##### 



U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB

(Mark One)

[X]    Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2001

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act

For the transition period from _________ to _________

Commission File number 0-32497

UDATE.COM, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)

|                                |  |                                     
|------------------------------- |  | ------------------------------------
|Delaware                        |  | 330835561                           
|                               
|                               
|                               
|                               
|(State or Other Jurisdiction of |  | (I.R.S. Employer Identification No.)
|                               
|                               
|                               
|                               
|Incorporation or Organization) 

New Enterprise House, St Helens Street,
Derby, England DE1 3GY
(Address of Principal Executive Offices)

(877) 802-7243
(Issuers Telephone Number, Including Area Code)

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

As of October 16, 2001, there were 24,676,820 shares of Registrants
Common Stock, $0.001 par value, outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No [X]





---



##### 



UDATE.COM, INC. AND SUBSIDIARIES
INDEX



|         |  |                                                                                                           |  |         
|-------- |  | --------------------------------------------------------------------------------------------------------- |  | --------
|PART I.  |  | FINANCIAL INFORMATION                                                                                     |  | Page No.
|        
|Item 1.  |  | Financial Statements:                                                                                    
|        
|         |  | Condensed Consolidated Balance Sheets 
September 30, 2001 and December 31, 2000                          |  | 1       
|        
|         |  | Condensed Consolidated Statements of Operations 
Three and Nine Months ended September 30, 2001 and 2000 |  | 2       
|        
|         |  | Condensed Consolidated Statements of Cash Flows 
Three and Nine Months ended September 30, 2001 and 2000 |  | 3       
|        
|         |  | Notes to Condensed Consolidated Financial Statements                                                      |  | 4       
|        
|Item 2.  |  | Managements Discussion and Analysis or Plan of Operations                                                |  | 11      
|        
|PART II. |  | OTHER INFORMATION                                                                                        
|        
|Item 1.  |  | Legal Proceedings                                                                                         |  | 28      
|        
|Item 2.  |  | Changes in Securities and Use of Proceeds                                                                 |  | 28      
|        
|Item 3.  |  | Defaults upon Senior Securities                                                                           |  | 28      
|        
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                       |  | 28      
|        
|Item 5.  |  | Other Information                                                                                         |  | 28      
|        
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                          |  | 28      
|        
|         |  | Signatures                                                                                                |  | 30      





---



##### 



UDATE.COM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)

|                                                                                                                                                                                                                                       |  |  |              |            |              |  |            |        | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------------ | ---------- | ------------ |  | ---------- | ------ | 
|                                                                                                                                                                                                                                       |  |  | Sep 30, 2001 |            | Dec 31, 2000
|                                                                                                                                                                                                                                       |  |  | $            |            | $           
|ASSETS                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Current assets :                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Cash                                                                                                                                                                                                                                   |  |  | 1,975,202    |            |              |  | 1,450,366  |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Trade accounts receivable                                                                                                                                                                                                              |  |  | 385,730      |            |              |  | 167,723    |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Due from officers and employees                                                                                                                                                                                                        |  |  | 112,953      |            |              |  | 25,067     |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Prepaid expenses                                                                                                                                                                                                                       |  |  | 258,413      |            |              |  | 348,452    |       
|                                                                                                                                                                                                                                       |  |  |             
|Total current assets                                                                                                                                                                                                                   |  |  | 2,732,298    |            |              |  | 1,991,608  |       
|                                                                                                                                                                                                                                       |  |  |             
|Intangible assets :                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Goodwill                                                                                                                                                                                                                               |  |  | 18,683,625   |            |              |  |           |       
|                                                                                                                                                                                                                                       |  |  |             
|                                                                                                                                                                                                                                       |  |  |              | 18,683,625 |              |  |            | 0      | 
|                                                                                                                                                                                                                                       |  |  |             
|Plant and equipment                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Computer and office equipment                                                                                                                                                                                                          |  |  | 2,465,737    |            |              |  | 1,765,372  |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Website Development                                                                                                                                                                                                                    |  |  | 128,285      |            |              |  |           |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Less : Accumulated depreciation                                                                                                                                                                                                        |  |  | 1,263,838    |            |              |  | 501,096    |       
|                                                                                                                                                                                                                                       |  |  |             
|Net computer and office equipment                                                                                                                                                                                                      |  |  | 1,330,184    |            |              |  | 1,264,276  |       
|                                                                                                                                                                                                                                       |  |  |             
|Total assets                                                                                                                                                                                                                           |  |  | 22,746,107   |            |              |  | 3,255,884  |       
|                                                                                                                                                                                                                                       |  |  |             
|Current liabilities :                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Current portion of obligations under capital leases                                                                                                                                                                                    |  |  | 97,927       |            |              |  | 70,177     |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Accounts payable and accrued liabilities                                                                                                                                                                                               |  |  | 1,371,324    |            |              |  | 1,156,524  |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Deferred revenue                                                                                                                                                                                                                       |  |  | 1,725,513    |            |              |  | 439,929    |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Note payable                                                                                                                                                                                                                           |  |  | 4,103,695    |            |              |  |           |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Amounts due to officers and directors                                                                                                                                                                                                  |  |  |             |            |              |  | 207,228    |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Other current liabilities                                                                                                                                                                                                              |  |  | 430,072      |            |              |  | 54,822     |       
|                                                                                                                                                                                                                                       |  |  |             
|Total current liabilities                                                                                                                                                                                                              |  |  | 7,728,531    |            |              |  | 1,928,680  |       
|                                                                                                                                                                                                                                       |  |  |             
|Obligations under capital leases, excluding current portion                                                                                                                                                                            |  |  | 27,246       |            |              |  | 12,978     |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Deferred revenue                                                                                                                                                                                                                       |  |  | 244,868      |            |              |  |           |       
|                                                                                                                                                                                                                                       |  |  |             
|                                                                                                                                                                                                                                       |  |  |              | 272,114    |              |  |            | 12,978 | 
|                                                                                                                                                                                                                                       |  |  |             
|Total liabilities                                                                                                                                                                                                                      |  |  | 8,000,645    |            |              |  | 1,941,658  |       
|                                                                                                                                                                                                                                       |  |  |             
|Stockholders equity (deficit) :                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Common stock $0.001 par value
Authorised 150,000,000 and 50,000,000 at September 30, 2001 and
December 31, 2000 respectively
Issued and outstanding 24,640,257 and 18,255,000 at September 30, 2001 and December 31, 2000 respectively |  |  | 24,640       |            |              |  | 18,255     |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Additional paid-in capital                                                                                                                                                                                                             |  |  | 22,274,876   |            |              |  | 7,963,157  |       
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Retained deficit                                                                                                                                                                                                                       |  |  | (7,595,647   | )          |              |  | (6,708,779 | )     
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                      
|Accumulated other comprehensive income  cumulative translation adjustment                                                                                                                                                             |  |  | 41,593       |            |              |  | 41,593     |       
|                                                                                                                                                                                                                                       |  |  |             
|Total stockholders equity                                                                                                                                                                                                             |  |  | 14,745,462   |            |              |  | 1,314,226  |       
|                                                                                                                                                                                                                                       |  |  |             
|Total liabilities and stockholders equity                                                                                                                                                                                             |  |  | 22,746,107   |            |              |  | 3,255,884  |       
|                                                                                                                                                                                                                                       |  |  |             

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

1



---



##### 



|                                                                                              |  |              |            |              |  |              |            |              |  |  |            |   |  |  |            |  
|--------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ------------ |  | ------------ | ---------- | ------------ |  |  | ---------- | - |  |  | ---------- | -
|UDATE.COM, INC. AND SUBSIDIARIES                                                             
|Consolidated
Statements of Operations(unaudited)                                              |  | 3 month      |            | 3 month      |  | 9 month      |            | 9 month     
|                                                                                              |  | period ended |            | period ended |  | period ended |            | period ended
|                                                                                              |  | Sep 30, 2001 |            | Sep 30, 2000 |  | Sep 30, 2001 |            | Sep 30, 2000
|                                                                                              |  | $            |            | $            |  | $            |            | $           
|                                                                                             
|Sales                                                                                         |  |              | 6,620,863  |              |  |              | 541,690    |              |  |  | 12,376,423 |   |  |  | 767,644    |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Operating expenses                                                                           
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Selling general and admin expenses                                                            |  |              | 2,414,863  |              |  |              | 1,480,317  |              |  |  | 5,675,492  |   |  |  | 2,147,925  |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Advertising expense                                                                           |  |              | 2,172,926  |              |  |              | 2,078,674  |              |  |  | 4,696,385  |   |  |  | 2,898,215  |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Depreciation                                                                                  |  |              | 194,041    |              |  |              | 139,671    |              |  |  | 536,475    |   |  |  | 215,105    |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Amortization of goodwill                                                                      |  |              | 1,039,068  |              |  |              |           |              |  |  | 2,076,606  |   |  |  |           |  
|                                                                                              |  |              |           
|Total operating expenses                                                                      |  |              | 5,820,898  |              |  |              | 3,698,662  |              |  |  | 12,984,958 |   |  |  | 5,261,245  |  
|                                                                                              |  |              |           
|Earnings Before Interest and Tax                                                              |  |              | 799,965    |              |  |              | (3,156,972 | )            |  |  | (608,535   | ) |  |  | (4,493,601 | )
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Interest income                                                                               |  |              | 3,565      |              |  |              | 57,522     |              |  |  | 12,635     |   |  |  | 85,660     |  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Interest expense                                                                              |  |              | 279,581    |              |  |              | 2,543      |              |  |  | 375,347    |   |  |  | 10,191     |  
|                                                                                              |  |              |           
|Profit/(Loss) before income taxes                                                             |  |              | 523,949    |              |  |              | (3,101,993 | )            |  |  | (971,247   | ) |  |  | (4,418,132 | )
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Income taxes                                                                                  |  |              |           |              |  |              |           |              |  |  |           |   |  |  |           |  
|                                                                                              |  |              |           
|Net Profit/(Loss)                                                                             |  |              | 523,949    |              |  |              | (3,101,993 | )            |  |  | (971,247   | ) |  |  | (4,418,132 | )
|                                                                                              |  |              |           
|Basic and diluted earnings per share                                                          |  |              | 0.02       |              |  |              | (0.17      | )            |  |  | (0.04      | ) |  |  | (0.31      | )
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Weighted average number of shares used in
calculation of basic and diluted earnings per share |  |              | 24,590,012 |              |  |              | 18,255,000 |              |  |  | 22,518,996 |   |  |  | 14,351,449 |  

