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

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

                                  FORM 10-KSB/A

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

(MARK ONE)
 X       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
---      OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
---      SECURITIES EXCHANGE ACT OF 1934
               FOR THE TRANSITION PERIOD __________ TO __________

                        COMMISSION FILE NUMBER 33-19196-A

                          INTERNET VENTURE GROUP, INC.
           (NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

                            STRATEGIC VENTURES, INC.
                           (FORMER NAME OF REGISTRANT)

                FLORIDA                                   59-2919648
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                  Identification No.)

  9307 WEST SAM HOUSTON PARKWAY SOUTH
               BLDG. 100
             HOUSTON, TEXAS                                 77049
(Address of principal executive offices)                  (Zip Code)

         Issuer's telephone number, including area code: (713) 596-9308

    SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT: NONE

    SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT: NONE

Check whether the issuer (1) filed all reports  required to be filed by Sections
13 or 15(d) of the  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
                                                              ---    ---

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. Yes     No  X
                      ---    ---
         State issuer's revenues for its most recent fiscal year: $464,740.

         As of December 31, 2000, 43,941,519 shares of common stock were
outstanding. The aggregate market value of the common stock held by
non-affiliates on December 29, 2000 was approximately $33,503,525.

                   DOCUMENTS INCORPORATED BY REFERENCE: None.

              Transitional Small Business Disclosure Format: Yes     No  X
                                                                 ---    ---
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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         Internet Venture Group, Inc. (the "Company") is an Internet company
focused on the acquisition, development and operation of companies engaged in
business-to-business ("B2B") and business-to-consumer ("B2C") e-commerce, as
well as e-commerce suitable brick-and-mortar ("BAM" or "click-and-mortar"
("CAM")) business activities.

         The Company's Internet business strategy is to acquire, develop and
operate unique e-commerce and e-commerce suitable BAM companies that are leaders
in their commercial niche by virtue of a compelling business model, technology
and/or proprietary service. The Company plans to provide a value-added corporate
structure that will enable its portfolio companies to quickly leverage their
expertise and deploy their e-commerce strategy by utilizing the management,
financial and corporate resources of the Company.

         The Company is a Florida corporation. Its principal executive offices
are located at 9307 W. Sam Houston Parkway, Suite 100, Houston, Texas 77049, and
its telephone number is (713) 596-9308. The Company's web site is
www.ivgcorp.com.

         The following is an overview of the Company's business and investment
considerations associated with ownership of the Company and includes information
associated with the Company through the date of this Amendment.


E-COMMERCE MARKET OPPORTUNITY

         The Internet has seen explosive growth over the last two years as more
and more people go on-line to conduct business and companies provide services to
connect Internet buyers and sellers. Generally, the business-to-business ("B2B")
segment involves the sale of goods and services between businesses while the
business-to-consumer ("B2C") segment involves the dissemination of information
or sale of goods and services from businesses to consumers. In the first case,
B2B has traditionally involved electronic data interchange over proprietary
networks, which are expensive, and of limited availability. B2C e-commerce has
historically been limited by limited consumer access to a centralized electronic
system.

         As the Internet has matured into a widespread, stable electronic
network, reliability, speed, and security have improved to the point where
e-commerce is being facilitated on a wide scale basis. As more and more
businesses and individuals are being connected to the Internet, traditional
brick and mortar B2B and B2C businesses are using the Internet to conduct
e-commerce and exchange information with customers, suppliers and distributors.
Such e-commerce suitable BAM businesses are sometimes referred to as
"click-and-mortar" businesses. In 1998, according to IDC, B2C e-commerce topped
$15 Billion. Forrester Research has reported that B2B e-commerce in 1998
exceeded $43 Billion and is expected to grow to over $1.3 Trillion by 2003.

         The Company believes that this rapid expansion and deployment of the
Internet e-commerce will provide unique and dramatic business opportunities for
new Internet businesses based on innovative business models that take advantage
of several fundamental trends:

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         o CENTRALIZED COMMUNITIES FOR WIDELY DISPERSED INDUSTRIES. On-line web
site business portals now allow widely dispersed industries to come together to
communicate, share ideas and match buyers, sellers and distributors in real time
when the participants are in geographically disparate locations. Many industries
that do not yet have the critical mass to physically congregate to conduct
business, can now utilize the time, space and network offered by on-line
business portals.

         o EXPANDED REAL TIME ACCESS TO INFORMATION, GOODS AND SERVICES.
Consumers now enjoy unlimited real time access to the World Wide Web. This
allows consumers to access and download information, goods and services in a way
that is fundamentally changing the way consumers collect information, buy goods
and conduct transactions.

         o INCREASED EFFICIENCY AND REDUCED COSTS. Traditional business can now
utilize the Internet to automate their internal operations, including
manufacturing, finance, sales and purchasing functions. The Internet also
increases information flow and access throughout an organization, thus
increasing business efficiency by reducing the time, costs and resources
required to transact business, lowering inventory levels and improving
responsiveness to customers and suppliers.


BUSINESS STRATEGY

         The Company plans to acquire B2B and B2C Internet e-commerce companies
and e-commerce suitable BAM companies that management believes can become
profitable market leaders in their e-commerce industry segment by virtue of a
compelling business model, technology and/or proprietary service. The Company
intends to focus on acquiring portfolio companies that are currently profitable
or those with business models that identify what management believes to be a
potentially profitable e-commerce strategy. The Company plans to help these
portfolio companies accelerate the successful deployment of their e-commerce
strategy by providing corporate and strategic development resources and
financial support, and by leveraging the collective knowledge, experience,
industry relationships and other resources of the Company's management, board of
advisors, strategic corporate partners and portfolio companies. The Company
intends to build value in its portfolio companies by helping them transition to
a paperless, web-centric e-commerce business model and by leveraging their
corporate assets through cross-marketing and affinity marketing programs with
its other portfolio companies. The Company is creating strategic alliances with
a variety of e-commerce technology enabling companies that can provide services
to accelerate the deployment of a company's Internet strategy from web site
design and construction and e-commerce software engine creation, to e-commerce
strategic alliances and corporate and financial development.

         The Company intends to devote significant resources to the development
of its subsidiaries and the acquisition of additional B2B, B2C and CAM
businesses. Additionally, the Company intends to continue to evaluate new
opportunities to further its investment in its Internet strategy and also to
seek out opportunities to increase shareholder value through the sale of
selected investments or having separate subsidiaries sell a minority interest to
outsiders, either privately or by means of a spin-off initial public offering of
one or more portfolio companies.

         Initially, the Company intends to focus on accumulating a significant
revenue base in the Professional Employment Organization ("PEO"), or staff
leasing, industry. PEO companies typically provide employee payroll, human
resource and benefit services on an outsourced basis. Unlike temporary
employment agencies, PEOs carry client companies' full-time employees on the PEO
payroll and bill the client a surcharge each payroll period. Historically, this
business model has resulted in high revenues and small profit margins for the
PEO. The Company believes that it can apply its e-commerce resources to increase
the profit margins of PEO firms by helping them transition from a paper-centric
human intensive operation to a paper-less electronic web-centric operation. The

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Company also hopes to leverage the employee base of PEOs by creating cross
marketing and affinity marketing programs between the PEO and other Company
portfolio companies and strategic partners.


EVALUATION OF POTENTIAL ACQUISITIONS

         While the Company believes there are numerous Internet opportunities
for emerging e-commerce, and a virtual flood of new e-commerce start-ups, there
are a number of fundamental challenges that any new Internet business must
master in order to be successful.

         DEVELOPING A SUCCESSFUL BUSINESS MODEL. Any new e-commerce Internet
company must develop a business model that eventually makes money and provides a
return-on-investment. Some companies have focused on gaining market share or
revenues without regard to profitability. Some of these companies have been able
to sustain this approach due, in large part, to the tremendous run up in their
underlying stock prices as investors flock to scoop up the newest Internet
public offering. This high valuation has provided these companies with an
Internet currency that allows them to grow through the acquisition of other
Internet companies or to raise working capital by issuing new securities to the
Internet--starved financial community. It also can provide early investors with
a paper return-on-investment.

         However, the Company's management does not believe that this makes a
sustainable successful business model. The Company believes that as the Internet
matures and begins to transact real business on a wide scale, each Internet
segment will consolidate, resulting in a few market leaders that have a sound
business model to achieve sustained earnings. The mission of the Company is to
find businesses that can obtain a leadership position within their market
segment and to help them capitalize on their position by implementing a
successful earnings business model.

         BUILDING A CORPORATE INFRASTRUCTURE. By definition, all Internet
companies are relatively new. Even industry leaders are often only a few years
old. Accordingly, almost all new Internet companies are in need of assistance in
sales and marketing, executive recruiting, human resources, information
technologies, and finance and business development. These companies also require
capital as significant resources may be required to build technological
capabilities and internal operations.

         FINDING THE BEST PEOPLE. The single most important resource for any new
company, whether Internet or BAM, is the people that manage, operate and execute
the business and strategy of the company. Therefore, the Company will look for
companies that are led by entrepreneurs with the vision to guide a new business
to its market space to satisfy its market demand. To facilitate the Company's
success, the Company intends to augment management with professionals who have
expertise in the applicable market, an understanding of the Internet's
capabilities, the ability to manage rapid growth and the flexibility to adapt to
the changing Internet marketplace. Such people are few and are highly sought
after. To be successful, each venture must be able to attract and retain such
people.

         When evaluating a potential portfolio company, the Company will
consider whether it believes the particular portfolio company can meet the
foregoing challenges. Management will also evaluate a variety of other factors,
including the following:

         o MARKET SEGMENT. Is the portfolio company positioned in a market
segment that can experience extraordinary growth or leverage?

