - settlement of litigation            5,000         30,000              -              -              -         30,000
Stock options exercised                          229,374        190,289              -              -              -        190,289
Stock warrants sold                                    -          1,073              -              -              -          1,073
Shares issued upon conversion of debt            190,000        190,000              -              -              -        190,000
Warrants issued in convection with debt                -         18,750              -              -              -         18,750
Net loss for the year ended June 30, 1998              -              -              -              -     (6,273,378)    (6,273,378)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 1998                       3,210,372     12,850,167              -              -    (14,353,434)    (1,503,267)

Shares issued in connection with debt            100,000         12,500              -              -              -         12,500
Shares issued in exchange for rent                40,000          5,000              -              -              -          5,000
Stock options exercised                           10,000          2,100              -              -              -          2,100
Net loss for the year ended June 30, 1999              -              -              -              -       (604,930)      (604,930)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 1999                       3,360,372     12,869,767              -               -   (14,958,364)    (2,088,597)

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

                                                                              16
</TABLE>



<PAGE>

<TABLE>

                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

             STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT), CONTINUED

<CAPTION>

                                                                                                           Deficit
                                                                                                         accumulated
                                                                           Common stock                    during          Total
                                                     Common stock          subscriptions    Treasury     development   shareholders'
                                                Shares         Amount       receivable       stock           stage        deficit
                                             ------------   ------------   ------------   ------------   ------------   ------------
<S>                                          <C>            <C>            <C>            <C>            <C>            <C>
Issuance of common stock                         500,000         20,000              -              -              -         20,000
Shares issued as bonus                           500,000         50,000              -              -              -         50,000
Issuance of common stock                         700,000        100,000              -              -              -        100,000
Shares issued in exchange for services             5,000          1,719              -              -              -          1,719
Shares issued in exchange for rent                20,000          2,000              -              -              -          2,000
Shares issued in exchange for services            10,000          1,250              -              -              -          1,250
Net loss for the year ended June 30, 2000              -              -              -              -       (801,504)      (801,504)
                                             ------------   ------------   ------------   ------------   ------------   ------------

Balance at June 30, 2000                       5,095,372    $13,044,736              -              -    (15,759,868)   $(2,715,132)
                                             ============  =============   ============   ============   ============   ============




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

                                                                              17
</TABLE>



<PAGE>


<TABLE>

                                                TOMORROW'S MORNING, INC.
                                            (A DEVELOPMENT STAGE ENTERPRISE)

                                                STATEMENTS OF CASH FLOWS

                                    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>

                                                                                                  From inception on
                                                                   Year ended       Year ended     June 30, 1992 to
                                                                  June 30, 2000    June 30, 1999    June 30, 2000
                                                                  -------------    -------------    -------------

<S>                                                               <C>              <C>              <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
  Net loss                                                        $   (801,504)    $   (604,930)    $(15,759,868)

 ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
  PROVIDED BY OPERATING ACTIVITIES:
      Depreciation                                                      26,080           27,784           90,830
      Amortization of debt issuance costs                                    -                -          138,168
      Amortization of loans payable discount                             6,248           21,355           31,249
      Non-cash litigation settlement                                     2,000                -           32,000
      Non-cash compensation                                             50,000            5,000        4,693,481
      Non-cash payment for services rendered                             2,969                -          135,469

 CHANGES IN OPERATING ASSETS AND LIABILITIES:
  (INCREASE) DECREASE IN ASSETS:
      Accounts receivable                                                   -              445               445
      Prepaid expenses                                                   1,648           42,587           43,790
      Software development costs                                        70,171                -          (53,939)
      Deposits                                                          32,772                -            9,405

  INCREASE (DECREASE) IN LIABILITIES:
      Accounts payable and accrued expenses                            457,985          294,175          719,296
      Deferred revenue                                                       -                -        1,459,238
                                                                  -------------    -------------    -------------

          Net cash used for operating activities                      (151,631)        (213,584)      (8,460,436)
                                                                  -------------    -------------    -------------

CASH FLOWS USED FOR INVESTING ACTIVITIES -
  acquisition of fixed assets                                                -                -         (142,697)
                                                                  -------------    -------------    -------------

CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                                70,000                -        6,819,734
  Proceeds from revolving line of credit                                     -                -           50,000
  Proceeds from loans and warrants                                      30,000          110,000          939,276
  Proceeds from notes payable                                                -                -        1,705,086
  Proceeds from contracts payable                                            -                -          127,401
  Cash paid for debt issuance costs                                          -                -         (210,757)
  Proceeds from exercise of stock options                                    -            2,100           84,638
  Proceeds from exercise of warrants                                    50,000                -           51,074
  proceeds from shareholders                                                 -                -           11,619
  Repayment of revolving line of credit                                      -                -          (50,000)
  Repayments from shareholder, net of unpaid interest                   15,176           57,584           85,333
  Repayment of loans payable                                                 -                -         (423,400)
  Repayment of notes payable                                                 -                -          (11,456)
  Repayment of contracts payable                                             -           (2,241)        (110,377)
  Loans payable shareholders                                                 -                -          (96,952)
  Loans to shareholders                                                (12,059)               -          (12,059)
  Cash paid for offering costs                                               -                -         (304,528)
  Purchase of treasury stock                                                 -                -          (50,000)
                                                                  -------------    -------------    -------------

          Net cash provided by financing activities                    153,117          167,443        8,604,632
                                                                  -------------    -------------    -------------

NET INCREASE (DECREASE) IN CASH                                          1,486          (46,141)           1,499
CASH, beginning of year                                                     13           46,154                -
                                                                  -------------    -------------    -------------

CASH, end of year                                                 $      1,499     $         13     $      1,499
                                                                  =============    =============    =============


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

                                                            18
</TABLE>

<PAGE>

<TABLE>

                                                TOMORROW'S MORNING, INC.
                                            (A DEVELOPMENT STAGE ENTERPRISE)

                                          STATEMENTS OF CASH FLOWS (CONTINUED)

                                    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<CAPTION>

                                                                                                  From inception on
                                                                   Year ended       Year ended     June 30, 1992 to
                                                                  June 30, 2000    June 30, 1999    June 30, 2000
                                                                  -------------    -------------    -------------

