UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington D.C.  20549

                          FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended  December 31, 1999.

OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
          THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from______________to_______________

Commission file Number 0-7693

              INTERNATIONAL MERCANTILE CORPORATION
              ------------------------------------
         (Name of small business issuer in its charter)

     Missouri                                          43-0970243
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                     Identification Number)

1625 Knecht Avenue, Baltimore, Maryland                    21227
---------------------------------------                    -----
Address of principal executive offices )                 (Zip Code)

Issuer's telephone number, including area code     (410) 242-5000

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

Title of each class                               Name of exchange
                                                on which registered
-------------------                             -------------------
      None                                              None

Securities registered pursuant to Section 12(g) of the Exchange
Act:

             Class A Common Stock, $0.01 par value
             -------------------------------------
                        (Title of Class)


<PAGE>


     Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X_ No____

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

     State issuer's revenues for its most recent fiscal
year..................$1,465,294

     State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was sold, or the average bid and
asked prices of such common equity, as of a specified date within
the past 60 days. (See definition of affiliate in Rule 12b-2 of the
Exchange Act).

     As of April 13, 2000, the aggregate market value of common
stock, no par value, held by non-affiliates was approximately
$5,102,099 (7,759,846 shares at $0.6575, which is an average of the
bid and asked price).

          (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practical
date................

As of March 31, 2000, there were outstanding 14,151,513 shares of
Class A Common Stock, $0.01 par value, and 2,000,000 shares of
Class B Common Stock, $0.01 par value.

Transitimal Small Business Disclosure Format (check one)

                    Yes ________        No ___X_____


<PAGE>


                          PART I

Item 1.        Description of Business

     Forward-Looking Statements

     This Report on Form 10K-SB contains statements that plan for
or anticipate the future.  Forward-looking statements include
statements about the future of the white-box aspect of the PC
industry, statements about our future business plans and
strategies, and most other statements that are not historical in
nature.  In this report, forward-looking statements are generally
identified by the words "anticipate", "plan", "believe", "expect",
"estimate", and the like. Because forward-looking statements
involve future risks and uncertainties, there are factors that
could cause actual results to differ materially from those
expressed or implied.  For example, a few of the uncertainties that
could affect the accuracy of forward-looking statements include:

     1.   changes in general economic and business conditions
          affecting the white-box aspect of the PC industry;
     2.   technical developments that make our products or
          inventory obsolete;
     3.   our costs in the pricing of our products;
     4.   the level of demand for our products;
     5.   availability of product;  and
     6.   changes in our business strategies.

     The Private Securities Litigation Reform Act of 1995, which
provides a "safe harbor" for similar statements by existing public
companies, does not apply to our Company.

     We were organized as International Mercantile Corporation
under the laws of Missouri on March 10, 1971 to operate in the
insurance industry.  Since September 2, 1999, we have engaged in
the business of manufacturing competitively  priced custom-
configured, build-to-order, unbranded or "white-box" desktop
systems and servers for value added resellers ("VARs"). We are in
our development stage. We presently do business under the
fictitious name of Micromatix.net ("Micromatix").  Unless the
context otherwise requires, all references to the "Company" "we"
"our" and other similar terms means Micromatix, but not Home
America Mortgage Company, our other subsidiary company which is
presently inactive.

    (a) Business Development

    We were organized as International Mercantile Corporation
under the laws of Missouri on March 10, 1971 for the purpose of
acquiring Frontier Insurance Company ("Frontier") and Universal
Life Holding Corporation ("Universal"). We effected these
acquisitions on August 31, 1973 and subsequently acquired a
controlling interest in Sterling Financial Corporation
("Sterling").


                            Page -3-
<PAGE>


    Our Sale of Sterling - Fall 1993

    In the Fall of 1993, in order to minimize our operational
expenses, we sold our interest in Sterling to Mike Polland and
Associates in exchange for stock, debt assumption and cash.

    Our Sale of Universal -  May 4, 1995

    Universal Life Holding Corporation ("Universal") was
incorporated under the laws of Illinois on August 13, 1964.
Historically, the principal business of Universal has been in real
estate development, ownership, and management and the investment in
Frontier Insurance Company.

    On May 4, 1995, we exchanged all of our common stock in
Universal with Universal for forgiveness of notes and other
payables owed by us to Universal. We incurred a gain on the sale in
the amount of $751,089.

    Our Sale of Frontier's wholly owned subsidiary, IFS - April
1994

    On January 1, 1994, Frontier owned 100% of International
Financial Services Life Insurance Company ("IFS"). On April 15,
1994, Frontier entered into a Stock Purchase Agreement (the "IFS
Agreement") with Franklin American Corporation, a Tennessee
corporation ("Franklin"), whereby Frontier sold Franklin all of
Frontier's  issued and outstanding common stock of IFS (the "IFS
Shares"). The nature and amount of the consideration to be paid to
Frontier by Franklin for the purchase of the IFS Shares were as
follows: The aggregate purchase price of the IFS Shares equaled the
sum of (a) the current market value of IFS' total assets as of the
fifth business day prior to the closing date less IFS' total
liabilities calculated on a statutory basis as of the closing date,
plus (b) $1,155,000, based on Frontier's providing valid licenses
authorizing IFS to conduct business in 42 states less $27,500 per
state in which a valid license authorizing IFS to transact the
business of insurance was not delivered by Frontier at closing. The
consideration paid by Franklin for the IFS Shares was determined
through arm's-length negotiations, and neither Franklin, nor any of
its officers or directors, was in any way affiliated with, or
related to, Frontier. The Company recognized loss on this sale in
the amount of $775,508.

    Our Sale of Frontier - November 1995

    By December 31, 1994 Frontier was no longer issuing new
business due to regulatory actions and a voluntary commitment on
Frontier's part to the State of Missouri. Additionally, in the
fourth quarter of 1994, Frontier entered into an
Assumption/Reinsurance Agreement with Mid-South Insurance Frontier
pursuant to which Frontier transferred all policyholder
liabilities, effective October 1, 1994. On November 17, 1995, we
sold Frontier by (i) transferring all of our stock in Frontier for
full satisfaction of a note owed to two of our former officers,
Robert and William Bruce, (ii) canceling consulting agreements
(iii) canceling all inter-company receivables and payables (iv)
transferring our accrued rights to commissions due from the former
third party administrator, (v) transferring all obligations of
Ventana Corporation (f/k/a The C. J. Brown Corporation) which we
held, and (vi) assigning all our rights regarding litigation
against the Ventana Corporation and its officers to Frontier. As a



                            Page -4-

<PAGE>

result of this sale, the Company incurred a loss of $1,652,689.

    Our Purchase, Sale and Reacquisition of Home America Mortgage
    Company

    Purchase - October 1992

    Home America Mortgage Company ("Home America ") was
incorporated in 1986 under the name Realty Mortgage Company and in
October 1992, Frontier purchased Home America  from the C. J Brown
Corporation. Home America operated as a provider of first mortgage
residential home loans. Home America  originated, processed,
underwrote, closed, funded and delivered qualifying home loans to
established mortgage companies throughout the country. Its target
markets were in Louisiana, Alabama and Texas. Home America
originated over 1,056 loans in 1994 and 1,190 loans in 1993
totaling approximately $90,000,000 and $92,000,000, respectively.
Home America's revenues were derived primarily from origination
fees, servicing- release fees, and discount income.
Home America  ceased operations in November 1995.

    Pursuant to our Settlement Agreement on November 17, 1995 with
Robert and William Bruce concerning Frontier, we retained 100%
ownership of Home America  common stock. Home America  received a
mortgage executed by one of our consultants in the approximate
amount of $200,000, and in 1996, said mortgage was offset by fees
incurred, and the remaining asset and related mortgage debt of Home
America were transferred to Robert and William Bruce.

    On November 17, 1995 we entered into a Settlement Purchase and
Sale Agreement of Corporate Stock with Continent Finance
Corporation whereby a change in control of our board of directors
occurred.  We subsequently entered into a new settlement agreement
with Continent Finance Corporation whereby Continent Finance
Corporation would forgive certain debt and cash owed to them and
assist us in the administration of our affairs in exchange for our
delivery to Continent Finance Corporation 100% of any and all
interest we had in the common stock of Home America Mortgage
Company, which was then a non-operating shell company.

    As a non-operating shell, Continent Finance Corporation and
our management were forced to assume all of the operating expenses
of Home America Mortgage Company. The former management of Home
America Mortgage Company abandoned Home America Mortgage Company's
offices and subsequently set up their own mortgage company within
the same building.  We are exploring our legal options as a result
of their actions. We subsequently transferred ownership of Home
America Mortgage Company to Continent Finance Corporation.

    In July of 1997, we acquired Continent Finance Corporation's
interest in Home America Mortgage Company and its rights to acquire
University Mortgage, Inc., and we acquired 50% of University
Mortgage, Inc. with the right to acquire the balance of ownership
by year's end 1997. The transaction called for us to issue
1,500,000 shares of our common stock to Continent Finance
Corporation and 400,000 shares of our common stock to the sellers
of University Mortgage, Inc., subject to a reverse split of our
outstanding common stock.



                            Page -5-
<PAGE>


    Additionally, Continent Finance Corporation was entitled to
receive additional shares of our Company for work associated with
mergers and acquisitions, assisting in raising capital, obtaining
additional market makers and securing investment banking
relationships.  In addition, Continent Finance Corporation had an
option to obtain another 2,000,000 shares of our Company in the
event Home America Mortgage Company and its Balance Sheet could
withstand independent audit review. Management and its auditors
could not verify Home America Mortgage Company's balance sheet and
Continent Finance Corporation's option was canceled.  We carried
Home America Mortgage Company at a zero value at year end 1997.
Continent Finance Corporation remained as our administrator and
assisted us in obtaining outside financing and located viable
business opportunities.

    On July 7, 1997, our board of directors authorized a 31 to 1
reverse stock split of our $1.00 par value common stock which
reduced the number of our issued and outstanding shares of common
stock to 101,070. This reverse stock split was conditioned upon,
and occurred  simultaneously with, Continent Finance Corporation's
transfer to us of (i) 100% of the total issued and outstanding
shares of Home America and all the rights it owned in University
Mortgage Inc.; (ii) and its continued  assistance in obtaining
capital and viable business opportunities; in exchange for
1,500,000 shares of our restricted common stock.  According to
Continent Finance Corporation's December 31, 1996, Audited Balance
Sheet, Home America was valued at $10,955,315.  This transaction
occurred on August 1, 1997 and provided Continent Finance
Corporation with voting control of our Company. Prior to this
transaction, no one person or group possessed voting control of our
Company.

    Our Acquisition of University Mortgage - January 1997

    In December of 1997, we acquired the balance of University
Mortgage Inc. for 400,000 restricted shares and a note for
$300,000.  The Purchase Agreement call for a maintenance value for
the shares transferred to the seller for (1) one year.  In the
event that the stock price fell, we were obligated to issue
additional restricted class "A" common stock to maintain the
original value of the transaction, which resulted in the issuance
of 1,100,000 additional shares during 1998.

    University Mortgage, Inc. is a mortgage banking company based
in Chevy Chase, Maryland. University Mortgage, Inc.'s principal
business is the origination and sales of purchase, refinance, home
equity, home improvement and debt consolidation loans from
residential customers in Maryland, Virginia, Washington, D.C.,
Pennsylvania and Delaware. The Company does not retain any
servicing rights on loans it originates

    In December 1998 we completed restructuring with University
Mortgage and our agreement with Continent Finance Corporation.  FSR
Group acquired all debt due and owing to the sellers of University
Mortgage Inc. in exchange for release of FSR Group's obligations to
our Company.  In addition, Continent Finance Corporation agreed to
pay obligations on behalf of our Company.