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         o MARKET POSITION. Is the portfolio company well positioned within the
segment compared to competitors? Is the portfolio company first in its space?
Does the portfolio company have some other market advantage?

         o INDUSTRY LEADERSHIP. Does the portfolio company have the products,
services and skills necessary to become an industry leader in the market
segment?

         o PROPRIETARY TECHNOLOGY. Does the portfolio company possess some
proprietary technology or other technical competitive edge?

         o MANAGEMENT TEAM. Does the management team exhibit the traits or
potential necessary to recognize and quickly exploit a market opportunity and
focus the company to seize market share?

         o BUSINESS MODEL. Does the company have, or is it open to, adopting a
business model and strategy that will allow the portfolio company to mature and
eventually generate earnings per share that results in a return-on-investment?

         o NETWORK SYNERGY. Does the portfolio company contribute to, or will it
benefit from, relationships with the Company's other portfolio companies
umbrella?


STRATEGIC ALLIANCES

         An important piece of the Company's business model is its strategy to
establish strategic alliances with e-commerce enabling companies. These would
include, for example, front-end web design firms, back-end transaction support
firms, and enablers for horizontal electronic business communities. By
establishing a network of strategic business alliances, the Company can provide
their Internet enabling expertise to the Company's portfolio companies. This
will allow the portfolio companies to quickly deploy their Internet strategies
and contribute to the Company's community of related companies.

         EC Outlook.com, Inc., a Houston, Texas-based e-commerce solutions
provider, is one of the Company's first strategic business partners. EC Outlook
is an e-commerce consultant and solutions implementer with a special focus on
B2B applications. EC Outlook has expertise in electronic data interchange,
Internet commerce, web application development, community enablement, sales and
marketing, application integration and network communications. Management
believes that EC Outlook can deliver a full range of B2B e-commerce capabilities
from automating existing paper based processes and communications through
establishing sophisticated e-commerce communities including web sites and
customer profiling. The Company anticipates that EC Outlook will be a primary
e-commerce solutions provider for the Company and its portfolio companies.

GEEWHIZ

         While the Company has several acquisitions pending (see "Pending
Acquisitions," below), the Company's only revenue-generating business is
conducted through its GeeWhiz division. GeeWhiz, which was merged with the
Company effective December 31, 1999, intends to operate a vertical business
portal e-commerce web site designed to access and service the $34 Billion
promotional products, gifts, and souvenir markets. To date, GeeWhiz has
principally been engaged in the sale of its proprietary Starglas line of fiber
optic illuminated drinking containers. GeeWhiz intends to rapidly expand its
product line to include a wide variety of promotional, gift and souvenir items,
which will be sold over its web site (www.geewhizusa.com) and traditional
distribution channels. Although GeeWhiz is currently a division of the Company,
management intends to form a new, wholly-owned subsidiary to operate the GeeWhiz
business sometime in 2001.

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         GeeWhiz intends to become the first one-stop-electronic-shop for
purchasers, sellers, inventors and suppliers of innovative specialty and gift
promotional items that are inscribed with unique identifying branding. The
GeeWhiz web site incorporates state-of-the-art electronic commerce technologies
to allow high volume, low cost transactions to be conducted at GeeWhiz. GeeWhiz
plans to bring together the customers, distributors, merchandisers,
concessionaires and resellers of this highly fragmented industry to meet and
transact on-line at the industry's first electronic promotional products and
gift/souvenir bazaar. GeeWhiz's strategy is to leverage its existing sales of
its propriety Starglas line of fiber optic illuminated drinking containers by
expanding its product line to include other promotional and gift items for sale
through both the GeeWhiz web site bazaar and traditional reseller and specialty
distribution channels. The Starglas imaging process allows a wide range of laser
etched images to be illuminated via light emitting diodes that transmit colored
light to the image and create a halo effect where the light exits. This process
has been used on a line of drinking glasses and is planned to be applied to art
glass and other illuminated specialty items.

         The GeeWhiz web site (www.geewhizusa.com) will focus on aggregating
innovative specialty and promotional items for sale to individual buyers in the
gift/retail market, corporate and special event buyers for the promotional
products industry, and consumer purchasers in the souvenir market. A sampling of
customers include Continental Airlines, Lucent, Microsoft, Sabre, certain NBA
and NFL teams, and many special events, concerts, state fairs and festivals. The
Company plans to add, among other items, golf memorabilia and collectibles.

         The GeeWhiz on-line store will offer an extensive selection of
competitively priced promotional products and will feature detailed product
information, helpful and useful shopping services and innovative merchandising
through easy-to-use Web pages. In addition, the Company will offer customers the
convenience and flexibility of shopping 24 hours a day with reliable and timely
product delivery and excellent customer service. The GeeWhiz on-line store will
also allow inventors of new novelty and specialty items an opportunity to list
their products on the GeeWhiz site and to access vendors and suppliers through
the GeeWhiz directory.


COMPETITION

         Competition for Internet products and services is intense. As the
market for B2B, B2C and CAM e-commerce grows, we expect that competition will
intensify. Barriers to entry are minimal, and competitors can offer products and
services at a relatively low cost. Although the Company believes that the
diverse segments of the Internet market will provide opportunities for more than
one supplier of products and services similar to those of the Company, it is
possible that a single supplier may dominate one or more market segments. The
Company believes the principal competitive factors in this market are name
recognition, performance, ease of use, variety of value-added services,
functionality and features and quality of support. Many of the Company's
competitors have greater brand recognition and greater financial, marketing and
other resources than the Company. This may place the Company at a disadvantage
in responding to competitors' pricing strategies, technological advances,
advertising campaigns, strategic partnerships and other initiatives.
Furthermore, competitors may develop Internet products or services that are
superior to, or have greater market acceptance than, the solutions offered by
the Company and its portfolio companies.

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         The Company also faces competition from other capital providers
including publicly-traded Internet companies, venture capital companies and
large corporations. These competitors have greater financial resources and brand
name recognition than the Company. These competitors may limit the Company's
opportunity to acquire interests in new portfolio companies. If the Company
cannot acquire interests in attractive companies, its business strategy may not
succeed.

         There can be no assurance that the Company will be able to compete
successfully against its current or future competitors or that competition will
not have a material adverse effect on the Company's business, results of
operations and financial condition.


INTELLECTUAL PROPERTY

         The Company's success and ability to compete may be dependent on its
ability to develop and maintain the proprietary aspects of technology and
operate without infringing on the proprietary rights of others. The Company will
rely on a combination of patent, trademark, trade secrets, and copyright law and
contractual restrictions to protect the proprietary aspects of its technology.
These legal protections afford only limited protection for its technology.

         Despite efforts to protect the Company's proprietary rights,
unauthorized parties may attempt to copy aspects of its products or to obtain
and use information regarded as proprietary. Litigation may be necessary in the
future to enforce the Company's intellectual property rights, to protect its
trade secrets, to determine the validity and scope of the proprietary rights of
others or to defend against claims of infringement or invalidity. Any such
resulting litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on the Company's business,
operating results and financial condition. There can be no assurance that the
Company's means of protecting its proprietary rights will be adequate or that
competitors will not independently develop similar technology. Any failure by
the Company to meaningfully protect its property could have a material adverse
effect on the Company's business, operating results and financial condition.

         To date, the Company has not been notified that its products or
services infringe the proprietary rights of third parties, but there can be no
assurance that third parties will not claim infringement with respect to the
Company's current or future products and services. Any such claims, with or
without merit, could be time-consuming to defend, result in costly litigation,
divert management's attention and resources, cause product shipment delays or
require the Company to enter into royalty or licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms acceptable
to the Company or at all. A successful claim of product infringement against the
Company and the failure or inability to license the infringed technology or
develop or license technology with comparable functionality could have a
material adverse effect on the Company's business, financial condition and
operating results.

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SUBSEQUENT EVENTS - ACQUISITION OF SUBSIDIARY

         SWAN MAGNETICS, INC. On September 28, 2000, the Company acquired
ownership of approximately 93% of Swan Magnetics, Inc. As part of a two step
purchase transaction, the Company exchanged 20,000,000 shares of restricted
common stock for approximately 93% of the outstanding common shares of Swan. The
Company then offered to those stockholders an exchange of restricted common
stock for warrants to purchase common stock at an exercise price equal to the
market value on September 28, 2000. The Company has received verbal commitments
from stockholders to exchange 9,206,333 shares of its restricted common stock
for common stock warrants as of December 31, 2000. The acquisition was accounted
for using the purchase method.

         Swan is the developer of a proprietary ultra-high capacity ("UHC"),
flexible disk drive technology, and is based in Santa Clara, California. Swan's
President is Eden Kim, Chairman of the Board and Secretary of the Company. Swan
currently has a small demonstration lab in Santa Clara displaying working UHC
drives, media and pilot production equipment and is under discussion with
potential partners for commercial exploitation of the products.


SUBSEQUENT EVENTS - PENDING ACQUISITIONS

         To date, the Company has entered into definitive agreements to acquire
100% of SES-Corp., Inc ("SES"), certain of the assets of Cheyenne Management
Company, Inc. ("Cheyenne"), and a minority interest in CyberCoupons.com, Inc.
("CyberCoupons"). Each transaction is subject to a number of conditions to
closing, and there can be no assurance as to when or whether any of these
transactions will be completed.

         SES-CORP, INC. / CHEYENNE MANAGEMENT COMPANY, INC. On December 29,
2000, the Company entered into an Asset Purchase Agreement and Agreement and
Plan of Merger by and among SES Acquisition 2001, Inc., Cheyenne Management
Company, Inc., SES-Corp., Inc.("SES"), Dennis Lambka, and Ronald Bray (the
"Acquisition Agreement"). The Acquisition Agreement provides for both the
Company's purchase of certain of the assets of Cheyenne Management Company, Inc.
and the merger of SES Acquisition 2001, Inc., a wholly owned subsidiary of the
Company, with and into SES, with SES to be the surviving corporation.

         In consideration of the merger, the former shareholders of SES will
receive a number of restricted shares of the Company's common stock equal to 25%
of its issued and outstanding common stock immediately prior to the merger. An
additional number of restricted shares of the Company's common stock equal to up
to 8% of the Company's issued and outstanding stock prior to the merger may be
issued in 2002 based upon SES's 2001 pre-tax net income. The Company will also
acquire certain of the assets of Cheyenne Management Company, Inc. in exchange
for shares of the Company's common stock determined by dividing the fair market
value of the acquired assets as stated on Cheyenne's audited balance sheet as of
December 31, 2000 by $1.50.