<S>                                                               <C>              <C>              <C>
Supplemental disclosure of cash flow information -
  income taxes paid                                               $        800     $          -     $      5,600
                                                                  =============    =============    =============
Supplemental disclosure of non-cash financing activities:
  Decrease in debt issuance costs recorded in connection
    with the issuance of convertible notes payable                $          -     $          -     $    (72,589)
                                                                  =============    =============    =============
  Conversion of notes payable to common stock                     $          -     $          -     $  1,532,707
                                                                  =============    =============    =============
  Non-cash compensation                                           $     54,969     $      5,000     $  2,103,093
                                                                  =============    =============    =============
  Issuance of warrants connected to debt conversion               $          -     $          -     $     18,750
                                                                  =============    =============    =============




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

                                                            19
</TABLE>



<PAGE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

                            YEAR ENDED JUNE 30, 2000




(1)      SUMMARY SIGNIFICANT ACCOUNTING POLICIES:

         NATURE OF BUSINESS:

                  The Company was incorporated in June 1992 in the State of
                  California and is engaged in the publication of a children's
                  weekly newspaper. As of June 30, 2000, the Company is a
                  development stage enterprise, as defined in Financial
                  Accounting Standards Board Statement No. 7. The Company is
                  devoting substantially all of its efforts toward establishing
                  new business and product.

                  In June 1996 the Company filed for an initial public offering
                  ("IPO") of its common stock on Form SB-2 with the Securities
                  and Exchange Commission. That offering was successfully
                  completed in March 1997.

         GOING CONCERN:

                  For the years ended June 30, 2000 and June 30, 1999, the
                  Company had negative cash flows from operations of $151,631
                  and $213,584, respectively, and incurred a net loss of
                  $801,504 and $604,930, respectively. The Company's expenses
                  continue to greatly exceed its income, and its future depends
                  on: (i) finding a strategic partner; (ii) the development of
                  complementary products; (iii) completion and successful
                  marketing of the SCOOP(TM) CD-ROM journalism game; (iv) the
                  formation of joint-marketing alliances for corporate
                  sponsorship of schools through the Company's Reading Partners
                  Program and/or the sale of advertising space; (v) getting one
                  or more television shows, or interstitial news "flashes", on
                  the air; and (vi) expansion into ancillary publishing and
                  merchandising through redirecting the Company's content and/or
                  licensing the Company's characters and identity. The Company
                  has used all of the net proceeds of its initial public
                  offering and finds that it requires substantial additional
                  funds in order to reach the above long-term goals. In
                  addition, the Company requires an immediate infusion of
                  working capital to continue its present operations. There can,
                  however, be no guarantee that the Company will be able to
                  obtain such additional long- and short-term funds or that, if
                  obtained, it will be able to achieve or sustain significant
                  revenues or profitability in the future.

         REVENUE RECOGNITION:

                  Subscription sales are recorded as deferred revenue at the
                  time of sale. Revenues from subscriptions are recognized
                  ratably over the subscription period as newspapers are
                  delivered. Deferred revenue represents unfulfilled
                  subscription sales at period-end.

         ADVERTISING:

                  The Company expenses the costs of all general advertising in
                  the period incurred. There was no advertising expense for the
                  years ended June 30, 2000 and 1999.




See accompanying independent auditors' report.

                                       20


<PAGE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                            YEAR ENDED JUNE 30, 2000




(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

         RESEARCH AND DEVELOPMENT:

                  Research and development costs are expensed as incurred.

         INCOME TAXES:

                  The Company accounts for taxes under SFAS No. 109, which
                  requires recognition of deferred tax liabilities and assets
                  for the expected future tax consequences of events that have
                  been included in financial statements or tax returns. Under
                  this tax method, deferred tax assets and liabilities are
                  determined based on differences between financial reporting
                  and tax bases of assets and liabilities and are measured using
                  the enacted tax rates and laws that will be in effect when the
                  differences are expected to reverse. The Company does not have
                  any material differences between financial reporting and tax
                  bases of assets and liabilities. Valuation allowances are
                  established when necessary to reduce deferred tax assets to
                  amounts expected to be realized.

         NET LOSS PER SHARE:

                  The Company computes net loss per share following SFAS No.
                  128, "Earnings Per Share". Under the provisions of SFAS No.
                  128, basic net loss per share is computed by dividing the net
                  loss available to common shareholders for the period by the
                  weighted average number of common shares outstanding during
                  the period. Diluted net loss per share is computed by dividing
                  the net loss for the period by the weighted average number of
                  common and common equivalent shares outstanding during the
                  period. Common equivalent shares are not included in the
                  computation of loss per share for the years ended June 30,
                  2000 and June 30, 1999, because the effect would be
                  anti-dilutive.

         VARIABLE NONDILUTABLE STOCK OPTIONS:

                  The Company records non-cash compensation expense resulting
                  from an increase in fair value of the common stock to be
                  issued upon the exercise of the variable nondilutable stock
                  options outstanding (Note 5).

         DEBT WITH STOCK PURCHASE WARRANTS:

                  The proceeds received from debt issued with stock purchase
                  warrants is allocated between the debt and the warrants, based
                  upon the relative fair values of the two securities. Fair
                  value of the debt element of the financial instrument is
                  determined by discounting the future payments of principal and
                  interest, based upon management's estimate of its borrowing
                  rate for similar financial instruments of this risk (generally
                  20%), and the balance of the proceeds is accounted for as
                  additional paid in capital. The resulting debt discount is
                  amortized to expense over the term of the debt instrument,
                  using the interest method.



See accompanying independent auditors' report.

                                       21


<PAGE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                            YEAR ENDED JUNE 30, 2000




(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

         CASH AND CASH EQUIVALENTS:

                  The Company considers cash equivalents to include highly
                  liquid investments purchased with a maturity of less than
                  three months. Cash and cash equivalents are held in a major
                  financial institution and at times, such balances can be in
                  excess of the Federal Deposit Insurance Corporation's
                  insurance limits.

         FINANCIAL INSTRUMENTS:

                  The estimated fair values of cash, accounts receivable,
                  accounts payable, and accrued expenses approximate their
                  carrying value because of the short term maturity of these
                  instruments or the stated interest rates are indicative of
                  market interest rates.

         OFFICE FURNITURE AND EQUIPMENT:

                  Office furniture and equipment is stated at cost and
                  depreciation is computed on a straight-line basis over a
                  period of five years.