    In 1999, prior to the sale of University Mortgage Inc. to
PCLoan.com, University Mortgage Inc. sold a substantial control



                            Page -6-
<PAGE>


position to one of our affiliates through the purchase of
authorized but unissued shares of University Mortgage Inc., in
exchange for assets and debt assumption.

    Dilution of Our University Mortgage Holdings - July 1999

    On July 31, 1999, we caused our sole operating subsidiary,
University Mortgage, Inc., to issue a significant amount of new
stock to M. Scott Hess, one our directors, in consideration of his
investment in University Mortgage, Inc. of approximately
$14,000,000 in assets, notes and securities.  This action
effectively diluted our holding in University Mortgage, Inc. to
less than 5%. Subsequently, in a stock for stock transaction, we
exchanged our 3,000,000 shares of University Mortgage, Inc. for
3,000,000 of shares of VirtualLender.com, Inc., a publically traded
company controlled by Mr. Hess.  As a result, we effectively turned
our Company into a publicly traded "shell" company.

    Other than maintaining our good standing status in the State
of Missouri, and seeking prospective businesses or assets to
acquire, from August 1, 1999 to September 2, 1999, we had no
business operations. Our subsidiary company, Home America remained
inactive.

    Since  September 2, 1999, we have engaged in the business of
manufacturing competitively  priced custom-configured, build-to-
order, unbranded or "white-box" desktop systems and servers for
value added resellers ("VARs"). We are in our development stage. We
presently do business under the fictitious name of Micromatix.net
("Micromatix").  Unless the context otherwise requires, all
references to the "Company" "we" "our" and other similar terms
means Micromatix, but not Home America Mortgage Company, our other
subsidiary company which is presently inactive.

     Our Recapitalization With Micromatix.com, Inc.

     On September 2, 1999, we entered into a transaction with Red
River Trading Company, Inc. ("Red River"), the sole shareholder of
Micromatix.com, Inc., a Delaware corporation, whereby we
recapitalized our Company with Micromatix.com, Inc., in exchange
for consideration payable to Red River equal to $1,375,000, payable
by delivery of (i) one million shares of Class B common stock at a
deemed price of $1.00 per share. Each share of Class B common stock
is entitled to 51 votes; and (ii) 1.5 million shares of Class A
common stock at market value of $.25 per share. We are treating
this transaction as a reverse merger for accounting purposes, even
though we have not yet filed the requisite articles of merger and
other related documents with the applicable state authorities.

     Pursuant to this transaction, we have a put option to return
the Micromatix.com, Inc. shares back to Red River if
Micromatix.com, Inc. fails to implement its business plan and
achieve certain performance benchmarks. This put option expires
September 2, 2000.  If we exercise our put option, Red River must
return to us all of their shares of Class A and Class B common
stock.  Additionally, Red River is required to repay any funds that
we, or any third party, invested into Micromatix.com, Inc.  This
obligation is to be evidenced by a promissory note payable in 24
equal monthly installments, guaranteed by Red River and secured by



                            Page -7-
<PAGE>


all of the capital stock and assets of Micromatix.com, Inc.

     Additionally, Red River has a put option to reacquire
Micromatix.com, Inc. and return all of its  Class A and Class B
common stock to us if we do not invest, directly or indirectly,
$350,000 in Micromatix.com, Inc. on or before November 30, 1999
(excluding the $150,000 which was invested at closing). If Red
River exercises its put option, Red River must repay all funds we
invested in Micromatix.com, Inc., in the same manner as described
above.  This put option expires September 2, 2000.

     Our agreement with Red River also provided that we hold our
annual meeting of stockholders and a meeting of our board of
directors no later than 60 days after closing to consider and act
upon the following matters:

     (1)  a 2 for 1  reverse stock split of the Class B common
          stock;
     (2)  payment of a dividend consisting of the issued and
          outstanding common shares of University Mortgage, Inc.,
          the registrant's wholly-owned subsidiary;
     (3)  the issuance to our chairman, Frederic S. Richardson, of
          1.5 million shares of Class A common stock, or options to
          purchase such shares, in consideration of services
          rendered;
     (4)  an employee stock ownership or option plan to attract and
          retain key employees;
     (5)  an agreement with Swartz Institutional Finance for the
          purchase and sale of shares of Class A common stock for
          $5 million;
     (6)  amendment of the certificate of incorporation to change
          the registrant's name to Micromatix or a derivative
          thereof; and
     (7)  changing our state of domicile to Delaware.

     Items 3, as described above was successfully implemented.
Other than with respect to item 5., we intend to implement the
remaining items during 2000.

     Additionally, at the closing, we made the following changes in
our management structure:

     (1)  Michael Scott Hess resigned as our Director and
          President.
     (2)  C. Timothy Jewell, Red River's President, was appointed
          as our new President; and
     (3)  Bernard Cary was appointed as our Vice President and
          Chief Operating Officer.

     (b)  Our Present Business

     Since September 2, 1999, we have engaged in the business of
manufacturing competitively  priced custom-configured, build-to-
order, unbranded or "white-box" desktop systems and servers for
value added resellers ("VARs"). We are in our development stage. We
presently do business under the fictitious name of Micromatix.net
("Micromatix").  Unless the context otherwise requires, all
references to the "Company" "we" "our" and other similar terms
means Micromatix, but not Home America Mortgage Company, our other
subsidiary company which is presently inactive.


                            Page -8-
<PAGE>


OUR PRODUCTS

     We manufacture competitively  priced custom-configured, build-
to-order, unbranded or "white-box" desktop systems and servers for
value added resellers ("VARs"). Our PC systems utilize compatible,
industry standard, branded components as a cost-effective
alternative to branded PC systems.   Our goal is to become the
VARs' source-of-choice for build-to-order PC systems.  We intend to
do this by:

     1.   Serving the VARs' integration needs.  We intend to
          develop an East Coast network of local, high quality
          white-box manufacturers supported by an Internet based,
          state of the art e-commerce system.  Through our network
          of local assembly facilities, we expect to be able to
          deliver high quality white-box PC systems that use
          compatible, industry standard, branded components as a
          cost-effective alternative to branded PC systems.
          Further, as a large East Coast operator, we expect to
          also provide VARs with infrastructure and support which
          is typically difficult and costly for a VAR to maintain
          itself.

     2.   Creating a Web-Centric 'Application' for the VAR to
          conduct business via our state of the art e-commerce
          system.  We believe that end-users are increasingly
          demanding the ability to customize and purchase computer
          products and services online.  Therefore, we will provide
          solutions designed to provide our customers the ability
          to offer online product configuration, pricing,
          selection, ordering, tracking, and returns capabilities,
          which in turn will provide the VAR with the ability for
          end-users to easily order computer products and support
          services from their supplier.

      3.   Maintaining Build-to-Order Customer Focus.  We  intend to
          focus on VARs and Fortune 1000 companies, and to act as
          a partner of the VAR rather than its competitor.  We
          provide "just-in-time," local assembly of PC systems
          pursuant to the VAR's customers' specifications upon
          receipt of an order by utilizing in stock industry
          standard branded components, including Intel
          microprocessors and Microsoft operating systems, at the
          facility serving the VAR which placed the order.  This
          enables us to maintain only limited quantities of
          components sensitive to technological improvement or
          price decreases and insulate us from inventory
          obsolescence that otherwise might increase our costs. We
          can then pass our cost savings on to the VAR, which, in
          turn, can offer a more competitive price to their
          customers. As a result, we expect the VARs to outsource
          their assembly, logistics and other requirements to us,
          allowing them to focus on higher margin businesses such
          as providing software, integration and support.

     4.   Consolidating the fragmented white-box market.  We
          believe that there are a large number of attractive
          acquisition candidates in the highly fragmented white-box
          segment of the PC systems market.  We intend to actively
          seek to acquire companies engaged in the assembly of



                            Page -9-
<PAGE>


          white-box PC systems in targeted geographic markets in
          order to establish an East Coast network of local
          assembly facilities.  We will target companies that have
          a strong local market share, are led by an experienced
          management team, and that focus on serving VARs.

     5.   Emphasizing Quality Control as Foundation for Growth.
          Since the production of superior quality systems is the
          foundation on which we expect our business will prosper,
          our strategy is to embrace ISO 9002 as its foundation for
          quality since it encompasses all of the operating
          departments of our business and is not just one of the
          latest 'quality fads' that come and go.  When
          implemented, and actively worked, ISO provides key
          improvements to both the qualities of the product and our
          overall business model.

OUR MARKET

     According to International Data Corporation:

     1.   The total U.S. market in 1998 for PC systems, including
          desktops, notebooks and servers, was approximately 36
          million units, accounting for approximately $75 billion
          in revenue.

     2.   It is estimated that this market will grow at a
          compounded annual growth rate of 12.1% over the next
          three years.

     3.   It is estimated that the white-box PC market accounts for
          more than 20% of all U.S. PC shipments, which makes the
          white-box market the biggest 'brand' of PCs sold in the
          United States. In 1998, 8.3 million white-box PC systems
          were sold, compared to 3.3 million units sold by Compaq
          (the leading PC systems manufacturer), 2.7 million units
          sold by Dell, 1.9 million units sold by Hewlett-Packard,
          and 1.5 million units sold by IBM.

     4.   The white-box market expanded at a unit rate of at least
          15% in 1998 and it is currently maintaining its share by
          growing at least in line with the overall industry
          average.



OUR CUSTOMERS   RESELLERS/VARs

     The white-box market includes:



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<PAGE>


     1.   Small business and small office marketplaces (primary
          market);
     2.   State and local government;
     3.   Educational institutions;
     4.   Home offices;
     5.   Consumer markets;
     6.   Some medium-sized and large businesses.

     We believe the lower cost of a white-box PC compared to a
branded PC is an important factor for small businesses, which makes
up our primary market.  In addition, many VARs appear to be more
inclined to recommend white-box PCs to their small business
customers over branded PC's due to:

     1.   Quality control principles. VARs can easily assemble
          desktop PCs, notebooks and servers and perform their own
          diagnostic burn-ins, ensuring that each unit meets high
          quality standards prior to delivery to the VAR's
          customer.

     2.   Enhanced customer service. Since the same branded
          components used by manufacturers of branded PCs are
          available to VARs on short notice, VARs can offer their
          customers a greater choice in components and can
          configure the white-box PC to meet their customers'
          requirements.

     3.   Greater profit margins.  International Data Corporation
          research shows that reseller margins are greater for
          white-box PCs than for branded PCs.  On average, white-
          boxes with the same components as a branded system can
          return margins as high as 20% to the manufacturer.

OUR VENDOR RELATIONS

     We have accounts with numerous suppliers that provide us with
the components required to custom configure systems for our
customers.  Our purchasing decisions are primarily governed by
pricing and availability.  We currently do not have any guarantees
to purchase from specified vendors for any parts.  Conversely, we
also do not have any contracts that require any vendor to segregate
and maintain inventory for our consumption.  As a result, we are
dependant upon market conditions to obtain products at reasonable
prices that allow us to operate profitably.  Should market
conditions experience any shortages or price hikes, we would be
subject to such conditions and would be unable to compete with
other companies with supplier contracts.