         SES is the nation's largest privately held, full-service Professional
Employer Organization and headquarters in Auburn Hills, Michigan. SES currently
has 10 offices in 9 states, with operations in 42 states. Founded in 1989, SES
provides its services to over 3,000 client employers and more than 40,000 work
site employees throughout the United States. Cheyenne is a Michigan corporation
currently owned by the shareholders of SES. The assets of Cheyenne that the
Company will be purchasing will be used to support the business and operations
of SES after the consummation of the merger transaction with SES Acquisition
2001, Inc.

         CYBERCOUPONS. On January 9, 2001, the Company executed a Reorganization
Agreement and Plan of Exchange pursuant to which the Company will exchange up to
2,372,625 shares of its common stock for approximately 35% of the issued and
outstanding common stock of CyberCoupons.com,Inc., a Houston, Texas-based
company. CyberCoupons was formed to be an Internet source for consumers to
obtain on-line-printable manufacturer coupons for grocery, household and beauty
products. Advertiser expenditures on coupons amounted to over $6.2 billion in
1997. Much of this consisted of the printing, distribution and logistics
associated with coupon-based marketing activities. CyberCoupons believes that
the disintermediation of coupon distribution and redemption can result in a
significant savings to the billions of dollars spent by manufacturers to print,
distribute and redeem paper coupons. CyberCoupons allows shoppers to select
specific grocery coupons from its web site at a steep discount for use at local
grocery outlets. For example, $50 of coupons can be purchased for as little as
$9.95, with the user enjoying the benefit of being able to choose specific
product coupons.

         CyberCoupons believes that it is positioned to capitalize on the
disintermediation of coupon distribution and redemption by offering on-line
download of specific coupons and point-of-sale redemption of coupon face value.
CyberCoupons has established a web site for the purchase of specific grocery
coupons (www.grocerycoupons.com) and is currently involved in key test markets
with regional grocery stores for point-of-sale redemption of electronically
downloaded coupons.

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                            INVESTMENT CONSIDERATIONS

THE COMPANY MAY NOT BE SUCCESSFUL IN HIRING AND RETAINING THE KEY PERSONNEL
NECESSARY TO IMPLEMENT ITS BUSINESS PLAN.

         In order to successfully implement its business plan, the Company will
need to recruit, supervise and compensate a variety of senior professionals in
addition to its two current executives, including, among others, a Chief
Financial Officer and a Vice President-Corporate Development. The Company's
efforts to recruit talented individuals to serve in such capacities are taking
place in an extremely competitive job market. No assurances can be given that
the Company will be successful in recruiting a full array of senior managers.
The Company's failure to recruit a full slate of officers within such time frame
will result in a delay by the Company in achieving the goals in its business
plan.


THE COMPANY HAS A LIMITED OPERATING HISTORY.

         The Company has a very limited prior operating history upon which
investors may evaluate the Company's performance. The likelihood of the success
of the Company must be considered in light of the expenses, complications and
delays frequently encountered in connection with the establishment and expansion
of new businesses, and the competitive environment in which the Company will
operate. The Company only recently completed its merger with GeeWhiz in July
2000, and the resulting effect on the Company is unable to be determined with
any certainty.


THE COMPANY'S FINANCIAL STATEMENTS REFLECT A CUMULATIVE LOSS AFTER THE
COMPLETION OF THE GEEWHIZ TRANSACTION.

         The Company's financial statements are reported on a consolidated
basis, reflecting the assets, liabilities, revenue, profits and losses of
GeeWhiz prior to the merger with and into the Company. The Company itself did
not actively conduct business prior to January 2000, and so has no independent
profits or assets to report. GeeWhiz was previously engaged in product research
and design, market research and the development of manufacturing and marketing
systems. Historically, the Company operated at a loss. As a result, the Company
reports a cumulative loss through operations from its inception to date.


THE COMPANY DOES NOT ANTICIPATE PAYING ANY DIVIDENDS ON ITS COMMON STOCK.

         The Company has not paid any dividends on its Common Stock since its
inception and does not anticipate paying any dividends upon its Common Stock in
the foreseeable future. Instead, the Company intends to retain any future
earnings for use in the operation and expansion of its business.


THE VALUE OF THE COMPANY'S BUSINESS MAY FLUCTUATE BECAUSE THE VALUE OF SOME OF
ITS ASSETS FLUCTUATES.

         The Company's business plan contemplates that a portion of the
Company's assets will include the equity securities of both publicly traded and
non-publicly traded companies. The market price and valuations of the securities
that the Company holds in these companies may fluctuate due to market conditions
and other conditions over which the Company has no control. Fluctuations in the
market price and valuations of the securities that the Company holds in other
companies may result in fluctuations of the market price of the Company's Common
Stock and may reduce the amount of working capital available to the Company.

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THE COMPANY MAY EXPERIENCE DIFFICULTY IN TARGETING ACQUISITIONS.

         The Company's success depends upon the ability of its managers to
identify and close the acquisition of equity interests in e-commerce related
companies that compliment the Company's overall strategy and business plan. No
assurances can be given that the Company will be able to identify e-commerce
related companies that are complimentary and interested in completing
transactions with the Company. Even if such prospects are successfully
identified, any number of factors could preclude successful completion of
transactions, including the failure to agree on terms, incompatibility of
management teams, competitive bids from other e-commerce companies, lack of
capital to complete the transactions, or unwillingness on the part of the
prospects. If the Company cannot acquire substantial equity interests in
attractive e-commerce companies, the Company's business strategy may not be
successful.


THE COMPANY MAY HAVE DIFFICULTY PROTECTING ITS PATENTS AND OTHER PROPRIETARY
RIGHTS.

         The success of the Company and its subsidiaries may depend in part on
its ability to obtain and maintain patent, trademark and copyright protection
for their intellectual property, to preserve their trade secrets and to operate
without infringing the proprietary rights of third parties. The Company cannot
give assurances that, in each instance, the Company will be successful in
completely protecting its intellectual property. Further, in the event that
another party infringes upon the patents, copyrights or trademarks of the
Company or its trade secret rights, the enforcement of such rights can be a
lengthy and costly process, with no guarantee of success. Also, other parties
may be issued patents, copyrights or trademarks that restrict the Company and
its subsidiaries from pursuing initiatives or selling products that are
fundamental to their business plans, or that require licenses and the payment of
royalties by the Company. Finally, there can be no assurance that such claims
will not be brought in the future, or that any such claims will not be
successful. If such a claim were successful, the Company's business, asset value
or stock value could be materially adversely affected.


THE COMPANY MAY INCUR SIGNIFICANT COSTS TO AVOID INVESTMENT COMPANY STATUS AND
MAY SUFFER OTHER ADVERSE CONSEQUENCES IF DEEMED TO BE AN INVESTMENT COMPANY.

         The Company may incur significant costs to avoid investment company
status and may suffer other adverse consequences if deemed to be an investment
company under the Investment Company Act of 1940 (the "1940 Act"). Some equity
investments in other businesses made by the Company and its subsidiaries may
constitute investment securities under the 1940 Act. A company may be deemed to
be an investment company if it owns investment securities with a value exceeding
40% of its total assets, subject to certain exclusions. Investment companies are
subject to registration under, and compliance with, the 1940 Act unless a
particular exclusion or Securities and Exchange Commission safe harbor applies.
If the Company were to be deemed an investment company, it would become subject
to the requirements of the 1940 Act. As a consequence, the Company would be
prohibited from engaging in business or issuing its securities as it has in the
past and might be subject to civil and criminal penalties for noncompliance. In
addition, certain of the Company's contracts might be voidable, and a
court-appointed receiver could take control of the Company and liquidate its
business.

         Although management anticipates that the Company's investment
securities will comprise less than 40% of its total assets, fluctuations in the
value of these securities or of the Company's other assets may cause this limit
to be exceeded. Unless an exclusion or safe harbor were available to it, the
Company would have to attempt to reduce its investment securities as a
percentage of its total assets. This reduction can be attempted in a number of
ways, including the disposition of investment securities and the acquisition of
non-investment security assets. If the Company were required to sell investment

                                       10
<PAGE>

securities, it may sell them sooner than it otherwise would. These sales may be
at depressed prices and the Company may never realize anticipated benefits from,
or may incur losses on, these investments. Some investments may not be sold due
to contractual or legal restrictions or the inability to locate a suitable
buyer. Moreover, the Company may incur tax liabilities when it sells assets. The
Company may also be unable to purchase additional investment securities that may
be important to its operating strategy. If the Company decides to acquire
non-investment security assets, it may not be able to identify and acquire
suitable assets and businesses.


THE COMPANY'S WORKING CAPITAL REQUIREMENTS MAY CAUSE IT TO SEEK ADDITIONAL
FINANCING IN THE NEAR-TERM AND, IF SUCH FINANCING IS UNAVAILABLE, MAY PREVENT
THE COMPANY FROM SUCCEEDING.

         The Company is a development-stage company. The Company's working
capital requirements and the cash flow provided by future operating activities,
if any, will vary greatly from quarter to quarter, depending on the volume of
business during the period and payment terms with its customers. There can be no
assurance that adequate levels of additional financing, whether through
additional equity financing, debt financing or other sources, will be available
when needed or on terms favorable to the Company. Additional financings could
result in significant dilution to the Company's existing shareholders or the
issuance of securities with rights superior to those of the holders of the
Company's Common Stock. If adequate capital is not available or is not available
on acceptable terms, the Company may be unable to fully implement its business
plan, develop or enhance its services, take advantage of future opportunities,
or respond to competitive pressures on a timely basis. If the Company is unable
to obtain additional financing as needed, the Company may be required to reduce
the scope of its operations or its anticipated expansion. This could have a
material adverse effect on the Company's business, operating results and
financial condition. The Company's failure to do any of these things could
seriously harm its financial condition by preventing it from being able to take
advantage of new business opportunities.