         SOFTWARE DEVELOPMENT COSTS:

                  The Company accounts for its software development costs in
                  accordance with Statement of Financial Accounting Standards
                  No. 86, "Accounting for the Costs of Computer Software to be
                  Sold, Leased or Otherwise Marketed." This statement provides
                  for capitalization of certain software development costs once
                  technological feasibility is established. The costs so
                  capitalized are then amortized on a straight-line basis over
                  the estimated product life (generally eighteen months to three
                  years), or on the ratio of current revenue to total projected
                  product revenues, whichever is greater.

         USE OF ESTIMATES

                  The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions for the reporting period and
                  as of the financial statement date. These estimates and
                  assumptions affect the reported amounts of assets and
                  liabilities, the disclosure of contingent liabilities and the
                  reported amounts of revenues and expenses. Actual results
                  could differ from the estimates.

         RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

                  In June 1998, the United States Financial Accounting Standards
                  Board (FASB) issued SFAS No. 133, "Accounting for Derivative
                  Instruments and Hedging Activities", effective for fiscal
                  years beginning after June 15, 1999. The Company anticipates
                  that due to its limited use of derivative instruments, the
                  adoption of SFAS No. 133 will not have a material effect on
                  its financial statements.




See accompanying independent auditors' report.

                                       22


<PAGE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                            YEAR ENDED JUNE 30, 2000




(2)      LOANS PAYABLE, RELATED PARTIES:

         A summary is as follows:

               Unsecured demand loans with no stated
                 interest, due to related parties                 $     114,298
               Note payable, shareholder, due September
                 9, 1998 with stated interest at 10% per
                 annum, 15% per annum as note is in default             125,000
               Note payable, shareholder due December 24,
                 1998, with stated interest at 10% per
                 annum, 15% per annum as note is in default.            250,000
               Note payable, net of discount - shareholder,
                 due December 14, 1999, with interest at
                 10% per annum, 15% per annum as note is
                 in default; convertible at noteholder's
                 option, at a conversion rate of $2 per share.          100,000
                                                                  --------------

                                                                  $     589,298
                                                                  ==============

(3)      CONTRACTS PAYABLE:

         The Company has entered into lease contracts to purchase office
         equipment and a telephone system. The contracts provide for a
         fair-market-value purchase at the end of the lease terms. In accordance
         with Statement of Financial Accounting Standards No. 13 (SFAS 13), the
         Company has capitalized the cost of the equipment.

         Lease commitments for capital leases with remaining terms of more than
         one year at June 30, 2000 are as follows:

               Year ending June 30,
                   2001                                           $      13,737
                   2002                                                   3,287
                                                                  --------------

                                                                  $      17,024
                                                                  ==============



See accompanying independent auditors' report.

                                       23


<PAGE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                            YEAR ENDED JUNE 30, 2000




(4)      COMMITMENTS AND CONTINGENCIES:

         Leases
         ------

         Rent expense, including additional costs per the leases, for the years
         ended June 30, 2000 and June 30, 1999 was $86,553 and $109,972,
         respectively, and $432,639 for the period from inception through June
         30, 2000.

         Software Development Agreement
         ------------------------------

         During the year ended June 30, 1996, the Company entered into a
         software development agreement for the development of a CD-ROM
         journalism game called "SCOOP(TM)". Pursuant to the agreement, the
         budgeted costs to develop the CD-ROM game shall not exceed $1,210,000;
         through June 30, 2000, expenditures for "SCOOP(TM)" were approximately
         $908,000.

         Legal Proceedings
         -----------------

         On August 17, 1998, the Company received a notice of levy from the
         Internal Revenue Service as to $30,761 for back taxes. Upon receipt of
         the notice, the Company contacted that agency and negotiated a payment
         plan. As of June 30, 2000, the Company had made payments totaling
         $15,000 toward the amount owed. The balance was subsequently paid in
         full.

         On December 17, 1998, Starbright Graphics, Inc. filed an action against
         the Company in the Superior Court of New Jersey Law Division, Middlesex
         County, seeking $699,231, included in accounts payable, for services
         rendered in connection with the printing and distribution of the
         newspaper. This action was dismissed in New Jersey by stipulation
         without prejudice on March 23, 1999, and filed in Los Angeles County
         Superior Court for breach of contract on July 13, 1999. On April 5,
         2000, the plaintiff was granted a summary judgment in the full amount
         of the claim with respect to the Company. The total amount of the
         judgment is $876,992, which includes the principal sum of $699,231,
         together with prejudgment interest thereon at the legal rate of 10% per
         annum. The full judgment is included in accounts payable and accrued
         expenses, with the interest charged to operating expenses.

         On March 10, 1999, Peter Li, Inc. filed an action against the Company
         in Los Angeles County Superior Court seeking $33,711 in damages for
         breach of contract in connection with services provided to the Company.
         The plaintiff was granted a judgment in that amount, which is included
         in accounts payable and accrued expenses at June 30, 2000.

         On May 14, 1999, the Company's landlord filed an action in Los Angeles
         County Superior Court, West District, against the Company and Adam
         Linter, the Chief Executive Officer, seeking $238,519 in connection
         with the Company's breach of its lease payment obligations. In December
         1999, this action was settled by a stipulated judgment providing for
         payments of $125,000 in cash and 20,000 shares of the Company's common
         stock, which were issued in January 2000. At June 30, 2000, $51,769 of
         the total amount of the judgment has been paid, with the balance due
         included in accounts payable and accrued expenses.




See accompanying independent auditors' report.

                                       24


<PAGE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                            YEAR ENDED JUNE 30, 2000



(5)      COMMON STOCK, STOCK OPTIONS AND WARRANTS:

         On May 15, 1996, the Company adopted a Non-Qualified Stock Option Plan
         ("the Plan"). The aggregate number of shares of common stock to be
         delivered upon the exercise of all options granted under the Plan was
         increased from a maximum of 100,000 to 500,000 shares. During the year
         ended June 30, 2000, 69,000 options had been granted under the Plan.
         During the year ended June 30, 1999, no options had been granted under
         the Plan. At June 30, 2000, options that had been granted under the
         Plan totaled 100,000.

         The Company has granted non-qualified stock options outside the
         Non-Qualified Stock Option Plan adopted on May 15, 1996 that allow each
         holder the right to purchase one share of the Company's common stock.
         The Board of Directors determines the exercise price of the options at
         the date of the grant. Options granted to date are fully vested on the
         date of the grant and have expirations ranging from two to five years
         from grant date.