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

2



---



##### 



UDATE.COM, INC. AND SUBSIDIARIES
Consolidated statements of cashflow (unaudited)

|                                                                                                                                                                       |  |              |           |              |  |              |            |              |  |  |           |   |  |  |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ------------ |  | ------------ | ---------- | ------------ |  |  | --------- | - |  |  | ---------- | -
|                                                                                                                                                                       |  | 3 month      |           | 3 month      |  | 9 month      |            | 9 month     
|                                                                                                                                                                       |  | period ended |           | period ended |  | period ended |            | period ended
|                                                                                                                                                                       |  | Sep 30, 2001 |           | Sep 30, 2000 |  | Sep 30, 2001 |            | Sep 30, 2000
|                                                                                                                                                                       |  | $            |           | $            |  | $            |            | $           
|                                                                                                                                                                      
|Cashflow                                                                                                                                                              
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|NetProfit/(Loss)                                                                                                                                                       |  |              | 523,949   |              |  |              | (3,101,993 | )            |  |  | (971,247  | ) |  |  | (4,418,132 | )
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Depreciation of plant and equipment                                                                                                                                    |  |              | 194,041   |              |  |              | 139,671    |              |  |  | 536,475   |   |  |  | 215,105    |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Amortization of goodwill                                                                                                                                               |  |              | 1,039,068 |              |  |              |           |              |  |  | 2,076,606 |   |  |  |           |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Stock compensation expense                                                                                                                                             |  |              | 10,641    |              |  |              |           |              |  |  | 24,829    |   |  |  |           |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Interest paid via issuance of stock                                                                                                                                    |  |              | 186,137   |              |  |              |           |              |  |  | 270,516   |   |  |  |           |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|(Increase) in trade accounts receivable, amounts due from officers and employees and prepaid expenses                                                                  |  |              | (177,299  | )            |  |              | (261,161   | )            |  |  | (145,417  | ) |  |  | (445,730   | )
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Increase in amounts payable and accrued liabilities, deferred revenue, amounts due to officers and directors, accrued salaries and wages and other current liabilities |  |              | 141,543   |              |  |              | 958,567    |              |  |  | 533,272   |   |  |  | 1,461,333  |  
|                                                                                                                                                                       |  |              |          
|Net cash provided by / (used in) operating activities                                                                                                                  |  |              | 1,918,080 |              |  |              | (2,264,916 | )            |  |  | 2,325,034 |   |  |  | (3,187,424 | )
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Cash flows used in investing activities :                                                                                                                             
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Cash acquired with Kiss.com, Inc                                                                                                                                       |  |              |          |              |  |              |           |              |  |  | 49,483    |   |  |  |           |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Costs associated with the acquisition of Kiss.com                                                                                                                      |  |              | (25,334   | )            |  |              |           |              |  |  | (520,216  | ) |  |  |           |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Website development                                                                                                                                                    |  |              |          |              |  |              |           |              |  |  | (128,285  | ) |  |  |           |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Capital expenditure                                                                                                                                                    |  |              | (46,383   | )            |  |              | (1,220,153 | )            |  |  | (224,366  | ) |  |  | (1,528,083 | )
|                                                                                                                                                                       |  |              |          
|Net cash used in investing activities                                                                                                                                  |  |              | (71,717   | )            |  |              | (1,220,153 | )            |  |  | (823,384  | ) |  |  | (1,528,083 | )
|                                                                                                                                                                       |  |              |          
|Cash flows used in financing activities :                                                                                                                             
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Repayment of capital lease obligations                                                                                                                                 |  |              | (32,538   | )            |  |              | (20,599    | )            |  |  | (80,509   | ) |  |  | (68,170    | )
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Loan note repayment                                                                                                                                                    |  |              | (796,305  | )            |  |              |           |              |  |  | (896,305  | ) |  |  |           |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Proceeds from issuance of common stock                                                                                                                                 |  |              |          |              |  |              |           |              |  |  |          |   |  |  | 7,635,580  |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Exchange difference proceeds from issuance of common stock                                                                                                             |  |              |          |              |  |              |           |              |  |  |          |   |  |  | 9,665      |  
|                                                                                                                                                                       |  |              |          
|Net cash used in financing activities                                                                                                                                  |  |              | (828,843  | )            |  |              | (20,599    | )            |  |  | (976,814  | ) |  |  | 7,577,075  |  
|                                                                                                                                                                       |  |              |          
|Net increase/(decrease) in cash and cash equivalents                                                                                                                   |  |              | 1,017,520 |              |  |              | (3,505,668 | )            |  |  | 524,836   |   |  |  | 2,861,568  |  
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|                                                                                                                                                                      
|Cash and cash equivalents at beginning of period                                                                                                                       |  |              | 957,682   |              |  |              | 6,419,653  |              |  |  | 1,450,366 |   |  |  | 52,417     |  
|                                                                                                                                                                       |  |              |          
|Cash and cash equivalents at end of period                                                                                                                             |  |              | 1,975,202 |              |  |              | 2,913,985  |              |  |  | 1,975,202 |   |  |  | 2,913,985  |  
|                                                                                                                                                                       |  |              |          

Noncash Investing and Financing Activities

The Company purchased all of the outstanding shares of Kiss.com via the issuance
of 6,249,998 shares of its common stock, along with notes payable in an aggregate
principal amount of $5,000,000.

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

3



---



##### 



UDate.com, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements, September 30, 2001 (unaudited)

NOTE 1. BASIS OF PRESENTATION

The accompanying interim unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with Regulation S-B. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.

In the opinion of management, the accompanying interim unaudited condensed
consolidated financial statements contain all material adjustments consisting
only of normal recurring adjustments necessary to present fairly the
consolidated financial position, the consolidated results of operations, the
changes in stockholders equity and cash flows of uDate.com, Inc., a Delaware
corporation (the Company), and subsidiaries for the interim periods
presented.

The results of the three months ended September 30, 2001 are not necessarily
indicative of the results of operations for the full year. These interim
unaudited condensed consolidated financial statements and related footnotes
should be read in conjunction with the financial statements and footnotes
thereto included in the Companys Form 10-KSB filed with the Securities and
Exchange Commission (the Commission) on April 2, 2001, as amended by the
Companys Forms 10-KSB/A filed with the Commission on April 30, 2001 and July
11, 2001, the Companys Form 10-QSB filed with the Commission on May 15, 2001
and the Companys Form 10-QSB filed with the Commission on August 1, 2001.

NOTE 2. NATURE OF BUSINESS

The Companys operations, which are all within the Internet dating segment, are
split across two entities :

|  |  |                                                                                                                                  
|- |  | ---------------------------------------------------------------------------------------------------------------------------------
| |  | uDate.com Ltd. (uDate-UK), which is a United Kingdom (UK) based
company providing Internet dating services on a global basis.
| 
| 
| 
| 
| |  | Kiss.com, Inc. (Kiss.com), which is a Delaware corporation also
providing Internet dating services on a global basis.          

On March 29, 2001, the Company acquired Kiss.com for a consideration of
approximately $19.1 million, consisting of 6,249,998 shares of the Companys
common stock and notes with an aggregate principal amount of $5,000,000.

The results of operations for the Company include the operating results for
both uDate-UK and Kiss.com for the whole of the three months ended September
30, 2001.

Revenues are derived principally from the sale of membership subscriptions that
allow a paying member to contact and communicate with other members using the
Web sites private e-mail and messaging services.

NOTE 3. ACQUISITIONS

On March 29, 2001, the Company completed the acquisition of Kiss.com, a
privately held Washington corporation. Kiss.com operates a picture personals
service. As a result of the acquisition, Kiss.com became a wholly-owned
subsidiary of uDate.com, Inc. and uDate.com, Inc. issued 6,249,998 shares of
its common stock, along with notes payable for an aggregate principal amount of
$5,000,000, in exchange for all of the outstanding shares of Kiss.com. The
acquisition was accounted

4



---



##### 



for under the purchase method of accounting, and was valued at approximately
$19.6 million, including transaction costs.

In respect of the $5,000,000 notes payable, $100,000 was repaid in March 2001
and $796,305 was repaid during the three months ended September 30, 2001. The
principal balance of the notes outstanding as of September 30, 2001 is $4,103,695.
The Company is required to repay to the noteholders an amount equal to 20% of the
Companys gross Internet dating revenues on a monthly basis. Any balance
outstanding is payable in full on the completion of any Company financing.

Interest is payable on the notes at a rate of 7% per annum from July 1, 2001.
In addition, until the notes are repaid, the Company shall issue and deliver to
each noteholder a certificate or certificates representing that number of
shares of the Companys common stock equal to two percent (2%) of the aggregate
principal amount of such persons note that is unpaid as of the end of the
month then-ended, divided by the greater of (i) $2.00 per share and (ii) the
Average Price (as such term is defined in the notes).

A summary of the purchase price for the acquisition is as follows:

|                         |  |   |            | 
|------------------------ |  | - | ---------- | 
|Stock                    |  | $ | 14,107,138 | 
|                        
|                        
|                        
|                        
|Notes payable            |  | $ | 5,000,000  | 
|                         |  |   |            | 
|                         |  | $ | 19,107,138 | 
|                        
|                        
|                        
|                        
|Direct acquisition costs |  | $ | 523,216    | 
|                         |  |   |            | 
|Total purchase price     |  | $ | 19,630,354 | 
|                         |  |   |            | 

The purchase price was initially allocated as follows:

|                            |  |   |             |  
|--------------------------- |  | - | ----------- | -
|Current assets acquired     |  | $ | 78,578      |  
|                           
|                           
|                           
|                           
|Equipment                   |  | $ | 206,492     |  
|                           
|                           
|                           
|                           
|Non-current assets acquired |  | $ | 41,342      |  
|                           
|                           
|                           
|                           
|Liabilities                 |  | ( | $ 1,456,289 | )
|                           
|                           
|                           
|                           
|Goodwill                    |  | $ | 20,760,231  |  
|                            |  |   |             |  
|Total                       |  | $ | 19,630,354  |  
|                            |  |   |             |  

The Company has not yet completed the purchase accounting analysis to allocate
acquisition costs to the acquired net assets. The amount shown above as
goodwill represents the excess of purchase price over the value of the net
assets acquired.

The goodwill amount shown above may be allocated to identified intangible
assets and other assets and acquired liabilities assumed as appraisal and
evaluations are completed.

Goodwill will be amortized on a straight line basis over its estimated useful
life of five years.

In connection with the acquisition of Kiss.com, the Company incurred
approximately $523,000 in acquisition-related expenditures for professional and
other costs. As of September 30, 2001, approximately $520,000 of these costs
have been paid. The remaining costs will be paid during the fourth quarter of
2001.

The following table presents pro forma results of operations as if the
acquisition had occurred at the beginning of each of the periods presented. The
pro forma information is not necessarily indicative of the combined results
that would have occurred had the acquisition taken place at the beginning of
the periods presented, nor is it necessarily indicative of results that may
occur in the future :

5



---



##### 



|                                       |  |                                 |            |             |  |   |            |  
|-------------------------------------- |  | ------------------------------- | ---------- | ----------- |  | - | ---------- | -
|                                       |  | Nine months ended September, 30
|                                      
|                                      
|                                      
|                                      
|                                       |  | 2001                            |            | 2000       
|                                      
|                                      
|                                      
|                                      
|                                       |  | (unaudited)                     |            | (unaudited)
|                                      
|Total revenue                          |  | $                               | 13,870,989 |             |  | $ | 3,235,802  |  
|                                      
|                                      
|                                      
|                                      
|Net loss                               |  | $                               | (2,557,364 | )           |  | $ | (8,610,526 | )
|                                      
|                                      
|                                      
|                                      
|Net loss per share  basic and diluted |  | $                               | (0.10      | )           |  | $ | (0.42      | )

Amortization of goodwill included in both periods above is $3,112,611.

NOTE 4. LIQUIDITY

As of September 30, 2001, the Company had $1,975,202 of cash. The Company
believes that its current cash balance, together with its projected operating
results and cash flows, will be sufficient to meet its liquidity needs for the
next 12 months and, accordingly, has prepared its financial statements assuming
that the Company will continue as a going concern. Notwithstanding this, however, the Company does not currently have an
established line of credit with a commercial bank. Such a credit facility may
be difficult to obtain in the short-term with the Companys historical
operating results.

In order to obtain additional funds in the future, the Company may need to seek
additional equity capital, which would be dilutive to current stockholders.

The Company has a liability of approximately $4.1 million outstanding in
respect of the notes payable issued on the acquisition of Kiss.com. This is
repayable on a monthly basis from July 31, 2001, based on a percentage of
dating revenue, or in full on the raising of finance by the Company.

On the basis of the actual position as at September 30, 2001 and forecasts
through 2001, the Company anticipates that it will be able to fund its operating
expenses and required debt service payments in 2001 with the cash flow from its
operations.

6



---



##### 



NOTE 5. EARNINGS PER SHARE

Basic earnings (loss) per share (EPS) is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding for the period, excluding the effect of any dilutive
potential common stock. Diluted EPS reflects the potential dilution in the
earnings of an entity that could occur as a result of any potential common
stock outstanding during the period. For the periods presented herein, basic EPS is the same as
diluted EPS since (i) the Company reported a net loss for each period reported upon
other than the three months ended September 30, 2001 and (ii) for the
three months ended September 30, 2001, applying the treasury stock method, the
outstanding options are anti-dilutive (i.e., 6,670,000 potential
common shares related to employee stock options and 787,550 potential common
shares related to other options and warrants were excluded from the EPS
calculations, since their impact was anti-dilutive).

