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


                                AMENDMENT NO. 2


                                       TO


                                   FORM 10-KSB

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                    000-27763
                            (Commission file number)

                              SITESTAR CORPORATION
                              --------------------
        (Exact name of small business issuer as specified in its charter)

                   NEVADA                             88-0397234
        (State or other jurisdiction                 (IRS Employer
      of incorporation or organization)           Identification No.)

              16133 Ventura Boulevard, Suite 635, Encino, CA   91436
              (Address of principal executive offices)       (Zip Code)

                                 (818) 981-4519
                           (Issuer's telephone number)

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                               TITLE OF EACH CLASS
                          COMMON STOCK, $.001 PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate  by check  mark 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 referenced in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]

Revenue for the year ended December 31, 1999:  $223,749

The  aggregate  market  value  of  the  voting  and  non-voting  stock  held  by
non-affiliates  of the registrant at March 31, 2000 was $16,745,543.  The number
of shares outstanding of the registrant's  Common Stock as of March 31, 2000 was
23,194,825.

                    DOCUMENTS INCORPORATED BY REFERENCE: None

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

<PAGE>


                   TABLE OF CONTENTS - 1999 FORM 10-KSB REPORT

                                                                       Page
                                                                      Numbers
                                                                    -----------
                                     PART I

Item   1.      Business                                                    3

Item   2.      Properties                                                 42

Item   3.      Legal Proceedings                                          42

Item   4.      Submission of Matters to a Vote of Security Holders        42

                                     PART II

Item   5.      Market for Registrant's Common Equity and Related
               Stockholder Matters                                        43

Item   6       Management's Discussion and Analysis of Financial
               Condition and Results of Operations                        44

Item   7.      Financial Statements                                       50

Item   8.      Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                        74

                                    PART III

Item  9.       Directors, Executive Officers, Promoters and
               Control Persons; Compliance with Section 16(a)
               of the Exchange Act                                        74

Item  10.      Executive Compensation                                     75

Item  11.      Security Ownership of Certain Beneficial Owners
               and Management                                             76

Item  12.      Certain Relationships and Related Transactions             77

Item  13.      Exhibits and Reports on Form 8-K                           78

Signatures                                                                79

Exhibit Index                                                             80

                                       2
<PAGE>

                                     PART I

     This  Annual   Report  on  Form  10-KSB   contains   statements   that  are
forward-looking, including statements relating to anticipated operating results,
growth,  financial  resources,  the development of new markets, the development,
and  acceptance  of our  business  strategy  and new  applications  for Sitestar
Corporation's existing products. Investors are cautioned that, although Sitestar
believes   that  its   expectations   are  based  on   reasonable   assumptions,
forward-looking  statements  involve  risks and  uncertainties  which may affect
Sitestar 's business  and  prospects,  including  changes in economic and market
conditions,  acceptance  of  Sitestar  's  products,  maintenance  of  strategic
alliances and other factors discussed elsewhere in this Form 10KSB.

Item 1. Description of Business

Overview
--------
     Sitestar  Corporation  (the  "Company"  or  "Sitestar")  is  a  diversified
Internet  holding  company.  Our near term  strategy is to acquire and invest in
emerging  Internet-based  enterprises  to create a broad and diverse set of core
Internet  businesses that deliver a variety of online solutions.  In addition to
developing and integrating Internet-based technologies, our primary objective is
to create a mix of Internet operating companies and  Internet-related  portfolio
investments  that  will  enhance  the  value of our  current  businesses  in the
following areas:

     o    Internet e-commerce

          We design and offer customized  e-commerce  services which include the
          ability  to  create  and  operate  an  online  "storefront"  and  sell
          merchandise  over the  Internet.  We will also continue to enhance and
          expand our products and services towards opportunities surrounding the
          growth of the Internet and the electronic commerce industry.

     o    Value-added content

          We have  developed and will continue  developing  content that provide
          the ability to target specific demographics.  We will also continue to
          pursue  innovative niche oriented  value-added  content in segments we
          believe are underdeveloped  and under-served.  We are actively seeking
          opportunities to develop innovative ways for consumers to retrieve and
          access information effectively through the Internet.

     o    Internet Service Providers (ISP)

          We  offer  a  full  range  of  dial-up  Internet  access  services  to
          residential  subscribers and dedicated and dial-up  Internet access to
          business  customers  within the secondary  markets of the mid-Atlantic
          region which we believe  have been  historically  under-served  by the
          larger,  national  Internet  service  providers.  We will  continue to
          pursue and focus on  acquisition  opportunities  within the  secondary
          locations in the  mid-Atlantic  region to further  expand our Internet
          access coverage.

                                       3
<PAGE>

     o    Internet Portals/Community Web sites

          We will continue to pursue innovative  portal and community  web-based
          destinations.  We are actively seeking to develop  innovative ways for
          consumers to interact  effectively  through the Internet.  The Company
          designs and offers  customized  packages  which include the ability to
          change advertisements  quickly and frequently,  to conduct advertising
          test  campaigns  with rapid  result  delivery and to track daily usage
          statistics.  The Company has developed  and will  continue  developing
          software that provides the ability to target ads based on demographics
          and usage patterns.

     o    Strategic investments in Internet-related ventures

          We intend to continue to evaluate new Internet  related  opportunities
          to further our  investment  in our Internet  strategy and also to seek
          out opportunities to increase  shareholder  value. We are currently in
          preliminary  discussions with a number of Internet related enterprises
          for possible investment  opportunities.  However, we cannot assure you
          that we  will  successfully  complete  any of the  investments  we are
          currently evaluating.

     We will  attempt to develop  and refine the  products  and  services of our
existing  businesses  and  businesses  or  assets  we  acquire  with the goal of
significantly  increasing  revenue as new products are commercially  introduced.
Additionally,   we  will  continue  to  pursue  strategic   investments  in  new
Internet-related  opportunities to leverage our existing  assets.  Our operating
strategy  is  to  integrate  our  subsidiaries  and  future  Internet  portfolio
investments into a collaborative network that leverages our collective knowledge
and resources. We will actively explore synergistic  opportunities such as cross
marketing and co-development  efforts within our subsidiaries and investments to
further leverage our resources.


Corporate History
-----------------
     We were incorporated under the name of White Dove Systems, Inc. in December
1992  under the laws of the State of  Nevada to engage in any  lawful  corporate
activity.

     In  October  1998 we  acquired  all the issued  and  outstanding  shares of
Interfoods  Consolidated,  Inc. ("IFCO"), a California corporation,  in exchange
for 5,580,000 shares of our Common Stock.  IFCO,  operating under the trade name
of Holland  American  International  Specialties  ("HAIS"),  is a  retailer  and
wholesaler  of imported and domestic  specialty  gourmet  foods.  IFCO began its
operations in June 1997 with the purchase of the inventory assets and trade name
of HAIS from an unrelated third party. HAIS' product offering ranges from exotic
European  delicacies  to  mainstream  specialty  candies,  chocolates  and other
confectionery  products.  In connection  with this  acquisition  and in order to
properly  reflect the new corporate  focus,  we changed our name from White Dove
Systems, Inc. to Interfoods Consolidated, Inc. in October 1998.


                                       4
<PAGE>

     In January  1999 we acquired 9% of the  outstanding  Common Stock of Sierra
Madre Foods, Inc.  ("SMF"),  a California  corporation,  through a joint venture
arrangement  with the  debtor-in-possession  who owns the  remaining  91% of the
outstanding  Common Stock of SMF, for  $200,000.  SMF,  formerly  known as Queen
International  Foods ("QIF"), is a manufacturer and wholesaler of frozen Mexican
food products such as burritos and chimichangas. We acquired our equity interest
through   the   U.S.    Bankruptcy    court    proceedings    along   with   the
debtor-in-possession  as our joint  venture  partner.  QIF filed for  Chapter 11
Bankruptcy  protection  on April 1998. We formed SMF as a joint venture with the
debtor-in-possession  for the sole purpose of acquiring substantially all of the
assets  of  QIF  from  the  U.S.   Bankruptcy   court.  Our  $200,000   purchase
consideration for our 9% stake,  along with the consideration  paid by our joint
venture  partners,   were  paid  to  the  U.S.   Bankruptcy  court  trustee  for
substantially all of the assets of QIF.

     In July 1999 a majority of IFCO  shareholders,  including  our Chairman Mr.
Manlunas,  acquired  all the issued and  outstanding  shares of  Sitestar,  Inc.
("SYTE"), a Delaware corporation, in exchange for 3,491,428 shares of our Common
Stock owned by the majority IFCO shareholders.  Simultaneous with the closing of
this transaction,  the IFCO shareholders contributed SYTE to IFCO as contributed
capital.  SYTE is a Web  development,  design and hosting company formed in 1996
and is based in Annapolis,  Maryland.  This acquisition included  Soccersite.com
which is currently  one of our  operating  subsidiaries.  Soccersite.com  was an
operating  subsidiary of SYTE. As a result of this  acquisition  and shareholder
contribution,  we changed our corporate  focus from a food holding company to an
Internet holding company.  To better reflect our new primary  corporate focus we
changed our corporate name from Interfoods Consolidated, Inc.
to Sitestar Corporation in July 1999.