         The following table summarizes information about options outstanding at
         June 30, 2000 and June 30, 1999:
<TABLE>
<CAPTION>

                                                                        Weighted
                                                                   average        Number of         Date
                                                    Total         exercise        options          options
                                                   options          price        exercisable       expire
                                                ------------    ------------    ------------    ------------
<S>                                             <C>             <C>             <C>             <C>
              Options outstanding at
                June 30, 1998                       987,198            0.76         987,198
                                                ============

              1999:
                  Exercised                         (10,000)         0.2125               -
                  Expired                           (83,266)              -               -
                                                ------------

              Balance at June 30, 1999              893,932            0.68         893,932
                                                ============                    ============

              2000:
                  Granted                            44,500          0.1275               -
                  Expired                           (41,391)              -               -
                                                ------------
                                                                                                   Through
              Balance at June 30, 2000              897,041            0.70          897,041    May 17, 2002
                                                ============    ============    ============
</TABLE>


         The Company has elected, as permitted by SFAS No. 123, "Accounting for
         Stock Based Compensation"' to account for its stock compensation
         arrangements under the provisions of APB No. 25, "Accounting for Stock
         Issued to Employees". Accordingly, because the exercise price of the
         Company's employee stock options equals or exceeds the market price of
         the underlying stock on the date of grant, no compensation expense is
         recognized. Proforma information regarding the effect on operations
         required by SFAS 123 is not as presented due to the number of shares
         and the value of the underlying stock, any differences would be
         immaterial. There were 44,500 options granted to employees in the year
         ended June 30, 2000 and no options granted in the year ended 1999.

         In connection with financing raised during the year ended June 30,
         2000, the Company sold 500,000 warrants exercisable at $0.10 per share
         through December 2004.



See accompanying independent auditors' report.

                                       25


<PAGE>


                            TOMORROW'S MORNING, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                            YEAR ENDED JUNE 30, 2000




(6)      INCOME TAXES:

         The Company had deferred tax assets of approximately $4,962,000 and
         $4,382,000 as of June 30, 2000 and June 30, 1999, respectively, which
         have been offset by 100% valuation allowances of $4,962,000 and
         $4,382,000, respectively. The deferred tax assets are primarily due to
         the Company's federal and state net operating loss (NOL's)
         carryforwards available to offset future taxable income, if any, of
         approximately $10,980,000, which expires in years up to 2020. However,
         ultimate utilization of these NOL's is dependent on future taxable
         income of the Company, subject to certain limitations, as defined under
         Section 382 of the Internal Revenue Code.


(7)      RELATED PARTY TRANSACTIONS:

         The printer used by the Company also has an equity interest in the
         Company. As a result of the judgment against the Company (see Note 4),
         an expense of approximately $178,000 related to this party was
         recognized in the year ended June 30, 2000. There was no expense
         incurred during the year ended June 30, 1999, and approximately
         $2,414,000 for the period from inception through June 30, 2000. At June
         30, 2000 and 1999, amounts payable to the printer were approximately
         $877,000 and $699,000, respectively.

         Alan G. Dunn, a director, has previously loaned money to the Company,
         with the maximum amount at any one time being approximately $102,800.
         As a result of repayments, the Company's indebtedness to Mr. Dunn is
         now approximately $72,800.




See accompanying independent auditors' report.

                                       26





<PAGE>

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

None, except as previously reported.

                                    PART III

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

DIRECTORS AND OFFICERS. The officers and directors of the Company and their ages
as of October 5, 2000, are as follows:

                NAME                  AGE          CORPORATE POSITIONS HELD (1)
                ----                  ---          ------------------------
               Adam Linter             54          Chairman of the Board,
                                                   President, Treasurer and
                                                   Secretary

               James R. Rosbe          51          Director

               Rick Nicita (2)         54          Director

               Alan G. Dunn (2)        44          Director

----------
(1)      Directors are elected for a term that expires at the Company's next
         annual shareholders' meeting.
(2)      These persons are the Company's independent directors. An "independent
         director" is a director who is not an officer or employee of the
         Company and who does not have any relationship with the Company which,
         in the opinion of the Board of Directors, would interfere with the
         exercise of independent judgment in carrying out the responsibilities
         of a director.

ADAM LINTER, the founder of the Company, has served as Chairman of the Board,
President and Secretary since the Company's inception, and, as Editor-in-Chief
and Publisher, has overall responsibility for all aspects of the Company's
operations. Responsible for a majority of the writing, he has presided over the
growth and finance of the Newspaper and oversees its production every week.
Prior to founding the Company in June 1992, Mr. Linter was active in a variety
of endeavors, including biotechnology, real estate, screenwriting, and
management/consulting. From 1970 to 1976, he formed and operated his own
business management company in New York, and from 1976 to 1985, worked in real
estate and consulting in Los Angeles. From 1985 to 1991, Mr. Linter collaborated
on several venture capital projects in biotechnology involving scientists at
Harvard, Yale, Rutgers, Mt. Sinai and the University of Minnesota. He has a B.A.
in history from George Washington University.

JAMES R. ROSBE, a director since February 1996, and an Associate Publisher of
the Company from April 1997 to October 1998, has been active with the Company
since its inception, collaborating on business planning and strategy, as well as
advising on finance, marketing, circulation and synergistic product development,
and monitoring commercial opportunities on the Internet and in electronic
publishing. Mr. Rosbe is currently the President of Soar Technologies, Inc., an
Ann Arbor, Michigan, software development firm. Mr. Rosbe previously served as
Vice President-Operations for Online Technologies Corporation in Ann Arbor,
Michigan, an Internet service provider for which he worked from October 1994 to
April 1997. From August 1991 until September 1993, Mr. Rosbe was the co-founder
of Mobile Metal Services in Troy, Michigan, a company providing metal
stabilization services. From 1985 to 1989, with Mr. Linter (his brother-in-law),
he formed a seed venture capital effort to develop commercial opportunities in
biotechnology, and engaged in real estate finance and analysis. Mr. Rosbe has an
M.B.A. in Finance/Strategy from UCLA, and a B.A. in Political Science from the
University of Michigan.