7



---



##### 



NOTE 6. SHARE OPTION AGREEMENTS

The Company has granted stock options to certain officers and employees of the
Company as follows:

|       |  |                                                                                                                                                                                                                                                                                                                            
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)    |  | To purchase 1,000,000 shares of common stock at an exercise price of
$7.50 per share. 50% of the options vest on May 23, 2001 and 50% vest
evenly over the following twelve months. These options expire on May 22,
2010 if not exercised.                                                                                 
|      
|      
|      
|      
|(ii)   |  | To purchase 200,000 shares of common stock at an exercise price of $7.50
per share. 25% of the options vested on October 16, 2001 and 75% vest
evenly over the following 24 months. These options expire on October 2,
2010 if not exercised.                                                                              
|      
|      
|      
|      
|(iii)  |  | To purchase 850,000 shares of common stock at an exercise price of $1.88
per share. 25% of the options vested on February 12, 2001 and 75% vest
evenly over the following 24 months. These options expire on February 11,
2011 if not exercised.                                                                           
|      
|      
|      
|      
|(iv)   |  | To purchase 150,000 shares of common stock at an exercise price of $1.88
per share. 10% of the options vested on February 12, 2001 and 90% vest
evenly over the following 24 months. These options expire on February 11,
2011 if not exercised.                                                                           
|      
|      
|      
|      
|(v)    |  | To purchase 190,000 shares of common stock at an exercise price of $1.88
per share. The whole of these options vest evenly over the 24 months
following February 12, 2001. These options expire on February 11, 2011 if
not exercised.                                                                                     
|      
|      
|      
|      
|(vi)   |  | To purchase 280,000 shares of common stock at an exercise price of $1.88
per share. 40% of the options vested on March 29, 2001 and 60% vest evenly
over the following 15 months. These options expire on March 28, 2011 if
not exercised.                                                                                 
|      
|      
|      
|      
|(vii)  |  | To purchase 520,000 shares of common stock at an exercise price of $1.94
per share. 25% of the options vested on March 29, 2001 and 75% vest evenly
over the following 24 months. These options expire on March 28, 2011 if
not exercised.                                                                                 
|      
|      
|      
|      
|(viii) |  | To purchase 80,000 shares of common stock at an exercise price of $1.94
per share. 25% of the options vested on March 29, 2001 and 75% vest evenly
over the following 36 months. These options expire on March 28, 2011 if
not exercised.                                                                                  
|      
|      
|      
|      
|(ix)   |  | To purchase 2,785,000 shares of common stock at an exercise price of
$1.50 per share. 700,000 of the options vested on July 1, 2001 and the
remainder vest at the rate of 521,250 shares on each of the six month
anniversaries of July 1, 2001 until fully vested. These options expire on
June 30, 2011 if not exercised.
|      
|      
|      
|      
|(x)    |  | To purchase 15,000 shares of common stock at an exercise price of $1.88
per share. The options vest at the rate of 3,750 shares on each of the six
month anniversaries of July 1, 2001 until fully vested. These options
expire on June 30, 2011 if not exercised.                                                         
|      
|      
|      
|      
|(xi)   |  | To purchase 600,000 shares of common stock at an exercise price of $1.94
per share. The options vest at the rate of 150,000 shares on each of the
six month anniversaries of July 1, 2001 until fully vested. These options
expire on June 30, 2011 if not exercised.                                                      

8



---



##### 

Stock option activity during the periods indicated is as follows:

|                                           |  |                  |           |                |  |                  |      | 
|------------------------------------------ |  | ---------------- | --------- | -------------- |  | ---------------- | ---- | 
|                                           |  |                  |           |                |  | Weighted average
|                                           |  | Number of shares |           | exercise price
|                                           |  |                  |           |               
|                                          
|Balance at March 1, 1999 and March 1, 2000 |  |                  |          |                |  |                  |     | 
|                                          
|Granted                                    |  |                  | 1,200,000 |                |  | $                | 7.50 | 
|                                           |  |                  |           |                |  |                  |      | 
|                                          
|Balance at December 31, 2000               |  |                  | 1,200,000 |                |  | $                | 7.50 | 
|                                          
|Granted                                    |  |                  | 2,070,000 |                |  | $                | 1.90 | 
|                                           |  |                  |           |                |  |                  |      | 
|                                          
|Balance at March 31, 2001                  |  |                  | 3,270,000 |                |  | $                | 3.95 | 
|                                          
|Granted                                    |  |                  |          |                |  |                  |     | 
|                                           |  |                  |           |                |  |                  |      | 
|                                          
|Balance at June 30, 2001                   |  |                  | 3,270,000 |                |  | $                | 3.95 | 
|                                          
|Granted                                    |  |                  | 3,400,000 |                |  | $                | 1.58 | 
|                                           |  |                  |           |                |  |                  |      | 
|                                          
|Balance at September 30, 2001              |  |                  | 6,670,000 |                |  | $                | 2.74 | 

NOTE 7. SIGNIFICANT ACCOUNTING POLICIES

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board issued Statement No.
141, Business Combinations, and Statement No. 142, Goodwill and Other
Intangible Assets. Statement 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
as well as all purchase method business combinations completed after June 30,
2001. Statement 141 also specifies criteria intangible assets acquired in a
purchase method business combination must meet to be recognized and reported
apart from goodwill, noting that any purchase price allocable to an assembled
workforce may not be accounted for separately. Statement 142 will require that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 will also require that
intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of.

The Company has adopted the provisions of Statement 141, and is required to
adopt the provisions of Statement 142 effective January 1, 2002. Furthermore,
any goodwill and any intangible asset determined to have an indefinite useful
life that are acquired in a purchase business combination completed after June
30, 2001 will not be amortized, but will continue to be evaluated for
impairment in accordance with the appropriate pre-Statement 142 accounting
literature. Goodwill and intangible assets acquired in business combinations
completed before July 1, 2001 will continue to be amortized prior to the
adoption of Statement 142.

Statement 141 will require, upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary
reclassifications in order to conform with the new criteria in Statement 141
for recognition apart from goodwill. Upon adoption of Statement 142, the
Company will be required to reassess the useful lives and residual values of
all intangible assets acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the first interim
period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required
to test the intangible asset for impairment in accordance with the provisions
of Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of
a change in accounting principle in the first interim period.

In connection with the transitional goodwill impairment evaluation, Statement
142 will require the Company to perform an assessment of whether there is an
indication that goodwill is impaired as of the date of adoption. To accomplish
this the Company must identify its reporting
units and determine the carrying value of each reporting unit by assigning the
assets and liabilities, including the existing goodwill and intangible assets,
to those reporting units as of the date of adoption. The Company will then
have up to six months from the date of adoption to determine the fair value of
each reporting unit and compare it to the reporting units carrying amount. To
the extent a reporting units carrying amount exceeds its fair value, an
indication exists that the reporting units goodwill may be impaired and the
Company must perform the second step of the transitional impairment test. In
the second step, the Company must compare the implied fair value of the
reporting units goodwill, determined by allocating the reporting units fair
value to all of it assets (recognized and unrecognized) and liabilities in a
manner similar to a purchase price allocation in accordance with Statement
141, to its carrying amount, both of which would be measured as of the date of
adoption. This second step is required to be completed as soon as possible,
but no later than the end of the year of adoption. Any transitional impairment
loss will be recognized as the cumulative effect of a change in accounting
principle in the Companys statement of earnings.

And finally, any unamortized negative goodwill existing at the date Statement
142 is adopted must be written off as the cumulative effect of a change in
accounting principle.

The Company has not yet completed the purchase accounting analysis to allocate
acquisition costs to the acquired net assets. Prior to this allocation, as of
the date of adoption, the Company expects to have unamortized goodwill in the
amount of $17,646,000 which will be subject to the transition provisions of
Statements 141 and 142. Amortization expense related to goodwill was $nil and
$2,076,606 for the year ended December 31, 2000 and the nine months ended
September 30, 2001, respectively. Because of the extensive effort needed to
comply with adopting Statements 141 and 142, it is not practicable to
reasonably estimate the impact of adopting these Statements on the Companys
financial statements at the date of this report, including whether any
transitional impairment losses will be required to be recognized as the
cumulative effect of a change in accounting principle.

Statement of Accounting Standard number 143, Accounting for Asset Retirement
Obligations, which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs, will be effective for the Company for the year
commencing 1 January, 2003. The Company does not expect the standard to have a
material effect on its financial statements.

Statement of Accounting Standard number 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets, will be
effective for the Company for the year commencing 1 January, 2002. The Company
does not expect the standard to have a material effect on its financial
statements.

9



---



##### 



NOTE 8. SHAREHOLDERS EQUITY

UDATE.COM, INC. AND SUBSIDIARIES
Statement of Shareholders Equity and Other Comprehensive Income
Year ended March 1, 2000, 10 months ended December 31, 2000, 3 months ended March 31, 2001, 3 months ended June 30, 2001 and 3 months ended September 30, 2001