THE COMPANY MAY INCUR LIABILITIES IN CONNECTION WITH THE MERGER WITH GEEWHIZ.

         In connection with the Company's acquisition of GeeWhiz and based upon
the advice of counsel, the acquisition was structured in two separate steps. The
first step involved the Company purchasing approximately 87% of the outstanding
stock of GeeWhiz from less than 35 of its shareholders in exchange for the
Company's Common Stock. The first step was followed by a statutory merger of
GeeWhiz with and into the Company with the Company being the survivor
corporation. In connection with the merger, the Company issued Common Stock to
the remaining GeeWhiz shareholders in consideration for their shares in GeeWhiz.
On advice of counsel, the shares of the Company's Common Stock issued in both
the first and second steps of the acquisition transaction were not registered
under the Securities Act. If registration were deemed to have been required,
then all those who received shares of the Company's Common Stock in the
acquisition transaction could be entitled to demand the rescission of their
participation in the transaction, return their shares of the Company's Common
Stock, and receive the fair value of the shares of GeeWhiz that they held before
the acquisition.


THE COMPANY'S STRATEGY OF EXPANDING ITS BUSINESS THROUGH ACQUISITIONS OF OTHER
BUSINESSES AND TECHNOLOGIES PRESENTS SPECIAL RISKS.

         The Company intends to continue to expand through the acquisition of
businesses, technologies, products and services from other businesses.
Acquisitions involve a number of special problems, which the Company may not be
capable of handling, including:

                                       11
<PAGE>

         o difficulty integrating acquired technologies, operations, and
           personnel with the existing business;

         o diversion of management attention in connection with both negotiating
           the acquisitions and integrating the assets;

         o potential issuance of securities in connection with the acquisition,
           which securities dilute the holders of the Company's currently
           outstanding securities;

         o strain on managerial and operational resources as management tries to
           oversee larger operations;

         o exposure of unforeseen liabilities of acquired companies; and

         o the requirement to record additional future operating costs for the
           amortization of good will and other intangible assets, which amounts
           could be significant.


THE COMPANY MUST KEEP PACE WITH RAPID TECHNOLOGICAL INNOVATION.

         The markets in which the Company will operate are characterized by
rapid technological change, frequent new product and service introductions, and
constantly evolving industry standards. Significant, unanticipated and expensive
technological change could render the Company's web site technology, products or
services obsolete or render them less competitive in the marketplace. If the
Company is unable or unwilling to respond to rapid technological change in a
cost-effective way, the Company's financial condition and operating results may
be adversely affected.

THE COMPANY FACES SUBSTANTIAL COMPETITION AND, IN MANY CASES, BETTER FINANCED
COMPETITORS.

         The business of developing, acquiring and capitalizing early stage
Internet B2B and B2C e-businesses and assisting BAM companies to transition to
e-commerce is highly competitive. The Company's competitors include existing
Internet holding companies that have a longer operational history, existing
portfolios of e-commerce companies, substantially greater financial resources,
and an established market for their publicly traded securities. The Company
faces competition from venture capital companies, investment banks, Internet
holding companies, and large capitalization industrial companies with captive
investment and venture capital divisions. There is no assurance that the Company
will be successful in finding suitable portfolio companies or that such
companies will want to be acquired by the Company.

                                       12
<PAGE>

THE COMPANY IS DEPENDENT UPON THE CONTINUED DEVELOPMENT OF THE E-COMMERCE
MARKET.

         The acquired companies will rely on the viability of the Internet to
succeed in their businesses. The development of e-commerce on the Internet is in
the earliest, developmental stages. Widespread commercial use of the Internet
could be delayed or even completely discouraged by a number of factors,
including, but not limited to, insufficient infrastructure to support high
transaction volume, security issues, and governmental regulation and/or
taxation. If the Internet does not become generally accepted as a main line
media for the conduct of routine business transactions, the Company will not be
successful in its business.


THE COMPANY WILL BE ADVERSELY AFFECTED BY DISRUPTION IN INTERNET SERVICE.

         The ability of the Company to conduct business on the Internet will
depend on its ability to develop reliable, uninterrupted computer and
telecommunications technology. Any system disruptions that cause an acquired
company's web site to go off line, even for a limited period of time, will
result in the loss of users and a reduction in the attractiveness of the site
for third party content providers.


THE COMPANY MAY NOT BE ABLE TO PROMOTE OR PROTECT ITS INTERNET PRESENCE.

         The availability of URL domain names, the registration of the same and
the protection of them once they are registered is, at the present time, an
imprecise area. The ability of the Company to obtain the domain names that best
promote their businesses is subject to conflicts with the operators of existing
web sites, conflicts with speculators who have registered large numbers of names
betting on their future relevance, and conflicts with the trademarks of other
competing companies. The relationship between the regulations governing the use
of domain names on the Internet and the laws protecting trademarks is not clear.
No assurances can be given that the Company will be universally successful in
obtaining and protecting the domain names that it needs to conduct its business
activities.


THE COMPANY'S REVENUES MAY BE UNRELIABLE AND DIFFICULT TO PREDICT.

         Acquired companies often will embrace a strategy that places a premium
on being the first in category or first in the Internet space. Such a strategy
will mean that the primary thrust of the business in the early stages will be to
log the highest number of unique hits rather than generating revenue. Therefore,
acquired companies pursuing this "first-in-time" strategy may not generate
revenue or may be in a negative cash flow position for an extended period of
time. As a consequence, the Company may be forced to support any of its acquired
companies' operations financially, which will negatively impact the Company's
cash flow and profitability.


THE COMPANY FACES RISKS BECAUSE OF UNCERTAINTIES REGARDING THE INTERNET.

         The Company's ability to derive revenues from Internet professional
services and related products will depend in part upon a robust industry and the
infrastructure for providing Internet access and carrying Internet traffic. The
Internet may not prove to be a viable commercial marketplace. Because global
commerce and on-line exchange of information on the Internet and other similar
open wide area networks are new and evolving, it is difficult to predict with
any assurance whether the Internet will prove to be and remain a viable
commercial marketplace. Moreover, critical issues concerning the commercial use
of the Internet (including security, reliability, cast, ease of use and access
and quality of service) remain unresolved and may impact the growth of Internet
use. In addition, the applicability of the Internet to existing laws governing
issues such as property ownership, libel and personal privacy is uncertain. The
Federal Trade Commission and the U.S. Congress have expressed interest in

                                       13
<PAGE>

regulating advertising on the Internet, and although no material regulation has
yet occurred, it may in the future, and could have an adverse impact on the
business of the Company. There can be no assurance that the Internet will become
a viable commercial marketplace. If the necessary infrastructure or
complementary products are not developed, or if the Internet does not become a
viable commercial marketplace, the Company's business, operating results and
financial condition would be materially adversely affected.

THE COMPANY'S SUCCESS DEPENDS GREATLY ON INCREASED USE OF THE INTERNET BY
BUSINESSES AND INDIVIDUALS.

         The Company's success depends greatly on increased use of the Internet
for advertising, marketing, providing services, and conducting business.
Commercial use of the Internet is currently at an early stage of development and
the future of the Internet is not clear. In addition, it is not clear how
effective advertising on the Internet will be in generating business as compared
to more traditional types of advertising such as print, television, and radio.
Because a significant portion of the Company's business depends on the Company's
Internet operating company subsidiaries, the Company's business will suffer if
commercial use of the Internet fails to grow in the future.

         Internet usage may not continue to grow because of inadequate network
infrastructure, security concerns, inconsistent service quality and lack of
cost-effective, high-speed service, among other reasons. On the other hand, if
Internet usage grows too rapidly, the Internet infrastructure may not support
the demands this growth will place on it. As a result, the Internet's
performance and reliability may decline. In addition, outages and delays have
occurred throughout the Internet network infrastructure and have interrupted
Internet service. If these outages or delays occur frequently in the future,
Internet usage could grow more slowly or decline.

         The Company may also incur substantial costs to keep up with changes
surrounding the Internet. Unresolved critical issues concerning the commercial
use and government regulation of the Internet include the following:

         o security;
         o cost and ease of Internet access;
         o intellectual property ownership;
         o privacy;
         o taxation;
         o liability issues.

Any costs the Company incurs due to these factors would materially and adversely
affect its business, financial condition and results of operations.


THE COMPANY FACES POTENTIAL ON-LINE SECURITY RISKS.

         Many prospective users of the Internet have concerns regarding the
security of their on-line transactions and the vulnerability of confidential
information transmitted over the Internet. To the extent that any of the
acquired companies are engaged in on-line transactions, the success of their
businesses will depend on their ability to meet their customers' expectations
for security. No assurances can be given that each acquired company will be able
to successfully accomplish this fundamentally important issue.

                                       14
<PAGE>

GOVERNMENT REGULATION OR TAXATION COULD HAVE A MATERIAL ADVERSE EFFECT UPON THE
COMPANY'S OPERATIONS.

         Presently, there are relatively few laws and regulations governing how
business is done on the Internet. However, as the Internet grows, it seems
inevitable that new laws and regulations will be enacted. Likely subjects for
legislation are collection, ownership and use of data collected on the Internet,
privacy, security, pricing, content, taxation of Internet transactions,
copyrights, gambling, and distribution of goods and services. There can be no
assurances that the course of regulation of the Internet will not have a
significant negative impact on the acquired companies.


CONCENTRATION OF STOCK OWNERSHIP.

         As of December 31, 2000, the directors and executive officers of the
Company own an aggregate of 19,009,591 shares, representing 43.26% of the
Company's then outstanding Common Stock. The Company may grant additional stock
options to its directors and executive officers in the future which could
increase this concentration of ownership further. As a result, the directors and
officers, acting together in concert, could exercise a significant influence
over all matters requiring shareholder approval, including the ability to elect
members of the Company's Board of Directors, including themselves, and to
approve or prevent the Company from taking significant corporate actions
requiring director and/or shareholder approval. If these directors and officers
collectively withheld their consent and approval, they could (a) delay or
prevent a change in control of the Company; (b) impede a merger, consolidation,
takeover or other business involving the Company; or (c) discourage a potential
acquiror from making a tender offer or otherwise attempting to obtain control of
the Company.