RICK NICITA, a director since March 1997, is the Co-Chairman of Creative Artists
Agency ("CAA") in Beverly Hills, California, one of the leading talent agencies
in the country. Prior to his October 1, 1995, appointment as Co-Chairman, Mr.
Nicita was co-head of the Motion Picture department and head of the Talent
department at CAA. Since joining CAA in 1980, Mr. Nicita has represented many of
the motion picture industry's most renowned actors, actresses and directors. Mr.
Nicita holds a Bachelor of Arts degree from Wesleyan University.



<PAGE>

ALAN G. DUNN, a director since March 1997, has been a strategic advisor to the
Company since 1993. Currently, he is President of Gerald E. Dunn, Inc. ("GDI"),
a Huntington Beach, California, company which provides specialized manufacturing
and systems consulting to industrial clients nationwide. Mr. Dunn has worked for
GDI since 1980. Simultaneously, from August 1993 to May 1995, Mr. Dunn was
vice-president of Gemini Management Consulting, a global consulting firm based
in New Jersey. From July 1991 to August 1993, Mr. Dunn was a partner at Coopers
& Lybrand, the international accounting and management consulting firm, where he
was responsible for the firm's manufacturing consulting practice in the western
states. Prior to Coopers & Lybrand, Mr. Dunn was founder and President of ADI, a
manufacturing consulting and training company, acquired by Coopers & Lybrand in
1991. Mr. Dunn's consulting clients include a wide variety of publicly-held
companies. Mr. Dunn has conducted training programs across North America,
Europe, the Far East and southeast Asia in the areas of manufacturing systems,
information management, cost management and business finance. He also conducts
24 seminars per year for senior manufacturing executives at California Institute
of Technology (Caltech) in Pasadena. Mr. Dunn holds a degree in business
management from California State University in Fullerton.

There are no family relationships between the Company's officers and directors
other than between Adam Linter and James R. Rosbe, who are brothers-in-law.

Within the past five years (1) no petition under the federal Bankruptcy Act or
any state insolvency law has been filed by or against any executive officer or
director of the Company, and no receiver, fiscal agent or similar officer has
been appointed by a court for the business or property of any such persons, or
any partnership in which any of such persons was a general partner at or within
the two years before the time of such filing or appointment, or any corporation
or business association of which any such person was an executive officer at or
within two years before the time of such filing or appointment, (2) no director
or executive officer of the Company has been convicted in a criminal proceeding
(excluding traffic violations and other minor offenses), (3) no order, judgement
or decree has been issued enjoining, barring, suspending or otherwise limiting
the involvement of any executive officer or director of the Company in any type
of business, securities or banking activity and (4) no director or executive
officer of the Company has been found to have violated a federal or state
securities or commodities law.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. In June 2000, Adam
Linter filed a Form 4 for the month of January 2000 reporting his acquisition of
500,000 shares of Common Stock and warrants to purchase another 500,000 shares
of Common Stock in non-cash private transactions.

On December 15, 1999, Peter Rettman acquired shares of Common Stock and warrants
sufficient to give him beneficial ownership of more than 10% of the Company's
Stock. On February 22, 2000, Mr. Rettman exercised those warrants in full and
purchased an additional 200,000 shares of the Company's Common Stock. See "Item
12. Certain Relationships and Related Transactions." It is not known whether Mr.
Rettman filed a Form 3 or Form 4, respectively, in connection with those
transactions.

ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION. Adam Linter has served as the Company's President (Chief
Executive Officer) since its inception. Except as shown below, no executive
officer of the Company received compensation in excess of $100,000 during fiscal
2000.

<TABLE>

SUMMARY COMPENSATION TABLE:

<CAPTION>
                                                                                             Long-Term
                                                                                             Compensation
                                                                                             ------------
                                                                                             Securities
Name and Principal                                                Other Annual               Underlying
Position                       Year      Salary        Bonus      Compensation(1)    Options/warrants
--------------------------     ----      ------        -----      ------------       ----------------

<S>                            <C>     <C>             <C>           <C>             <C>
Adam Linter, President         2000    $250,000(2)     $ -0-         $8,750(3)       500,000 shares
                               1999    $250,000(2)     $ -0-         $8,750(3)           -0-
                               1998    $250,000(2)     $ -0-         $8,750(3)           -0-
</TABLE>

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

         (1)      The compensation described in this table does not include
                  medical insurance and other benefits received by Mr. Linter
                  which are available generally to all employees of the Company
                  and certain perquisites and other personal benefits received
                  by Mr. Linter the value of which did not exceed 10% of his

                  cash compensation in the table.
         (2)      Of this amount, $250,000 was accrued but unpaid in fiscal 2000
                  and 1999 and $104,167 was accrued but unpaid in fiscal 1998.
         (3)      Consists of a $730 per month car allowance which was accrued
                  but unpaid in its entirety in fiscal 2000 and 1999 and accrued
                  but unpaid as to $3,650 in fiscal 1998.



<PAGE>

The following table provides information concerning stock options and warrants
granted to Mr. Linter during the year ended June 30, 2000:

<TABLE>
<CAPTION>
                Number of                  Percent of
                Securities                 Options or Warrants
                Underlying                 Granted to Employees           Exercise         Expiration
   Name         Options and Warrants       in Fiscal Year                 Price ($/Sh)     Date
   ----         -----------------------    ---------------------------    ------------     -------------
<S>                <C>                                  <C>                   <C>             <C>
Adam Linter        500,000                              100%                  $0.10           1/14/05

</TABLE>

As to Mr. Linter, the following table sets forth the number and value of vested
and unvested options and warrants held as of June 30, 2000.

<TABLE>
<CAPTION>
                                               Number of Securities            Value of Unexercised
                                               Underlying Unexercised          In-the-Money Options
                                               OPTIONS AND WARRANTS            AND WARRANTS
                                               -------------------------       ------------------------
                Shares
                Acquired          Value
Name            On Exercise       Realized     Exercisable Unexercisable      Exercisable Unexercisable
----            -----------       --------     ----------- -------------      ----------- -------------
<S>                 <C>              <C>         <C>            <C>             <C>             <C>
Adam Linter         -0-              N/A         781,113        -0-             $75,000         -0-

</TABLE>

STOCK OPTION PLAN. The Company's Non-Qualified Stock Option Plan (the "Option
Plan") was adopted by the Board of Directors and approved by the Company's
shareholders on May 15, 1996 and amended on May 18, 2000. Under the Option Plan
(which is administered by the Company's Compensation Committee), all officers
and directors of the Company, as well as employees and consultants of the
Company and any subsidiaries, are eligible to be selected to participate. The
purpose of the Option Plan is to promote the interests of the Company by
providing participants with an inducement to maintain their status with the
Company or a subsidiary and to further advance the interests of the Company.
Options are granted in consideration of things such as past and potential future
contributions to the Company.