|                                   |                                                            |  |            |           |        |  |            |        |          |  |               |            |               |  |            |   |  |  |             |   |       |  |            |            | 
|---------------------------------- | ---------------------------------------------------------- |  | ---------- | --------- | ------ |  | ---------- | ------ | -------- |  | ------------- | ---------- | ------------- |  | ---------- | - |  |  | ----------- | - | ----- |  | ---------- | ---------- | 
|                                   |                                                            |  |            |           |        |  |            |        |          |  |               |            |               |  |            |   |  |  | Accumulated
|                                   |                                                            |  |            |           |        |  |            |        |          |  |               |            |               |  |            |   |  |  | other       |   | Total
|                                   |                                                            |  | Number     |           | Common |  | Additional |        | Retained |  | comprehensive |            | stockholders'
|                                   |                                                            |  | of shares  |           | stock  |  | capital    |        | earnings |  | income        |            | equity       
|                                   |                                                            |  |            |           | $      |  | $          |        | $        |  | $             |            | $            
|Balances at March 1, 1999          |                                                            |  | 10,711,835 |           |        |  | 167        |        |          |  |              |            |               |  | (213,875   | ) |  |  | (2,895      | ) |       |  | (216,603   | )         
|                                  
|                                  
|                                  
|                                  
|Net loss for the year              |                                                            |  |           |           |        |  |           |        |          |  |              |            |               |  | (292,213   | ) |  |  |            |   |       |  | (292,213   | )         
|                                  
|                                  
|                                  
|                                  
|Cumulative translation adjustment  |                                                            |  |           |           |        |  |           |        |          |  |              |            |               |  |           |   |  |  | 19,575      |   |       |  | 19,575     |           
|                                  
|                                  
|                                  
|                                  
|Comprehensive net loss             |                                                            |  |            |           |        |  |            |        |          |  |               |            |               |  |            |   |  |  |             |   |       |  | (272,638   | )         
|                                  
|                                  
|                                  
|                                  
|Balances at March 1, 2000          |                                                            |  | 10,711,835 |           |        |  | 167        |        |          |  |              |            |               |  | (506,088   | ) |  |  | 16,680      |   |       |  | (489,241   | )         
|                                  
|                                  
|                                  
|                                  
|Net loss for the 10 month period   |                                                            |  |           |           |        |  |           |        |          |  |              |            |               |  | (6,202,691 | ) |  |  |            |   |       |  | (6,202,691 | )         
|                                  
|                                  
|                                  
|                                  
|Cumulative translation adjustment  |                                                            |  |           |           |        |  |           |        |          |  |              |            |               |  |           |   |  |  | 24,913      |   |       |  | 24,913     |           
|                                  
|                                  
|                                  
|                                  
|Comprehensive net loss             |                                                            |  |            |           |        |  |            |        |          |  |               |            |               |  |            |   |  |  |             |   |       |  | (6,177,778 | )         
|                                  
|                                  
|                                  
|                                  
|Shares issued in connection with :
|                                  
|                                  
|                                  
|                                  
|                                   | Warrants and options granted to non-employees for services |  |            |          |        |  |            |       |          |  |               | 451,423    |               |  |            |  |  |  |             |  |       |  |            | 451,423    | 
|                                  
|                                  
|                                  
|                                  
|                                   | Offer to new investors in uDate.com Limited                |  |            | 213,165   |        |  |            |       |          |  |               | 223,880    |               |  |            |  |  |  |             |  |       |  |            | 223,880    | 
|                                  
|                                  
|                                  
|                                  
|                                   | Reverse Acquisition and Share reorganization               |  |            | 7,330,000 |        |  |            | 18,088 |          |  |               | 7,287,854  |               |  |            |  |  |  |             |  |       |  |            | 7,305,942  | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            |  |           
|                                  
|                                  
|                                  
|                                  
|Balances at December 31, 2000      |                                                            |  | 18,255,000 |           |        |  | 18,255     |        |          |  | 7,963,157     |            |               |  | (6,708,779 | ) |  |  | 41,593      |   |       |  | 1,314,226  |           
|                                  
|                                  
|                                  
|                                  
|Net (loss) for the 3 month period  |                                                            |  |           |           |        |  |           |        |          |  |              |            |               |  | (396,345   | ) |  |  |            |   |       |  | (396,345   | )         
|                                  
|                                  
|                                  
|                                  
|                                   | Warrants and options granted to non-employees for services |  |            |          |        |  |            |       |          |  |               | 3,547      |               |  |            |  |  |  |             |  |       |  |            | 3,547      | 
|                                  
|                                  
|                                  
|                                  
|Shares issued in connection with :
|                                  
|                                  
|                                  
|                                  
|                                   | Acquisition of Kiss.com                                    |  |            | 6,249,998 |        |  |            | 6,250  |          |  |               | 14,100,888 |               |  |            |  |  |  |             |  |       |  |            | 14,107,138 | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            |  |           
|                                  
|                                  
|                                  
|                                  
|Balances at March 31, 2001         |                                                            |  | 24,504,998 |           |        |  | 24,505     |        |          |  | 22,067,592    |            |               |  | (7,105,124 | ) |  |  | 41,593      |   |       |  | 15,028,566 |           
|                                  
|                                  
|                                  
|                                  
|Net (loss) for the 3 month period  |                                                            |  |           |           |        |  |           |        |          |  |              |            |               |  | (1,014,472 | ) |  |  |            |   |       |  | (1,014,472 | )         
|                                  
|                                  
|                                  
|                                  
|                                   | Warrants and options granted to non-employees for services |  |            |          |        |  |            |       |          |  |               | 10,641     |               |  |            |  |  |  |             |  |       |  |            | 10,641     | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            |  |           
|                                  
|                                  
|                                  
|                                  
|Balances at June 30, 2001          |                                                            |  | 24,504,998 |           |        |  | 24,505     |        |          |  | 22,078,233    |            |               |  | (8,119,596 | ) |  |  | 41,593      |   |       |  | 14,024,735 |           
|                                  
|                                  
|                                  
|                                  
|Net profit for the 3 month period  |                                                            |  |           |           |        |  |           |        |          |  |              |            |               |  | 523,949    |   |  |  |            |   |       |  | 523,949    |           
|                                  
|                                  
|                                  
|                                  
|                                   | Warrants and options granted to non-employees for services |  |            |          |        |  |            |       |          |  |               | 10,641     |               |  |            |  |  |  |             |  |       |  |            | 10,641     | 
|                                  
|                                  
|                                  
|                                  
|Shares issued in connection with :
|                                  
|                                  
|                                  
|                                  
|                                   | Loan note interest following the acquisition of Kiss.com   |  |            | 135,259   |        |  |            | 135    |          |  |               | 186,002    |               |  |            |  |  |  |             |  |       |  |            | 186,137    | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                                            |  |           
|                                  
|                                  
|                                  
|                                  
|Balances at September 30, 2001     |                                                            |  | 24,640,257 |           |        |  | 24,640     |        |          |  | 22,274,876    |            |               |  | (7,595,647 | ) |  |  | 41,593      |   |       |  | 14,745,462 |           
|                                   |                                                            |  |           
|                                  
|                                  
|                                  
|                                  

10



---



##### 



Special Note Regarding References

References in this Quarterly Report on Form 10-QSB to www.udate.com,
www.kiss.com, any variations of the foregoing, or any other uniform resource
locator, or URL, are inactive textual references only. The information on
uDates website, Kiss website and any other website is not incorporated by
reference into this Quarterly Report on Form 10-QSB and should not be
considered to be a part of this document.

Item 2. Managements Discussion and Analysis or Plan of Operations.

This report includes forward-looking statements. Any statement in this report
that is not a statement of historical fact may be deemed to be a
forward-looking statement. Some of the forward-looking statements can be
identified by the use of forward-looking words such as believes, expects,
may, will, should, seeks, approximately, intends, plans,
estimates or anticipates or the negative of those words or other comparable
terminology. Forward-looking statements in this report include:

|  |  |                                                                                                      
|- |  | -----------------------------------------------------------------------------------------------------
| |  | forecasts of the growth of our market, and our ability to capitalize on such growth;                 
| 
| |  | statements regarding our profitability and growth strategy; and                                      
| 
| |  | statements regarding our future revenues, our expense levels and our liquidity and capital resources.

Forward-looking statements involve risks and uncertainties. A number of
important factors could cause actual results to differ materially from those in
the forward-looking statements. For a discussion of factors that could cause
actual results to differ, please see the discussion under Risk Factors
contained in this report. Any forward-looking statements in this report
represent our views as of the date of this report, and we disclaim any duty to
update these statements, even if subsequent events cause our views to change.

Any of such statements and this discussion should be read in conjunction with
the Companys unaudited consolidated financial statements included herein, the
Companys Form 10-KSB filed with the Securities and Exchange Commission (the
Commission) on April 2, 2001, as amended by the Companys Forms 10-KSB/A
filed with the Commission on April 30, 2001 and July 11, 2001, the Companys
Forms 10-QSB filed with the Commission on May 15, 2001 and August 1, 2001, the
Companys Form 8-K concerning the agreement to acquire Kiss.com, Inc.
(Kiss.com) filed with the Commission on February 20, 2001, the Companys Form
8-K concerning the acquisition of Kiss.com filed with the Commission on April
6, 2001, and the Companys Form 8-K/A concerning the acquisition of Kiss.com
filed with the Commission on June 12, 2001.

In this report, the Company, we, us and our refer to uDate.com, Inc., a
Delaware corporation.

OVERVIEW

uDate.com, Inc. is an Internet business that provides on-line personals,
matchmaking and private communication facilities for people looking to start
new friendships. The Company provides a global service through two leading
brands: uDate.com (uDate) and Kiss.com (Kiss).

The uDate and Kiss Web sites enable members to register free of charge and
build a personal profile, including detailed demographic data, photographs and
a personal description. Registered members may visit and use the Web sites at
any time to search the database of members to find people they might like to
meet. A wide range of tools are provided that enable registered members to find
potential friends. These include:



| |  |  | Whos On  a list of members who are logged on and active on the
Web site at that moment in time;                                                                                                                                                
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Match  a user-driven tool that enables members to search the
entire membership database using up to 33 elements of demographic and
psychographic criteria. A range of Matches are supported, including
1-Way, 2-Way, Online Users and New Users;
|
| |  |  | Encounters  a list of users who have shown an interest in the
users profile, along with the type of interest shown;                                                                                                                            
|
| |  |  | My uDate / Kiss  a summary of the users profile with useful hints
and tips on how to get noticed. This feature also provides a number of
useful lists of members who may be of interest to the user;                                           
|
| |  |  | Gallery  a summary of users with new or revised photographs; and                                                                                                                                                                                
|
| |  |  | E-mail prompts  all members are provided with system-generated
e-mail prompts and alerts about new or matching members that may be of
interest.                                                                                                 

Both the uDate and Kiss Web sites utilize a pay only to communicate business
model. Members may subscribe to enable unlimited communication with other
paying members. Subscription plans are available for periods of 5 days, 1
month, 3 months, 6 months and 12 months. A one month subscription currently
costs $24.95.

Paying members have access to two communication features:



| |  |  | Whispers  an integrated instant-messaging product which enables
members to hold up to 30 real-time, discreet one-on-one conversations
with other members; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Private E-mail  an HTML-based private e-mail system.                                                                                                         

As of September 30, 2001, the uDate and Kiss Web sites collectively had in
excess of 6 million registered users and over 156,000 paying subscribers.

Free memberships do not have a fixed duration or term and may be cancelled by
the member at any time.

11



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##### 



REVENUES

The Companys revenues are derived from the sale of membership subscriptions to
registered members. Membership subscription provides paying members with the ability
to correspond with other members using various channels of communication.
Subscription plans are available allowing communication for varying periods.
These subscription plans generally renew automatically, into a one-month
payment plan, upon the expiration of the subscription period.

SUBSCRIPTIONS

The Companys primary goal is to achieve sustainable growth in its subscriber
base. In the three months ended September 30, 2001 uDate increased its number
of subscribers from 53,758 as at June 30, 2001 to 75,707; an increase of 41%.
In the same period Kiss increased its number of subscribers from 65,623 at June
30, 2001 to 80,957; an increase of 23%. Growth in subscribers in the period for
the Company as a whole was, therefore, 31%.

REORGANIZATION AND CONSOLIDATION

udate.coms Web site includes many extensive matchmaking
features which enable members to spend less time identifying potential partners
and more time corresponding an activity requiring payment. Members are able
to run two-way matches against the uDates 2.5 million-member database or
focus the match on those currently online  exceeding 5,000 users at peak
times. Online matches provide members with the opportunity to seize the moment,
and make contact with matching members using uDates instant messaging feature
known as Whispers. These features were designed to encourage non-paying
members to take advantage of the full benefits of the web site and to purchase
a subscription.

Kiss.com, one of the longest established businesses in the on-line matchmaking
space, was acquired by the Company in March 2001. In comparison to uDate, Kiss
developed as a picture personals service, providing users with the opportunity to
post a personal advertisement, and manually search a large database of
profiles, many with pictures. Since its inception, Kiss has relied on
traditional e-mail (known as KissMail) to enable members to communicate

In October 2001, the Company announced a plan of reorganization and consolidation to maintain the two
existing brands but to replace the existing Kiss application with a new
application based on the uDate operating platform enabling members to run two-way matches against the Kiss
member database or focus the match on those currently online using an instant
messaging feature. These features are designed to encourage non-paying members
to take advantage of the full benefits of the Web site and to purchase a
subscription.

This plan involves the consolidation of the Kiss.com Web site onto uDates central operating platform, hosted at the Companys
Secaucus, New Jersey data center. This will

12



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enable the Company to consolidate substantially all of its technical,
operational, customer support, and marketing functions in its UK Head Office,
and close the Kiss office in Seattle, Washington. This restructuring is ongoing
and is expected to be completed during the fourth quarter of 2001.

The Company plans to maintain both the Kiss and uDate brands in the foreseeable
future and continues to promote both brands using its advertising partners.

Following the launch of the new Kiss application, there was an immediate
improvement in the conversion of Kiss registered members to paying members,
resulting in record new payments for Kiss.com. As with any program
of change, however, the launch of the new Kiss application has given rise to a
number of complaints from a portion of existing Kiss users. These complaints
came predominantly from long-term users of Kiss and are due to the increase in
complexity of the new application. The Company is and will continue to make
efforts to address these issues.