     In  August   1999  we   acquired   substantially   all  of  the  assets  of
Greattools.com  in exchange for 49,000 shares of our Common  Stock.  We acquired
the  assets of  Greattools.com  from  Global  Sourcing  Group,  Greattools.com's
current fulfillment center. Gateway Holdings, Inc., a private investment company
our Chairman  Frederick  Manlunas is managing,  has a 14.6% equity  ownership in
Global  Sourcing Group.  Greattools.com  is an online low cost retailer of power
tools.

     Effective as of September 30, 1999 we sold the non-Internet  assets of HAIS
to IFCO Group, LLC ("IFCO GROUP"), whose members consist of certain shareholders
of the Company,  including Frederick T. Manlunas,  our Chairman of the Board. We
retained the assets  consisting  of the Internet web site  Holland-American.com.
HAIS will  continue  to serve as  Holland-American.com's  exclusive  fulfillment
center.  The purchase  consideration  for HAIS was $900,000 and was based upon a
business  appraisal by an independent  third party appraiser.  The consideration
included $200,000 which was to be offset against the Company's  liability to Mr.
Manlunas for services  rendered in  connection to the  acquisition  of Sitestar,
Inc.,  the assumption of $654,000 of  liabilities  and a promissory  note in the
amount of $46,000.  The note bears  interest  at a rate of 8% per annum,  and is
payable in annual  installments of $15,333,  and is due and payable on September
30, 2002. The note is secured by HAIS' accounts receivable and inventory.


                                       5
<PAGE>

     On September  30, 1999 we sold our 9% equity  interest in SMF to IFCO Group
for $200,000.  The  consideration was paid in the form of assumption of $160,000
of  debt  related  to the  investment  and  the  balance  of  $40,000  paid by a
promissory  note payable in three annual  installments of $13,334 each. The note
bears interest at a rate of 8% per annum. The purchase  consideration  was equal
to our original investment in January 1999.

     Effective  December 15, 1999,  we  consummated  the  acquisition  of Neocom
Microspecialists,  Inc.  ("Neocom") in exchange for 6,782,353 shares of Sitestar
Common Stock for 100% of the  outstanding  shares of Neocom.  Effective upon the
closing of the  acquisition,  we issued 4,782,353 shares of our Common Stock and
have reserved  2,000,000  shares of Common Stock that we have agreed to issue on
the second  anniversary of the acquisition based on certain  contingencies.  The
certain  contingencies are related to potential unrecorded  liabilities.  Of the
4,782,353  shares issued for Neocom,  900,000 shares were issued in exchange for
certain  liabilities  that the majority of Neocom's  selling  shareholders  have
agreed to assume based on a debt assumption  agreement executed and delivered at
the closing of the acquisition.

     Neocom is an Internet service provider and Web development company based in
Martinsville,  Virginia.  Neocom  provides  Internet  access and other  Internet
services to approximately 5,100 customers in the Southern Virginia area.

Possible Future Acquisitions
----------------------------
     We are also currently in preliminary  discussions with a number of Internet
service  providers  for  potential  acquisitions  in  targeted  markets  in  the
Mid-Atlantic  region.  However,  there is no assurance that we will successfully
complete any of the acquisitions we are currently evaluating. All discussions we
are  conducting are at an early stage and we have not made any decisions to make
any acquisitions at this time.

Market Opportunity
------------------
     Overview.  We believe  that the  Internet  has become an  important  global
medium enabling  growing  numbers of people to obtain and share  information and
conduct  business  electronically.  Its  expanded  use has made the  Internet  a
critical tool for information and communications for many users. We believe that
Internet  access and  enhanced  Internet  services,  including  Web  hosting and
electronic  commerce services,  represent two of the fastest growing segments of
the telecommunications  services market.  International Data Corporation ("IDC")
estimates  that at the end of 1997 there  were over 38 million  Web users in the
United  States and over 68 million  worldwide,  and projects  that by the end of
2002 the number of Web users  will  increase  to over 135  million in the United
States and over 319  million  worldwide.  We believe  that the  availability  of
Internet access, advancements in technologies required to navigate the Internet,
and the  proliferation of content and  applications  available over the Internet
have attracted a rapidly growing number of Internet users.


                                       6
<PAGE>

     Growth in Business Use of the Internet. We believe that the dramatic growth
in  Internet  usage in  recent  years,  combined  with  enhanced  functionality,
accessibility  and security,  has made the Internet  increasingly  attractive to
businesses as a medium for  communication  and  commerce.  We feel that for many
businesses, the Internet has created a new communication and sales channel which
enables large numbers of geographically dispersed organizations and consumers to
be  reached  quickly  and  cost-effectively.  IDC  estimates  that the number of
consumers  buying goods and services on the Internet will grow from 17.6 million
in 1997 to 128.4 million in 2002, and that the total value of goods and services
purchased over the Internet will increase from approximately $12 billion in 1997
to approximately $426 billion by 2002.

     We believe  that  businesses  will  increasingly  add a variety of enhanced
services  and  applications  to their  basic  Internet  access,  Web  sites  and
e-commerce  applications  in order to more fully  capitalize on the power of the
Internet.  We feel that these services and applications  will allow them to more
efficiently and securely  communicate  company  information,  expand and enhance
their  distribution   channels,   increase   productivity   through  back-office
automation, ensure reliability and reduce costs. We see opportunities for growth
in the following areas:

     o    Demand for Internet Access Services

          Internet   access   services   represent   the  means  by  which  ISPs
          interconnect  their  customers to the Internet or corporate  Intranets
          and  extranets.  According  to  Forrester  Research,  Internet  access
          revenues  from  businesses  are expected to increase from less than $1
          billion in 1997 to more than $16  billion in 2002.  Due,  in part,  to
          their size, small and medium sized enterprises often seek to outsource
          these services.

     o    Demand for Web Hosting Services

          Many  businesses are seeking to outsource to ISPs services such as Web
          hosting,  collocation  and file  transfer  protocol  data  storage and
          retrieval.

     o    Demand for Secure Private Networks

          We believe  that  concerns  relating to the  security of internal  and
          proprietary information,  data loss and reduced transmission speed has
          led businesses to demand Internet services that include the ability to
          provide electronic security monitoring and threat responses.

     The Small and Medium  Sized  Enterprise  Market.  We define  this market as
business  enterprises  having  sales of less than  $20.0  million  per annum and
enterprises having less than 100 employees.  We have specifically targeted small
and medium sized enterprises because:

     o    We believe that these  enterprises  increasingly  need high-speed data
          and  Internet  connections  to  access  business  information  and  to
          communicate more effectively with employees, customers and vendors.


                                       7
<PAGE>

     o    We believe that a relatively  small  percentage  of these  enterprises
          currently  utilize the  Internet,  but that this number is  increasing
          rapidly.  The small and medium sized enterprise segment is expected to
          be one of the fastest growing segments of the Internet industry.

     o    Many of these enterprises lack the resources and expertise to develop,
          maintain and expand,  on a  cost-effective  basis,  the facilities and
          network systems necessary for successful Internet operations.

     o    We believe  that these  enterprises  will prefer an  Internet  service
          provider with  locally-based  personnel who are available to assist in
          developing and  implementing  their growing use of the Internet and to
          respond to technical problems in a timely manner.

     o    We believe that these  enterprises rely more heavily on their Internet
          service  provider than larger  enterprises and tend to change Internet
          service providers relatively infrequently.

     Internet Services in Secondary Markets.  Small and medium sized enterprises
are often  concentrated  in  so-called  "secondary  markets" to avoid the higher
costs associated with locating in a metropolitan area. A secondary market is any
market smaller than the 100 most populated U.S. metropolitan  markets.  However,
national  ISPs have  historically  placed their largest  points of presence,  or
POPs, only in or around densely populated major cities. A POP is an access point
at which customers in a traditional ISP network architecture can connect to data
circuits in order to obtain Internet access and other services.  While customers
located  within a few miles from these POPs often  receive cost savings on their
access pricing,  customers  located in secondary markets that are as close as 20
to 75 miles away from these POPs have  typically  been charged higher prices for
Internet access services.

     We believe that small and medium sized  enterprises  located in high-growth
secondary markets are currently underserved by both national and local providers
of  Internet  access  and  related  services.  National  ISPs,  on the one hand,
typically lack the local  presence to provide local support.  Local ISPs, on the
other hand, often lack the requisite scale and resources to provide a full range
of services at acceptable quality and pricing levels.

Our Growth Strategy
-------------------
     Our goal is to be a premier  Internet  company that offers products ranging
from Internet access and a complete suite of Internet products and services to a
variety of e-commerce  platforms targeting small and medium sized enterprises in
our target markets. We would like to offer a variety of business-to-consumer and
business-to-business e-commerce solutions to our customers.

Key elements of our strategy include:
-------------------------------------
     Focus  Growth on  Secondary  Markets.  We intend  to expand  into  selected
secondary  markets by replicating our regional  network and marketing model. Our
network architecture and scalable sales and marketing plan are designed to allow
us to penetrate additional regions rapidly and cost-effectively.