THE COMPANY'S CURRENT STOCK PRICE COULD ADVERSELY AFFECT THE MARKET FOR THE
COMPANY'S COMMON STOCK.

         The penny stock regulations require that broker-dealers who recommend
penny stocks to persons other than institutional accredited investors must make
a special suitability determination for the purchaser, receive the purchaser's
written agreement to the transaction prior to the sale and provide the purchaser
with risk disclosure documents which identify risks associated with investing in
penny stocks. Furthermore, the broker-dealer must obtain a signed and dated
acknowledgment from the purchaser demonstrating that the purchaser has actually
received the required risk disclosure document before effecting a transaction in
penny stock. These requirements have historically resulted in reducing the level
of trading activity in securities that become subject to the penny stock rules.
Holders of our Common Stock may find it more difficult to sell their shares of
Common Stock, which is expected to have an adverse effect of the market price of
the Common Stock.

ITEM 2.  PROPERTIES

         The Company leases office and warehouse space under a lease agreement
for approximately 10,000 square feet expiring in 2002. The Company intends to
relocate its headquarters to Sugar Land, Texas.

ITEM 3.  LEGAL PROCEEDINGS

         From time to time in the ordinary course of business, the Company may
be subject to litigation. The Company is not currently a party to any litigation
matter which it believes to be material.

                                       15
<PAGE>

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

         None

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

         The outstanding securities of the Company were not traded in any
quotation medium maintained by members of the National Association of Securities
Dealers, Inc. during the years 1999 and 1998. As a result, during such time the
Company's Common Stock did not have a market price.

         Since the closing of the Company's Initial Public Offering the
Company's shares traded over the counter by market makers for a period in 1989
and 1990. Share prices have not been quoted since then. Quotations, when made,
represent only prices between dealers and do not include retail markups,
markdowns or commissions and accordingly, may not represent actual transactions.
As of December 31, 2000, there are approximately 521 stockholders holding shares
in their name and an unknown number of shareholders whose shares were held in
the name of securities broker/dealers.

         No dividends have been declared or paid by the Company and presently
the Company intends to retain all future earnings, if any, to finance the
expansion and development of its business.

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

         The following discussion should be read in conjunction with the
Company's financial statements set forth on pages F-1 through F-11.

                                PLAN OF OPERATION
                                -----------------

         While the Company has three acquisitions pending, as of the date of
this Report, the Company's only revenue-generating business is conducted through
its GeeWhiz division. GeeWhiz, which was merged with the Company effective as of
December 31, 1999, intends to operate a vertical business portal e-commerce web
site designed to access and service the promotional products, gifts, and
souvenir markets. To date, GeeWhiz has principally been engaged in the sale of
its proprietary Starglas line of fiber optic illuminated drinking containers.
Although GeeWhiz is currently a division of the Company, management intends to
form a new, wholly-owned subsidiary to operate the GeeWhiz business sometime in
2001.

         The Company's plan of operation for the remainder of the year 2000 will
consist of activities aimed at:

         o        Concluding its pending acquisitions;

         o        Investigating and, if appropriate, pursuing definitive
                  agreements for acquisitions believed by the Board to be
                  consistent with the Company's plan to become an Internet
                  company through the acquisition, development and operation of
                  early stage companies engaged in "business-to-business,"
                  "business-to-consumer" and "click and mortar" business
                  activities;

         o        Establishing strategic partnerships and alliances with
                  e-commerce enabling companies, such as front-end web design
                  firms, back-end transaction support firms, and enablers for
                  horizontal electronic business communities;

         o        Continuing the development of the GeeWhiz web site and forming
                  a new, wholly-owned subsidiary to operate the GeeWhiz
                  business; and

         o        Seeking additional equity financing for the Company.

                                       16
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                -------------------------------------------------
                       CONDITION AND RESULTS OF OPERATIONS
                       -----------------------------------

FINANCIAL CONDITION

         At December 31, 1999, the Company had current assets of approximately
$100,000 and total assets of approximately $448,607. Current liabilities at
December 31, 1999 were approximately $571,000, and the Company had no long-term
liabilities. The Company's stockholders' deficit at December 31, 1999 was
($122,476).


RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 1999 to December 31, 1998
-------------------------------------------------------------------

         Revenues increased to approximately $465,000 for 1999, compared to
approximately $328,000 for 1998. The increase was attributable principally to
increased product sales.

         Costs of goods sold during 1999 increased to $181,000, from $133,000
during 1998. This increase was primarily the result of the larger number of
drinking glasses produced and distributed in 1999.

         Other expenses, consisting of selling, general and administrative
expenses, and sales and marketing expenses, decreased to $575,000 in 1999, from
$585,000 in 1998. The decrease was principally due to decreased sales and
marketing expenses in 1999.

         The Company's net loss for 1999 was approximately $292,000, compared to
a net loss of $389,000 during 1998.

Comparison of the Year Ended December 31, 1998 to December 31, 1997
-------------------------------------------------------------------

         The Company had revenue in 1998 of approximately $328,000, compared to
1997 revenue of approximately $287,000. The increase was primarily the result of
increased product sales.

         Costs of goods sold during 1998 decreased to $133,000, from $267,000
during 1997. The higher cost of goods sold in 1997 as compared to 1998 was a
result of start-up manufacturing costs that were expensed during 1997.

         Other expenses were approximately $585,000 in 1998 and $561,941 in
1997.

         The Company had a net loss of $389,000 in 1998, compared to a net loss
of $542,064 in 1997.

LIQUIDITY AND CAPITAL RESOURCES

         Over the last two years, operations have been financed through private
sales of common stock and loans from management and stockholders. In addition,
in 1998, the Company obtained services or paid expenses through the issuance of
common stock.

         Net cash used by operating activities was approximately $254,000 in
1999 and $125,000 in 1998. The Company had $6,000 in cash at December 31, 1999.
The Company financed its losses from operations in 1999 and 1998 principally
through the issuance of common stock in private transactions, and borrowings
from its management and stockholders.

         The Company recently secured a $1,000,000 loan from Swan Magnetics,
Inc. and has pending the acquisition of businesses that management believes can
provide additional cash for the Company's operations and be profitable in both
the short and long-term. Management also intends to attempt to raise additional
funds through private sales of the Company's common stock. Although management
believes that these efforts will enable the Company to meet its liquidity needs
in the future, there can be no assurance that these efforts will be successful.

GOING CONCERN CONSIDERATION

         The Company has continued losses from operations, negative cash flow
and liquidity problems. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The accompanying financial
statements do not include any adjustments relating to the recoverability of
reported assets or liabilities should the Company be unable to continue as a
going concern.

         The Company has been able to continue based upon the financial support
of certain of its stockholders, and the continued existence of the Company is
dependent upon this support and the Company's ability to acquire assets by the
issuance of stock. Management has recently been able to secure a $1,000,000 loan
from Swan Magnetics, Inc. and has pending the acquisition of businesses that
management believes can provide additional cash for the Company's operations and
be profitable in both the short and long-term. Management also intends to
attempt to raise additional funds through private sales of the Company's common
stock. Although management believes that these efforts will enable the Company
to continue as a going concern, there can be no assurance that these efforts
will be successful.

ITEM 7.  FINANCIAL STATEMENTS.

         See attached Financial Statements on pages F-1 through F-12.

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

         In connection with audits of the two most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former accountant would have caused him to
make reference in connection with his report to the subject matter of the
disagreement(s).

                                       17
<PAGE>

                                    PART III


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

         The individuals who serve as executive officers and directors of the
Company are:


      NAME                    AGE                        POSITION

Elorian Landers               51         President, Chief Executive Officer and
                                         Director
Eden Kim                      44         Chairman of the Board and Secretary
Thomas McCrimmon              54         Director
Eduardo Orilliac              42         Director
Thomas G. Gruenert            45         Director

         ELORIAN LANDERS, PRESIDENT AND CEO. Serving as President and CEO, Mr.
Landers was the founding principal of GeeWhiz. Mr. Landers has primary
responsibility for the day-to-day management of the Company's affairs. Mr.
Landers plans to focus on the acquisition of Portfolio Companies and the
formation of strategic business alliances. Mr. Landers brings to the Company
many years of specific expertise in corporate development and finance. Mr.
Landers has successfully orchestrated the early stage capitalization and
corporate development of several public companies. Mr. Landers has also
previously served as Vice President of Marketing for Watermark Corporation, a
startup company involved in several segments of the water industry, including a
chain of retail water centers. He has extensive advertising agency experience
and expertise. Mr. Landers was a founder and partner of South Coast Venture
Group, which funded several technology based companies. Mr. Landers holds a B.A.
in Advertising from Art Center College in Pasadena, California. He also attended
Texas A & M University studying Architecture.

         EDEN KIM, CHAIRMAN AND SECRETARY. Serving as Chairman of the Board of
Directors. Mr. Kim plans to be responsible for the long term strategic
positioning of the Company and the development of business models for Portfolio
Companies. Mr. Kim has specific expertise in strategic corporate development,
technology development, strategic alliances and corporate partnering. Mr. Kim
has been the President and Chairman of Swan Magnetics, Inc., a disk drive high
technology company in the Silicon Valley, since 1992. He was also one of the
founders of the Company and served previously as President from 1984 to 1986.
Mr. Kim's management duties at the Company included directing the Company's
business development as well as establishing and maintaining Swan's key
strategic alliances. Under Mr. Kim's guidance, Swan raised over $30 million in
equity financing and established strategic working relationships with world
class high technology companies including Hewlett Packard Co., SEGA Enterprises
Co., Ltd., Mitsubishi Chemical Co., Ltd., Emtec Magnetics GmbH, JTS Corporation,
CSK Venture Capital and others.