OUR COMPETITION

     The PC systems industry is highly competitive and has been
characterized by intense pricing pressure, generally low gross
margin percentages, rapid technological advances in hardware and
software, frequent introduction of new products and rapidly
declining component costs.  Our current and potential competitors
can be divided into three primary groups:




                            Page -11-
<PAGE>

     1.   Other white-box manufacturers;
     2.   Distributors; and
     3.   Branded PC system manufacturers.

     Other White-Box Manufacturers.

     We compete for market share against other white-box
manufacturers. Competitive factors in the white-box PC systems
market include:

          (a)  Product quality and availability;
          (b)  Price;
          (c)  Brand name components;
          (d)  Marketing and distribution resources; and
          (e)  Customer service and support.

     We believe that we can strongly compete against other white-
box manufacturers with respect to each of these factors since we
expect to be in the unique position of being the only white-box
manufacturer with a nationwide presence.  As a result, we should be
able to negotiate favorable terms with vendors of branded
components and achieve efficiencies and economies of scale not
typically available to white-box manufacturers located in more
remote locations.

     Distributors.

     We also compete for market share against distributors of PC
systems. Many of these competitors are well-established and possess
greater financial, marketing, technical, personnel and other
resources than we do, and we cannot assure that we will have the
ability to compete successfully. Our financial resources are
relatively limited when contrasted with these competitors.

     However, we feel we can compete with these competitors to a
certain degree since we intend to act as a VAR's partner and sell
and distribute our PC systems and components exclusively to VAR's
and not their customers, while PC system distributors market their
products to both VARs and end-users, the VARs' customers. We
believe that acting as a VARs' partner, instead its competitor,
will cause the VAR's  to source their PC systems needs from us
rather than from other non-exclusive distributors.

     Branded Manufacturers.

     We also compete for market share against regional, national
and international manufacturers of branded PC systems, all of which
are well-established and possess significantly greater financial,
marketing, technical, personnel and other resources than we do. We
cannot assure that we will have the ability to compete successfully
against any of these competitors.  The dominant companies in the
branded PC system industry are Compaq, Dell, Gateway, IBM, Apple,
and Hewlett-Packard.




                            Page -12-
<PAGE>


     However, although the residual resistance of consumers to
unbranded PC systems remains a challenge to us, we feel we are well
positioned to face challenges from this segment of the PC systems
market due to the growing acceptance of the white-box, as well as
the higher sales and marketing expenses which such manufacturers of
branded systems must internalize and pass on to their customers.

OUR FACILITIES

     Our executive and business offices and manufacturing
facilities are located at 1625 Knecht Avenue, Baltimore, Maryland
21227.  Our facilities consist of approximately 40,000 square feet
of space.  We believe our facilities are adequate for our
reasonably foreseeable needs. See "Description of Property".

OUR EMPLOYEES

     We presently employ 40 full time and 8 part time personnel who
work in management, administration, sales, assembly, and
warehousing. We have also contracted with two consulting executives
to advise in our business development, business strategies and
securities and investment banking activities. We consider our
employee relations to be good, and none of our employees are
represented by a labor union. We believe that our future success
will depend in part on our continued ability to attract, integrate,
retain and motivate highly qualified sales, technical, and
managerial personnel, and upon the continued service of our senior
management and key sales and technical personnel.

     Our success depends upon our senior management, particularly,
C. Timothy Jewel, our President and Chief Executive Officer and
Bernard C. Cary, our Vice President and Chief Operating Officer.
The loss of any one of their services could have a material affect
on our Company. Although Mr. Jewell and Mr. Cary have entered into
employment arrangements with us, neither the final terms of Mr.
Jewell's nor Mr. Cary's employment agreement with us have been
determined and placed in written form.

     Most of our technical personnel are not bound by employment
agreements that prevents such personnel from terminating his or her
relationship with us at any time for any reason. At times we have
experienced difficulties in attracting new personnel. We cannot
assure that we will successfully attract, integrate, retain and
motivate a sufficient number of qualified personnel to conduct our
business in the future.

Item 2.   Properties.

       Our executive and business offices and manufacturing
facilities are located at 1625 Knecht Avenue, Baltimore, Maryland
21227.  Our facilities consist of approximately 40,000 square feet
of space.  We believe our facilities are adequate for our
reasonably foreseeable needs.



                            Page -13-
<PAGE>


Item 3.   Legal Proceedings.

     In July of 1999, Bowne & Co., Inc., a financial and corporate
printer, filed suit against us in New York, seeking  approximately
$18,000 for, among other things, outstanding printing invoices
which we did not pay.  As of yet, we have not filed any response to
this law suit, and this suit is still pending.

       No other material legal proceedings are pending of which we
are a party.

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

     No matter was submitted to a vote of our security holders
during the fourth quarter of our fiscal year.


                            PART II

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

     (a)  Market Information

     Our Class A common stock ("common stock") has been traded on
the over-the-counter market since 1971. The following table sets
forth the range of high and low bid quotations for each quarterly
period in the fiscal year ended December 31, 1999, and 1998 as
reported by over-the-counter market quotations. The quotations
reflect inter-dealer prices, without retail mark-up, mark down or
commission and may not represent actual transactions.


<TABLE>
<CAPTION>
                      High                       Low
                Bid       Asked           Bid            Asked
<S>            <C>         <C>            <C>            <C>
1998
1st Quarter    $5.25       $6.25          $0.50          $1.00
2nd Quarter    $2.625      $2.75          $0.75          $1.25
3rd Quarter    $2.00       $2.125         $0.75          $1.125
4th Quarter    $1.25       $1.50          $0.40625       $0.53125

1999
1st Quarter    $0.625      $0.8125        $0.1875        $0.125
2nd Quarter    $0.34375    $0.375         $0.0625        $0.125
3rd Quarter    $0.30       $0.50          $0.03125       $0.09375
4th Quarter    $0.8125      $1.00         $0.125         $0.21875


</TABLE>

     (b)  Holders

     As of March 1, 2000, approximately 2,500 holders of record
held our common stock.




                            Page -14-
<PAGE>


     (c)  Dividends

     No cash dividends were declared or paid on either class of our
common stock for the last two fiscal years.  No restrictions limit
our ability to pay dividends on its common stock.

     Recent Sales of Unregistered Securities

     During the first half of fiscal year 1999, we sold 1,732,333
shares of our common stock at $0.30 per share, $519,700 in the
aggregate,  pursuant to a private placement transaction. The
exemptions we relied upon were Sections 4(2), 4(6) and Regulation
D of the Securities Act of 1933, as amended. The  stock was sold to
22 individuals and/or entities, all of whom were  "accredited"
investors as that term is defined in Regulation D.  The net
proceeds to our Company for the sale of the 1,732,333 shares were
approximately $451,700 after offering expenses paid in our common
stock of approximately $16,000 and commissions paid in cash of
approximately $52,000. No underwriting discounts were paid by our
Company in connection with the abovementioned transactions.

     On July 31, 1999, we caused our sole operating subsidiary,
University Mortgage, Inc., to issue a significant amount of new
stock to M. Scott Hess, one our directors, in consideration of his
investment in University Mortgage, Inc. of approximately
$14,000,000 in assets, notes and securities.  This action
effectively diluted our holding in University Mortgage, Inc. to
less than 5%. Subsequently, in a stock for stock transaction, we
exchanged our 3,000,000 shares of University Mortgage, Inc. for
3,000,000 of shares of VirtualLender.com, Inc., a publically traded
company controlled by Mr. Hess.  The exemptions we relied upon were
Sections 4(2), 4(6) and Regulation D of the Securities Act of 1933,
as amended. No commissions or underwriting discounts were paid by
our Company in connection with the abovementioned transaction.

     On September 2, 1999, we entered into a transaction with Red
River Trading Company, Inc. ("Red River"), the sole shareholder of
Micromatix.com, Inc., a Delaware corporation, whereby we
recapitalized our Company with Micromatix.com, Inc., in exchange
for consideration payable to Red River equal to $1,375,000, payable
by delivery of (i) one million shares of Class B common stock at a
deemed price of $1.00 per share. Each share of Class B common stock
is entitled to 51 votes; and (ii) 1.5 million shares of Class A
common stock at market value of $.25 per share. At the time of this
transaction, Red River was an unrelated third party and this
transaction was negotiated at arms length. The exemptions we relied
upon were Sections 4(2), 4(6) and Regulation D of the Securities
Act of 1933, as amended. No commissions or underwriting discounts
were paid by our Company in connection with the abovementioned
transaction.

     Also, during the second half of fiscal year 1999, we sold
1,434,342 shares of our common stock at various prices ranging from
$0.22 to $0.41 per share (depending upon OTCBB price quotations for
our common stock at the time of sale), $368,905 in the aggregate,
pursuant to a private placement transaction. The exemptions we
relied upon were Sections 4(2), 4(6) and Regulation D of the
Securities Act of 1933, as amended. The  stock was sold to 57
individuals and/or entities, all of whom were  "accredited"



                            Page -15-
<PAGE>


investors as that term is defined in Regulation D.  The net
proceeds to our Company for the sale of the 1,434,342 shares were
approximately $320,905 after offering expenses paid in our common
stock of approximately $11,000 and commissions paid in cash of
approximately $37,000. No underwriting discounts were paid by our
Company in connection with the abovementioned transactions.

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

     This Annual Report on Form 10-KSB contains forward-looking
statements.  For this purpose, any statements contained in it that
are not statements of historical fact should be regarded forward
looking statements.  For example, the words "believes,"
"anticipates," "plans," and "expects" are intended to identify
forward-looking statements.  There are a number of important
factors that could cause the Company's actual results to differ
materially from those indicated by such forward-looking statements.
These factors include those shown at the end of this section under
the caption "Certain Factors That May Affect Future Results."

     Since September 2, 1999, we have engaged in the business of
manufacturing competitively  priced custom-configured, build-to-
order, unbranded or "white-box" desktop systems and servers for
value added resellers ("VARs"). We are in our development stage. We
presently do business under the fictitious name of Micromatix.net
("Micromatix").  Unless the context otherwise requires, all
references to the "Company" "we" "our" and other similar terms
means Micromatix, but not Home America Mortgage Company, our other
subsidiary company which is presently inactive.

     Since September 2, 1999, our primary efforts have been focused
on our capitalization; the establishment of our website, internal
infrastructure, production lines and development of a marketing
team.

Results of Operations

    We began sales operations on October 1, 1999 and for the first
quarter ended December 31, 1999 we posted total sales of
$1,465,294.  The ability to realize this level of sales, while a
start up company in a developmental phase, is due to a number of
factors.  Our management has a depth of experience within and
related to the computer industry and a history of successful
business ventures.  The business plan prepared by these individuals
is based upon their knowledge of the market and its conditions.  To
implement and achieve the aggressive but attainable goals outlined
in their plan, management recruited salespersons at the top of
their field; salespersons who have customer bases that reflect our
goals in both our target markets and reseller qualifications.  The
hiring of these salespersons resulted in an immediate clientele
with existing purchasing power and ability and allowed us to
achieve the sales results reflected.

    By taking advantage of an extraordinary situation resulting
from a competitor going out of business, we were able to establish
our manufacturing and warehouse facility with minimal time, effort
and capital outlay.  From our September 2, 1999 date of inception,
our management was able to concentrate on recruiting and hiring the



                            Page -16-
<PAGE>


personnel necessary to implement our plan in the areas of
accounting, technical support, warehouse and inventory management,
purchasing and customer service.  All these important areas have
been fully staffed from the first day of operations to support the
projected volume of sales anticipated in our business plan.  As a
reflection of our proactive outlook, our SG&A for the quarter ended
December 31, 1999 is higher than would occur under normal business
conditions given the level of sales generated.  The SG&A of
$502,065, as a percentage of sales for the period since inception
of September 2, 1999 was 35%.  This is a reflection of the quality
of the personnel and our Company's positioning to allow us to
handle the higher sales volume once it is realized.