As of June 30, 2000, options as to 100,000 shares have been issued under the
Option Plan. The aggregate number of shares of Common Stock to be delivered upon
the exercise of all options granted under the Option Plan cannot exceed 500,000
shares. In the event of any merger, reorganization, recapitalization, stock
dividend, stock split or reverse split or other act or event which effects a
restructure of the Company's Common Stock (but not including the issuance of
additional shares of Common Stock or preferred stock), the total number of
shares covered by the Option Plan, the exercise price, and number of shares
covered by outstanding options granted pursuant to the Option Plan, and the
rights, preferences and privileges incident to such shares will be appropriately
adjusted as to any remaining options. Any shares covered by options granted
pursuant to the Option Plan which expire or are canceled are available for
reissuance under the Option Plan.

There is no maximum or minimum number of shares which may be subject to options
granted to any one individual under the Option Plan. The exercise price of the
stock covered by each option will be determined by the Compensation Committee;
provided, however, that (i) as to options granted to any person who owns stock
possessing more than 10% of the total combined voting power or value of all
classes of stock of the Company, such exercise price will not be less than an
amount equal to 110% of the "fair value" of the stock (as determined pursuant to
the Option Plan) on the date the option is granted and (ii) as to all other
persons, such exercise price will not be less than an amount equal to 85% of the
fair value of the stock on the date the option is granted. Upon the exercise of
an option granted under the Option Plan, the exercise price is payable in full
at the time of exercise, either in cash or by check or, in the discretion of the
Compensation Committee, in whole or in part in stock of the Company valued at
fair market value at the time of each such exercise.

As a general rule, if the option holder ceases, for any reason, to be an
employee of the Company or any of its subsidiaries, or a director of the
Company, as the case may be, the option holder will have a right thereafter to
exercise the option during a specified period set forth in the option agreement
between the Company and the option holder, which in the event of termination due
to death or permanent disability, will be no less than six months and which, in
all other cases, will be no less than 30 days in the case of an employee or one
year in the case of a director.

Options granted under the Option Plan are not assignable or transferable except

by will or the laws of descent and distribution, and are exercisable during the
option holder's lifetime only by the option holder. No options will be
exercisable more than five years after the date of grant.



<PAGE>

Upon the occurrence of certain specified events, including (i) a change in
control of the Company in connection with a cash tender offer, exchange offer,
merger or other business combination, sale of assets or contested election or
(ii) a merger, consolidation or other transaction in which the Company ceases to
be an independent corporation, all options granted under the Option Plan will
become exercisable in full for a period of 30 days following a specified date
and, thereafter, all unexercised options will expire.

Subject to the express provisions of the Option Plan, the terms of each option
granted under the Option Plan, including the exercise price, manner of exercise,
vesting and duration of each option, shall be as specified in the applicable
option agreement between the Company and the option holder; provided, however,
in no event will an option vest over a period of more than five years or at a
rate of less than 20% per year.

Subject to the express provisions of the Option Plan, in most instances the
Compensation Committee will determine the individuals to whom and the times at
which options are granted and the exercise price and terms of, and number of
shares subject to, each option. However, grants of options to members of the
Compensation Committee while members of such committee, or to members of the
Company's Board of Directors, must be approved by the Board of Directors without
counting the vote of the person being granted the options. The Compensation
Committee also has the authority to construe and interpret the Option Plan.

The Board of Directors of the Company may amend, suspend or terminate the Option
Plan at any time. Unless terminated sooner, the Option Plan will terminate on
May 15, 2006 and no options may be granted thereafter. No amendment, suspension
or termination of the Option Plan will, without the consent of the option
holder, be made which would alter or impair any rights or obligations under any
option then outstanding. Upon the dissolution or liquidation of the Company, the
Option Plan will terminate, and any option previously granted thereunder and not
yet exercisable in full will also terminate. In the event, however, that the
Company is succeeded by another corporation, the Option Plan and any remaining
options granted thereunder will be assumed by such successor corporation,
subject to such adjustments as may be necessary due to the capital structure of
the successor corporation.

EMPLOYMENT AGREEMENTS. Mr. Linter and the Company have entered into a five-year
employment agreement (terminating February 28, 2002) which provides for a salary
to Mr. Linter of $250,000 per year. Such agreement also provides for automobile
expense reimbursement, plus such annual salary increases, bonuses and other
perquisites as the Company's Board of Directors may determine. The agreement is
terminable by the Company for "good cause" (as defined in the agreement), upon
Mr. Linter's death or beginning 15 months after his permanent "disability" (also
as defined in the agreement). Under the terms of the agreement, the Company is
prohibited from merging, consolidating or otherwise reorganizing with any other
corporation or business unless the succeeding or continuing entity agrees to
assume the Company's obligations under the agreement.

DIRECTOR COMPENSATION. At this time, the Company does not contemplate paying
fees to its directors for their services solely as directors, although they are
eligible for options under the Company's Option Plan. See "Stock Option Plan"
above. It will be the policy of the Company to reimburse directors for
reasonable travel and lodging expenses incurred in attending meetings of the
Board of Directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of the Company's Common
Stock as of October 5, 2000 as to (i) each person or entity who is known by the
Company to own beneficially more than five percent of the Company's Common Stock
(the Company's only class of voting stock), (ii) Adam Linter, the only executive
officer named above in "Item 10. Executive Compensation," (iii) the Company's
directors and (iv) all directors and executive officers as a group.