                                       8
<PAGE>

     Market a Variety of Services to New and  Existing  Customers.  We intend to
offer a  comprehensive  suite of a variety of products  and services to meet the
expanding needs and complexity of our customers' Internet operations allowing us
to increase revenue per customer and maintain a high customer  retention rate by
strengthening relationships with our customers.

     Use of  Centralized  Sales and Marketing  Operations.  We intend to use our
centralized  sales and marketing  staff to help implement our regional  strategy
cost-effectively.  We  intend  to hire and  train  additional  local  sales  and
marketing  personnel  within our target  regions to  complement  the core of our
sales and  marketing  staff,  which  will  continue  to be  concentrated  in one
centralized location to maximize efficiency.  These regionally located employees
are intended to add local market  knowledge,  expertise and  familiarity  to our
sales and marketing efforts and allow us to maintain a field presence in each of
our regions, while maximizing our central operations.

     Strategic Relationships and Acquisitions. We intend to enter into strategic
relationships, such as partnerships and joint ventures, and to make acquisitions
to expand our line of enhanced products and services.

     As part of this strategy, we recently consummated the acquisition of Neocom
Microspecialists,  Inc., a provider of Web hosting and  co-location  services in
the Mid-Atlantic region. This acquisition is consistent with our growth strategy
of building our presence in secondary markets that have traditionally been under
served by the larger  Internet  services  companies.  In  addition,  we are also
actively seeking acquisition opportunities and/or candidates in the Mid-Atlantic
region that would help us achieve critical mass in terms of our Internet access,
development and hosting customers.

Internet Industry Overview
--------------------------
     We believe  that  Internet  commerce is  reshaping  the way  consumers  and
businesses  conduct  business.  According  to  new  projections  from  Forrester
Research,  worldwide  e-commerce  sales will reach as high as $3.2  trillion  in
2003,  representing  nearly 5% of all global sales.  These sales figures include
business-to-business  and  business-to-consumer  sales and EDI (electronic  data
interchange)  orders placed on the Internet,  but exclude the value of financial
transactions.  E-commerce is defined as the trade of goods and services in which
the final order is placed over the Internet.

     Growth in Electronic Commerce

     We feel strongly that the growing popularity of the Internet  represents an
opportunity  for  companies  like  us to take  advantage  of the  potential  for
commercial  transactions conducted online, referred to as electronic commerce or
e-commerce.  International  Data,  Inc., a market research firm,  estimates that
business-to-consumer  commerce  over the Internet  will  increase  from over $12
billion worldwide at the end of 1997 to approximately  $425 billion worldwide by
the end of 2002. In addition,  Jupiter  Communications,  another market research
firm,  predicts that by 2002, 44% of Internet users will make purchases  online,
as compared to an estimated 22% that did so in 1997. Several factors are driving
the growth in both  business to  consumer  and  business to business  electronic
commerce. These factors include:


                                       9
<PAGE>

     o    increasing familiarity with the Internet;

     o    broadening consumer acceptance of online shopping;

     o    increasing   acceptance  on  online   distribution   relationships  by
          businesses;

     o    improved online network security and infrastructure;

     o    the growing base of personal  computers and improved  Internet access;
          and

     o    expanding network bandwidth and access speeds.

     We believe that the Internet is  particularly  well-suited  for  promoting,
marketing, selling and distributing merchandise both on a retail and a wholesale
level,  permitting  customers  throughout  the  world to have  direct  access to
suppliers.  Online  stores can  provide  direct  customer  service  and  product
information to a large number of customers at the same time with a substantially
smaller sales staff than traditional stores. Online stores also have the ability
to rapidly and  continually  update such  information.  Internet  merchandisers,
unlike  traditional  stores,  do not  have  the same  expenses  associated  with
operation of physical  stores and  warehouse  facilities,  and can change stores
design without substantial cost. In contrast to catalog merchandisers,  Internet
retailers can react quickly to change product  descriptions,  pricing or product
mix and are not subject to the costs of catalog  publication  and  distribution.
Additionally,  online  merchandisers have the ability to track directly customer
responses and  preferences,  which enables the  merchandisers to customize their
online stores to target specific customer groups and individuals.

     Changing Demographics

     In the  early  days of the  Internet,  users  consisted  mainly  of  young,
technology-savvy  or  upscale  males.  Today,  while the online  population  has
appears  to  have  changed  drastically,   it  remains  a  fairly  elite  group.
Demographics from Mediamark  Research show that Internet users are approximately
twice as likely to have high household  incomes,  college degrees and management
positions  than the  overall  U.S.  population.  They are also more likely to be
young and single. Geographically,  Internet users can be found in all corners of
the U.S., although, according to researcher Inteco, the level of Internet use in
several major metropolitan areas exceeds the overall U.S. average.

     Consumer Acceptance

     We believe  broadening  consumer  acceptance  and retailer  ambitions  will
combine to fuel a rapid growth in online  retail sales and to drive more than 40
million U.S. households to shop online by 2003, producing $108 billion revenues.
According to Forrester Research, online retail sales will account for 6% of U.S.
consumer retail spending in the U.S. by 2003.  Analysts estimate that by the end
of 1998,  nearly 9 million U.S.  households  will have shopped online for travel
services and retail  goods other than  automobiles,  generating  $7.8 billion in
online  sales.  We expect these numbers to grow rapidly over the next five years
as high speed Internet  connections  become more popular and consumers  overcome
security and privacy concerns and embrace the convenience of Web shopping.


                                       10
<PAGE>

     Corporate E-Commerce

     Although retail online shopping appears to receive more attention, analysts
predict a much  larger  growth  in  business-to-business  e-commerce.  Forrester
Research  estimates that by year 2003,  consumers will spend $108 billion to buy
goods online, while businesses will spend $1.3 trillion. As expected,  computing
and  electronic  equipment  will remain one of the largest  categories  of goods
traded between businesses, reaching $395 billion in revenue by 2003, while other
industries,  such as cars and  petrochemicals,  will  also top the $150  billion
mark.  In  addition  to the  $1.3  trillion  in  business-to-business  sales  of
products,  Forrester also reports that online  transactions in business services
will equal $220 billion by 2003.  Michael  Putnam of Forrester  Research  states
that "Just as the Internet has revolutionized the goods industries, the services
industry is going to be reinvented."

     Internet-based  businesses  have  already  created  more  than 200  on-line
marketplaces  for conducting  business-to-business  (B2B)  electronic  commerce.
These  Internet  locations  bring  buyers  and  sellers  together  in a  central
marketplace and, in addition,  provide services such as procurement  management,
financial  settlement  and quality  assurance.  These  services  enhance the B2B
sites'  value to the end  customers  and allow it to become an integral  part of
those customers' business processes.

     By providing a central on-line hub that automates transactions,  aggregates
information,  improves market reach and provides  related  services,  we believe
these B2B sites will help their  participants  reduce  both  product and process
costs. By resolving information-based  inefficiencies,  they act as catalysts to
compress time,  slash costs and improve  processes in ways that were  previously
unimaginable.  Leading  research  firms  estimate  that product and process cost
savings afforded by B2B sites will amount to $57 billion by 2003.

Sitestar.net
------------

      Product Offerings

      Internet Access

      Sitestar.net  offers  a  variety  of  Internet  access  solutions.   These
solutions  range from 56K and ISDN  dial-up  accounts to 3Mbps  wireless  access
connections.  We are one of the few  ISP's  in the  county  of Anne  Arundel  in
Maryland to offer Internet access with wireless technology. Our wireless service
ranges in speed from  128Kbps to up to 3Mbps.  We are also  offering  high-speed
Digital  Subscriber Line (DSL) service in Annapolis,  Baltimore,  and Washington
D.C. All dial-up accounts include e-mail,  unlimited Internet access, and Usenet
newsgroups  and  require no  long-term  contracts.  The  prices of our  Internet
services range from 16.95 to 79.95 per month.

      Our Web services help  organizations  and individuals  implement their Web
site goals.  We offer  complete Web hosting  services  that enable  customers to
establish  a Web site  presence  without  maintaining  their own Web servers and
high-speed connectivity to the Internet.


                                       11
<PAGE>

      Web Hosting

      We offer a variety of Web hosting  services  which enable our customers to
establish and maintain a Web site on the Internet  using Web servers and related
equipment owned and administered by us. Our Web hosting  services  utilizes both
Unix and Windows NT Servers.
Standard  hosting  services  include  access  to the web  site  via  FTP  and/or
Microsoft FrontPage.

      E-commerce

      We  also  provide   electronic   commerce   solutions  for  consumers  and
businesses.  We develop and operate an on-line "storefront" and sell merchandise
over the  Internet.  Our  e-commerce  services  include  secure  online  payment
processing services, technical support and additional e-mail accounts.

      Co-location

      We offer co-location services, providing telecommunications facilities for
customer-owned  Web servers,  for  customers who prefer to own and have physical
access to their servers but require the reliability, security and performance of
our on-site facilities.  Our co-location  customers house their equipment at our
secure network operating  facility and receive direct high-speed  connections to
the Internet.