Plan of Operation

    As reflected above, since inception, our primary efforts have
been focused on our capitalization; the establishment of our
website, internal infrastructure, production lines and development
of a marketing team.  Our emphasis during the year 2000 will be to
increase sales by capturing a larger percentage of the growth in
the white box market.  Based upon the current SG&A rate, we believe
that sales revenues of $1.5 million per month, at a gross margin of
12%, is our Company's break even level.  Management anticipates
that this amount is not only achievable, but conservative.  Our
growth is projected to be an increase in sales of equal to or
greater than 50% each quarter, which would annualize to
approximately $18 million in sales.  Potentially, should all the
contracts materialize that we are currently negotiating, annual
sales could exceed $40 million for the calendar year 2000.  In
addition, future growth strategies may include strategic
acquisitions should opportunities arise which would not jeopardize
current operations.  This anticipated growth, along with the growth
already experienced, has and will strain our financial and
operational resources.  Additional funding is necessary to achieve
the results projected.  Multiple funding avenues are currently
being explored to provide the resources needed to fund this growth
while allowing our Company to maintain our debt at a manageable
level for our cash flow.

Marketing

    We currently have a sales force consisting of six account
executives, with varying degrees of experience, but all with a
knowledge of computers essential to assisting customers in
configuring their orders optimally.  In addition, we have two
account executives specializing in government sales and marketing,
along with the management of our strategic corporate accounts
(Fortune 500).  Our website allows our customers and potential
customers to view our specials and to apply for active account
status.  In the year 2000, we have plans to upgrade the site to
allow our customers to custom configure their orders online, with
real-time interaction with our inventory software to allow them to
ascertain availability of product, and an order tracking function
which will allow the customer to monitor their orders progress
through production.  We anticipate that this upgrade will cost
approximately $125,000.  Our sales department is currently faxing
to all current customers and potential customers in our extensive
database our specials on a weekly basis.  We have tele-marketers
calling and updating our database of prospective customers on a
daily basis.  We anticipate that the addition of a minimum of 5



                            Page -17-
<PAGE>


sales persons will be required to attain the sales goals outlined.

Production

    Our production department is designed for flexibility and
staffed with skilled assemblers and system integration technicians.
Small to medium quantity orders can be easily produced on our
existing custom configuration line.  In addition, we have the
capability, at very short notice, of activating an assembly line of
skilled workers for large production builds.  As these contracts
increase in consistency and quantity, these workers will be brought
in on a permanent basis.  The facility has the capacity to add
additional assembly lines as the need arises.  We have completed
the required independent audit for ISO 9002 certification and we
expect to have our certification on or around April 15, 2000.  The
ISO 9002 certification is an internationally accredited standard
which guarantees that our product is processed to the highest
quality standards.

Inventory

    We manage the quantity and quality of our component inventory
through our experienced purchasing personnel and warehousing policy
and procedures.  We strive to maximize our responsiveness to
customer requirements while optimizing inventory turns.  Inventory
management is critical to the success of our business.  Our
strategy is to focus on products with high turnover ratios to
reduce exposure to product obsolescence, changing consumer demands
and declines in market prices, while still fulfilling the needs of
our customers.  Our software program facilitates the control of
purchasing,  inventory, and accounts payable.  Each sales
representative has available real-time data with respect to our
inventory levels.  We believe that we are able to take advantage of
synergies and efficiencies arising out of the combination of system
assembly and inventory warehousing in a single facility.

Certain Factors That May Affect Future Results

    The white box PC industry, as well as the distribution
industry, is highly competitive.  Competition is largely based on
price, quality, range of service offered, shipping capabilities,
customer service,  and product availability.  Many of our
competitors are larger, more established and have greater name
recognition and financial and marketing resources than our Company.
 As a result, we could potentially experience downward pricing
pressure and increased competition which would drive down revenues
by either forcing a cut in sales or in prices.  There is always the
risk of general market down turn which could impact revenues and
growth.

    We are considered a start-up company and have no significant
operating history.  We have not generated significant revenue to
date to support operations on an ongoing basis. There can be no
assurance that we will achieve sufficient revenues to offset
anticipated operating costs.  Our viability, profitability and
growth depend upon our meeting our sales goals and our attaining
sufficient financing to purchase inventory at competitive prices.
There can be no assurance that we will be able to generate revenues
or ever achieve profitable operations.




                            Page -18-
<PAGE>


    We have no significant capital.  We have required significant
capital to develop our business and to date all of our setup costs
have been funded via sales of common stock and related party loans.
We will continue to require significant funds as we grow.  We are
currently generating limited revenue from our operations.  We have
no current arrangements in place with respect to sources of
additional financing.  If we have to arrange for financing to
further the development of our business, there can be no assurances
that such financing will be available on acceptable terms or at
all.  The inability to obtain additional financing, when needed,
would have a material adverse effect on us, including possibly
requiring us to curtail or cease our operations.

  Demand and market acceptance for white box PC systems are
subject to a high level of uncertainty.  There can be no assurance
that widespread acceptance of white box PC systems, or our products
in particular, will occur.  We will rely on VAR's who utilize white
box PC systems to purchase our products.  In order for us to be
successful, these VAR's must perceive us as their partner, not
their competitor.  Further, issues concerning the reliability, cost
and quality of white box PC systems may affect our market.  We
cannot assure that VAR's will view us as "partners" and utilize our
products.  If our products do not achieve market acceptance, our
business, results of operations and financial condition could be
materially adversely affected.

Year 2000 Issues

   Many currently installed computer systems and software
products are coded to accept only two-digit entries in the date
code field and cannot reliably distinguish dates beginning January
1, 2000. Many companies' software and computer systems have been
upgraded or replaced in order to correctly process dates beginning
in 2000 and to comply with the "Year 2000" requirements.  We have
reviewed our internal programs and have determined that there are
no significant Year 2000 issues within our systems or services.  We
have completed modifications to our internal systems to attempt to
ensure Year 2000 compliance.  The costs of these modifications was
not material and involved a reallocation of internal resources
rather than incremental expenditure.  In addition, we utilize third
party hardware, software and services that may not be Year 2000
compliant.  Although we believe that our software and the hardware
and software provided by third parties is Year 2000 compliant and
no year 2000 complications have been noted as of the date of this
report; we may be wrong.  If complications do arise, we could face
unexpected expenses to resolve any related issues and any
unexpected interruptions could be harmful to our business.

Item 7.   Financial Statements

    Our Financial Statements of are attached as Appendix A
(following Exhibits) and included as part of this Form 10-KSB
Report.  A list of our Financial Statements is provided in response
to Item 13 of this Form 10-KSB Report.



                            Page -19-
<PAGE>


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

  Not Applicable


                            PART III

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

  (a)  Identity of directors and executive officers.


<TABLE>
<CAPTION>

Name                  Age       Position                   Director Since
----                  ---       --------                   --------------
<S>                   <C>       <C>                        <C>

Maxwell Apple         61        Director, Chairman of the
                                Board, Secretary              1991

C. Timothy Jewel      43        Director, Chief Exec.
                                Officer, President            1999

Bernard C. Cary       35        Chief Operating Officer        *

Frederic Richardson   40        Director, Treasurer,          1997
                                Executive V.P., Ass't
                                Secretary, Chmn. Emeritus

Edward A. Hutya       56        Director                      1997

</TABLE>


    Each director is elected until the next Annual Meeting of
shareholders and until his successor is qualified.

    (b)  Business experience of directors and executive officers.

    Mr. Maxwell W. Apple has been one of our directors since 1991,
and has also served as our Secretary since 1995.  Mr Apple is a
former judge and currently a member of the Indiana Bar. He has been
involved in various business ventures which include owning Nunur
Corporation, a company which owned commercial and residential
properties, being a partner in French Lick Springs Golf and Tennis
Resort, L.P., and being the sole shareholder of The Paoli
Corporation, a company specializing in the manufacturing of wood
products and operating lumber dry kilns. He received his Juris
Doctor Degree from the Indiana University School of Law and also
attended the National College of the State Judiciary and Indiana
Judicial College during.

    Mr. C. Timothy Jewell has been our President and Chief
Executive Officer since September 1999.  From 1997 to 1999, Mr.
Jewel served as general manager of Arbor Computer Company, a
computer manufacturing company. Prior to that time, Mr. Jewell
served as a consultant with CTJ Enterprises, Inc., a computer
systems integration consulting firm. Mr.  Jewell received a



                            Page -20-
<PAGE>


Bachelor of Science degree in accounting from the University of
Tennessee in 1976 and an MBA in Finance from Southeastern
University in 1980.

    Mr. Bernard C. Cary has been our Chief Operating Officer since
September 1999.  From October 1997 to June 1999 he served as a Vice
President of  Arbor Computer Company, a computer manufacturing
company. From 1991 to October 1997, Mr. Cary served as the managing
partner of Micromatix Distribution, a computer distribution
company.  Mr. Cary received a Bachelor of Science Degree in
Engineering from the University of Maryland in 1984.

    Mr. Frederic S. Richardson has been our director since
September 1998.  He also served as our Chief Financial Officer
during 1998 and part of 1999. Mr Richardson is experienced in
insurance, mortgage and financial services transactions. He focuses
on structuring transactions for private and public entities,
raising capital, and identifying acquisition targets. Since 1994,
Mr. Richardson has been the President of Maccabean Industries,
Inc., a consulting firm specializing in raising capital for
companies in the financial services industry and real estate
market. Mr. Richardson received a degree in Economics from the
University of Maryland in 1983 and a Masters in Business
Administration from American University in 1996.

    From 1991 until its liquidation in February 1994, Mr.
Richardson was a director and officer of Corporate Life Insurance
Company ("CLIC"), a stock life insurance company from 1991 until
its liquidation in February 1994. He was the controlling
stockholder of the corporate parent and controlling stockholder of
CLIC. In June 1995, Linda L. Kaiser, the Insurance Commissioner of
Pennsylvania and CLIC's Statutory Liquidator, filed a complaint
against Mr. Richardson (and others) alleging, among other things,
that he engaged in fraudulent and negligent conduct in his
operation of CLIC causing the company to lose millions of dollars
and finally collapse. CLIC was liquidated and dissolved by the
Insurance Commissioner. In October 1997, Mr. Richardson entered
into a Settlement Agreement with the Insurance Commissioner
pursuant to which he was released from the lawsuit and from any
further liability. Pursuant to the terms of the Settlement
Agreement, the policy limits of Mr. Richardson's insurance policy
were paid to the Statutory Liquidator. In addition, he agreed not
to accept any position of executive authority with any Pennsylvania
domiciled insurance company without the consent of the Commissioner
and agreed not to accept any position of executive authority with
any other insurance company for a period of ten years.