<TABLE>
<CAPTION>
                                             Number of Shares
Name                                        Beneficially Owned(1)       Percentage(2)
----                                        ------------------          ----------
<S>                                             <C>                        <C>
Peter Rettman (3)                               1,200,000                  23.6%
Michael Fuchs(4)                                  375,000(5)                6.9%
Adam Linter(6)                                  1,845,803(7)               31.5%
James R. Rosbe(8)                                  70,820(9)                1.4%
Rick Nicita(10)                                    95,138                   1.9%
Alan G. Dunn(11)                                   34,958(12)               0.7%
All directors and executive
 officers as a group (four persons)(13)         2,046,719                  34.7%

</TABLE>



<PAGE>

--------------------
         (1)      Beneficial ownership is determined in accordance with the
                  rules of the Securities and Exchange Commission. In computing
                  the number of shares beneficially owned by a person and the
                  percentage ownership of that person, shares of Common Stock
                  subject to options or warrants held by that person that are
                  exercisable on or before December 31, 2000 are deemed
                  outstanding. Such shares, however, are not deemed outstanding
                  for purposes of computing the percentage ownership of any
                  other person. To the Company's knowledge, the persons named in
                  the table have sole voting and investment power with respect
                  to all shares of Common Stock shown as beneficially owned by
                  them, subject to community property laws where applicable and
                  the information contained in the footnotes to this table.
         (2)      Based on 5,095,372 shares of Common Stock outstanding,
                  excluding (except as reflected in footnotes (5), (7)) and
                  (9)), 1,190,613 shares of Common Stock issuable upon the
                  conversion of a promissory note and exercise of outstanding
                  options and warrants, 375,000 of which are held by Michael
                  Fuchs, 781,113 of which are held by Adam Linter, and 34,500 of
                  which are held by James R. Rosbe.
         (3)      Address is 1001 Fourth Avenue, Suite 2200, Seattle, Washington
                  98154.
         (4)      Address is 9 West 57th Street, Suite 4220, New York, New York
                  10019.
         (5)      Includes 250,000 shares obtainable upon the exercise of
                  warrants and 125,000 shares obtainable upon the conversion of
                  a promissory note.
         (6)      Address is 125 South Barrington Place, Los Angeles, California
                  90049.
         (7)      Includes 781,113 shares of Common Stock presently obtainable
                  through the exercise of warrants and options.
         (8)      Address is 3364 Tacoma Circle, Ann Arbor, Michigan 48108.
         (9)      Includes 34,500 shares of Common Stock obtainable through the
                  exercise of options.
         (10)     Address is 9830 Wilshire Boulevard, Beverly Hills, California
                  90212.
         (11)     Address is 4041 Morningstar, Huntington Beach, California
                  92649.
         (12)     All shares are held in the Dunn Family Trust. Mr. Dunn and Jan
                  Dunn are trustees with shared voting power with respect to
                  such shares.
         (13)     Consists of Adam Linter, James R. Rosbe, Rick Nicita and Alan
                  G. Dunn. See footnotes (7), (9) and (12).

Except as listed above, there is no shareholder who is known to the Company to
beneficially own more than 5% of the Company's Common Stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of June 30, 2000, Adam Linter owed a total of $12,059 to the Company. Such
amount is unsecured and is repayable upon demand.

Rick Nicita, a director, is the Co-Chairman of Creative Artists Agency, a talent
agency the Company was a client of during the fiscal year ended June 30, 2000
and continues to be a client of in the current fiscal year.

Alan G. Dunn, a director, has previously loaned money to the Company, with the
maximum amount at any one time being approximately $102,800. As a result of
repayments, the Company's indebtedness to Mr. Dunn is now approximately $72,800.

On January 13, 2000, in return for services rendered and liability on a personal
guarantee of a Company obligation, the Company issued to Adam Linter (i) 500,000
shares of Common Stock and (ii) warrants to purchase another 500,000 shares for
$0.10 per share until January 14, 2005.

On December 15, 1999, in return for $50,000 in cash, the Company issued to Peter
Rettman (i) 500,000 shares of Common Stock and (ii) warrants to purchase another
500,000 shares for $0.10 per share until December 14, 2004. On February 22,
2000, the Company issued 700,000 shares of Common Stock to Peter Rettman,
500,000 of which were issued for $50,000 in cash pursuant to his exercise of
previously granted warrants, and the balance of which were issued for an
additional payment of $50,000 in cash.



<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS. The following exhibits are filed as part of this report:

EXHIBIT                        DESCRIPTION
-------                        -----------
3.1           Articles of Incorporation of the Registrant, as amended (1)
3.2           Amendment to Articles of Incorporation (1)
3.3           Amended and Restated Bylaws of the Registrant (1)
4.1           Form of Warrant Agreement and Certificate (1)
4.2           Form of Managing Placement Agent's Warrant (1)
4.3           Form of Warrant issued to Michael Fuchs (3)
4.4           Form of Warrant issued to Peter Rettman (4)
4.5           Form of Warrant issued to Adam Linter
10.1          Employment Agreement between the Registrant and Adam Linter (1)
10.2          Non-Qualified Stock Option Plan (1)
10.3          Form of Stock Option Agreement (1)
10.4          Software Development Agreement between the Registrant and Robit
              Hairman (1)
10.5          Amendment to Stock Option Agreement appearing below as Exhibit
              10.11 (1)
10.6          Stock Option Agreement dated as of April 14, 1995 between the
              Registrant and Kristan Altimus (1)
10.7          Stock Option Agreement dated as of April 14, 1995 between the
              Registrant and Adam Linter (1)
10.8          Stock Option Agreement dated as of April 14, 1995 between the
              Registrant and S-M Investments (1)
10.9          Stock Option Agreement dated as of April 18, 1994 between the
              Registrant and S-M Investments (1)
10.10         Stock Option Agreement dated as of April 18, 1994 between the
              Registrant and S-M Investments (1)
10.11         Stock Option Agreement dated as of June 30, 1993 between the
              Registrant and Jim Rosbe (1)
10.12         Stock Option Agreement dated as of October 5, 1994 between the
              Registrant and Michael Weinstock (as amended January 31, 1996) (1)
10.13         Stock Option Agreement dated as of May 15, 1996 between the
              Registrant and S-M Investments (1)
10.14         Stock Option Agreement dated as of May 15, 1996 between the
              Registrant and Adam Linter (1)
10.15         Form of Indemnification Agreement for directors and officers (1)
10.16         Warrant Agreement and Certificate issued to J.E. Liss & Company,
              Inc. on November 12, 1996 (1)
10.17         Stock Option Agreement dated as of December 1, 1995 between the
              Registrant and Philip Brodie, as amended (1)
10.18         Stock Purchase Agreement between the Registrant and Starbright
              Graphics, Inc. dated as of January 1, 1993 (1)
10.19         Amendment to Stock Option Agreement dated as of April 18, 1997
              between the Registrant and Adam Linter (3)
10.20         Second Amendment to Stock Option Agreement dated as of November 3,
              1997 between the Registrant and Adam Linter (2)
10.21         Convertible Promissory Note dated June 25, 1998 by the Registrant
              in favor of Michael Fuchs (3)
10.22         Agreement for Purchase and Sale of Stock dated December 14, 1998
              between the Registrant and Wolfgang Struss (5)
10.23         Negotiable Promissory Note dated December 14, 1998 by the
              Registrant in favor of Wolfgang Struss (5)
10.24         First Amendment to Non-Qualified Stock Option Plan
24            Power of Attorney
27            Financial Data Schedule