      Website Design

      We have provided web site design  services since 1996 and, as of September
1999,  have  developed  web sites for 250  customers.  We provide a free initial
consultation.  Our  customers  can choose from several  customized  possible web
layouts for their  business  requirements.  After our customer's  selection,  we
develop a  prototype  site and work with  customers  to design the site to their
specifications

      Banner Development

      We  also  design  banner  advertisements  for  our  customers  and,  as of
September  1999,  we  have  developed  300  banner  advertisements.  Our  banner
development  services  include banner design and  development,  maintenance  and
traffic  reporting.  We also  provide  consulting  services  to clients who need
guidance on where and how to post banners on other Web sites.

      Online Marketing

      We offer web site  marketing  services  that  continually  build  upon our
customer's  current  search  engine  listing to improve  their  placement in the
different search engines.  Our services include the evaluation of our customers'
search engine  positioning to assure easy  accessibility  to Internet  users. We
maximize our customers search engine  positioning by including industry specific
key words that are likely to be used by Internet  users.  Initial  launch of our
customer's web site reaches over 400 search engines and services.


                                       12
<PAGE>

      Customers and Marketing

     Our customer base consists  primarily of small and medium sized enterprises
and dial-up customers located in secondary markets.

     We use targeted  marketing and media advertising to develop brand awareness
and  supplement  these  efforts  with our highly  customized  sales  process and
personalized  customer  service.  Through  our  marketing  managers,  we seek to
develop strong customer relationships within local communities.

     Our  marketing  managers  will also provide  assistance  and support to our
centralized  sales  staff.  This  enables us to evaluate  customers'  needs more
effectively,  to design customized solutions and to reinforce our local presence
as a value-added provider of enhanced Internet services.  Our marketing managers
also identify  market trends,  provide  constant data  regarding  changes in the
competitive  landscape  and also may  identify  and  initiate  contact  with new
customers.  We also  attend  trade shows and other  events to further  reach the
targeted small and medium sized enterprises in each region.

      Competition

     The  Internet   services   market  is  extremely   competitive  and  highly
fragmented.  We face competition from numerous types of ISPs, including national
ISPs, and anticipate that  competition  will only intensify in the future as the
ISP industry  consolidates.  We believe that the primary  competitive factors in
the Internet services market include:

     o    Pricing;

     o    Quality and breadth of products and services;

     o    Ease of use;

     o    Personal customer support and service; and

     o    Brand awareness.

    We believe that we compete  favorably  based on these factors,  particularly
due to our:

     o    Regionally focused operating strategy;

     o    Superior customer support and service;

     o    High performance; and

     o    Competitive pricing.


                                       13
<PAGE>

     Our  current   competitors   include   many  large   companies   that  have
substantially  greater market  presence,  brand-name  recognition  and financial
resources than we do. Some of our local or regional  competitors  may also enjoy
greater  recognition within a particular  community.  We currently  compete,  or
expect to compete, with the following types of companies:

     o    national   Internet   service   providers,   such  as  PSINet,   Inc.,
          ConcentricNetwork Corporation, Earthlink, Netcom and Mindspring;

     o    providers  of  Web  hosting,   collocation  and  other  Internet-based
          business services, such as Verio, Inc. and Navisite;

     o    numerous regional and local Internet service providers,  some of which
          have significant market share in their particular market area;

     o    established  on-line service providers,  such as America Online,  Inc.
          and Prodigy;

     o    computer hardware and other technology companies that provide Internet
          connectivity with their or other products, including the International
          Business Machines Corporation and Microsoft Corporation;

     o    national  long  distance  carriers  such  as  AT&T  Corporation,   MCI
          WorldCom,  Inc., Qwest  Communications  International  Inc. and Sprint
          Communications Company, L.P.;

     o    regional Bell operating companies and local telephone companies;

     o    providers  of free  Internet  service,  including  NetZero,  Inc.  and
          MicroWorkz Computer Corporation;  cable operators or their affiliates,
          including At Home Corporation and Time Warner  Entertainment  Company,
          L.P.;

     o    terrestrial wireless and satellite Internet service providers; and

     o    non-profit or educational ISPs.

     Many of the major cable companies and some other Internet access  providers
have  begun to offer or are  exploring  the  possibility  of  offering  Internet
connectivity  through the use of cable modems.  Cable  companies,  however,  are
faced  with  large-scale  upgrades  of  their  existing  plant,   equipment  and
infrastructure  in order to support  connections  to the  Internet  backbone via
high-speed  cable  access  devices.  We  believe  that  there is a trend  toward
horizontal  integration  through  acquisitions  or joint ventures  between cable
companies and telecommunications  carriers.  Other alternative service companies
have also announced plans to enter the Internet connectivity market with various
wireless  terrestrial and  satellite-based  service  technologies.  In addition,
several  competitive local exchange carriers and other Internet access providers
have launched  national or regional digital  subscriber line programs  providing
high  speed   Internet   access  using  the  existing   copper  wire   telephone
infrastructure.  Several  of these  competitive  local  exchange  carriers  have
announced  strategic  alliances  with  local,   regional  and  national  service
providers  to provide  broadband  Internet  access.  If we are unable to provide
technologically competitive service, our revenues and profit margins may decline
materially, and our ability to attract additional customers may suffer.

                                       14
<PAGE>

     Recently,  several  national  access  providers have begun to offer dial-up
Internet access for free or at substantial  discounts to prevailing rates, which
may result in significant pricing pressure for dial-up Internet access services.
We also believe that  manufacturers of computer hardware and software  products,
media and  telecommunications  companies  and others will  continue to enter the
Internet services market, which will also intensify competition,  especially for
dial-up access providers.  If we are unable to compete with lower-cost providers
by providing  superior service and support,  our revenues and profit margins may
decline materially, and our ability to attract additional customers may suffer.

       Acquisition Strategy

       We recently consummated the acquisition of Neocom Microspecialists, Inc.,
a provider of Internet  access,  Web  hosting  and  co-location  services in the
Mid-Atlantic  region. This acquisition is consistent with our growth strategy of
building our presence in secondary  markets that have  traditionally  been under
served by the larger  Internet  services  companies.  In  addition,  we are also
actively seeking acquisition opportunities and/or candidates in the Mid-Atlantic
region that would help us achieve critical mass in terms of our Internet access,
development and hosting customers.

Greattools.com
--------------

       Product Offerings

       Founded in January 1998,  Greattools.com is a direct merchandiser of over
60 specialty tool products designed for light to heavy industrial  applications.
We market our  products  under the name Great Tools  Direct(TM)  and  maintain a
diverse product line comprised of five categories:  (1) Power Tools; (2) Cutting
Tools;  (3)  Masonry;   (4)  Accessories;   and  (5)  Automotive.   We  offer  a
comprehensive  product line  aggregating  approximately  90 different  models of
cordless drills,  batteries,  cutting tools, sanders, grinders and miscellaneous
power tool  accessories.  Our main product and primary  source of revenue is the
cordless  drill.  Sales  from  cordless  drill  account  for  about  80%  of our
Greattools.com  revenues.  We offer a variety of cordless  drills from the least
powerful  2.4volt model to the more advanced  18.8volt power drill. The 14.4volt
cordless drill has become a popular  consumer drill for household use due to its
price  affordability.  We  offer a  16.8volt  drill  and an  18.8volt  drill  at
discounted  prices.  We have  recently  introduced  a 24volt  drill  and plan on
introducing other products based on our assessment of trends and market demand.

       All GREAT TOOLS DIRECT products are designed and manufactured in China by
Tehao and Hitachi, two large manufacturers of industrial products,  according to
strict  specifications  determined by our  fulfillment  center.  Our fulfillment
center, Global Sourcing Group, frequently develops innovative design concepts in
an effort  to  improve  and  differentiate  their  product  line  from  existing
competition. Greattools.com is not an exclusive distributor of Tehao and Hitachi
products.


                                       15
<PAGE>

       Our home page features  advertisements,  testimonials  and promotions for
various in-stock  merchandise.  Our in-stock  merchandise is carried entirely by
our  fulfillment  center  at no extra  charge to us.  Greattools.com  acts as an
online   distribution   agent  for  Global  Sourcing  Group.   This  fulfillment
arrangement  with Global  Sourcing  Group  negates any necessity for us to carry
inventory. As part of our fulfillment  arrangement,  Global Sourcing Group ships
all  merchandise  purchased from the  Greattools.com  site directly to customers
eliminating any need for us to maintain costly operational overhead. As a result
of this arrangement,  we don't have to take title to the merchandise we sell and
we don't have to purchase  merchandise  from Global  Sourcing every time we sell
products  online.  Since  Greattools.com  is  merely  an  online  agent  for our
fulfillment center, we only derive our revenues from our agreed upon commissions
earned on each  merchandise  sold and not on the aggregate sales price of a sale
transaction

       The web site provides customers with product  information and the ability
to directly  purchase  products  over the Internet in a secure  environment.  We
maintain a standard  refund  policy to any  consumer  who  purchases a defective
product.  We have a thirty-day money back guarantee wherein we refund or replace
any products within thirty days from purchase.  From inception, we have refunded
on the average less than three percent of our sales.