PROFITABILITY AND GROWTH STRATEGY

It is the Companys belief that Internet dating has the potential to generate
significant profitability. In the three months ended September 30, 2001, the
Company was able to report a net profit, including a charge of
$1,039,068 for the amortization of goodwill following the acquisition
of Kiss. The performance of the Company resulted from the continued pursuit of
its profitability strategy, which comprises two key initiatives:

|  |  |                                                                                                                                                                                       
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increasing membership of uDate and Kiss while contemporaneously
reducing new member acquisition costs by entering into partnership
deals with key Web properties.                     
| 
| |  | growing membership subscription revenues by (i) improving the rate of
conversion of non-paying members to paying subscribers, and (ii)
increasing the average life of each subscriber.

The Company also believes that it can generate further growth by acquisition
and will continue to pursue opportunities to acquire existing on-line personals
businesses to capitalize on brand, membership and subscriber bases without
significantly increasing the Companys cost base. While the Company is
receptive to making further acquisitions, opportunities will be weighed against
the Companys resources, the price sought by sellers and managements belief as
to the expected benefits from any such acquisition. The Company currently has
no agreements or understandings with respect to any such acquisitions.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,2001 AND
SEPTEMBER 30, 2000

The acquisition of Kiss.com was completed on March 29, 2001. Accordingly, the
results of operations for the nine months ended September 30, 2001 include six
months of operating results of both uDate-UK and Kiss.com.

Unless specifically discussed below, there were no material changes from period
to period in line items of the financial statements, other than those changes
arising from the inclusion of the results of operations of Kiss.com for the
three and nine months ended September 30, 2001. In addition, unless
specifically discussed below, there are no seasonal aspects that had a material
effect on the Companys financial conditions or results of operations.

13



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##### 



REVENUES

Total revenues for the three months ended September 30, 2001 were $6,620,863
compared to $541,690 for the three months ended September 30, 2000 and
$4,217,129 for the three months ended June 30, 2001. Total revenues for the
nine months ended September 30, 2001 were $12,376,423 compared to $767,644 for
the nine months ended September 30, 2000.

Revenues for the third quarter of 2001 therefore show an increase of 57% over
the previous quarter. This reflects the continued growth in members and
subscribers of both: (i) uDate, which returned revenues of $3,328,835 for the third
quarter of 2001, an increase of 84% over the second quarter, and (ii) Kiss,
which returned revenues of $3,292,028 for the third quarter of 2001, an
increase of 37% over the second quarter.

Membership revenues for the three months ended September 30, 2001 made up 99.8%
of total revenues returned in the quarter.

The growth in membership revenues achieved during the third quarter of 2001 as
compared to the second quarter of 2001 was due to (i) the continued greater
awareness of the uDate and Kiss Web sites as a consequence of targeted
marketing activities; (ii) an increase in the rate of conversion of registered
members to paying subscribers, and (iii) an increase in the average life of
membership arising from improvements in the uDate Web products and from the
impact of automatic renewal of the members subscriptions upon the expiration
of the subscription period. The automatic renewal process was introduced on the
uDate Web site on May 23, 2001.

No barter advertisements were displayed on either Web site during the three
months ended September 30, 2001.

SALES AND MARKETING EXPENSE

Total sales and marketing expenses for the three months ended September 30,
2001 were $2,172,926 compared to $2,078,674 for the three months ended
September 30, 2000 and $1,644,882 for the three months ended June 30, 2001.
Total sales and marketing expenses for the nine months ended September 30, 2001
were $4,696,385 compared to $2,898,215 for the nine months ended September 30,
2000.

Sales and marketing expenses for the third quarter of 2001 therefore show an
increase of 32% over the previous quarter.

Advertising through on-line media contributed to the majority of the 1,450,287
new registered members who joined in the third quarter of 2001, an increase of
35% over the previous quarter.

Sales and marketing expense continues to be predominantly for on-line media.
The Company has strategic contracts in place with key Web properties including
portals, alumni networks, search engines, internet service providers, newspaper
and television company portals and a widespread affiliate network.

GENERAL AND ADMINISTRATIVE EXPENSE

Total general and administrative expenses for the three months ended September
30, 2001 were $2,414,863 compared to $1,480,317 for the three months ended
September 30, 2000 and $2,349,155 for the three months ended June 30, 2001.
Total general and administrative expenses for the nine months ended September
30, 2001 were $5,675,492 compared to $2,147,925 for the nine months ended
September 30, 2000.

14



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##### 



General and administrative expenses for the third quarter of 2001 therefore
show an increase of 3% over the previous quarter.

Significant components of general and administrative expense in the nine months
ended September 30, 2001 include a) wages and salaries of $2,597,837, b) legal,
professional, accounting and consultancy fees of $1,359,891, c) bank and
transaction charges of $509,781, and d) Internet Service Provider charges of
$461,797.

In October 2001, the Company announced plans for the consolidation of the
Kiss business which include: a) the launch of a new Kiss Web site using the uDate
platform, to be hosted at the existing uDate data center located in Secaucus,
New Jersey; b) the migration of all Kiss users onto the new Kiss Web site; c)
the transfer of all Kiss data to uDates central database housed in Secaucus,
New Jersey; d) the consolidation of substantially all internet dating
operations, including finance, technical development, customer services and
marketing, to the Companys Head Office in England; and e) the closure of Kiss
office in Seattle, Washington with the loss of 23 jobs.

The consolidation plan is being implemented and is expected to be
completed during the fourth quarter of 2001, and as a result the Company
expects to incur costs, predominantly related to the elimination of
redundancies and associated legal fees. On completion of this
consolidation, the Company believes it will have established an acceptable
level for its fixed cost base, which should remain relatively fixed in respect
of the existing operations.

DEPRECIATION EXPENSE

Depreciation expense during the three months ended September 30, 2001 totaled
$194,041, compared to $139,671 for the three months ended September 30, 2000.
This represents an increase of 39% and is a result of the significant capital
expenditure undertaken by the Company to continue to build its server farm,
housed in Secaucus, New Jersey.

AMORTIZATION OF GOODWILL

Amortization of goodwill relating to the acquisition of Kiss.com amounts to
$1,039,068 for the three months ended September 30, 2001.

Goodwill will be amortized on a straight line basis over its estimated useful
life of five years.

In July 2001, the Financial Accounting Standards Board issued Statement No.
141, Business Combinations, and Statement No. 142, Goodwill and Other
Intangible Assets. Statement 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
as well as all purchase method business combinations completed after June 30,
2001. Statement 141 also specifies criteria intangible assets acquired in a
purchase method business combination must meet to be recognized and reported
apart from goodwill, noting that any purchase price allocable to an assembled
workforce may not be accounted for separately. Statement 142 will require that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 will also require that
intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of.

The Company has adopted the provisions of Statement 141, and is required to
adopt the provisions of Statement 142 effective January 1, 2002. Furthermore,
any goodwill and any intangible asset determined to have an indefinite useful
life that are acquired in a purchase business combination completed after June
30, 2001 will not be amortized, but will continue to be evaluated for
impairment in accordance with the appropriate pre-Statement 142 accounting
literature. Goodwill and intangible assets acquired in business combinations
completed before July 1, 2001 will continue to be amortized prior to the
adoption of Statement 142.

Statement 141 will require, upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary
reclassifications in order to conform with the new criteria in Statement 141
for recognition apart from goodwill. Upon adoption of Statement 142, the
Company will be required to reassess the useful lives and residual values of
all intangible assets acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the first interim
period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required
to test the intangible asset for impairment in accordance with the provisions
of Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of
a change in accounting principle in the first interim period.

In connection with the transitional goodwill impairment evaluation, Statement
142 will require the Company to perform an assessment of whether there is an
indication that goodwill is impaired as of the date of adoption. To accomplish
this the Company must identify its reporting units and determine the carrying
value of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those reporting
units as of the date of adoption. The Company will then have up to six months
from the date of adoption to determine the fair value of each reporting unit
and compare it to the reporting units carrying
amount. To the extent a reporting units carrying amount exceeds its fair
value, an indication exists that the reporting units goodwill may be impaired
and the Company must perform the second step of the transitional impairment
test. In the second step, the Company must compare the implied fair value of
the reporting units goodwill, determined by allocating the reporting units
fair value to all of it assets (recognized and unrecognized) and liabilities
in a manner similar to a purchase price allocation in accordance with
Statement 141, to its carrying amount, both of which would be measured as of
the date of adoption. This second step is required to be completed as soon as
possible, but no later than the end of the year of adoption. Any transitional
impairment loss will be recognized as the cumulative effect of a change in
accounting principle in the Companys statement of earnings.

And finally, any unamortized negative goodwill existing at the date Statement
142 is adopted must be written off as the cumulative effect of a change in
accounting principle.

The Company has not yet completed the purchase accounting analysis to allocate
acquisition costs to the acquired net assets. Prior to this allocation, as of
the date of adoption, the Company expects to have unamortized goodwill in the
amount of $17,646,000 which will be subject to the transition provisions of
Statements 141 and 142. Amortization expense related to goodwill was $nil and
$2,076,606 for the year ended December 31, 2000 and the nine months ended
September 30, 2001, respectively. Because of the extensive effort needed to
comply with adopting Statements 141 and 142, it is not practicable to
reasonably estimate the impact of adopting these Statements on the Companys
financial statements at the date of this report, including whether any
transitional impairment losses will be required to be recognized as the
cumulative effect of a change in accounting principle.

NET PROFIT / LOSS

The overall net profit for the three months ended September 30, 2001 totaled
$523,949 compared to a net loss of $3,101,993 for the three months ended
September 30, 2000 and net loss of $1,014,472 for the three months ended June
30, 2001. The total net loss for the nine months ended September 30, 2001 was
$886,868 compared to a net loss of $4,418,132 for the nine months ended
September 30, 2000.

The net profit for the three months ended September 30, 2001 includes
amortization of goodwill of $1,039,068 arising from the acquisition of
Kiss.com. The net profit before amortization of goodwill for the three months
ended September 30, 2001, therefore, amounted to $1,563,017.

15



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The net loss for the three months ended June 30, 2001 includes amortization of
goodwill of $1,037,538 arising from the acquisition of Kiss.com. The net profit
before amortization of goodwill for the three months ended June 30, 2001,
therefore, amounted to $23,066.

The improvement in net profit before amortization of goodwill from $23,066 for
the three months ended June 30, 2001 to a net profit before amortization of
goodwill of $1,563,017 for the three months ended September 30, 2001 results
from continued increased revenues and the maintenance of a relatively fixed
cost base.

LIQUIDITY AND CAPITAL RESERVES

At September 30, 2001, the Companys principal sources of liquidity consisted
of cash of $1,975,202, compared to $957,682 as at June 30, 2001.

The Companys net working capital deficit position decreased to ($4,996,233) at September
30, 2001 from a position of ($6,922,315) at June 30, 2001.

This working capital position includes $4,103,695 in respect of the value of
the promissory notes that it is anticipated will be repaid within one year. The
Company is required to pay the noteholders an amount equal to 20% of the
Companys gross internet dating revenues on a monthly basis from July 2001,
with payments made by the 5th of the following month. Any balance outstanding
is payable in full on the completion of any Company financing after June 30,
2001.

Interest is payable on the notes at a rate of 7% per annum from July 1, 2001.
In addition, until the notes are repaid, the Company shall issue and deliver to
each noteholder a certificate or certificates representing that number of
shares of the Companys common stock equal to two percent (2%) of the aggregate
principal amount of such persons note that is unpaid as of the end of the
month then-ended, divided by the greater of (i) $2.00 per share and (ii) the
Average Price (as such term is defined in the notes).

During the three months ended September 30, 2001, $796,305 was repaid on the
principal amount of the notes.

On the basis of the actual position as at September 30, 2001 and forecasts
through 2001, the Company anticipates that it will be able to fund its
operating expenses and required debt service payments in 2001 with the cash
flow from its operations. Notwithstanding this, however, the Company does not
currently have an established line of credit with a commercial bank. Such a
credit facility may be difficult to obtain in the short-term with the Companys
historical operating results, or may not be obtainable on terms acceptable to
the Company.