         Mr. Kim has founded several high technology companies in the hard disk
drive industry and other companies in the water purification industry. He has
led successful research and development programs and product introductions. Mr.
Kim has experience in acquiring companies through stock, debt and cash
transactions. In addition, Mr. Kim has established distribution channels in the
Asian Pacific Rim and has orchestrated corporate mergers and acquisitions. Mr.
Kim is an attorney and a member of the California State Bar Association.

                                       18


         THOMAS MCCRIMMON, DIRECTOR. Mr. McCrimmon serves as a member of the
Board of Directors. Mr. McCrimmon is a principal and the Managing Director of
Chatham International, Inc., an international financial services company
headquartered in Tampa, Florida. Mr. McCrimmon has special expertise in the
areas of corporate securities, public offerings and corporate finance.

         EDUARDO ORILLAC, DIRECTOR. Mr. Orillac serves as a member of the Board
of Directors. Mr. Orillac is the founder and Chief Executive Officer of T-Shirts
Interamerica, a leading Panamanian company involved in screen-printing and
manufacturing of garments, promotional products and gift/souvenirs
internationally. Mr. Orillac also is a founder and director of Zetta
CentroAmerica y Caribe, a leading color separation and large image reproduction
company, and of Multimedia Live, Inc. which is an Internet service provider in
the United States and Latin America.

         THOMAS G. GRUENERT, DIRECTOR. An attorney, Mr. Gruenert is a founding
partner of Gibson-Gruenert, L.L.P., a law firm with offices in Houston, Texas
and Lafayette, Louisiana. Mr. Gruenert obtained his J.D. decree in 1983 from the
Washington and Lee University School of Law. Mr. Gruenert's practice is focused
on corporate and securities work for private and public technology and
e-commerce companies.


BOARD OF ADVISORS

         The Company has instituted a Board of Advisors intended to provide the
Company with access to special expertise in the technical and management areas
relevant to e-commerce. Members of the Advisory Board are:

         MARK KINGSTON. Mr. Kingston is the President of EC Outlook, Inc., an
e-commerce solutions company that is one of the Company's prime strategic
partners.

         JAMES BRACKEEN. Mr. Brackeen retired from Exxon/Mobil after a
thirty-year career and currently serves as a Vice President of EC Outlook, Inc.

         DR. DEREK NAM. Dr. Nam provides technical expertise in the field of
broadband fiber optic telecommunications. Dr. Nam is presently a Vice President
of Manufacturing at SDL, Inc., a leading designer and manufacturer of pump laser
diodes used in broadband fiber optic telecommunications.

         SABURO (STEVE) OTO. Mr. Oto graduated from Brigham Young University in
1974 with a Bachelor of Arts degree in Finance, and did post-graduate work at
UCLA. Mr. Oto is a former audit partner at Deloitte & Touche and is a member of
the American Institute of Certified Public Accountants. Mr. Oto currently owns
and operates CMR International, LLC, an international business and finance
consultancy. CMR International routinely provides services to major Japanese
corporations and American multi-nationals doing business in the Pacific Rim.

         DALE BURCHFIELD. Mr. Burchfield is President of DPI Design Print, Inc.
("DPI"). DPI is a visual marketing solutions provider that assists the Company
in maintaining high graphic standards to further its brand identity. DPI is the
developer and administrator of the innovative GeeWhizUSA.com web site and is one
of the Company's prime strategic partners.

                                       19
<PAGE>

         In consideration of their services as members of the Board of Advisors,
the Company has awarded each of the members of the Advisory Board of Directors
an option to purchase 50,000 shares of the Company's Common Stock at an exercise
price of $0.25 per share. The options are presently exercisable and expire on
December 31, 2003.

SECTION 16(A) - BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

         The Company believes that during the period from December 31, 1998
through December 31, 1999, there were no Section 16(a) filing requirements
applicable to its officers, directors and greater-than-ten-percent shareholders
because the Company has no securities registered pursuant to Section 12(b) or
Section 12(g) of the Securities Exchange Act of 1934, as amended.

ITEM 10. EXECUTIVE COMPENSATION.

         The Company intends to enter into employment agreements with each of
Messrs. Landers and Kim pursuant to which Messrs. Landers and Kim will receive a
specified base salary subject to annual adjustment by the Board of Directors.
Currently the salaries payable under to Messrs. Landers and Kim are $220,000 and
$210,000, respectively, and the Company anticipates that such salaries will be
the initial base salaries payable under the employment agreements. The Company
expects that each employment agreement will provide if the employment agreement
is terminated by the Company without cause, the employee will be entitled to
severance pay equal to one year's base salary and all options previously awarded
to the employee will become immediately exercisable. The Company reimburses all
of its officers, directors and employees for actual expenses incurred on behalf
of the Company.


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

         The following table sets forth as of December 31, 2000, the name and
number of shares of the Company's Common Stock held of record or beneficially by
(1) each person who held of record or was known by the Company to own
beneficially more than 5% of the issued and outstanding shares of the Company
and (2) the officers and directors of the Company. The address for each of the
individuals listed is c/o Internet Venture Group, Inc., 9601W. Sam Houston
Parkway, Suite 100, Houston, Texas 77049.


     Name                     Number of Shares Owned(1)      Percent of Class(2)
     ----                     ----------------------         ----------------

Elorian Landers(3)                        9,496,483                   21.34%
Eden Kim(4)                               8,330,641                   18.49%
Thomas C. McCrimmon(5)                    3,310,000                    7.33%
Eduardo Orillac(6)                        1,153,500                    2.59%
Thomas G. Gruenert(7)                       481,467                    1.09%
Executive officers and
directors as a group(8) (5 persons)      22,772,091                   47.96%

------

1.  Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial
    ownership of any securities as to which such person, directly or indirectly,
    through any contract, arrangement, undertaking, relationship or otherwise
    has or shares voting power and/or investment power as to which such person
    has the right to acquire such voting and/or investment power within 60 days.
    Percentage of beneficial ownership as to any person as of a particular date
    is calculated by dividing the number of shares beneficially owned by such
    person by the sum of the number of shares outstanding as of such date and
    the number of unissued shares as to which such person has the right to
    acquire voting and/or investment control within 60 days. The number of
    shares shown includes outstanding Shares owned as of December 31, 2000 by
    the person indicated and Shares underlying warrants and/or options owned by
    such person on December 31, 2000 that were exercisable within 60 days of
    that date.
2.  Based on 43,941,519 shares of Common Stock issued and outstanding as of the
    close of business on December 31, 2000, which takes into effect the issuance
    of 20,000,000 shares of the Company's Common Stock (the "Swan Exchange
    Shares") in connection with its purchase of approximately 93% of the common
    stock of Swan Magnetics, Inc. and also giving effect to verbal commitments
    from holders of 9,206,333 of the Swan Exchange Shares to exchange such
    shares for warrants to purchase shares of the Company's stock (the "Warrant
    Exchange").

                                       20
<PAGE>

3.  Excludes 479,000 Swan Exchange Shares that Mr. Landers is tendering to the
    Company in the Warrant Exchange. Includes options to purchase 562,500 shares
    of Common Stock purchasable at a price of $0.25 per share.
4.  Excludes 4,539,946 Swan Exchange Shares that Mr. Kim is tendering to the
    Company in the Warrant Exchange. Includes options to purchase 1,125,000
    shares of Common Stock at a price of $0.25 per share.
5.  Includes options to purchase 1,125,000 shares of Common Stock at a price of
    $0.25 per share and options to purchase 75,000 shares of Common Stock at a
    price of $0.75 per share.
6.  Includes options to purchase 75,000 shares of Common Stock at a price of
    $0.75 per share and options to purchase 500,000 shares of Common Stock at a
    price of $0.225 per share.
7.  Includes options to purchase 75,000 shares of Common Stock at a price of
    $0.75 per share and options to purchase 225,000 shares of Common Stock at a
    price of $0.625 per share.
8.  Includes options to purchase 3,537,500 shares of Common Stock.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The Company issued a secured convertible promissory note (the "Note")
in the original principal amount of $1,000,000 to Swan Magnetics Inc. ("Swan")
in connection with a loan by Swan to the Company. The Note bears interest at the
rate of 8% per annum and is payable in three annual installments of principal
and interest commencing July 18, 2001. The principal and interest on the Note or
any proportionate amount of principal and interest is convertible into up to
500,000 shares of Common Stock. The Note is secured by all capital stock and
holdings of the Company in any other entity, collateral and equipment, accounts
receivable and other intangibles and intellectual property of the Company. Eden
Kim, the Company's Chairman of the Board, is the President and Chairman of Swan.

         On September 28, 2000, the Company acquired approximately 93% of the
outstanding capital stock of Swan through a share exchange. Swan shareholders
who elected to participate in the share exchange collectively received 20
million shares of Company Common Stock in exchange for all of their shares of
Swan common stock.

         Thomas Gruenert, a director of the Company, is a partner of
Gibson-Gruenert LLP, a Houston, Texas law firm that has provided legal services
to the Company. Mr. Gruenert's firm has been paid $132,350 in legal fees in
2000, and Mr. Gruenert was issued 300,000 shares of restricted Common Stock in
exchange for his services as a director at a time prior to the Company's
commencement of trading.


                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)  The following exhibits are filed as exhibits to this Report:


EX #             DESCRIPTION                              LOCATION
3(a)      Articles of Incorporation         *Exhibits to Registration Statement
                                            filed by Registrant on Form S-18

                                       21
<PAGE>

3(b)      Bylaws of Registrant              *Exhibits to Registration Statement
                                            filed by Registrant on Form S-18

4(a)      Form of Stock Certificate         *Exhibits filed as part of
                                            Registration Statement of Registrant
                                            filed on Form S-18

4(b)      Form of Warrant Certificate       *Exhibits filed as part of
                                            Registration Statement of Registrant
                                            filed on Form S-18

27.1      Financial Data Schedule           EX 27.1

*    Incorporated by reference to Registration Statement #33-19196A.


         (b)  REPORTS ON FORM 8-K. There were no reports on Form 8-K for the
              twelve month period ended December  31, 1999.



                                   SIGNATURES

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

                                    Internet Venture Group, Inc.