       Customers and Marketing

     Our target  market  consists of retail  customers  located  throughout  the
United States,  Canada and South America.  We target  value-oriented  consumers,
do-it-yourselfers  and  contractors  who use  power  tools  for  light  to heavy
industrial applications. We also target professionals who require tools in their
daily  activity,  such as plumbers,  carpenters,  electricians  and a variety of
other services and repair professionals.

     The  retail  segment  also  includes  consumers  who use  power  tools  for
household applications.  These include hobbyists, homemakers, students and other
do-it-yourselfers.

     The Company's  market  development  strategy is based on several  marketing
channels:

       Direct Response Advertising

     We advertise in specialty  magazines and consumer  publications,  including
Popular Mechanics (circulation:  1,000,000),  American Woodworker  (circulation:
400,000), Wood Magazine (circulation: 650,000), Popular Woodworker (circulation:
220,000)  and  American  How To  (circulation:  750,000).  We believe that these
publications  are the most  efficient  medium to reach its  target  market.  The
advertisements  highlight  our product line and feature the Internet  address as
the primary means of ordering products, as well as a toll-free telephone number.


                                       16
<PAGE>

       Database Marketing

     We have  created a  database  of  customers  for repeat  sales and  special
promotions.  The  database  currently  contains  over 3,500  names.  Each time a
customer  places an order  online,  the  database  is updated  to  reflect  that
customer's  information  and  buying  patterns.  Due to the  database's  sorting
capabilities,  we believe it receives a greater  percentage  of  responses  from
direct mail to the database  targets  than it would  receive from a generic mass
mailing. We repeatedly mail marketing  materials,  catalogs and brochures to our
customers. Our catalog,  produced once a year, lists the products we maintain in
our fulfillment center's warehouse and products our fulfillment center can order
directly  from  Tehao.  The  catalog is mailed to all of the 3,500  names on our
mailing list as well as new  potential  customers  generated by our Web site and
regular advertisements.

     We believe  that a large  portion of our  potential  success  relies on the
reputation we have created in our "Great Tools Direct" brand name.  However,  we
do not have any  specific  plans to protect  our mark  "Great  Tools  Direct" by
filing a  trademark  application  with the United  States  Patent and  Trademark
office  (PTO).  We have  conducted a  trademark  search on the label Great Tools
Direct that did not result in the discovery of any other commercial entity using
the Great Tools Direct or a substantially similar label in the United States. We
decided that we could better use our limited  capital in  advertising  and other
expenses rather than investing in protecting the Great Tools Direct brand name.

       Power Tools Industry

     Dominated by large home centers and hardware and lumber  cooperatives  such
as Home Depot,  Loews,  Menard's,  Ace and True Value, the tool market is large,
highly fragmented and  characterized by multiple  channels of distribution.  The
distribution  channels in the power tools market include retail  outlets,  small
distributorships,   national,  regional  and  local  distributors,  direct  mail
suppliers, large warehouse stores and manufacturer's own direct sales forces.

     Products   imported  from  low-cost  labor  countries  have  increased  the
competitive  pressures on pricing.  Cost  pressures from more  established  name
brands are providing a focus on high quality, low cost alternatives.  Aggressive
value pricing has redefined the basis for  competition  in many of the Company's
product lines.

     There are many  discount  retailers  in the industry  offering  products at
competitive  prices and blurring the  distinction  between  wholesale and retail
such as Home Depot,  Menards and Wal-Mart.  Warehouse  clubs and other  category
leaders are  establishing  a new  economic  framework  for the retail  business,
forcing industry  participants to reduce costs.  Major marketers have focused on
value pricing  strategies,  changing the nature of merchandising  throughout the
industry.


                                       17
<PAGE>

       Competition

     The power tool market in which we operate is extremely competitive,  and we
expect such competition to intensify in the future.  Our current and prospective
competitors include many large companies that have substantially  greater market
presence and financial,  technical,  marketing and other resources than we have.
We compete with many retailers and direct  marketers who sell  merchandise  over
the Internet and through  catalogs.  We also compete with traditional  retailers
who sell similar  merchandise to that sold by us. Those retailers  usually offer
brand  name  products  at prices  higher  than our  products.  As newer and more
powerful tools are being introduced into the market, intense competition between
manufacturers  has  developed.  Companies  in the industry  are  developing  new
features to attract  customers and tools are becoming more  reliable,  efficient
and quiet. At the same time,  prices are becoming more competitive as power tool
companies are vying to gain market share. Moreover, as brand delineation becomes
more challenging,  pricing becomes more competitive, thus further increasing the
drive to gain market share.

     We believe that our ability to compete  successfully depends on a number of
factors,  including:  (1) our ability to  continually  provide the customer with
value by  offering  quality  products  at prices  lower than the prices  usually
charged for name brand products; and (2) maintaining a flexible product line and
quickly adapting to the changing needs and tastes of the market.

       Acquisition Strategy

     We believe there are acquisition opportunities among the many small sellers
of power tools. If we believe a favorable opportunity exists, we anticipate that
we will enter into discussions with the owners of such businesses  regarding the
possibility of an acquisition by the Company.  As of the date hereof,  we do not
have any  agreements  or  pending  acquisitions  and have not  entered  into any
letters of intent with  respect to pending  acquisitions.  No  assurance  can be
given  that  we  will  identify  satisfactory   acquisition  candidates  or,  if
identified,  that  we  will  be  able to  consummate  an  acquisition  on  terms
acceptable to us.


Holland-American.com
--------------------

       Product Offerings

     In October 1998, HAIS created an online division to respond to the needs of
the   emerging   online   specialty   foods   segment.   Since   October   1998,
Holland-American.com  has been an  online  purveyor  of  imported  and  domestic
specialty gourmet foods. We sell specialty products, such as condiments,  sauces
and toppings,  entrees,  prepared  foods and soups,  breads,  pasta,  grains and
beans, crackers/snacks, desserts and confections and oils and vinegar. We intend
to  increase  our sales  volume  significantly  in the next  twelve  months once
sufficient  capital  resources are available by increasing our marketing efforts
to reach a broader audience.


                                       18
<PAGE>

     Our in-stock  merchandise is carried entirely by our fulfillment  center at
no extra charge to us. Holland-American.com acts as an online distribution agent
for HAIS. This fulfillment arrangement with HAIS negates any necessity for us to
carry  inventory.  As  part  of our  fulfillment  arrangement,  HAIS  ships  all
merchandise purchased from the  Holland-American.com  site directly to customers
eliminating any need for us to maintain costly operational overhead. As a result
of this arrangement,  we don't have to take title to the merchandise we sell and
we don't have to  purchase  merchandise  from HAIS  every time we sell  products
online. Since Holland-American.com is merely an online agent for our fulfillment
center,  we only derive our revenues from our agreed upon commissions  earned on
each  merchandise  sold  and  not  on  the  aggregate  sales  price  of  a  sale
transaction.

     We  have  maintained  a  solid   relationship  with  HAIS  even  after  our
divestiture of the non-Internet  business in September 1999. As a result, we act
as their  exclusive  online  agent for all their  products.  We provide  all the
maintenance  to the web site through our own  personnel in  Sitestar.net  and we
coordinate  closely  with HAIS  personnel  with  regards to product  and pricing
updates.  We conduct all the  marketing  efforts  needed to promote the site. We
view  Holland-American.com  as an integral part of our e-commerce strategy since
it gives us an online presence in the emerging specialty gourmet foods industry.


       Specialty Foods Industry

       Specialty Food Market Today

     The products we sell are known as "gourmet and specialty  food," defined by
the  industry as a whole as  distinctive  food of high  quality.  This  includes
traditional  gourmet food and  confections.  This category also includes branded
specialty products which are available in specialty restaurants or retail shops.
Our  criteria for  determining  whether to classify a food product as gourmet or
specialty include:

     o    cost of ingredients;

     o    cost of processing;

     o    freshness/perishability;

     o    uniqueness;

     o    newness/cutting edge;

     o    cost of packaging; and

     o    cost of importation/distribution.


                                       19
<PAGE>

     We work closely with our fulfillment center, Holland American International
Specialties,  our former food distribution  division,  in selecting products for
our Web site  through  a formal  review  process  which  involves  review of the
supplier  background  and the details of their  product  line.  Our  fulfillment
center's product review committee then samples representative products from each
supplier and rates the products by standardized criteria.

       Retail Market

     The retail food market  involves  the sale of food  products to  individual
consumers and  households.  The gourmet and specialty food industry is a sizable
segment of the United  States  retail food  market.  According  to a 1995 market
report  published by Packaged Facts,  retail sales of gourmet and specialty food
are projected to reach approximately $48 billion in 2000.  Currently,  specialty
food is principally sold through the following retail channels:

     o    supermarkets;

     o    gourmet and specialty food stores;

     o    mail order catalogs;

     o    department stores;

     o    32-television shopping channels; and

     o    discount warehouse retailers.

     The  combination of the size of the specialty food market and the growth of
online shopping have created what we believe to be a sizable market opportunity.