    Mr. Edward A. Hutya has been one of our directors since 1997.
He also served as our vice president until September 1999. He is
currently the president of the Center of Independent Living and a
consultant to Riverside Healthcare foundation, two not-for-profit
organizations. Mr. Hutya has many years of experience in the
operations and acquisitions of health care properties. During his
tenure as president of several not-for-profit corporations, Mr.
Hutya directed corporate development for the acquisition of housing
and nursing facilities for the elderly and special populations. Mr.
Hutya also selected and hired management companies which operated
nursing homes. Prior to his involvement with not-for-profit
organizations, Mr. Hutya specialized in financing, including
equipment, vehicles, real estate and governmental leasing and
financing. Mr. Hutya received a degree in Economics from the
University of Connecticut in 1965, and participated in graduate



                            Page -21-
<PAGE>


work in Urban Economics at American University.

Officer and Director Resignations

     In September 1999, Walter DeRonde and M. Scott Hess resigned
as directors and officers of our Company. In September 1999, Mr.
Hutya resigned as our vice president.

     Section 16(a) Beneficial Ownership Reporting Compliance.

     To the best of our knowledge, based solely on reports
furnished to us, none of our officers, directors and/or beneficial
owners of more than 10% of our common stock, filed any reports as
required by Section 16(a) of the Exchange Act during the most
recent fiscal year.

Item 10.  Executive Compensation.
<TABLE>
<CAPTION>

                                                                  Long Term Compensation
                                                                  ----------------------
                 Annual Compensation                          Awards               Payouts
                 -------------------                          ------               --------
 (a)            (b)       (c)         (d)         (e)          (f)           (g)         (h)        (i)
                                                 Other                                             All
Name &                                           Annual     Restricted    Securities               Other
Position        Year    Salary ($)   Bonus($)    Compen-    Stock         Underlying    LTIP       Compen-
                                                 sation     Award(s)      Options/      Payouts    sation
                                                  ($)         ($)         Sars(#)        ($)        ($)
_______________________________________________________________________________________________________________
<S>             <C>    <C>           <C>         <C>        <C>           <C>           <C>        <C>

Frederic S.     1999   -0-           -0-         -0-        $375,000(2)   -0-           -0-        $120,000 (3)
Richardson
Director,
former Chmn.
of the Board
(1)

Timothy         1999   -0-           -0-         -0-           -0-        -0-           -0-        $35,773 (4)
Jewel,
Director,
Chief Exec.
Officer,
President

</TABLE>

Notes to table:

     (1)  Mr. Richardson now serves as our director, treasurer,
          executive vice president, and assistant secretary.
     (2)  In September 1999, Mr. Richardson was issued 1.5 million
          shares of our Class A common stock, valued at $375,000



                            Page -22-
<PAGE>

          ($0.25 per share), in consideration for services he
          rendered to us. He subsequently transferred ownership in
          such shares to the Sarah Saul Simon Trust, the
          beneficiaries of which are Frederic Richardson's children
          and the trustees of which are Mr. Richardson's mother and
          sister-in-law.
     (3)  On May 1, 1995, we entered into a compensation plan
          financial consulting agreement with Frederic Richardson
          for a monthly fee of $10,000 per month and reimbursement
          of all "out-of-pocket" expenses. The term of this
          agreement is 10 years and is renewable. The agreement was
          assigned to FSR Group, Inc. ("FSR") a company owned by
          the Sarah Saul Simon Trust, in October 1997. Commencing
          January 1, 1999, the agreement was reassigned by FSR to
          Mr. Richardson.
     (4)  In September 1999, Mr Jewel, through Red River Trading
          Company, Inc. entered into employment arrangements with
          our Company whereby in exchange for Mr. Jewell serving as
          our director, chief executive officer and president, Red
          River Trading Company, Inc. would be compensated $10,000
          per month.  The exact terms of this employment
          arrangement with our Company has not been determined, and
          no written employment arrangement with our Company has
          yet been entered into.

     Employee Stock Option Plan

     Our board of directors has authorized our officers to offer
certain employees, including non-management employees, certain
employee benefits under an unqualified employee stock option plan.
To date, we have do not have a written plan in place.  The terms of
the options we grant to our employees are contracted between each
employee and our Company on a case by case basis. No options have
vested to date.

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

     (a)  The names, addresses, amount and nature of beneficial
ownership and percent of such ownership of persons known to us to
be beneficial owner of more than five percent (5%) of any class of
our voting securities as of March 31, 2000 are as follows:

<TABLE>
<CAPTION>

Class A Common Stock
                               Number of shares of
Name and Address of            Class A Common Stock       Percent
Beneficial Owner (1)           Beneficially Owned (2)     Of Class
----------------------         ---------------------      --------
<S>                            <C>                        <C>
Sarah Saul Simon Trust(3)      1,523,667 (D)              10.8%

C. Timothy Jewell (4)          1,500,000 (I)              10.6%

VirtualLender.com, Inc.        3,000,000 (D)              21.2%
__________________________________

</TABLE>


(1)  In care of our Company's address at 1625 Knecht Avenue,
     Baltimore, Maryland 21227.



                            Page -23-
<PAGE>

(2)  To our best knowledge, as of March 31, such holders had the
     sole voting and investment power with respect to the voting
     securities of the Company beneficially owned by them, unless
     otherwise indicated herein.
(3)  Includes 1,500,000 shares of Class A Common Stock owned by the
     Sarah Saul Simon Trust, the beneficiaries of which are Mr.
     Richardson's children, and the trustees of which are Mr.
     Richardson's mother and sister-in-law; and 23,667 shares of
     Class A Common Stock owned by Continent Finance Corporation
     which is owned by the Sarah Saul Simon Trust. Mr. Richardson
     disclaims beneficial ownership of these shares.
(4)  All of these shares are held indirectly by Mr. Jewell through
     Red River Trading Company. Mr. Jewell is the president of Red
     River Trading Company, Inc., and his wife, Mrs. Shannon C.
     Jewell, is its sole owner.

<TABLE>
<CAPTION>

Class B Common Stock (1)
                               Number of shares of
Name and Address of            Class A Common Stock       Percent
Beneficial Owner (1)           Beneficially Owned (2)     Of Class
----------------------         ---------------------      --------
<S>                            <C>                        <C>

Sarah Saul Simon Trust (4)     1,000,000 (D)              50%

C. Timothy Jewell (5)            500,000 (I)              25%

Bernard C. Cary                  500,000 (D)              25%
___________________________________

(1)  Each share of Class B common stock is entitled to 51 votes.
(2)  In care of our Company's address at 1625 Knecht Avenue,
     Baltimore, Maryland 21227.
(3)  To our best knowledge, as of the date hereof, such holders had
     the sole voting and investment power with respect to the
     voting securities of the Company beneficially owned by them,
     unless otherwise indicated herein.
(4)  The beneficiaries of the Sarah Saul Simon Trust are Frederic
     Richardson's children. The current trustees are Mr.
     Richardson's mother and sister-in-law.
(5)  All of these shares are held indirectly by Mr. Jewell through
     Red River Trading Company. Mr. Jewell is the president of Red
     River Trading Company, Inc., and his wife, Mrs. Shannon C.
     Jewell, is its sole owner.

     (b)  The names, addresses, amount and nature of beneficial
ownership and percent of such ownership of our officers and
directors who are the beneficial owner of our voting securities as
of March 31, 2000, are as follows:

Class A Common Stock

                               Number of shares of
Name and Address of            Class A Common Stock       Percent
Beneficial Owner (1)           Beneficially Owned (2)     Of Class
----------------------         ---------------------      --------
<S>                            <C>                        <C>

Frederic S. Richardson(3)(4)       48,000    (D)            *

</TABLE>


                            Page -24-
<PAGE>


Class A Common Stock

                               Number of shares of
Name and Address of            Class A Common Stock       Percent
Beneficial Owner (1)           Beneficially Owned (2)     Of Class
----------------------         ---------------------      --------
[S]                            [C]                        [C]

C. Timothy Jewell (5)          1,500,000 (I)               10.6%

Bernard C. Cary                   -0-                       -0-

Maxwell W. Apple (6)             380,000 (D)                2.7%

Edward A. Hutya (7)              180,000 (D)                1.3%

All officers and directors
as a group (5 persons)(8)      2,108,000                   14.9%
___________________________________
*    Less than 1%.

(1)  In care of our Company's address at 1625 Knecht Avenue,
     Baltimore, Maryland 21227.
(2)  To our best knowledge, as of December 31, 1999, such holders
     had the sole voting and investment power with respect to the
     voting securities of the Company beneficially owned by them,
     unless otherwise indicated herein.
(3)  Does not include 1,500,000 shares of Class A Common Stock
     owned by the Sarah Saul Simon Trust, the beneficiaries of
     which are Mr. Richardson's children, and the trustees of which
     are Mr. Richardson's mother and sister-in-law. Mr. Richardson
     disclaims beneficial ownership of these shares.
(4)  Does not include 23,667 shares of Class A Common Stock owned
     by Continent Finance Corporation which is owned by the Sarah
     Saul Simon Trust, the beneficiaries of which are Mr.
     Richardson's children, and the trustees of which are Mr.
     Richardson's mother and sister-in-law. Mr. Richardson
     disclaims beneficial ownership of these shares.
(5)  All of these shares are held indirectly by Mr. Jewell through
     Red River Trading Company. Mr. Jewell is the president of Red
     River Trading Company, Inc., and his wife, Mrs. Shannon C.
     Jewell is its sole owner.
(6)  Includes (i) 260,000 shares of which are owned directly by Mr.
     Apple, and (ii) the right to acquire 120,000 shares within 60
     days.
(7)  Includes 60,000 shares of which are owned directly by Mr.
     Hutya, and (ii) the right to acquire 120,000 shares within 60
     days.
(8)  Includes (i) 1,868,000 shares owned directly or indirectly by
     such officers and directors, and (ii) the right of certain of
     such persons to acquire 240,000 shares within 60 days.

Class B Common Stock (1)

<TABLE>
<CAPTION>

                               Number of shares of
Name and Address of            Class A Common Stock       Percent
Beneficial Owner (1)           Beneficially Owned (2)     Of Class
----------------------         ---------------------      --------
<S>                            <C>                        <C>

C. Timothy Jewell (5)            500,000 (I)               25%

Bernard C. Cary                  500,000 (D)               25%
_____________________________

</TABLE>



                            Page -25-
<PAGE>


(1)  Each share of Class B common stock is entitled to 51 votes.
(2)  In care of our Company's address at 1625 Knecht Avenue,
     Baltimore, Maryland 21227.
(3)  To our best knowledge, as of March 31, 2000, such holders had
     the sole voting and investment power with respect to the
     voting securities of the Company beneficially owned by them,
     unless otherwise indicated herein.
(4)  All of these shares are held indirectly by Mr. Jewell through
     Red River Trading Company. Mr. Jewell is the president of Red
     River Trading Company, Inc., and his wife, Mrs. Shannon C.
     Jewell, is its sole owner.

Item 12.  Certain Relationships and Related Transactions.

     On July 31, 1999, we caused our sole operating subsidiary,
University Mortgage, Inc., to issue a significant amount of new
stock to M. Scott Hess, one our directors, in consideration of his
investment in University Mortgage, Inc. of approximately
$14,000,000 in assets, notes and securities.  This action
effectively diluted our holding in University Mortgage, Inc. to
less than 5%. Subsequently, in a stock for stock transaction, we
exchanged our 3,000,000 shares of University Mortgage, Inc. for
3,000,000 of shares of VirtualLender.com, Inc., a publically traded
company controlled by Mr. Hess.  As a result, we effectively turned
our Company into a publicly traded "shell" company.