Date:  January 12, 2001           By:     /s/ Elorian Landers
                                            ------------------------------------
                                            Elorian Landers, President

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Company and in the capacities and on the dates indicated.

SIGNATURE                  TITLE                             DATE

/s/ Elorian Landers        President, Chief Executive        January 12, 2001
----------------------     Officer, Director
Elorian Landers

/s/ Eden Kim               Secretary,  Director, Chairman    January 12, 2001
----------------------     of the Board
Eden Kim

/s/ Thomas McCrimmon       Director                          January 12, 2001
----------------------
Thomas McCrimmon

/s/ Eduardo Orlliac        Director                          January 12, 2001
----------------------
Eduardo Orlliac

/s/ Thomas G. Gruenert     Director                          January 12, 2001
----------------------
Thomas G. Gruenert
                                       22
<PAGE>

                          INTERNET VENTURE GROUP, INC.


                        Consolidated Financial Statements
                      For the Year Ended December 31, 1999



                                       F-1
<PAGE>

                           Michael Johnson & Co., LLC
                          Certified Public Accountants
                        9175 East Kenyon Ave., Suite 100
                             Denver, Colorado 80237

Michael B. Johnson, C.P.A.                            Telephone:  (303) 796-0099
Member:  A.I.C.P.A.                                   Facsimile:  (303) 796-0137
Colorado Society of CPAs


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------


To the Board of Directors of
Internet Venture Group, Inc.
Houston, TX

We have audited the accompanying balance sheet of Internet Venture Group, Inc.
as of December 31, 1999, and the related consolidated statements of operations,
cash flows, and changes in stockholders' equity for the years ended December 31,
1999 and 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Internet Venture Group, Inc. at
December 31, 1999, and the results of its operations and its cash flows for
the years ended December 31, 1999 and 1998, in conformity with generally
accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As described in Note 8 to the
financial statements, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern unless it is able to generate
sufficient cash flows to meet its obligations and sustain its operations. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



/s/ Michael Johnson & Co., LLC
DENVER, COLORADO
January 11, 2001

                                      F-2
<PAGE>

                          INTERNET VENTURE GROUP, INC.
                           Consolidated Balance Sheet
                      For the Year Ended December 31, 1999


ASSETS

CURRENT ASSETS:
     Cash                                                        $        6,006
     Accounts Receivable - net                                           14,145
     Inventories                                                         79,588
                                                                 ---------------
     Total Current Assets                                                99,739
                                                                 ---------------

EQUIPMENT - NET                                                          59,546
                                                                 ---------------

OTHER ASSETS - NET                                                      289,322
                                                                 ---------------

TOTAL ASSETS                                                     $      448,607
                                                                 ===============

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Accounts Payable - trade                                    $      206,057
     Accrued Expenses                                                    35,370
     Notes Payable                                                      329,656
                                                                 ---------------
     Total Current Liabilities                                          571,083
                                                                 ---------------


STOCKHOLDERS' DEFICIT:
     Common Stock, Par Value $.0001, 100,000,000 shares
       Authorized,  issued and outstanding
       - 30,537,402 shares                                                3,054

     Additional Paid-In Capital                                       1,969,035
     Retained Deficit                                                (2,094,565)
                                                                 ---------------
     Total Stockholders' Deficit                                       (122,476)
                                                                 ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                      $      448,607
                                                                 ===============

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

                                      F-3
<PAGE>

                          INTERNET VENTURE GROUP, INC.
                      Consolidated Statement of Operations
                 For the Years Ended December 31, 1999 and 1998

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

REVENUES:
     Sales                                      $      402,422   $      328,480
     Other revenues                                     62,318                -
                                                --------------------------------
       Total revenues                                  464,740          328,480
                                                --------------------------------

COSTS OF GOODS SOLD:                                   181,303          133,099
                                                --------------------------------

GROSS PROFIT                                           283,437          195,381
                                                --------------------------------


OPERATING EXPENSES:
     Sales and marketing                                41,707           86,080
     General and administrative                        533,561          498,484
                                                --------------------------------
       Total Expenses                                  575,268          584,564
                                                --------------------------------

NET (LOSS)                                      $     (291,831)  $     (389,183)
                                                ================================


Basic and diluted net loss per common share     $        (0.05)  $        (0.09)

Weighted average number of common shares
  outstanding for basic and diluted net
  loss per common share                              6,288,554        4,000,000

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

                                      F-4
<PAGE>
<TABLE>

                                              INTERNET VENTURE GROUP, INC.
                                Consolidated Statement of Changes in Stockholders' Equity
                                     For the Years Ended December 31, 1999 and 1998
<CAPTION>


                                               COMMON STOCK              ADDITIONAL          RETAINED         TOTAL
                                       ----------------------------        PAID-IN           EARNINGS     STOCKHOLDERS'
                                            SHARES        AMOUNT           CAPITAL          (DEFICIT)         EQUITY
----------------------------------     --------------  ------------   ------------------ ---------------  -------------

<S>                                       <C>          <C>               <C>               <C>              <C>
BALANCE - DECEMBER 31, 1997                4,000,000   $       400       $    1,712,124    $ (1,413,551)    $  298,973

Net Loss - December 31, 1998                       -             -                    -    $   (389,183)    $ (389,183)
Balance December 31, 1998                  4,000,000           400            1,712,124      (1,802,734)       (90,210)

Merger with GeeWhiz.Com -
  4.5 to 1 split for 4,844,511 shares     26,537,402         2,654              256,911               -        259,565


Net Loss for year                                  -             -                    -        (291,831)      (291,831)

BALANCE - DECEMBER 31, 1999               30,537,402   $     3,054       $    1,969,035    $ (2,094,565)    $ (122,476)


                  The accompanying notes are an integral part of these financial statements.
</TABLE>
                                                     F-5
<PAGE>
<TABLE>

                                    INTERNET VENTURE GROUP, INC.
                                Consolidated Statement of Cash Flows
                           For the Years Ended December 31, 1999 and 1998
<CAPTION>

                                                                       1999             1998
                                                                 --------------------------------
<S>                                                              <C>              <C>
CASH FLOW FROM OPERATING ACTIVITIES:
     Net (Loss)                                                  $     (291,831)  $     (389,183)
     Adjustments to reconcile net loss to net cash
       used in operating activities:
       Services exchanged for common stock                                    -           83,751
       Depreciation                                                      21,473           21,474
       Amortization                                                      37,450           24,799
       Changes in Assets & Liabilities:
       Decrease (Increase) in Accounts Receivable                        12,232           (1,406)
       Decrease (Increase) in Inventory                                   8,916          (15,936)
       (Decrease) Increase in Accounts Payable                          (48,113)         128,725
       (Decrease) Increase in Accrued Expenses                            5,304           22,201
                                                                 --------------------------------
Net Cash Used In Operating Activities                                  (254,569)        (125,575)
                                                                 --------------------------------

CASH FLOW FROM INVESTING ACTIVITIES
     Purchase of equipment                                               (2,726)          (4,000)
                                                                 --------------------------------
Cash Flows Used in Investing Activities                                  (2,726)          (4,000)
                                                                 --------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from stock issuance                                       259,565           56,800
     Proceeds from notes payable                                        121,261          101,070
     Note principal payments                                           (117,525)         (29,778)
                                                                 --------------------------------
Cash Flows Provided by Financing Activities                             263,301          128,092
                                                                 --------------------------------

Net Increase in Cash and Cash Equivalents                                 6,006           (1,483)

Cash and Cash Equivalents - Beginning of Year                                 -            1,508
                                                                 --------------------------------

CASH AND CASH EQUIVALENTS - END OF YEAR                          $        6,006   $           25
                                                                 ================================

Supplemental Cash Flow Information:
     Interest Paid                                               $        3,562   $        6,861
                                                                 ================================
     Income Taxes Paid                                           $            -   $            -
                                                                 ================================

Supplemental schedule of noncash financing activities:
     Acquisition of subsidiary:
       Assets acquired                                           $      448,607
       Liabilities assumed                                              571,083
       Net equity effect of acquisition                          $     (122,476)
                                                                 ===============
</TABLE>

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

                                      F-6
<PAGE>

                          INTERNET VENTURE GROUP, INC.
                          Notes to Financial Statements
                                December 31, 1999

NOTE 1 - ORGANIZATION AND PRESENTATION:
         ------------------------------

       Strategic Ventures, Inc. (the Company) was incorporated in the state of
       Florida on March 19, 1987. The Company, at the shareholders' meeting on
       October 18, 1999, completed its name change to Internet Venture Group,
       Inc.

       Effective December 31, 1999, the Company acquired all issued and
       outstanding shares of GeeWhiz.Com, Inc. (a Texas corporation) for
       26,537,402 shares of the Company's stock by the purchase method.
       Accordingly, the Company's consolidated financial statements as of and
       for the year ended December 31, 1999 reflect the consolidation of all its
       operations on a consolidated basis. All significant intercompany
       transactions for the year have been eliminated to arrive at the
       "Consolidated" financial statements. The impact of the acquisition was
       not material in relation to the Company's results of operations.

       The merger was treated as a reverse acquisition for accounting purposes
       with GeeWhiz.Com, Inc. as the acquirer and Strategic Ventures, Inc. as
       the acquiree based upon GeeWhiz.com current officers and directors
       assuming management control of the resulting entity and the value and
       ownership interest being received by current GeeWhiz.com, Inc.
       stockholders exceeding that received by Strategic Ventures, Inc.

       The Company primary business operations are the development, acquisition,
       marketing and distribution of proprietary products as specialty products
       and items for the worldwide gift, and novelty and souvenir industries.

       The Company fiscal year end is December 31.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
         -------------------------------------------

       These financial statements are presented on the accrual method of
       accounting in accordance with generally accepted accounting principles.
       Significant principles followed by the Company and the methods of
       applying those principles, which materially affect the determination of
       financial position and cash flows, are summarized below:

       REVENUE RECOGNITION

       Product Sales are sales of on-line products and specialty items. Revenue
       is recognized at the time of sale. Other revenue and commission income is
       recognized when earned.