       Wholesale Market

     The wholesale  market  consists of specialty  food  retailers,  gift shops,
caterers,   restaurants   and  other   resellers  of  specialty  food  products.
Traditionally,  suppliers  of specialty  food have  distributed  their  products
either by using a food broker to sell to retailers at  wholesale  prices,  or by
selling  their  products  to  specialty  food  distributors  who in turn sell to
retailers.  In  these  arrangements,   food  brokers  generally  receive  a  10%
commission  on the  wholesale  price and  distributors  generally  purchase  the
product  at a 20% to 25%  discount  from the  supplier's  wholesale  price.  The
assortment of specialized food brokers and distributors that currently  supports
the  industry  is  highly  fragmented.  As a result,  many  retail  outlets  for
specialty  food products are  underserved  or have limited  access to these food
brokers and distributors.


                                       20
<PAGE>

       Online opportunity in Specialty Foods

     In both the retail and wholesale markets,  we believe  electronic  commerce
offers  opportunities  to improve the  specialty  food shopping  experience  and
selection.  We believe  traditional  specialty food  businesses face a number of
challenges in providing a satisfying experience:

     o    the specialty food market is highly fragmented with no single dominant
          retailer  or  wholesaler,  and we  estimate  there are at least  5,000
          suppliers throughout the United States;

     o    this fragmentation  leaves both retail and wholesale customers without
          access to a broad base of specialty food products;

     o    distributors  who carry  specialty  food  products  are limited in the
          products they can offer by inventory holding costs, inventory spoilage
          and warehouse size, which restricts the supply and selection available
          for customers;

     o    mail order  catalogs  are not updated as  inventory  level or consumer
          demand changes and are expensive to produce and mail; and

     o    traditional  retail stores have costs  associated  with  occupying and
          operating a physical store and selection is limited by the size of the
          store and inventory considerations.

     We believe  that  sales of gourmet  and  specialty  food over the  Internet
provides a means to address many of these challenges.

       Customers and Marketing

     Specialty foods are value-added, premium-priced items that are specifically
targeting  consumers  who are willing to pay a premium.  The  Company's  primary
target market consists of discriminating  consumers who seek imported  specialty
gourmet  foods.  According to the National  Association  of the  Specialty  Food
Trade, such consumers typically share certain of the following demographics: (1)
Reside on the Pacific Coast or in New England;  (2) Live in an urban  community;
(3) are in the 25-44 age group;  (4) College  educated;  (5) A  professional  or
proprietor/manager; (6) Earn upwards of $50,000 per annum; and (7) Have children
under the age of six.

     We also have a potential to market to multiple  secondary target markets in
the wholesale sector. Such potential  customers include corporate  coffeehouses,
restaurant  chains,  gift shops,  supermarkets,  grocery  stores,  institutional
accounts and other specialty stores.


                                       21
<PAGE>

     The cornerstone in our marketing  strategy is our personnel's  knowledge of
the consumer.  We believe that  tomorrow's  specialty  food consumer will have a
broader age range from teens to elderly and will be more  health  conscious  and
adventurous  when  it  comes  to  specialty  foods  products.  According  to the
International  Dairy-Deli-Bakery  Association's  1996 year-end report,  the next
generation will have a slant toward global  environmentalism,  blurred political
boundaries and cross-cultural values. In terms of the food consumer of tomorrow,
the report found that "clean" or "organic"  food will be in great demand as baby
boomers  and young  people,  with their  concern  for the  environment,  do more
shopping.

     The development of the Holland-American.com  market potential is predicated
upon the establishment of a diversified product portfolio capable of serving the
different  types  of  imported  specialty  gourmet  food  needs  of  its  target
customers.  This would be crucial if we intend to  exploit  the  opportunity  to
influence  "impulse"  purchases.  According to a 1996 A.C. Nielsen  (Schaumburg,
Illinois)  survey,  cookies,  crackers and other specialty  snacks are among the
"high impulse" items.

     We believe that  convenience  is the driving force  spurring the desires of
America's  specialty  gourmet food product  needs. A growing number of consumers
are  embracing the  convenience  of shopping for  specialty  foods  online.  Our
commitment to carrying a comprehensive  product line,  making shopping a fun and
easy  experience  for the consumer and shipping  orders in a timely  manner will
play a critical role in our objective in achieving critical mass.

       Competition

     We operate in a competitive environment. The industry is dominated by large
regional retail  establishments  such as Whole Foods Market,  Wild Oats,  Trader
Joe's,  Gelson's  and Bristol  Farm that rely  heavily on  aggressive  marketing
campaigns and customer  referrals.  Many of these  traditional  retailers  offer
diverse product lines and competitive pricing. In some instances, these firms do
market their  products over the Internet  such as Whole Foods Market,  Wild Oats
and Bristol Farms.

     We enjoy three  competitive  advantages over these larger,  regional firms:
(1) More diverse  product lines,  enabling the Company to act as a single-source
provider for all the customer's  specialty  foods needs;  (2) the convenience of
online shopping; and (3) Prompt shipment of all customer orders.

       Acquisition Strategy

     We intend to consider  potential  acquisitions  to attempt to increase  our
market share and revenues.  To date, we have not entered into  discussions  with
any specific  acquisition  candidates.  No  assurance  can be given that we will
identify satisfactory acquisition candidates or, if identified,  that we will be
able to consummate an acquisition on terms acceptable to us.


                                       22
<PAGE>

Soccersite.com
--------------

       Product Offerings

     Through our acquisition of SYTE, we now own  Soccersite.com  which has been
an operating  subsidiary since July 1999.  Soccersite.com is a  content-oriented
and e-commerce  Internet site with over 400 pages of information about the sport
of soccer. We provide  traditional news on recent professional soccer games, and
we allow visitors to post amateur league and tournament information and training
camps.  We also  provide a forum for coaches to interact  with players and other
coaches. We also host a special section that caters to young soccer enthusiasts.
In  addition,  we provide a search  capacity  for  visitors to explore  specific
topics. All content information is provided free of charge to the visitor.

     To capitalize on the retail opportunities  associated with our web site, we
created  SoccerMall,  an e-commerce  retailer of soccer-related  merchandise and
apparel.  All orders to  SoccerMall  are  fulfilled  directly  by us through our
relationship  with a local  distributor  in  Annapolis,  Maryland.  Our in-stock
merchandise is carried entirely by our fulfillment  center at no extra charge to
us.  Soccersite.com acts as an online distribution agent for the local Annapolis
distributor.  This fulfillment  arrangement with this local distributor  negates
any necessity for us to carry inventory. As part of our fulfillment arrangement,
the local  distributor ships all merchandise  purchased from the  Soccersite.com
site  directly  to  customers  eliminating  any need for us to  maintain  costly
operational  overhead.  As a result of this  arrangement,  we don't have to take
title to the merchandise we sell and we don't have to purchase  merchandise from
the local distributor every time we sell products online.  Since  Soccersite.com
is  merely an  online  agent for our  fulfillment  center,  we only  derive  our
revenues from our agreed upon  commissions  earned on each  merchandise sold and
not on the aggregate sales price of a sale transaction. Soccersite.com generated
sales volume of  approximately  $10,000 for the twelve month ending December 31,
1998.

       Soccer Industry

     Widely  regarded as the world's most popular sport,  soccer is growing at a
rapid pace in the United  States.  Largely  attributed to the  expansive  Latino
immigrant fan base,  Southern California has become the epicenter for the soccer
community in North America.  According to the Los Angeles  Times,  attendance at
international  soccer  games  hosted  in Los  Angeles  is up over  200% from its
introduction  in 1997. In comparison to other  professional  Los Angeles  sports
teams, the L.A. Galaxy (Major League Soccer professional team) consistently drew
larger home game crowds than any other local team except the Los Angeles Dodgers
with the local fan base largely  comprised  of members of the Latino  community.
Strategy  Research Corp., a leading industry  association which tracks trends in
the Latino community, estimates the Southern California Latino consumers yield a
collective buying power of $57 billion.


                                       23
<PAGE>

       Customers and Marketing

     To  date,  we  have  had  no  targeted  marketing  campaign.   Nonetheless,
word-of-mouth  advertising and traffic generated by search engines have resulted
in nearly one million visitors to the web site in the past year.

     In addition to retail sales through  SoccerMall,  we sell advertising space
on the web site to merchants and manufacturers.

     We are currently  developing a marketing  strategy designed to attract more
consumers to the web site, build greater  advertising  opportunities and further
advance  the sport of soccer.  This  strategy  will  likely  include  sponsoring
amateur  and   professional   soccer  events,   advertising  in  major  industry
publications   and   participating   in   cooperative   ventures  with  industry
associations.

       Competition

     There are numerous  soccer-related  organizations  which have a presence on
the Internet.  Most web sites are retail  e-commerce  websites  offering  soccer
merchandise  and apparel.  There are a smaller  number of web sites that look to
combine a  content-oriented  format with the  convenience  of retail,  including
Soccerweek.com and Soccermadness.com.

       Acquisition Strategy

     We believe there are acquisition opportunities among the providers of value
added  information  about the sport of soccer. In furtherance of our acquisition
strategy,  we anticipate  reviewing and conducting  investigations  of potential
acquisitions.  If we believe a favorable  opportunity exists, we anticipate that
we will enter into discussions with the owners of such businesses  regarding the
possibility of an  acquisition by us. As of the date hereof,  we do not have any
agreements or pending  acquisitions  and have entered into any letters of intent
with respect to pending  acquisitions.  No  assurance  can be given that we will
identify satisfactory acquisition candidates or, if identified,  that we will be
able to consummate an acquisition on terms acceptable to us.