Accordingly, in order to obtain additional funds in the future, the Company may
need to seek additional equity capital which would be dilutive to current
stockholders.

The Company currently anticipates that any capital expenditures in 2001 can be
funded from operating cashflows, other than any capital expenditures made in
connection with any mergers or acquisitions. The Company currently has no
agreements or understandings with respect to any such mergers or acquisitions.

16



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RISK FACTORS

RISKS RELATED TO THE COMPANYS FINANCIAL CONDITION AND BUSINESS MODEL

THE COMPANY HAS A LIMITED OPERATING HISTORY

The Company was formed in January 1999 in order to provide representation and
other services to musical artists such as songwriters and performers. The
Company had very limited operations and revenues, and limited business
prospects, until May 23, 2000, the date of the acquisition of uDate.com Ltd
(uDate-UK).

uDate-UK was established in February 1998 to provide high quality introduction,
matchmaking, relationship and dating services to Internet users. The Company
has changed its business strategy to that of its subsidiary, uDate-UK.

On March 29, 2001, the Company acquired Kiss.com, Inc  a picture personals
site.

Due to the limited operating histories of each of the Company and its
subsidiaries, it will be difficult for owners of the Companys securities and
persons considering an investment in the Company (collectively, Investors) to
evaluate the business and prospects of the Company and an investment in the
Company. As a new company, the Company faces risks and uncertainties relating
to its ability to successfully implement its strategy. Investors must consider
the risks, expenses and uncertainties that an early stage company in new and
rapidly evolving markets face. Some of these risks include:

|  |  |                                                                                                                                      
|- |  | -------------------------------------------------------------------------------------------------------------------------------------
| |  | ability to sustain historical revenue growth rates;                                                                                  
| 
| 
| 
| 
| |  | ability to increase brand awareness;                                                                                                 
| 
| 
| 
| 
| |  | managing expanding operations;                                                                                                       
| 
| 
| 
| 
| |  | competition;                                                                                                                         
| 
| 
| 
| 
| |  | attracting, retaining and motivating qualified personnel;                                                                            
| 
| 
| 
| 
| |  | maintaining current, and developing new, strategic relationships;                                                                    
| 
| 
| 
| 
| |  | ability to anticipate and adapt to the changing Internet market and any changes in government regulation;                            
| 
| 
| 
| 
| |  | the level of usage of the Internet and traffic to the Companys Internet sites;                                                      
| 
| 
| 
| 
| |  | continued acceptance of the Companys products and services;                                                                         
| 
| 
| 
| 
| |  | demand for Internet advertising, seasonal trends in advertising sales and the advertising budgeting cycles of individual
advertisers;
| 
| 
| 
| 
| |  | capital expenditure and other costs relating to the expansion of operations;                                                         
| 
| 
| 
| 
| |  | the introduction of new products or services by the Company or its competitors;                                                      
| 
| 
| 
| 
| |  | the mix of the services sold and the channels through which those services are sold;                                                 
| 
| 
| 
| 
| |  | pricing changes; and                                                                                                                 
| 
| 
| 
| 
| |  | general economic conditions and specific economic conditions in the Internet industry.                                               

THE COMPANY MAY NOT BE ABLE TO SUSTAIN PROFITABILITY

For the three months ended September 30, 2001 the Company returned a net profit
of $523,949. At September 30, 2001, the Company had an accumulated deficit of
approximately $7.6 million.

The Company cannot assure investors that it can sustain profitability in the
future. If revenues grow at a slower rate than anticipated or decrease, or if
spending levels exceed expectations or cannot be adjusted to

17



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reflect slower or negative revenue growth, the Company may not generate
sufficient revenues to sustain profitability.

QUARTERLY RESULTS MAY FLUCTUATE

Investors should not rely on quarterly operating results as an indication of
future results because they are subject to significant fluctuations.

Fluctuations in operating results or the failure of operating results to meet
the expectations of public market analysts and investors may negatively impact
the Companys stock price. Quarterly operating results may fluctuate
significantly in the future due to a variety of factors that could affect
revenues or expenses in any particular quarter. Fluctuations in quarterly
operating results could cause the Companys stock price to decline. Investors
should not rely on quarter-to-quarter comparisons of results of operations as
an indication of future performance. Factors that may affect the Companys
quarterly results include:

|  |  |                                                                                                                                                 
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | mismatches between resource allocation and consumer demand due to difficulties in predicting consumer demand in a new
market;                   
| 
| 
| 
| 
| |  | the demand for, and acceptance of, the Companys Web sites, products, product enhancements and services;                                        
| 
| 
| 
| 
| |  | the timing, amount and mix of the Companys subscription and advertising revenues;                                                              
| 
| 
| 
| 
| |  | changes in general economic conditions;                                                                                                         
| 
| 
| 
| 
| |  | the magnitude and timing of marketing initiatives;                                                                                              
| 
| 
| 
| 
| |  | the maintenance and development of strategic relationships;                                                                                     
| 
| 
| 
| 
| |  | the introduction, development, timing, competitive pricing and market acceptance of the Companys products and services and
those of            
| 
| 
| 
| 
| |  | the Companys competitors;                                                                                                                      
| 
| 
| 
| 
| |  | the Companys ability to manage anticipated growth and expansion;                                                                               
| 
| 
| 
| 
| |  | the Companys ability to successfully integrate acquired operations; and                                                                        
| 
| 
| 
| 
| |  | technical difficulties or system downtime affecting the Internet generally or the operation of the Companys products and
services specifically.

As a result of the factors listed above and because the on-line dating and
matchmaking market is still immature, making it difficult to predict consumer
demand, it is possible that in future periods results of operations may be
below the expectations of public market analysts and investors. This could
cause the Companys stock price to decline.

EXPENSE LEVELS AND CHANGES IN PRICING

The Companys expense levels are based, in significant part, on its
expectations as to future revenues and are therefore relatively fixed in the
short term.

The Companys major expenses continue to be sales and marketing costs, labor
costs and technology costs. The Company anticipates that its expenses will
increase as its business expands and if it makes further acquisitions. In
addition, these costs may still be subject to dynamic and, from time to time,
significant variation. If revenues fall below expectations in any quarter and
the Company is unable to quickly reduce spending in response, its operating
results would be lower than expected and the stock price may fall.

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THE COMPANYS BUSINESS MODEL IS UNPROVEN AND MAY NOT BE ADAPTABLE TO A CHANGING
MARKET

If the Company is not able to anticipate changes in the on-line dating and
matchmaking market or if the business model is not successful, the Company may
not be able to expand the business or to successfully compete with other
companies, which could have a material adverse effect on the Companys
business, results of operations and financial condition. The Companys current
business model depends on recurring revenues from members who subscribe for the
Companys fee-generating services (Subscribers).

Membership revenues depend upon (i) the conversion of new non-paying members to
Subscribers; and (ii) existing Subscribers renewing their membership for
further periods.
If current Subscribers decide to discontinue the Companys service and the
Company is unable to replace them with new Subscribers, it is possible that the
Company will be required to further adapt its business model in response to
additional changes in the on-line dating and matchmaking market or Internet
advertising or if the current business model is not successful.

Additionally, the Company operates on a global basis with registered members
and Subscribers in Europe and Asia, as well as North America. Changes in the
economies, trade policies, and fluctuations in interest or exchange rates may
have an impact on its future financial results. As the Company continues to
operate more globally, seasonality may become an increasing factor in its
financial performance.

THE COMPANY MAY NOT BE ABLE TO OBTAIN SUFFICIENT FUNDS TO GROW ITS BUSINESS AND
ANY ADDITIONAL FINANCING MAY BE ON TERMS ADVERSE TO THE INTERESTS OF ITS
STOCKHOLDERS

The timing, amount, terms and conditions of any additional financing required
by the Company may be unattractive to the Company, and such financing may be
unavailable. If the Company is able to raise additional funds and does so by
issuing equity securities, holders of its common stock may experience
significant dilution of their ownership interest and holders of these
securities may have rights senior to those of the holders of the Companys
common stock.

If the Company obtains additional financing by issuing debt securities, the
terms of these securities could limit its flexibility in making business
decisions. If additional financing is not available when required or is not
available on acceptable terms, the Company may be unable to fund its expansion,
successfully promote its brand name, develop or enhance its products and
services, take advantage of business opportunities or respond to competitive
pressures, any of which could have a material adverse effect on its business.

THE COMPANY WILL ONLY BE ABLE TO EXECUTE ITS BUSINESS MODEL IF USE OF THE
INTERNET GROWS AND ITS INFRASTRUCTURE IS ADAPTED TO THAT GROWTH

If Internet usage does not continue to grow, the Company may not be able to
meet its business objectives. Increased Internet usage will depend, in large
part, upon the maintenance of the Web infrastructure, such as a reliable
network backbone with the necessary speed, data capacity and security, and
timely development of enabling products, such as high speed modems, for
providing reliable Web access and services and improved content. Internet usage
may be inhibited by any of the following factors:

|  |  |                                                                                                                                                
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Internet infrastructure may not be able to support the demands placed on it, or its performance and reliability may
decline as usage grows;

19



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##### 



|  |  |                                                                                                                                                    
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
| 
| 
| 
| 
| |  | Web sites may not be able to provide adequate security and authentication of confidential information contained in
transmissions over the Internet;
| 
| 
| 
| 
| |  | the Internet industry may not be able to adequately respond to privacy concerns of potential users; and                                            
| 
| 
| 
| 
| |  | Government regulation may decrease the utility of the Internet for some purposes.                                                                  

The Company cannot assure investors that the Web infrastructure or Internet
industry will be able to effectively respond to the demands placed on the Web
by increased numbers of users, frequency of use or increased bandwidth
requirements of users.

THE COMPANY MAY NOT BE ABLE TO DEVELOP AWARENESS OF ITS BRAND NAMES

The Company believes that continuing to build and maintain awareness of its
brand names is critical to achieving widespread acceptance of its business and
to sustain or increase the number of people who use its Web sites. Brand
recognition is a key differentiating factor among providers of on-line dating
and matchmaking services, and the Company believes it could become more
important as competition in its industry increases. In order to maintain and
build brand awareness, the Company must succeed in its marketing efforts,
provide high quality services and increase the number of members using its Web
sites. If it fails to successfully protect, promote, position and maintain its
brand names, incurs significant expenses in promoting its brands and fails to
generate a corresponding increase in revenue as a result of its branding
efforts, or encounters legal obstacles which prevent the continued use of any
of its brand names, the Companys business, results of operations and financial
condition could be materially adversely affected.

THE COMPANY MAY NOT BE ABLE TO SUCCESSFULLY INTRODUCE NEW OR ENHANCED PRODUCTS
OR SERVICES

The failure of any new or enhanced products and services to achieve market
acceptance and generate revenue could result in a material adverse effect on
the Companys revenues. The Company expects to introduce enhanced products and
services in order to generate additional revenues, attract and retain more
members to its Web sites and respond to competition. Any new or enhanced
product or service introduced that is not favorably received could damage the
Companys reputation and the perception of its brand names.

The Company has made some investments in Web advertising and market research
products. The Internet advertising
market is highly competitive and largely untested. Issues abound concerning
privacy of personal information, accuracy of accounting for impressions, click
rates and revenues. New technologies are emerging regarding multi-media,
targeting, tracking and delivery. It is possible that the Companys advertising
technology may not prove as effective as hoped and could be made obsolete by
numerous third parties who may be planning to launch competing products.

COMPETITION COULD CAUSE THE COMPANY DIFFICULTY IN ATTRACTING AND RETAINING
REGISTERED MEMBERS AND CONVERTING REGISTERED MEMBERS TO SUBSCRIBERS

The Company expects competition to continue to increase because the market
poses no substantial barriers to entry for simple Web-based applications. The
Company believes that its ability to compete depends upon many factors both
within and beyond its control, including the following:

|  |  |                                                                                                                                             
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | the timing and market acceptance of new solutions and enhancements to
existing solutions developed either by the Company or its competitors;

20



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##### 



|  |  |                                                                                                                 
|- |  | ----------------------------------------------------------------------------------------------------------------
| 
| 
| 
| 
| |  | customer service and support efforts;                                                                           
| 
| 
| 
| 
| |  | sales and marketing efforts; and                                                                                
| 
| 
| 
| 
| |  | ease of use, performance, price and reliability of solutions developed
either by the Company or its competitors.