       CASH AND CASH EQUIVALENTS

       The Company considers all highly liquid debt instruments, purchased with
       an original maturity of three months or less, to be cash equivalents.

       PROPERTY AND EQUIPMENT

       Property and equipment is stated at cost. The cost of ordinary
       maintenance and repairs is charged to operations while renewals and
       replacements are capitalized. Depreciation is computed on the
       straight-line method over the following estimated useful lives:

                  Manufacturing Equipment            5 years
                  Furniture & Equipment              5 years


                                      F-7
<PAGE>

                          INTERNET VENTURE GROUP, INC.
                          Notes to Financial Statements
                                December 31, 1999

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
         -------------------------------------------------------

       INCOME TAXES:

       The Company accounts for income taxes under SFAS No. 109, which requires
       the asset and liability approach to accounting for income taxes. Under
       this method, deferred tax assets and liabilities are measured based on
       differences between financial reporting and tax bases of assets and
       liabilities measured using enacted tax rates and laws that are expected
       to be in effect when the differences are expected to reverse.

       USE OF ESTIMATES:

       The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make estimates and
       assumptions that affect the reported amounts of assets and liabilities
       and the disclosure of contingent assets and liabilities at the date of
       the financial statements and the reported amounts of revenue and expenses
       during the reporting period. Actual results could differ from these
       estimates.

       INVENTORIES

       Inventories are stated at cost, which is not in excess of market
       determined using the first-in, first-out (FIFO) method. Finished products
       comprise all of the Company inventories.

       PATENTS, TRADEMARKS, AND LICENSES

       The Company capitalizes certain legal costs and acquisition costs related
       to patents, trademarks, and licenses. Accumulated costs are amortized
       over the lesser of the legal lives or the estimated economic lives of the
       proprietary rights, generally seven to ten years, using the straight-line
       method and commencing at the time the patents are issued, trademarks are
       registered or the license is acquired.

       NET EARNING (LOSS) PER SHARE

       Basic and diluted net loss per share information is presented under the
       requirements of SFAS No. 128, EARNINGS PER SHARE. Basic net loss per
       share is computed by dividing net loss by the weighted average number of
       shares of common stock outstanding for the period, less shares subject to
       repurchase. Diluted net loss per share reflects the potential dilution of
       securities by adding other common stock equivalents, including stock
       options, shares subject to repurchase, warrants and convertible preferred
       stock, in the weighted-average number of common shares outstanding for a
       period, if dilutive. All potentially dilutive securities have been
       excluded from the computation, as their effect is anti-dilutive.

       FAIR VALUE OF FINANCIAL INSTRUMENTS

       The carrying amount of cash, accounts receivable, accounts payable and
       accrued expenses are considered to be representative of their respective
       fair values because of the short-term nature of these financial
       instruments. The carrying amount of the notes payable and long-term debt
       are reasonable estimates of fair value as the loans bear interest based
       on market rates currently available for debt with similar terms.

                                      F-8
<PAGE>

                          INTERNET VENTURE GROUP, INC.
                          Notes to Financial Statements
                                December 31, 1999

NOTE 2 - PROPERTY AND EQUIPMENT:
         -----------------------
         Property and equipment consist of the following:

                  Manufacturing Equipment                          $    105,513
                  Furniture & Equipment                                  29,208
                                                                   -------------
                       Total                                            134,721
                  Less: Accumulated Depreciation                        (75,175)
                                                                   -------------
                                                                   $     59,546
                                                                   =============

         Depreciation expense for 1999 was $21,473.

NOTE 3 - OTHER ASSETS
         ------------
<TABLE>
<CAPTION>
                                                              ACCUM          BOOK
                                               COST        AMORTIZATION      VALUE
                                           -------------  -------------  -------------

         <S>                               <C>            <C>            <C>
         Deposits - Security               $     15,360   $          -   $     15,360
         Licensing, Patents, Trademarks         364,496         90,534        273,962
                                           -------------  -------------  -------------
                                           $    379,856   $     90,534   $    289,322
                                           =============  =============  =============
</TABLE>


         Amortization expense for 1999 was $37,450.

NOTE 4 - NOTES PAYABLE
         -------------
<TABLE>
<CAPTION>

         Following is a summary of notes payable at December 31, 1999:

                                                                                      Amount
                                                                                      ------
       <S>                                                                         <C>
       Borrowings against a $30,000 line of credit agreement with a financial
       institution collateralized by a general security agreement covering
       substantially all assets of the Company.  The note bears interest at
       two points above the bank's prime rate (8.25% at December 31, 1999).
       The note is payable on demand; however, if no demand is made it
       matures on February 2001.                                                   $     22,985

       Note payable to a financial institution, payable on demand; however, if
       no demand is made, payable in monthly installments of $425, including
       interest at 9.75%, through February 2001. Certain equipment and a
       personal guaranty by the Company's officers
       collateralize the note.                                                            5,628

       Note payable to an individual shareholder, interest at 7%, payable in
       full - March 2000.                                                                 4,000

       Note payable to an individual shareholder, interest at 8%,payable
       in full - April 2000.                                                            201,043

       Note payable to an individual shareholder, interest at 10.5%, payable
       in full - June 2000.                                                              96,000
                                                                                   -------------

                                                                                   $    329,656
                                                                                   =============
</TABLE>
                                      F-9
<PAGE>

                          INTERNET VENTURE GROUP, INC.
                          Notes to Financial Statements
                                December 31, 1999

NOTE 5 - INCOME TAXES
         ------------

       There has been no provision for U.S. federal, state, or foreign income
       taxes for any period because the Company has incurred losses in all
       periods and for all jurisdictions.

       Deferred income taxes reflect the net tax effects of temporary
       differences between the carrying amounts of assets and liabilities for
       financial reporting purposes and the amounts used for income tax
       purposes. Significant components of deferred tax assets are as follows:

       Deferred tax assets
            Net operating loss carryforwards                       $  2,094,565
            Valuation allowance for deferred tax assets              (2,094,565)
                                                                   -------------
         Net deferred tax assets                                   $          -
                                                                   =============

       Realization of deferred tax assets is dependent upon future earnings, if
       any, the timing and amount of which are uncertain. Accordingly, the net
       deferred tax assets have been fully offset by a valuation allowance. As
       of December 31, 1999, the Company had net operating loss carryforwards of
       approximately $2,094,565 for federal income tax purposes. These
       carryforwards, if not utilized to offset taxable income begin to expire
       in 2003. Utilization of the net operating loss may be subject to
       substantial annual limitation due to the ownership change limitations
       provided by the Internal Revenue Code and similar state provisions. The
       annual limitation could result in the expiration of the net operating
       loss before utilization.

NOTE 6 - COMMITMENTS AND CONTINGENCIES
         -----------------------------

       Lease Commitments

       In December 1997, the Company entered into a five-year operating lease
       commencing December 1997 for office and warehouse space located in
       Houston, Texas. Future minimum lease commitments for all building lease
       approximate the following for each of the five years ending December 31,
       2004., and thereafter: 2000 - $75,943; 2001 -$78,386; 2002 -$73,907; and
       none thereafter. Rent expense for the year ended December 31, 1999 was
       $73,296.

NOTE 7 - STOCK OPTIONS:
         --------------

       The Company has granted options to purchase shares of common stock to
       employees, directors, consultants, and investors at prices not less than
       100% of the fair market value, as determined by the Board of Directors,
       at date of grant. Options generally become exercisable ratably over a
       five-year period, commencing one year from the date of grant and have a
       maximum term of five years. A summary of the Company's stock options is
       presented below:

                                                                     Weighted-
                                                                      Average
                                                                     Exercise
                                                       Number          Price
                                                      of Shares      per share
                                                    -------------  -------------
         Granted.................................        719,000   $        .58
         Exercised...............................              0            .00
         Canceled................................              0            .00
                                                    -------------
         Balance, December 31, 1998..............        719,000            .58
         Granted.................................        510,000            .68
         Exercised...............................              0            .00
         Canceled................................        (65,000)           .63
                                                    -------------  -------------
         Balance, December 31, 1999..............      1,164,150   $        .62
                                                    =============  =============

                                      F-10
<PAGE>

                          INTERNET VENTURE GROUP, INC.
                          Notes to Financial Statements
                                December 31, 1999

NOTE 7 - STOCK OPTIONS: CONTINUED
         ------------------------

       The fair value of each stock option was estimated on the date of grant
       using the Black-Scholes option-pricing model with the following
       weighted-average assumptions: an expected life of four (4) years,
       expected volatility of 87%, and a dividend yield of 0.%

NOTE 8 - GOING CONCERN:
         --------------

       The accompanying financial statements have been prepared in conformity
       with generally accepted accounting principles, which contemplates
       continuation of the Company as a going concern. The Company has sustained
       a substantial operation loss this year. As shown in the financial
       statements, the Company incurred a net loss of $291,831 for 1999. At
       December 31, 1999, current liabilities exceed current assets by $471,344.
       These factors indicate that there is substantial doubt about its ability
       to continue as a going concern.

       In view of these matters, realization of a major portion of the assets in
       the accompanying balance sheet is dependent upon continued operations of
       the Company, which in turn is dependent upon the Company's ability to
       meet it's financial requirements, and the success of it's future
       operations. Management believes that actions presently being taken to
       revise the Company's operating and financial requirements provide the
       opportunity for the Company to continue as a going concern. The Company
       has been able to continue based upon the financial support of certain of
       its stockholders, and the continued existence of the Company is dependent
       upon this support and the Company's ability to acquire assets by the
       issuance of stock. Management has recently been able to secure a
       $1,000,000 loan from Swan Magnetics, Inc. and has pending the acquisition
       of businesses that management believes can provide additional cash for
       the Company's operations and be profitable in both the short and
       long-term. Management also intends to attempt to raise additional funds
       through private sales of the Company's common stock. Although management
       believes that these efforts will enable the Company to continue as a
       going concern, there can be no assurance that these efforts will be
       successful.

                                      F-11