Neocom Microspecialists, Inc.
-----------------------------

     Effective  December 15, 1999, we have consummated the acquisition of Neocom
Microspecialists,  Inc.  ("Neocom") in exchange for 4,782,353 shares of Sitestar
common  stock.  As part of the  purchase  consideration  and  based  on  certain
contingencies,  we have  agreed  to  issue an  additional  2,000,000  shares  of
Sitestar common stock to the Neocom  shareholders  on the second  anniversary of
the  acquisition.  Neocom is an Internet  service  provider and Web  development
company based in  Martinsville,  Virginia.  Neocom provided  Internet access and
other  Internet  services  to  approximately  5,100  customers  in the  Southern
Virginia area.


                                       24
<PAGE>

       Product Offerings

     We provide  dial-up and private  Internet  access,  design  customized  web
sites,  host  customer web sites on our  computer  networks,  and offer  related
e-commerce  services to  individual  and business  subscribers  outside of large
metropolitan areas in the mid-Atlantic region,  particularly  southern Virginia.
We offer  subscribers  comprehensive  technical  assistance,  large  modem banks
providing  rapid  access  to  the  Internet,  and  high-speed  connectivity.  In
addition, our home page web sites serve as regional portals,  offering local and
national news and weather, community resources,  advertising, and links to other
local and national content providers.

       Customers and Marketing

     Our customer base consists  primarily of small and medium sized enterprises
and  dial-up  customers  located in  secondary  markets,  specifically  southern
Virginia.

     We use targeted  marketing and media advertising to develop brand awareness
and  supplement  these  efforts  with our highly  customized  sales  process and
personalized  customer  service.  Through  our  marketing  managers,  we seek to
develop strong customer relationships within local communities.

     Our  marketing  managers  will also provide  assistance  and support to our
centralized  sales  staff.  This  enables us to evaluate  customers'  needs more
effectively,  to design customized solutions and to reinforce our local presence
as a value-added provider of enhanced Internet services.  Our marketing managers
also identify  market trends,  provide  constant data  regarding  changes in the
competitive  landscape  and also may  identify  and  initiate  contact  with new
customers.  We also  attend  trade shows and other  events to further  reach the
targeted small and medium sized enterprises in each region.

       Competition

     The  market  for  Internet  accesses  and  related  services  is  extremely
competitive.  We  expect  competition  to  increase  as  Internet  use grows and
established national Internet service providers, telecommunications and computer
related vendors expand their traditional products and services.  The significant
financial  resources  of many of our  competitors  could  lead to  severe  price
cutting in an effort to secure market share,  which could have a negative effect
on our revenues and results of operations.  We cannot assure you of our survival
in this intensely competitive and rapidly evolving Internet services market. Our
competitors in the markets in which we operate include:

     o    national and  regional  commercial  Internet  service  providers  such
          asOneMain.com, BiznessOnline.com, US Online, Earthlink and Mindspring;

     o    established  on-line  commercial  information  providers  such as AOL,
          Prodigy and MSN;


                                       25
<PAGE>

     o    local  Internet  service  providers in Virginia  and the  mid-Atlantic
          states  namely  Virginia,  Maryland,  Pennsylvania,  Delaware and West
          Virginia who provide products and services that are similar to ours to
          small to medium sized businesses;

     o    cable    television    operators    such    as   Time    Warner    and
          Tele-Communications, Inc.;

     o    national long distance  telecommunications  carriers such as AT&T, MCI
          Worldcom, and Sprint;

     o    computer hardware and software companies, such as IBM and Compaq; and

     o    regional telephone operating companies such as Bell Atlantic.

     We also believe that new  competitors  will  continue to enter the Internet
access market, such as large computer hardware and software companies, media and
telecommunications  entities,  and  companies  that  provide  direct  service to
residential   customers,   including  cable   television   operators,   wireless
communication  companies,  local  and  long  distance  telephone  companies  and
electric utility companies.

     Many of our competitors are larger and have greater  financial,  technical,
and operating resources than we do. We cannot assure you of our survival in this
intensely competitive environment.  We will need to distinguish ourselves by our
product and service  knowledge,  our  responsiveness  to our targeted  market of
small to medium  sized  businesses,  our  ability to market and sell  customized
combinations  of products  and services  within our market,  and our capacity to
offer a diverse  Internet  product  line. We also believe that our ability to be
flexible  and to  respond  quickly  in  providing  solutions  to our  customer's
Internet needs will be an advantage over some of our competitors.

       Acquisition Strategy

     Our  strategy is to rapidly  build a base of Internet  subscribers  through
acquisitions and internal growth. We believe there are acquisition opportunities
among the Internet service providers in our geographic target. In furtherance of
our acquisition strategy, we anticipate reviewing and conducting  investigations
of potential  acquisitions.  If we believe a favorable  opportunity  exists,  we
anticipate  that  we  will  enter  into  discussions  with  the  owners  of such
businesses  regarding the  possibility  of an  acquisition by us. As of the date
hereof,  we do not have any  agreements  or  pending  acquisitions  and have not
entered  into any letters of intent  with  respect to pending  acquisitions.  No
assurance can be given that we will identify satisfactory acquisition candidates
or, if  identified,  that we will be able to consummate an  acquisition on terms
acceptable to us.


                                       26
<PAGE>

                Factors That May Affect Future Operating Results

     We  operate in a rapidly  changing  environment  that  involves a number of
risks, some of which are beyond our control.  Forward-looking statements in this
document  and those made from time to time by us are made  pursuant  to the safe
harbor  provisions  of the  Private  Securities  Litigation  Reform Act of 1995.
Forward-looking  statements  concerning the expected future revenues or earnings
or concerning projected plans, performance, product development, product release
or product shipment, as well as other estimates related to future operations are
necessarily  only estimates of future results and there can be no assurance that
actual results will not  materially  differ from  expectations.  We undertake no
obligation to publicly  release the results of any revisions to  forward-looking
statements which may be made to reflect events or circumstances  occurring after
the date such statements were made or to reflect the occurrence of unanticipated
events.

     Factors that could cause actual results to differ  materially  from results
anticipated in forward-looking  statements  include,  but are not limited to the
following:


                    Risks Particular to Sitestar Corporation

          We Have a Limited Operating History Upon Which You May Evaluate Us

     Our new corporate  philosophy was formulated in July 1999. Although we have
grown  significantly  since then, we have a limited operating history upon which
you may evaluate our business and prospects.  We and our wholly owned  operating
companies  are among the many  companies  that have  entered  into the  emerging
e-commerce  market.  All of our  operating  companies are in the early stages of
their development. Our business and prospects must be considered in light of the
risk, expense and difficulties  frequently  encountered by companies in an early
stage of development, particularly companies in new and rapidly evolving markets
such as e-commerce.  If we are unable to effectively  allocate our resources and
help  grow  existing  operating  companies,  our stock  price  may be  adversely
affected  and  we may  be  unable  to  execute  our  strategy  of  developing  a
collaborative network of operating companies.


          Change in Composition of Assets and Expenses

     The  change  in our  corporate  focus  from a food  holding  company  to an
Internet holding company has resulted in a dramatic change in the composition of
our assets and expenses. With the recent acquisitions of Internet companies, the
intangible  assets  purchased  as  a  result  of  these  acquisitions  represent
approximately   77%  of  our  total  assets  and   approximately   115%  of  our
stockholders' equity.  Further,  amortization of these intangible assets will be
the largest single  expense item in our statement of  operations.  This material
concentration  of  intangible  assets  increases  the risk of a large  charge to
earnings  in the event that the  recoverability  of these  intangible  assets is
impaired.


                                       27
<PAGE>

          Our Business Depends Upon the Performance of Our Operating  Companies,
     Which is Uncertain

     Economic,  governmental,  industry and internal company factors outside our
control affect each of our operating  companies.  If our operating  companies do
not succeed,  the value of our assets will decline.  The material risks relating
to our operating companies include:

     o    lack of the  widespread  commercial  use of the  Internet,  which  may
          prevent our operating companies from succeeding; and

     o    Intensifying  competition  for the products and services our operating
          companies  offer,  which  could  lead  to the  failure  of some of our
          operating companies.

     The other material risks relating to our operating companies are more fully
described below under "Risks Particular to Our Operating Companies."

          Our Business Model is Unproven

     Our strategy is based on an unproven business model. Our operating strategy
is to integrate our subsidiaries and future Internet portfolio  investments into
a collaborative network that leverages our collective knowledge and resources.

     We will actively explore synergistic  opportunities such as cross marketing
efforts  within  our  subsidiaries  and  investments  to  further  leverage  our
resources. Our business model depends on our ability to share information within
our network of operating companies.  If competition develops among our operating
companies,  we may be unable to fully  benefit  from the sharing of  information
within our network of operating  companies.  If we cannot convince  companies of
the value of our business  model,  our ability to attract new companies  will be
adversely affected and our strategy of building a collaborative  network may not
succeed.