The Company competes with traditional dating and matchmaking services, as well
as newspapers, magazines and other traditional media companies that provide
dating and matchmaking services. It also competes with large Internet
information hubs, or portals, such as Yahoo.com. Many of its current and
potential competitors have longer operating histories, significantly greater
financial, technical, marketing and other resources and larger customer bases
than it does. These factors may allow them to respond more quickly than the
Company can to new or emerging technologies and changes in customer
requirements. It may also allow them to devote greater resources than the
Company can to the development, promotion and sale of their products and
services.

These competitors may also engage in more extensive research and development,
undertake more far-reaching marketing campaigns and adopt more aggressive
pricing policies. The Company cannot assure Investors that its competitors will
not develop products or services that are equal or superior to its solutions or
that achieve greater market acceptance than its solutions. In addition, current
and potential competitors are making and are expected to continue to make
strategic acquisitions or establish cooperative, and, in some cases, exclusive
relationships with significant companies or competitors to expand their
businesses or to offer more comprehensive solutions. Any of these competitors
could cause the Company difficulty in attracting and retaining members and
converting registered members to Subscribers.

THE COMPANY MAY LOSE BUSINESS IF IT FAILS TO KEEP PACE WITH RAPIDLY CHANGING
TECHNOLOGIES AND CUSTOMER NEEDS

To remain competitive, the Company must continually improve the responsiveness,
functionality and features of its products and services and develop other
products and services that are attractive to members. If it is unable to timely
and successfully develop and introduce new services, products and enhancements
to existing products in response to industrys changing technological
requirements, revenues could be materially adversely affected. New
Internet-based services, products or enhancements that have been offered or may
be offered in the future by the Company may contain design flaws or other
defects that could require extensive modifications or result in a loss of
client confidence.

THE COMPANY MAY LOSE MEMBERS IF THE CONTENT OF ITS WEB SITES IS NOT ATTRACTIVE
TO THEM

The Companys future growth depends in part on its ability to attract and
retain members. This in turn depends in part on its ability to deliver original
and compelling content to these members. The Company cannot assure Investors
that its content will be attractive to Internet users. It also cannot assure
Investors that it will be able to anticipate, monitor and successfully respond
to rapidly changing consumer tastes and preferences to continue to attract a
sufficient number of Internet users to its Web sites. Internet users can freely
navigate and instantly switch among a large number of Web sites. In addition,
many other Web sites offer very specific, highly-targeted content. These sites
could have greater appeal than the Companys Web sites to particular groups
within its target audience.

21



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##### 



THE COMPANYS BUSINESS AND GROWTH WILL SUFFER IF IT IS UNABLE TO HIRE AND
RETAIN HIGHLY SKILLED PERSONNEL

The Companys success depends to a significant extent upon a number of key
management and technical personnel, the loss of one or more of whom could
adversely affect the business. In addition, the Company believes that its
future success will depend to a significant extent on its ability to recruit,
hire and retain highly skilled employees for product development, sales,
marketing, and customer service. Competition for such personnel in the Internet
industry is intense, and there can be no assurance that the Company will be
successful in attracting and retaining such personnel. Management of the
Company will also be required to manage growth of the Company in a manner that
requires a significant amount of management time and skill. There can be no
assurance that the Company will be successful in managing any future growth or
that any failure to manage such growth will not have a material adverse effect
on the Companys business, operating results or financial condition.

The Companys future success depends to a significant degree on the skills,
experience and efforts of Melvyn Morris, the Companys Chief Executive Officer.
The loss of the services of Mr. Morris could have a material adverse effect on
the Companys business, operating results and financial condition.

The Company does not currently maintain key person insurance for Mr. Morris or
any other member of its management team.

In addition, though the Company has confidentiality agreements with each of its
employees, if it were to lose a key employee, it cannot assure Investors that
it would be able to prevent the unauthorized disclosure or use of its
procedures, practices, new product development or client lists.

THE COMPANY MAY NOT BE ABLE TO EFFECTIVELY MANAGE ITS EXPANDING OPERATIONS

In order to execute its business plan, the Company must continue to grow
significantly. If it is not able to expand its operations in an efficient
manner, its expenses could grow disproportionately to revenues or its revenues
could decline or grow at a slower rate than expected, either of which could
have a material adverse effect on its business, results of operations and
financial condition. The Company has recently experienced a period of rapid
growth that has placed considerable demands on its managerial, operational,
financial and information systems resources. The Company continues to increase
the scope of its operations, and has grown its workforce substantially.

The Companys growth has placed, and its anticipated future growth, combined
with the requirements the Company faces as a public company, will continue to
place, a significant strain on its management, operations, systems and
resources. The Company expects that it will need to continue to improve its
financial and managerial controls and reporting systems and procedures, and
will need to continue to expand, train and manage its workforce. The Companys
success depends to a significant extent on the ability of its executive
officers and other members of senior management to operate effectively both
independently and as a group. It will also need to continue to expand and
maintain close coordination among its products and technology, finance and
administration and sales and marketing organizations. The Company cannot assure
Investors that if it continues to grow, management will be effective in
attracting and retaining additional qualified personnel, expanding its physical
facilities, integrating acquired businesses or otherwise managing growth. It
cannot assure Investors that its information systems, procedures or controls
will be adequate to support its operations or that its management will be able
to successfully offer its products and services and implement its business
plan.

22



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##### 



The Company has recently completed the acquisition of Kiss.com. A significant
amount of management time has been devoted to ensuring the successful
completion of this acquisition, and a significant amount of future time will
need to be devoted to ensuring a seamless and efficient integration of
Kiss.com. There can be no assurance that the Company will be successful in
managing this integration process or the expanded entity as a whole, or that
failure to manage these will not have a material adverse effect on the
Companys business, operating results or financial condition.

THE FAILURE TO ESTABLISH AND MAINTAIN AGREEMENTS AND ALLIANCES WITH OTHER WEB
PROPERTIES COULD LIMIT THE GROWTH OF THE COMPANYS BUSINESS

The Company has entered into, and expects to continue to enter into,
arrangements with third parties to increase its member base, bring traffic to
its Web sites and enhance its brands. If any of the current agreements are
terminated, it cannot assure Investors that it will be able to replace the
terminated agreement with an equally beneficial arrangement. It also cannot
assure Investors that it will be able to renew any of its current agreements
when they expire or, if it is able to do so, that such renewals will be
available on acceptable terms. It also does not know whether it will be
successful in entering into additional partnerships and alliances or that any
relationships, if entered into, will be on terms favorable to the Company.

THE COMPANY MAY NOT BE SUCCESSFUL IN ITS PLAN FOR INTERNATIONAL EXPANSION

The Company may not be able to successfully execute its business plan in
foreign markets. If revenue from international ventures is not adequate to
cover its investment in those ventures, total revenues could be materially
adversely affected. The Company believes that expansion into international
markets through a combination of internal business expansion, strategic
alliances, joint ventures and potential acquisitions will be important to
continue the business growth. Future international operations might not
succeed for a number of reasons including:

|  |  |                                                                                                                                  
|- |  | ---------------------------------------------------------------------------------------------------------------------------------
| |  | difficulties in staffing and managing foreign operations;                                                                        
| 
| 
| 
| 
| |  | competition from local dating services and cultural and sociological attitudes toward dating services;                           
| 
| 
| 
| 
| |  | operational issues such as longer customer payment cycles and greater difficulties in collecting accounts receivable;            
| 
| 
| 
| 
| |  | language and cultural differences;                                                                                               
| 
| 
| 
| 
| |  | legal uncertainties inherent in transnational operations such as export and import regulations, tariffs and other trade
barriers;
| 
| 
| 
| 
| |  | taxation issues;                                                                                                                 
| 
| 
| 
| 
| |  | unexpected changes in trading policies, regulatory requirements and exchange rates;                                              
| 
| 
| 
| 
| |  | issues relating to uncertainties of law and enforcement relating to the regulation and protection of intellectual property;
and  
| 
| 
| 
| 
| |  | general political and economic trends.                                                                                           

THE COMPANY MAY NOT BE ABLE TO SUCCESSFULLY MAKE ACQUISITIONS OF, OR
INVESTMENTS IN, OTHER COMPANIES

The Company expects its growth to continue, in part, by acquiring further
complementary businesses, products, services or technologies. It expects to
have discussions with companies regarding acquiring, or investing in, their
businesses, products, services or technologies. The Company cannot assure
Investors that it will be able to identify suitable acquisition or investment
candidates. Even if it does identify suitable candidates, it cannot assure
Investors that it will be able to make acquisitions or investments on

23



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##### 



commercially acceptable terms. Acquiring other businesses and technologies
involves several risks, including:

|  |  |                                                                                                                                             
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | availability of financing on terms acceptable to the Company;                                                                               
| 
| 
| 
| 
| |  | diversion of managements attention from other business concerns;                                                                           
| 
| 
| 
| 
| |  | retention of key personnel of the acquired company;                                                                                         
| 
| 
| 
| 
| |  | entry into markets in which the Company has little or no direct prior experience;                                                           
| 
| 
| 
| 
| |  | inability to identify and acquire businesses on a cost-effective basis;                                                                     
| 
| 
| 
| 
| |  | inability to manage and integrate acquired personnel, operations, services, products and technologies into its organization effectively; and
| 
| 
| 
| 
| |  | inability to retain and motivate key personnel and to retain the clients or goodwill of acquired entities.                                  

In pursuing acquisitions, the Company may compete with competitors that may be
larger and have greater financial and other resources than it has. Competition
for these acquisition targets could result in increased prices. In addition, in
executing the Companys acquisition strategy, it may incur expenses without
being able to identify suitable acquisition candidates. This could reduce its
profitability.

RISKS RELATED TO THE INTERNET AND THE COMPANYS TECHNOLOGY INFRASTRUCTURE

THE COMPANYS TECHNOLOGY MAY NOT BE ABLE TO ACCOMMODATE INCREASED WEB SITE
TRAFFIC

To support its high level of growth it is critical that the Company scales its
Web site operations to support growth and maintain acceptable levels of
performance. The Company believes that the process of converting registered
members to paying members is highly sensitive to Web site availability,
performance, speed of page delivery and database operations. Any catastrophic
failure at its facility could prevent it from serving its Web traffic for up to
several days, and any failure of one or more of its Internet service providers
may adversely affect the networks performance.

The Company believes that its sites are among the busiest of sites on the Web.
As the performance of the Companys services are enhanced following upgrades,
users typically stay on-line longer. This can make capacity planning extremely
difficult, giving rise to spikes in demand for services. The long-term
scalability of its current technology will be a critical factor as the Company
grows.

The Company may experience reduced visitor traffic, reduced revenue and harm to
its reputation in the event of unexpected network interruptions caused by
system failures. Any system failure, including network, software or hardware
failure, that causes an interruption in the delivery of the Companys products
and services or a decrease in responsiveness of its services could result in
reduced visitor traffic, reduced revenue and could materially adversely affect
its reputation and brand. The Companys servers and software must be able to
accommodate a high volume of traffic. The Company has experienced system
interruptions in the past, and it believes that these interruptions will
continue to occur from time to time in the future.

Any increase in demands on its servers beyond their current capacity will
require it to expand and adapt its network infrastructure. If it is unable to
add additional software and hardware to accommodate increased demand, it could
experience unanticipated system disruptions and slower response times.

The Companys members may become dissatisfied by any system failure that
interrupts its ability to provide its products and services to them or results
in slower response times. The Company does not

24



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##### 



maintain business interruption insurance and its other insurance may not
adequately compensate it for any losses that may occur due to any failures in
its system or interruptions in its service.