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

(1)      Incorporated by reference to Registration Statement on Form SB-2 (No.
         333-4792-LA). Exhibit numbers from that Registration Statement are
         retained, where applicable.
(2)      Incorporated by reference to Form 10-QSB for the quarter ended December
         31, 1997 (File No. 0-29050).
(3)      Incorporated by reference to Form 10-KSB for the fiscal year ended June
         30, 1998 (File No. 0-29050)
(4)      Incorporated by reference to Form 10-QSB for the quarter ended December
         31, 1999 (File No. 0-29050)
(5)      Incorporated by reference to Form 10-KSB for the fiscal year ended June
         30, 1999 (File No. 0-29050)

(b)      REPORTS ON FORM 8-K. The Company did not file any reports on Form 8-K
         during the fiscal year ended June 30, 2000.



<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on the 13th day of
October, 2000.


TOMORROW'S MORNING, INC.

By: /S/ ADAM LINTER
    -----------------------------------
   Adam Linter, President and Treasurer
   (Principal Executive Officer and Principal Financial and Accounting 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.

SIGNATURE                        TITLE                          DATE

/S/ ADAM LINTER                  Chairman of the Board,
------------------------         President, Treasurer and
 Adam Linter                     Secretary                      October 13, 2000



* JAMES R. ROSBE                 Director                       October 13, 2000
------------------------
James R. Rosbe

* RICK NICITA                    Director                       October 13, 2000
------------------------
Rick Nicita

* ALAN G. DUNN                   Director                       October 13, 2000
------------------------
Alan G. Dunn

* By:   /S/ ADAM LINTER
       -----------------
        Adam Linter
       (Attorney-In-Fact)



<PAGE>

<TABLE>

                                  EXHIBIT INDEX
<CAPTION>

Exhibit
Number                         Description
------                         -----------
<S>                  <C>                                                                                        <C>
3.1                  Articles of Incorporation of the Registrant, as amended                                    *
3.2                  Amendment to Articles of Incorporation                                                     *
3.3                  Amended and Restated Bylaws of the Registrant                                              *
4.1                  Form of Warrant Agreement and Certificate                                                  *
4.2                  Form of Managing Placement Agent's Warrant                                                 *
4.3                  Form of Warrant issued to Michael Fuchs                                                    ***
4.4                  Form of Warrant issued to Peter Rettman                                                    ****
4.5                  Form of Warrant issued to Adam Linter
10.1                 Employment Agreement between the Registrant and Adam Linter                                *
10.2                 Non-Qualified Stock Option Plan                                                            *
10.3                 Form of Stock Option Agreement                                                             *
10.4                 Software Development Agreement between the Registrant and Robit Hairman                    *
10.5                 Amendment to Stock Option Agreement appearing below as Exhibit 10.11                       *
10.6                 Stock Option Agreement dated as of April 14, 1995 between the Registrant
                     and Kristan Altimus                                                                        *
10.7                 Stock Option Agreement dated as of April 14, 1995 between the Registrant
                     and Adam Linter                                                                            *
10.8                 Stock Option Agreement dated as of April 14, 1995 between the Registrant
                     and S-M Investments                                                                        *
10.9                 Stock Option Agreement dated as of April 18, 1994 between the Registrant
                     and S-M Investments                                                                        *
10.10                Stock Option Agreement dated as of April 18, 1994 between the Registrant
                     and S-M Investments                                                                        *
10.11                Stock Option Agreement dated as of June 30, 1993 between the Registrant
                     and Jim Rosbe                                                                              *
10.12                Stock Option Agreement dated as of October 5, 1994 between the Registrant
                     and Michael Weinstock (as amended January 31, 1996)                                        *
10.13                Stock Option Agreement dated as of May 15, 1996 between the Registrant
                     and S-M Investments                                                                        *
10.14                Stock Option Agreement dated as of May 15, 1996 between the Registrant
                     and Adam Linter                                                                            *
10.15                Form of Indemnification Agreement for directors and officers                               *
10.16                Warrant Agreement and Certificate issued to J.E. Liss & Company, Inc. on
                     November 12, 1996                                                                          *
10.17                Stock Option Agreement dated as of December 1, 1995 between the Registrant
                     and Philip Brodie, as amended                                                              *
10.18                Stock Purchase Agreement between the Registrant and Starbright Graphics, Inc.
                     dated as of January 1, 1993                                                                *
10.19                Amendment to Stock Option Agreement dated as of April 18, 1997 between
                     the Registrant and Adam Linter                                                             ***
10.20                Second Amendment to Stock Option Agreement dated as of November 3, 1997
                     between the Registrant and Adam Linter                                                     **
10.21                Convertible Promissory Note dated June 25, 1998 by the Registrant in favor of
                     Michael Fuchs                                                                              ***
10.22                Agreement for the Purchase and Sale of Stock dated December 14, 1998 between
                     the Registrant and Wolfgang Struss                                                         *****
10.23                Negotiable Promissory Note dated December 14, 1998 by the Registrant in favor
                     of Wolfgang Struss                                                                         *****
10.24                First Amendment to Non-Qualified Stock Option Plan
24                   Power of Attorney
27                   Financial Data Schedule

</TABLE>



<PAGE>

*        Incorporated by reference to Registration Statement on Form SB-2 (No.
         333-4792-LA). Exhibit numbers from that Registration Statement are
         retained, where applicable.
**       Incorporated by reference to Form 10-QSB for the quarter ended December
         31, 1997 (File No. 0-29050).
***      Incorporated by reference to Form 10-KSB for the fiscal year ended June
         30, 1998 (File No. 0-29050).
****     Incorporated by reference to Form 10-QSB for the quarter ended December
         31, 1999 (File No. 0-29050).
*****    Incorporated by reference to Form 10-KSB for the fiscal year ended June
         30, 1999 (File No. 0-29050).