     On September 2, 1999, we entered into a transaction with Red
River Trading Company, Inc. ("Red River") whereby we acquired 100%
of the issued and outstanding shares of Micromatix.com, Inc., a
Delaware corporation ("Micromatix"), in exchange for $1,375,000,
payable by delivery of (i) one million shares of Class B common
stock at a deemed price of $1.00 per share. Each share of Class B
common stock is entitled to 51 votes; and (ii) 1.5 million shares
of Class A common stock at market value of $.25 per share. At the
time of this transaction, Red River was an unrelated third party
and this transaction was negotiated at arms length. The president
of Red River is C. Timothy Jewell.

     Pursuant to this transaction, we have a put option to return
the Micromatix shares back to Red River if Micromatix fails to
implement its business plan and achieve certain performance
benchmarks. This put option expires September 2, 2000.  If we
exercise our put option, Red River must return to us all of their
shares of Class A and Class B common stock.  Additionally, Red
River is required to repay any funds that we, or any third party,
invested into Micromatix .  This obligation is to be evidenced by
a promissory note payable in 24 equal monthly installments,
guaranteed by Red River and secured by all of the capital stock and
assets of Micrormatix.

     Additionally, Red River has a put option to reacquire
Micromatix and return all of its  Class A and Class B common stock
to us if we do not invest, directly or indirectly, $350,000 in
Micromatix on or before November 30, 1999 (excluding $150,000 which
was invested at closing), If Red River exercises its put option,
Red River must repay all funds we invested in Micromatix, in the
same manner as described above.  This put option expires September
2, 2000.



                            Page -26-
<PAGE>


     Our agreement with Red River also provides that we shall hold
our annual meeting of stockholders and a meeting of our board of
directors no later than 60 days after closing to consider and act
upon the following matters:

     (1)  a 2 for 1  reverse stock split of the Class B common
          stock;
     (2)  payment of a dividend consisting of the issued and
          outstanding common shares of University Mortgage, Inc.,
          the registrant's wholly-owned subsidiary;
     (3)  the issuance to our chairman, Frederic S. Richardson, of
          1.5 million shares of Class A common stock, or options to
          purchase such shares, in consideration of services
          rendered;
     (4)  an employee stock ownership or option plan to attract and
          retain key employees;
     (5)  an agreement with Swartz Institutional Finance for the
          purchase and sale of shares of Class A common stock for
          $5 million;
     (6)  amendment of the certificate of incorporation to change
          the registrant's name to Micromatix or a derivative
          thereof; and
     (7)  changing the domicile of the registrant to Delaware.

     Item 3, as described above was successfully implemented.
Other than with respect to item 5., we intend to implement the
remaining items during 2000.

     Additionally, at the closing, we made the following changes in
our management structure:

     (1)  Michael Scott Hess resigned as our Director and
          President.
     (2)  C. Timothy Jewell, Red River's President, was appointed
          as our new President; and
     (3)  Bernard Cary was appointed as our Vice President and
          Chief Operating Officer.

     On September 7, 1999, we purchased fixed assets in the amount
of $150,000 from Red River Trading for which we made an unsecured
note payable to Red River in the amount of $150,000, bearing
interest at 8% per annum. The note calls for six annual principle
payments of $25,000 plus accrued interest.

     On November 23, 1999, we borrowed $571,609.40 from the Sarah
Saul Simon Trust for which we made an unsecured note payable to the
Sarah Saul Simon Trust in the amount of $571,609.40, bearing
interest at 8% per annum until the note payable is paid in full.
The note payable calls for a lump sum principle payment of
$571,609.40 plus accrued interest, all of which is due on November
23, 2000.

     During the fourth quarter of 1999, Frederic Richardson
advanced us $261,322 on his personal credit card so that we could
purchase inventory.  We are making  payments on Mr. Richardson's
credit card for this purchase.  The credit card interest rate is
14% per annum.

     On May 1, 1995, the Company entered into a compensation plan
consulting agreement with Frederic Richardson for a monthly fee of



                            Page -27-
<PAGE>


$10,000 per month and reimbursement of all "out-of-pocket"
expenses. The term of this agreement is 10 years and is renewable.
The agreement was assigned to FSR Group, Inc. ("FSR"), a company
owned by the Sarah Saul Simon Trust, in October 1997. Commencing
January 1, 1999, the agreement was reassigned by FSR to Mr.
Richardson.

Item 13.  Exhibits and Reports on Form 8-K.

     (a)   Exhibits.

 (3)(i)    (a)  Articles of Incorporation (incorporated by
                reference to our Report on Form 10-K for the
                year ended December 31, 1981).
           (b)  Articles of Amendment (incorporated by reference to
                our Report on Form 10-K for the year ended December
                31, 1981).
           (c)  Articles of Amendment (incorporated by reference to
                our Report on Form 10-K for the year ended December
                31, 1998).
           (d)  Articles of Amendment (incorporated by reference to
                our Report on Form 10-K for the year ended December
                31, 1998).

 (3)(ii)        Bylaws (incorporated by reference to the
                Company's Report on Form 10-K for the year
                ended December 31, 1987).

           (4)  Instruments defining the rights of holders
                (incorporated by reference to Exhibit (3) herein).

 (10)
           (1)  Our Acquisition Agreement with Red River Trading
                Company, Inc. and Micromatix.com, Inc. and Addendum
                thereto.

           (2)  Our compensation plan agreement with Frederic
                Richardson.

           (3)  Our Lease Agreement.

           (4)  Our Note Payable to Sarah Saul Simon Trust.

           (5)  Our Note Payable to Red River Trading.


 (11)      Earnings per share (See Appendix A)

 (21)      Our Subsidiaries

 (27)      Financial Data Schedule



                            Page -28-
<PAGE>


       (b)  Reports on Form 8-K.

       During the last quarter of the year ended December 31, 1999,
the following reports on Form 8-K were filed by registrant.

Type                Date Filed          Reporting Purpose
----                ----------          -----------------

Item 1,2            December 3, 1999    To report our change in control
                                        and acquisition of Micromatix.

Item 1,2            September 17, 1999  To report our change in control
                                        and acquisition of Micromatix.

      (c)  Financial Data Schedule.



                           Appendix A
                     Financial Statements.

       The following Audited Financial Statements of Registrant are
filed as part of this Form 10-KSB Report:

     1.      Balance Sheet as of December 31, 1999.

     2.      Statement of Operations for the period September 2,
1999 (Date of Inception) through December 31, 1999.

     3.     Statement of Changes in Stockholder's Equity for the
period September 2, 1999 (Date of Inception) through December 31,
1999.

     4.      Statement of Cash Flows for the period September 2,
1999 (Date of Inception) through December 31, 1999.

     5.      Notes to Financial Statements


     SIGNATURES

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

INTERNATIONAL MERCANTILE CORPORATION

By:/s/C. Timothy Jewell
     C. Timothy Jewell,
     Chief Exec. Officer
     President, Director

Date: April 14, 2000



                            Page -29-
<PAGE>

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

By:/s/C. Timothy Jewell
     C. Timothy Jewell,
     Chief Exec. Officer
     President, Director

By:/s/ Frederic S. Richardson
      Frederic S. Richardson,
      Director

By:/s/ Max W. Apple
       Max W. Apple,
       Director

Date: April 14, 2000


<PAGE>


                    INTERNATIONAL MERCANTILE CORPORATION
                     (A COMPANY IN THE DEVELOPMENT STAGE)

                    Balance Sheet as of December 31, 1999
         Statements of Operations,  Changes in Stockholders' Equity
         and Cash Flows for the Period September 2, 1999 (Date of
                    Inception) Through December 31, 1999





<PAGE>

                        INTERNATIONAL MERCANTILE CORPORATION
                           (A COMPANY IN THE DEVELOPMENT STAGE)
                                    TABLE OF CONTENTS
                                    DECEMBER 31, 1999




                                                                    Page

    Auditors' Report                                                  1

    Balance Sheet                                                     2

    Statement of Operations                                           3

    Statement of Changes in Stockholders' Equity                      4

    Statement of Cash Flows                                           5

    Notes to the Financial Statements                                6-14




<PAGE>







To the Board of Directors and Stockholders
International Mercantile Corporation
Baltimore, Maryland

We have audited the accompanying balance sheet of
International Mercantile Corporation (a Company in the
Development Stage) as of December 31, 1999, and the related
statements of income, changes in stockholders' equity, and
cash flows for the period beginning September 2, 1999 (Date
of Inception) through December 31, 1999.  These financial
statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of International Mercantile Corporation (a Company
in the Development Stage) as of December 31, 1999 and the
results of its operations and its cash flows for the period
beginning September 2, 1999 (Date of Inception) through
December 31, 1999  in conformity with generally accepted
accounting principles.







Caruso & Caruso C.P.A.s', P.A.


Boca Raton, Florida
April 12, 2000



<PAGE>

                        INTERNATIONAL MERCANTILE CORPORATION
                        (A COMPANY IN THE DEVELOPMENT STAGE)
                                   BALANCE SHEET
                              AS OF DECEMBER 31, 1999

	      ASSETS
Current Assets
--------------
   Cash and Cash Equivalents                                     $   37,699
   Marketable Securities                                            715,075
   Accounts Receivable Net of Allowance for
     Doubtful Accounts of $17,336                                   849,471
   Inventory                                                        475,626
   Prepaids and Other Assets                                         14,298
                                                                 ----------
      Total Current Assets                                        2,092,169

Investments
-----------
   Investment in Virtual Lender.com, Inc. Stock                   2,725,642

Fixed Assets
------------
   Fixed Assets, net of Accumulated Depreciation                    200,008

Other Assets
------------
   Organization Costs, Net of Amortization                          196,832
   Deposits                                                          18,330
                                                                 ----------
      Total Other Assets                                            215,162
                                                                 ----------
             Total Assets                                        $5,232,981
                                                                 ==========
     LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities
-------------------
  Accounts Payable and Accrued Expenses                             745,218
  Accrued Interest Payable                                            9,052
  Due to Related Party                                              261,322
  Warranty Reserve - Current Portion                                  2,442
  Note Payable - Related Parties, Current Portion                   596,609
  Loans Payable                                                     750,124
  Capitalized Lease Payable - Current Portion                        10,221
                                                                 ----------
    Total Current Liabilities                                     2,374,988

Long Term Liabilities
---------------------
  Committments and Contingencies
  Warranty Reserve Net of Current Portion                             4,884
  Capitalized Lease Payable Net  of Current Portion                  23,787
  Note Payable - Related Party Net  of Current Portion              100,000
                                                                 ----------
     Total Long Term Liabilities                                    128,671
                                                                 ----------
        Total Liabilities                                         2,503,659

Stockholders' Equity
--------------------
  Common stock-Class A - $.01 Par, 31,000,000 shares
    authorized,  5,102,441 shares outstanding                        51,024
  Common stock-Class B - $.01 Par, 2,000,000 shares
    authorized,  1,000,000 shares outstanding                        10,000
  Preferred stock - Series 1 - $.10 Par, 10,000,000
    shares authorized,  -0- shares outstanding
  Preferred stock - Series 2 - $.10 Par, 2,000,000
    shares authorized,  -0- shares outstanding
  Preferred stock - Series 3 - $.10 Par, 5,000,000
    shares authorized,  -0- shares outstanding
  Additional paid in capital                                      2,967,742
  Deficit Accumulated During the Development Stage                 (299,444)
                                                                 ----------
     Total Stockholders' Equity                                   2,729,322
                                                                 ----------
                 Total Liabilities & Stockholders' Equity        $5,232,981
                                                                 ==========