BREACHES OF THE COMPANYS NETWORK SECURITY COULD BE COSTLY

The Company may be required to expend capital and resources to protect against,
or to alleviate, security breaches, which could reduce its profitability. A
significant barrier to confidential communications over the Internet has been
the need for security. If unauthorized persons penetrate its network security,
they could misappropriate proprietary information or cause interruptions in its
services. Misappropriation of the Companys and its members proprietary
information or interruptions of its services could result in reduced visitor
traffic and a loss of members. Computer viruses may cause its systems to incur
delays or interruptions, which could reduce demand for its service and damage
its reputation. Computer viruses may cause the Companys systems to incur
delays or other service interruptions and could damage its reputation and have
a material adverse effect on its business, financial condition and results of
operations. The inadvertent transmission of computer viruses could expose it to
a material risk of loss or litigation and possible liability.

THE COMPANYS INTELLECTUAL PROPERTY PROTECTION MAY NOT BE ADEQUATE

The Company has developed technologies that it uses in its business. It relies
primarily on a combination of common law trade secret, copyright and trademark
protection and contractual provisions to protect its proprietary rights in such
technologies.

The steps the Company has taken to protect its proprietary rights may not be
adequate to deter misappropriation of proprietary information. The Company may
not be able to detect unauthorized use of its proprietary information or take
appropriate steps to enforce its intellectual property rights. In addition, the
validity, enforceability and scope of protection of intellectual property in
Internet-related industries is uncertain and still evolving. The laws of other
countries in which the Company markets or may market its services in the future
are uncertain and may afford little or no effective protection of its
intellectual property. If the Company resorts to legal proceedings to enforce
its intellectual property rights, the proceedings could be burdensome and
expensive. The proceedings could also involve a high degree of risk.

Defending against intellectual property infringement claims could be time
consuming and expensive, and the Company may be liable for infringing on the
intellectual property rights of others. If the Company is not successful in
defending against these claims, it could be subject to significant damages and
the disruption of its business.

At this time the Company has not filed any applications for patents, copyrights
or trademarks for its technologies. Patents, trademarks and copyrights may
become important in the protection of the commercial viability of uDates and
Kiss products and the failure to obtain such patent protection could have an
adverse effect on the commercial viability of such products. The Companys
success, therefore, may in part depend on its ability to obtain patents,
trademarks and copyrights or licenses to such intellectual property in the
future. It is not possible to anticipate the breadth or degree of protection
that patents, trademarks and copyrights would afford any product or the
underlying technologies. There can be no assurance that any patents, trademarks
or copyrights issued or licensed to the Company will not be successfully
challenged in the future or that any of the Companys products will not
infringe the patents, trademarks or copyrights of third parties. There can be
no assurance that third parties will not assert infringement claims against the
Company in the future with respect to any current or future product. Any such
assertion, whether with or without merit, could require the Company to enter
into costly litigation or royalty arrangements. If required, such royalty
arrangements may not be available on reasonable terms, or at all.

25



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##### 



THE COMPANY MAY BE LIABLE AS A RESULT OF INFORMATION RETRIEVED FROM OR
TRANSMITTED OVER THE INTERNET

The Company may be sued for defamation, civil rights infringement, negligence,
copyright or trademark infringement, personal injury, product liability or
other legal claims relating to information that is published or made available
on its Web sites and the other sites linked to it. These types of claims have
been brought, sometimes successfully, against on-line services in the past. The
Company could also be sued for the content that is accessible from its Web
sites and through links to other Internet sites or through content and
materials that may be posted by members in chat rooms or on bulletin boards.
The Company also offers e-mail services, which may subject it to potential
risks, such as liabilities or claims resulting from unsolicited e-mail or
spamming, lost or misdirected messages, security breaches, illegal or
fraudulent use of e-mail or interruptions or delays in e-mail service. The
Companys insurance does not specifically provide for coverage of these types
of claims and therefore may not adequately protect it against these types of
claims. In addition, the Company could incur significant costs in investigating
and defending such claims, even if it ultimately is not liable. If any of these
events occur, the Companys revenues could be materially adversely affected.

OTHER RISKS

THE COMPANY MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATIONS AND LEGAL
UNCERTAINTIES AFFECTING THE INTERNET WHICH COULD ADVERSELY AFFECT ITS BUSINESS

Legal uncertainties and new regulations could increase the Companys costs of
doing business, require it to revise its products or services, prevent it from
delivering its products and services over the Internet or slow the growth of
the Internet, any of which could increase the Company's expenses, reduce its revenues or
cause its revenues to grow at a slower rate than expected and materially
adversely affect its business, financial condition and results of operations.
Laws and regulations directly applicable to Internet communications, commerce,
recruiting and advertising are becoming more prevalent, and new laws and
regulations are under consideration by the United States Congress and state
legislatures. Any legislation enacted or restrictions arising from current or
future government investigations or policy could dampen the growth in use of
the Internet generally and decrease the acceptance of the Internet as a
communications, commercial, recruiting and advertising medium. Many
areas of law governing the Internet remain unsettled, even in areas where
there has been some legislative action. In addition to new laws and
regulations being adopted, existing laws may be applied to the
Internet. It may take years to determine whether
and how existing laws such as those governing intellectual property,
privacy, the enforcement of online contracts, libel and taxation apply
to the Internet. Moreover, the laws and the interpretation of laws concerning the recruiting
industry are subject to change.

In addition, an increase in the application of state sales and use taxes on the products and
services sold over the Internet or new taxes on Internet access or
Internet-based transactions may decrease demand for products and services
that the Company sells over the Internet. The U.S. Congress passed legislation
in 1998 which limited for three years the ability of states to impose
taxes on Internet access or other taxes directed specifically at
Internet activities. This moratorium expired on October 21, 2001, and
has not yet been renewed by the U.S. Congress. If the moratorium is not
renewed, any subsequent imposition of new taxes on Internet-based
transactions could adversely affect the Companys future operating results
which could result in a decline in its stock price.

26



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##### 



THE COMPANYS STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS

The stock market in general and the market prices of shares in technology
companies, particularly those such as the Company which offer Internet-based
products and services, have been extremely volatile and have experienced
fluctuations that have often been unrelated or disproportionate to the
operating performance of such companies. These fluctuations are in response to
many factors, some of which are largely beyond the Companys control. These
factors include:

|  |  |                                                                                              
|- |  | ---------------------------------------------------------------------------------------------
| |  | quarterly variations in results of operations;                                               
| 
| 
| 
| 
| |  | adverse business developments;                                                               
| 
| 
| 
| 
| |  | changes in financial estimates by securities analysts;                                       
| 
| 
| 
| 
| |  | investor perception of the Company in particular and on-line
matchmaking services in general;
| 
| 
| 
| 
| |  | announcements by competitors of new products and services; and                               
| 
| 
| 
| 
| |  | general economic conditions both in the U.S. and in foreign countries.                       

Since the Companys stock price is potentially volatile, it may become subject
to securities litigation which is expensive and could result in a diversion of
resources. Litigation brought against it could result in substantial costs to
it in defending against the lawsuit and a diversion of managements attention.
Securities class action litigation has often been brought against companies
that experience volatility in the market price of their securities. Since the
Companys stock price is volatile, it could be subject to securities litigation
and incur higher expenses than expected, which could have a material adverse
effect on its business and results of operations.

FUTURE SALES OF THE COMPANYS STOCK MAY NEGATIVELY AFFECT ITS STOCK PRICE

The market price of the Companys common stock could decline as a result of
sales of a large number of shares of the common stock in the market or as a
result of sales by its existing stockholders, or the perception that these
sales could occur. The Company has and will continue to have a large number of
shares of common stock outstanding and available for resale. These sales might
make it more difficult for the Company to sell equity securities in the future
at a time and at a price that it deems appropriate. Unregistered shares of its
common stock currently outstanding are or will become eligible for sale without
registration pursuant to Rule 144 under the Securities Act, subject to certain
conditions of Rule 144. Certain holders of the common stock also have certain
demand and piggyback registration rights enabling them to register their shares
under the Securities Act for sale.

27



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PART II.
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(a)       None.

(b)       None.

(c)       On July 5, 2001, August 5, 2001 and September 5, 2001, the Company
issued an aggregate of 135,259 shares of common stock to four former stockholders
of Kiss.com, Inc. pursuant to notes issued to such former stockholders in
connection with the Companys acquisition of Kiss.com. The Company relied on
the exemption provided by Section 4(2) of the Securities Act for this issuance
of its common stock. The former stockholders represented their intention to
acquire such securities for investment only and not with a view to the
distribution thereof. Appropriate legends were affixed to the stock
certificates issued in such transactions. All recipients had access to
information about the Company to make an informed investment decision. No
underwriters were involved in these issuances of securities.

(d)       None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)       Exhibits.

|     |  |                                                                                                      
|---- |  | -----------------------------------------------------------------------------------------------------
|10.1 |  | Contract of Employment, dated December 4, 2000, between the Company and Allan Watson.                
|    
|10.2 |  | Amendment to Contract of Employment, dated July 13, 2001, between the Company and Allan Watson.      
|    
|10.3 |  | Amendment to Contract of Employment, dated July 13, 2001, between the Company and Martin Clifford.   
|    
|10.4 |  | Contract of Employment, dated October 2, 2000, between the Company and Michael Brocklesby.           
|    
|10.5 |  | Amendment to Contract of Employment, dated July 13, 2001, between the Company and Michael Brocklesby.

28



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(b)       Reports on Form 8-K.

On August 2, 2001, the Company filed a Current Report on Form 8-K to file
under Item 5 (Other Events) and Item 7 (Financial Statements, Pro Forma
Financial Information and Exhibits). No financial statements were filed with
this report.

On August 10, 2001, the Company filed a Current Report on Form 8-K to file
under Item 5 (Other Events) and Item 7 (Financial Statements, Pro Forma
Financial Information and Exhibits). No financial statements were filed with
this report.

On September 10, 2001, the Company filed a Current Report on Form 8-K to
file under Item 5 (Other Events) and Item 7 (Financial Statements, Pro Forma
Financial Information and Exhibits). No financial statements were filed with
this report.

29



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##### 



SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.



|                       |  |                 |  |                                       
|---------------------- |  | --------------- |  | --------------------------------------
|                       |  | UDATE.COM, INC. | 
|                      
|                      
|Date: October 22, 2001 |  | By:             |  | /s/ Melvyn Morris                     
|                       |  |                 |  |                                       
|                       |  |                 |  | Melvyn Morris                         
|                      
|                      
|                      
|                      
|                       |  |                 |  | Chief Executive Officer               
|                      
|                      
|Date: October 22, 2001 |  | By:             |  | /s/ Michael Brocklesby                
|                       |  |                 |  |                                       
|                       |  |                 |  | Michael Brocklesby                    
|                      
|                      
|                      
|                      
|                       |  |                 |  | Vice President and Chief              
|                      
|                      
|                      
|                      
|                       |  |                 |  | Financial Officer (Principal Financial
|                      
|                      
|                      
|                      
|                       |  |                 |  | and Chief Accounting Officer)         

30



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##### 



EXHIBIT INDEX

|Exhibits. |  |                                                                                                      
|--------- |  | -----------------------------------------------------------------------------------------------------
|          |  |                                                                                                      
|10.1      |  | Contract of Employment, dated December 4, 2000, between the Company and Allan Watson.                
|         
|10.2      |  | Amendment to Contract of Employment, dated July 13, 2001, between the Company and Allan Watson.      
|         
|10.3      |  | Amendment to Contract of Employment, dated July 13, 2001, between the Company and Martin Clifford.   
|         
|10.4      |  | Contract of Employment, dated October 2, 2000, between the Company and Michael Brocklesby.           
|         
|10.5      |  | Amendment to Contract of Employment, dated July 13, 2001, between the Company and Michael Brocklesby.

31