                     See Notes to Financial Statements


                                    2

<PAGE>


                     INTERNATIONAL MERCANTILE CORPORATION
                     (A COMPANY IN THE DEVELOPMENT STAGE)
                            STATEMENT OF OPERATIONS
             FOR THE PERIOD SEPTEMBER 2, 1999 (Date of Inception)
                           THROUGH DECEMBER 31, 1999


Revenues
  Sales                                                  $ 1,465,294
  Cost of Merchandise Sold                                 1,262,396
                                                         -----------
    Gross Profit                                             202,898
                                                         -----------
Operating Expenses
  Amortization                                                12,390
  Bad Debts                                                   17,336
  Bank Charges & Credit Card Fees                              4,718
  Depreciation                                                10,480
  Interest Expense                                            11,436
  Marketing & Advertising Expense                             55,074
  Office Supplies & Expense                                   32,021
  Professional Fees                                           18,476
  Rent                                                        42,823
  Repairs & Maintenance                                        5,168
  Sales Expense                                               61,848
  Salaries & Related Costs & Benefits                        188,706
  Subcontract Labor & Temporary Help                           9,725
  Telephone                                                   16,559
  Travel & Promotion                                           3,267
  Utilities                                                    4,989
  Warranty Reserve                                             7,326
                                                         -----------
    Total Operating Expenses                                 502,342

  Net (Loss)                                               ($299,444)
                                                         ===========
  Earnings (Loss) per share of Common
    Stock - Basic (Note 1)                                 ($0.0513)
                                                         ==========

  Weighted Average Shares - Basic                         5,835,166
                                                         ==========
  Earnings (Loss) per share of Common
    Stock - Diluted (Note1)                                ($0.0308)
                                                         ==========

  Weighted Average Shares - Diluted                       9,726,833
                                                         ==========





                       See Notes to Financial Statements


                                    3


<PAGE>

                      INTERNATIONAL MERCANTILE CORPORATION
                      (A COMPANY IN THE DEVELOPMENT STAGE)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE PERIOD SEPTEMBER 2, 1999 (Date of Inception)
                            THROUGH DECEMBER 31, 1999


<TABLE>
<CAPTION>

                                                                                                            DEFICIT
                                                                                                            ACCUMULATED
                                                                  COMMON STOCK             ADDITIONAL       DURING THE
                                                                                           PAID IN          DEVELOPMENT
                                                            SHARES              AMOUNT     CAPITAL          STAGE
                                                            -------------------------------------------------------------
<S>                                                         <C>                 <C>        <C>              <C>

Balance,  September 2, 1999 (Date of Inception)                   1,000         $    10    $      490            $     0

Reverse acquisition, September 6, 1999
  Exchange of Micromatix.com, Inc., a Delaware corp
    Common Stock                                                 (1,000)            (10)         (490)                 0

Authorization of Common Stock of International Mercantile
Corporation a Missouri corp to owners of
Micromatix.com, Inc., a Delaware corporation
    Class B Common Stock, issued and outstanding                     0                0             0                  0

Outstanding Common Stock of International Mercantile
Corporation, a Missouri corp.,
    Class A  Common Stock                                    5,102,441           51,024     2,967,742                  0
    Class B  Common Stock                                    1,000,000           10,000             0                  0


Net (Loss)                                                           0                0             0           (299,444)
                                                             -------------------------------------------------------------
Balance,  December 31, 1999                                  6,102,441         $ 61,024    $2,967,742           ($299,444)
                                                             =============================================================

</TABLE>






                         See Notes to Financial Statements


                                       4


<PAGE>


                        INTERNATIONAL MERCANTILE CORPORATION
                        (A COMPANY IN THE DEVELOPMENT STAGE)
                               STATEMENT OF CASH FLOWS
               FOR THE PERIOD SEPTEMBER 2, 1999 (Date of Inception)
                             THROUGH DECEMBER 31, 1999


CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
Net Loss                                                           ($299,444)
Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities
    Bad Debts                                                         17,336
    Depreciation & Amortization                                       22,870
    (Increase)Decrease In
       Marketable Securities                                        (715,075)
       Accounts Receivable                                          (866,807)
       Investment in Virtual Lender.com, Inc. Stock               (2,725,642)
       Inventory                                                    (475,626)
       Prepaids & Other Assets                                       (14,298)
       Deposits                                                      (18,330)
       Organization Costs                                           (209,222)
     Increase(Decrease)
       Accounts Payable &  Accrued Expenses                          745,218
       Due to Related Party                                          261,322
       Accrued Interest                                                9,052
       Warranty Reserve                                                7,326
                                                                 -----------
  NET CASH USED IN OPERATING ACTIVITIES                           (4,261,320)

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
  Acquisition of Fixed Assets                                       (210,488)
                                                                ------------

  NET CASH USED IN INVESTING ACTIVITIES                             (210,488)

CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
  Proceeds from Capitalized Leases                                    34,008
  Proceeds from Loans                                                775,124
  Payments on Loans                                                  (25,000)
  Capital Contributions                                            2,967,742
  Issuance of Capital Stock                                           61,024
  Proceeds from Note Payable - related parties                       696,609
                                                                ------------

  NET CASH PROVIDED BY IN FINANCING ACTIVITIES                     4,509,507
                                                                ------------


NET INCREASE IN CASH                                                  37,699
                                                                ------------
CASH - BEGINNING September 2, 1999
  (Date of Inception)                                                      0
                                                                ------------

CASH - ENDING December 31, 1999                                 $     37,699
                                                                ------------


                  See Notes to Financial Statements


			        5


<PAGE>


                 INTERNATIONAL MERCANTILE CORPORATION
                 (A Company in the Development Stage)
                     NOTES TO FINANCIAL STATEMENTS


1.  Organization and Summary of Significant Accounting Policies

ORGANIZATION

International Mercantile Corporation (The Company) is a
profit corporation organized under the laws of the State of
Missouri on March 10, 1971 as International Mercantile
Corporation (IMTL).  On July 31, 1999, the Company
liquidated its' majority interest holdings in its'
subsidiary, University Mortgage, Inc., which represented
the Company's operations, through a new issuance of
University Mortgage, Inc. stock to a related third party
investor in consideration of their capital investment in
University Mortgage, Inc.  The result of this action left
an OTC Bulletin Board publicly traded company with no
substantial assets or liabilities.  On September 6, 1999,
the Company merged with Micromatix.com, Inc. (the
predecessor company), a newly formed Delaware corporation
which maintained an Internet based personal computer
manufacturing business that sells build-to-order unbranded
or "white box" PC systems and PC related hardware
throughout the United States to value added retailers and
other marketers of micro computer systems.  Shareholders of
the predecessor company received 2,500 shares of the
Company's stock for each share of the predecessor company;
a total of 2,500,000 shares issued, in exchange for 100% of
the outstanding stock of the predecessor company.  The
merger is being accounted for as a capital transaction with
no recognition of goodwill or other intangible assets.  The
Company, however, has not completed the requisite articles
of merger and related documents which are required to be
filed with the applicable state authorities.  Subsequent to
the transaction, the owners of the predecessor company
assumed the management of the Company doing business as
Micromatix.net and owned approximately 26.92% of the
outstanding stock of the Company representing 48.32% of the
voting rights.  Since this transaction is, in substance, a
recapitalization of Micromatix.com, Inc. (the predecessor
company) and not a business combination, pro forma
information is not presented.  Accordingly, the historical
data contained in the financial statements is that of the
predecessor company.

DEVELOPMENT STAGE

The Company's principal operations, comprised of sales of
build-to-order unbranded or "white box" PC systems and PC
related hardware are in a start up phase as of December 31,
1999.  Although some sales, manufacturing and distribution
of personal computers and related PC hardware have
commenced, as of the date of these financial statements,
there has been no significant revenue generated therefrom.
Substantially all the efforts of the Company have been
focused on capitalization of the Company, the establishment
of its' website, internal infrastructure, production lines
and development of a marketing team.  Accordingly, the
Company is in the Development Stage.



                             6

<PAGE>


             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS


REVENUE RECOGNITION

Revenues are derived primarily from sales of build-to-order
personal computers and related PC hardware via the
Company's business to business e:commerce.  Revenues
related to these sales are recognized when a computer
product is shipped and invoiced.

INVENTORY

Inventory consists of component parts as there was no work
in process at year-end and all finished products were
shipped prior to December 31, 1999.  The Company maintains
a perpetual inventory system and determines quantities by
the average cost method. Inventory is valued at the lower
of actual cost or market, net of inventory allowance.

ADVERTISING EXPENSE

The Company recognizes advertising expenses in accordance
with Statement of Position ("SOP") 93-7 "Reporting on
Advertising Costs."  As such, the Company expenses the
costs of producing advertisements at the time production
occurs, and expenses the cost of communicating advertising
in the period in which the advertising space or airtime is
used.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost.  Depreciation is
computed using the straight-line method based on the
estimated useful lives of the assets, which range from
three to five years.  Costs for routine repairs and
maintenance are expensed as incurred and gains and losses
on the disposal of assets are recognized in the period such
disposals occur.

SOFTWARE DEVELOPMENT COSTS

Internal and external costs incurred to develop internal-
use software are capitalized during the application
development stage and are being amortized over three years.

INTANGIBLE ASSETS

Costs incurred to organize the Company are capitalized and
reported on the balance sheet as other assets.  The costs
are being amortized over a period of 5 years using the
straight-line method.



                           7

<PAGE>


             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS

MARKETABLE SECURITIES

The Company's marketable securities are comprised of equity
and debt securities and are classified as trading
securities.  Trading securities are recorded at fair value,
with the change in fair value during the period included in
net earnings.  There were no unrealized holding gains or
losses at December 31, 1999.

WARRANTY RESERVE

The Company maintains a depot warranty on components sold
and manufactured systems for three years; the equivalent
period of time that substantially all components from
supplier manufacturers are warranted.  As the Company is in
the Development Stage and has not established a history of
warranty service, a warranty reserve of 1/2 of 1% of sales
has been recorded at December 31, 1999.

INCOME TAXES

The Company files its tax return with the Internal Revenue
Service as a  C Corporation.  Applying statutory tax rates
to future year's differences between the tax bases and
financial reporting amounts of assets and liabilities
recognizes deferred income taxes.    Due to the fact that
the Company is in the development stage, no deferred tax
asset/valuation allowance has been recognized for the
losses incurred to date, as it is not determinable that the
Company will realize any tax benefit from such losses.
Loss carryforwards, if any, expire fifteen years following
the tax year-end in which they occur.

USE OF ESTIMATES AND ASSUMPTIONS

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

CONCENTRATIONS OF RISK

Financial instruments that potentially subject the Company
to concentrations of credit risk consist primarily of cash,
cash equivalents and marketable securities.  The Company
maintains its cash and cash equivalents in bank deposit
accounts, the balances of which, at times, may exceed
federally insured limits.  Additionally, the Company
assumes that computer chip and memory availability will
remain constant.  This assumption subjects the Company to
concentrations of risk should the availability of these
items become uncertain in the future.


                            8

<PAGE>


             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS


EARNINGS PER SHARE

As per Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 128 (SFAS 128), Earnings
Per Share, standards for computing and presenting earnings
per share (EPS) applies to publicly held common stock or
potential common stock.  It requires dual presentation of
basic and diluted EPS on the face of the income statement
for all entities with complex capital structures.  Basic
EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted average
number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common
stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared
in the earnings of the entity.  In computing EPS as a
result of the reverse acquisition, the number of shares
outstanding for the period from September 2, 1999 until the
date of the reverse acquisition, September 6, 1999, is the
number of shares issued by the Company to the shareholders
of the predecessor company.  For the period September 6,
1999 to December 31, 1999 the number of shares considered
to be outstanding is computed as actual number of shares of
the Company outstanding during that period.  The average
number of shares outstanding for the full period being
reported upon has been computed by averaging these two
amounts.  Other appropriate adjustments have been made to
deal with changes in numbers of shares issued during the
period.  Diluted EPS were computed as a result of the
Company's complex capital structure; including 6,000,000
shares of Class A Common stock and 1,000,000 shares of
Class B Common stock which were authorized and unissued as
of December 31, 1999.  These shares were subsequently
issued by April 12, 2000.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging
Activities effective for all fiscal quarters of fiscal
years beginning after June 15, 1999.  The Company does not
anticipate the impact of this pronouncement will be
material.  Further, the Company does not believe that any
recently issued, but not yet effective accounting standards
will have a material effect on the Company's financial
position, results of operations or cash flows.

2.	Allowance for Doubtful Accounts

In accordance with Generally Accepted Accounting Principles
the Company records anticipated uncollectible amounts by
creating an allowance account.  Bad Debt Expense is
recognized using the Percentage of Sales method.  For the
year ended December 31, 1999 the Company recognized a Bad
Debt Expense of $17,336 or approximately 1% of the gross
sales.  In 1999 no actual receivables were directly written
off.  As a result, the allowance account included on the
balance sheet as net of accounts receivables is equal to
the recognized Bad Debt Expense of $17,336.


                            9

<PAGE>


             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS


3.  Related Party Transactions

The Company's financing during its development stage has
been provided by interest bearing loans, non-interest
bearing loans and capital contributions to the Company by
its shareholders.  At December 31, 1999 the Company had
liabilities to a major shareholder of $125,000 in the form
of an unsecured note payable bearing interest at 8% per
annum.  The note calls for six annual principal
installments of $25,000 plus accrued interest.  In
December, 1999 the Company paid the first annual principal
installment of $25,000.  The note was issued for the
purchase of machinery, office equipment and furniture from
the shareholder.  Accrued interest through December 31,
1999 was $3,775.

     A B securities, a shareholder of IMTL, acquired
authorized, but unissued, shares of University Mortgage,
Inc. (UMI) diluting the voting and equity interest of IMTL
in UMI to less than 5%.  The shares of UMI remaining after
the dilution were then exchanged in a stock for stock
transaction for registered shares of Virtual Lender.com,
Inc. (VLDC), a publicly traded company.  The investment is
recorded at cost.  On December 31, 1999 IMTL acquired
3,000,000 authorized but unissued shares of VLDC's
restricted common stock in exchange for 3,000,000 shares of
IMTL restricted Class A common stock.  The investment is
recorded at the fair market value of Virtual Lender.com,
Inc. stock as of the date of the exchange.

     At December 31, 1999 the Company had outstanding a note
payable to a major stockholder due in one lump sum payment
of principal and interest on or before November 23, 2000.
The note bears interest at a rate of 8% per annum, and is
unsecured.

     In addition, shareholders' contribution amounts
totaling $3,028,766 as of December 31, 1999 are recorded as
par value class A and class B common stock and as
additional paid in capital.

     The Company owed $261,322 to an officer/director for
monies advanced as of December 31, 1999.  The advance
includes interest at 14% per annum and is due on demand.

4.  Commitments

The Company leases its corporate offices and manufacturing
facilities in Baltimore, Maryland under a six-year lease
agreement, which began on October 1, 1999.  The lease
encompasses commercial facilities of approximately 40,000
square feet.  Rent for the first year is $14,274 per month
plus applicable sales tax, utilities, maintenance and
property tax reimbursement and will increase approximately
5% in each of the succeeding five years.  An additional
security deposit of $14,274 was paid to the landlord on
February 21, 2000.  The Company leases sales offices in New
York, NY under a one year lease agreement, beginning March
1, 2000.  The lease encompasses office facilities of 1,000
square feet.  Rent is $1,774 per month.




                              10

<PAGE>

             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS



Commitments  cont'd

Future minimum requirements are:

                          Baltimore       New York     Total

        FYE 12/31/00      $  174,205      $ 17,744   $  191,949
        FYE 12/31/01         182,371         3,549      185,920
        FYE 12/31/02         187,040         -0-        187,040
        FYE 12/31/03         189,957         -0-        189,957
        FYE 12/31/04         195,790         -0-        195,790
        Thereafter           130,257         -0-        130,257
                          ----------      --------   ----------
                          $1,059,890      $ 21,293   $1,081,183
                          ==========      ========   ==========


5.	Capital Lease Obligations

The Company leases its operational and accounting software
under a capital lease, which expires in December, 2002.
The lease requires monthly payments of principal and
interest of $1,235 plus applicable sales tax.  Interest is
imputed at 13.25% per annum.  The lease agreement concludes
with a $1 buy option at the end of the lease term.
Approximate future lease payments under the capital lease
is as follows:

            FYE 12/31/00             $ 14,821
            FYE 12/31/01               14,821
            FYE 12/31/02               13,586
                                     --------
                                       43,228
Less Amount representing interest       9,220
                                     --------
                                       34,008
Less current maturities                10,221

Long-term debt, less current         --------
  maturities                         $ 23,787
                                     ========

6.  Officers' Compensation

Prior to the reverse acquisition, the Company's day to day
activities were managed by certain  officer/shareholders,
who contributed their time on the Company's behalf without
compensation in either cash or stock.  No value for these
services has been determined or recorded on the
accompanying financial statements.  One of these
officer/shareholders is compensated as a consultant through
a wholly owned corporation of the officer/shareholder.
This individual, and thirty nine other employees are
currently employed by the Company at their administrative
and operating facilities in Baltimore, Maryland, and sales
office in New York, New York.



                             11

<PAGE>

             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS


7.  Fixed Assets

Fixed assets for the Company consisted of the following at
December 31, 1999:

<TABLE>
<CAPTION>

                                                  Accumulated
                                 Fixed Asset      Depreciation      Balance
                                 -----------      ------------      -------
<S>                              <C>              <C>               <C>
Website Development              $   3,017        $     176         $   2,841
Furniture & Fixtures                32,000            1,333            30,667
Manufacturing/Warehouse Equip       33,000             1,375           31,625
Computer Hardware                   61,163             3,231           57,932
Transportation Equip                 7,000               408            6,592
Office Equipment                    30,959             1,806           29,153
Software Systems                    39,349             2,151           37,198
Leasehold Improvements               4,000              -               4,000
                                 ---------        ----------        ---------
                                 $ 210,488        $   10,480        $ 200,008
                                 =========        ==========        =========
</TABLE>


8.  Employee Stock Option Plan

The Company's Board of Directors has authorized officers of
the Company to offer certain employees benefits under an
unqualified Employee Stock Option Plan which, as of the
date of these financial statements, has not been
consummated.   The terms of such options are contracted
between each eligible employee and the Company on a case by
case basis.  As of the date of these financial statements,
7 such plans are either active, pending the start of
employment or under negotiation; none are vested.

9.  Notes Payable

Notes Payable consist of the following at December 31,
1999:

        Note Payable - related party dated
          September 6, 1999                       $  125,000
        Note Payable - related party dated
          November 23, 1999                          571,609
                                                  ----------
                                                     696,609
                Less Current Portion                 596,609
                                                  ----------
                Long Term Portion                 $  100,000
                                                  ==========


Based on the borrowing rates currently available to the
Company for loans with similar terms and average
maturities, the fair value of the Company's long term debt
approximates the carrying amount.  Interest expense on the
above note and the related third party note described in
foot note 3 amounted to $5,277 and $3,775 respectively.




                             12

<PAGE>

             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS


10.  Contingencies

The Company's management has confirmed that as of the date
of the financial statements the Company is not involved in
any lawsuits nor is there any pending litigation.

An unwind provision exists as part of the merger agreement,
whereby the merger agreement could be rendered void.
Management, however, believes that the provision will not
be exercised as all other provisions of the merger
agreement have been fulfilled.


11.  YEAR 2000

Many currently installed computer systems and software
products are coded to accept only two-digit entries in the
date code field and cannot reliably distinguish dates
beginning January 1, 2000 from dates prior to the year
2000.  Many companies' software and computer systems have
been upgraded or replaced in order to correctly process
dates beginning in 2000 and to comply with the "Year 2000"
requirements.  The Company has reviewed its' internal
programs and has determined that there are no significant
Year 2000 issues within the Company's systems or services.
The Company has completed modifications to its internal
systems to attempt to ensure Year 2000 compliance.  The
costs of these modifications was not material and involved
a  reallocation of internal resources rather than
incremental expenditures.  In addition, the Company
utilizes third party hardware, software and services that
may not be Year 2000 compliant.  Although the Company
believes that its' software and the hardware and software
provided by third parties is Year 2000 compliant and no
year 2000 complications have been noted as of the date of
these financial statements; the Company may be wrong.  If
complications do arise, the Company could face unexpected
expenses to resolve any related issues and any unexpected
interruptions could be harmful to its business.







                             13

<PAGE>

             INTERNATIONAL MERCANTILE CORPORATION
             (A Company in the Development Stage)
                NOTES TO FINANCIAL STATEMENTS


12.  Segment Information

The Company operates primarily in two industry segments:
(1) whitebox system sales and (2) computer component sales.
The accounting policies of the segments and the products
and services provided by the operating segments are
described in Note 1.  The table below presents information
about reported segments at December 31, 1999:

<TABLE>
<CAPTION>

                            System        Component
                            Sales           Sales       Other         Total
                           --------       ---------   ----------    ----------
<S>                        <C>            <C>         <C>           <C>
Sales                      $547,955        $917,339   $    -        $1,465,294
Gross Profit                 74,464         128,434        -           202,898
Operating Income (Loss)      18,160          47,272     (364,876)     (299,444)
Assets                      510,410         844,207    3,878,364     5,232,981
Capital Expenditures         14,956          25,044      170,788       210,488
Depreciation Expense            667           1,116        8,697        10,480

</TABLE>


13.  Subsequent Events

Subsequent to December 31, 1999 and through the date of the
Auditors' Report, the Company sold to unrelated private
investors 524,175 shares of Class A Common stock for a
total of $283,649.

On September 7, 1999 the Company entered into a one year
consulting agreement with two individuals and a third party
company for securities consulting and corporate investment
banking services.  On January 28, 2000 the Company
terminated the agreement and issued 250,000 shares of
restricted Class A Common Stock as settlement for all past
services rendered and a release of any future obligations.

In February 2000, the Company entered into an agreement to
manufacture approximately 2,000 white-box computer units
per month beginning March, 2000 with a national satellite
distributed program network marketing group.  The agreement
is open-ended and has no minimum purchase requirements.  To
fund the acquisition of inventory to fulfill the purchase
orders under the agreement, the Company entered into a
factoring arrangement in March 2000 with an unrelated third
party.  The financing calls for the payment of 3 points per
month on open invoices, and an initial payment of 650,000
restricted shares of the Company's Class A common stock.
The financing is secured by the underlying receivables,
acquired inventory related to the contract, and 1,500,000
shares of the Company's Class A common stock.

On March 31, 2000 the Company completed its ISO9002
certification audit which, upon receipt of it's
certificate, will allow the Company to perform under future
federal and state government contracts.



                         14


<PAGE>