          We May Have to Take Certain  Actions to Avoid  Registration  Under the
     Investment Company Act of 1940

     We believe  that we are  actively  engaged in the  business  of  e-commerce
through  our  network of  operating  companies.  However,  due to a  significant
possibility   that  many  of  our  future   operating   companies   may  not  be
majority-owned  subsidiaries,  changes  in the  value  of our  interests  in our
operating  companies  and  the  income/loss  and  revenue  attributable  to  our
operating  companies could require us to register as an investment company under
the  Investment  Company Act unless we take  action to avoid  being  required to
register.  For  example,  we may be unable to sell  minority  interests we would
otherwise want to sell and may need to sell some assets which are not considered
to be investment securities,  including interests in operating companies. We may
also have to ensure  that we retain  at least a 25%  ownership  interest  in our
operating  companies after their initial public offerings.  In addition,  we may
have to acquire  additional income or  loss-generating  assets that we might not
otherwise have acquired or may have to forgo  opportunities to acquire interests
in companies  that we would  otherwise want to acquire would be important to our
strategy. It is not feasible for us to register as an investment company because
the Investment  Company Act  regulations are  inconsistent  with our strategy of
actively managing,  operating and promoting  collaboration  among our network of
operating companies.

                                       28
<PAGE>

          Fluctuations in Our Quarterly  Results May Adversely  Affect Our Stock
     Price

      We expect that our quarterly  results will fluctuate  significantly due to
many factors, including:

     o    the operating results of our operating companies;

     o    changes  in equity  losses  or income  and  amortization  of  goodwill
          related to the  acquisition  or  divestiture of interests in operating
          companies;

     o    changes  in our  methods  of  accounting  for  our  operating  company
          interests,  which may result from changes in our ownership percentages
          of our operating companies;

     o    sales of equity  securities  by our operating  companies,  which could
          cause us to  recognize  gains or losses  under  applicable  accounting
          rules;

     o    the pace of  development  or a decline  in  growth  of the  e-commerce
          market;

     o    intense  competition from other potential  acquirors of B2B e-commerce
          companies,  which could  increase our cost of  acquiring  interests in
          additional  companies,  and  competition  for the goods  and  services
          offered by our operating companies; and

     o    our  ability  to  effectively  manage our growth and the growth of our
          operating  companies  during  the  anticipated  rapid  growth  of  the
          e-commerce market.

     We believe that  period-to-period  comparisons of our operating results are
not meaningful.  Additionally,  if our operating results in one or more quarters
do not meet securities  analysts' or your expectations,  the price of our common
stock could decrease.

          Our Success is Dependent on Our Key Personnel and the Key Personnel of
     our Operating Companies

     We believe  that our success  will depend on  continued  employment  by our
operating companies and us of senior management and key technical personnel.  If
one or more members of our senior management or our operating  companies' senior
management were unable or unwilling to continue in their present positions,  our
business and operations  could be disrupted.  Although,  our management team has
had their own  successes in other  industries,  our senior  management  team has
limited experience in the Internet industry.


                                       29
<PAGE>

     As of March 31, 2000,  all of our  management  personnel have worked for us
one year or less. Our efficiency may be limited while these employees and future
employees  are being  integrated  into our  operations.  In addition,  we may be
unable  to find  and  hire  additional  qualified  management  and  professional
personnel to help lead us and our operating companies.

     The success of some of our operating companies also depends on their having
highly trained technical and marketing  personnel.  Our operating companies will
need to  continue to hire  additional  personnel  as their  businesses  grow.  A
shortage in the number of trained technical and marketing  personnel could limit
the  ability of our  operating  companies  to increase  sales of their  existing
products and services and launch new product offerings.

     Our expenses will increase as we build an  infrastructure  to implement our
business  model.  For example,  we expect to hire additional  employees,  expand
information  technology  systems and lease more space for our corporate offices.
In addition, we plan to significantly increase our operating expenses to:

     o    broaden our operating company support capabilities;

     o    explore acquisition  opportunities and alliances with other companies;
          and

     o    facilitate business arrangements among our operating companies.

     Expenses  may  also  increase  due  to the  potential  effect  of  goodwill
amortization and other charges resulting from completed and future acquisitions.
If any of these and other expenses are not accompanied by increased revenue, our
operating losses will be greater than we anticipate.

          Our Operating Companies Are Growing Rapidly and We May Have Difficulty
     Assisting Them in Managing Their Growth

     Our operating companies have grown, and we expect them to continue to grow,
rapidly by adding new  products  and  services  and hiring new  employees.  This
growth is  likely to place  significant  strain  on their  resources  and on the
resources  we allocate  to assist our  operating  companies.  In  addition,  our
management may be unable to convince the future operating  companies  wherein we
have a minority  interest to adopt our ideas for  effectively  and  successfully
managing their growth.

     We may  compete  with some of our future  investors  and  shareholders  and
operating  companies,  and our operating  companies may compete with each other.
Our  current  and  future  operating  companies  and future  Internet  portfolio
investments  may  overlap in their  geographic  coverage.  One of our  operating
subsidiaries or future  portfolio  investments may possibly compete for the same
customers in the same  geographic  region.  In addition,  our current and future
shareholders  may  compete  with us in  terms of their  own  Internet  portfolio
investments  and other  Internet-related  acquisitions.  Some of our  current or
future  shareholders  may engage in their own  investment  activities  which may
directly compete with our own acquisition and investment parameters.


                                       30
<PAGE>

          We Face  Competition  From Other  Potential  Acquirers  of  E-Commerce
     Companies

     We face competition from other capital providers  including publicly traded
Internet companies,  venture capital companies and large  corporations.  Many of
these  competitors have greater  financial  resources and brand name recognition
than we do. These  competitors may limit our opportunity to acquire interests in
new operating companies. If we cannot acquire interests in attractive companies,
our strategy to build a  collaborative  network of operating  companies  may not
succeed.

          Our Success Could Be Impaired By Valuations Placed on Internet-Related
     Companies By the Financial Marketplace

     Our strategy involves creating value for our shareholders and the employees
of our operating  companies by helping our operating  companies  grow and access
the  capital   markets.   We  are   therefore   dependent   on  the  market  for
Internet-related  companies in general and for public offerings of those company
in particular. To date, there have been a substantial number of Internet-related
initial public offerings and additional offerings are expected to be made in the
future.  If  the  market  for  Internet-related  companies  and  initial  public
offerings  were to weaken for an  extended  period of time,  the  ability of our
operating companies to grow and access the capital markets will be impaired, and
we may need to provide additional capital to our operating companies.

          We May Be Unable to Obtain  Maximum  Value For Our  Operating  Company
     Interests

     We  have  significant  positions  in  our  operating  companies.  While  we
generally do not anticipate selling our interests in our operating companies, if
we were to divest  all or part of them,  we may not  receive  maximum  value for
these positions.  For future operating  companies with publicly traded stock, we
may be unable to sell our interest at then-quoted  market  prices.  Furthermore,
for those  operating  companies  that do not have  publicly  traded  stock,  the
realizable  value of our  interests  may  ultimately  prove to be lower than the
carrying value currently reflected in our consolidated financial statements.



                                       31
<PAGE>

Risks Inherent to Our Acquisition Strategy

     We have in the past,  and intend to in the  future,  to expand  through the
acquisition  of  businesses,  technologies,  products and services,  such as the
recent acquisitions of Sitestar  Corporation,  and Greattools.com.  Acquisitions
may  result in the  potentially  dilutive  issuance  of equity  securities,  the
incurrence  of  additional  debt,  development  costs  and the  amortization  of
goodwill and other intangible assets. Further,  acquisitions involve a number of
special problems, including difficulty integrating technologies,  operations and
personnel  and  diversion  of  management  attention  in  connection  with  both
negotiating  the  acquisitions  and  integrating  the  assets.  There  can be no
assurance that we will be successful in addressing  such problems.  In addition,
growth associated with numerous  acquisitions  places  significant strain on our
managerial and operational  resources.  Our future operating results will depend
to a  significant  degree on its  ability  to  successfully  manage  growth  and
integrate  acquisitions.  Furthermore,  many  of  our  operating  companies  are
early-stage  companies,  with  limited  operating  histories  and  limited or no
revenues;  there can be no assurance  that we will be  successful  in developing
such companies.

          Uncertainties Associated With Selling Assets

     A significant  element of our business plan involves selling,  in public or
private offerings,  portions of the companies it has acquired and developed. The
Company's  ability  to  engage  in any such  transactions,  the  timing  of such
transactions and the amount of proceeds from such  transactions are dependent on
market and other conditions largely beyond our control.  Accordingly,  there can
be no  assurance  that we will be able to  engage  in such  transactions  in the
future or that when we are able to engage in such  transactions  they will be at
favorable  prices.  If we were unable to  liquidate  portions  of its  portfolio
companies at favorable prices, our business,  financial condition and results of
operations would be adversely affected.


          Uncertainties of the Recoverability of Intangible Assets

     As a result of our change in corporate focus from a food holding company to
an Internet  holding  company,  the  composition of our assets and expenses have
dramatically  changed.  With the recent acquisitions of Internet companies,  the
intangible  assets  purchased  as  a  result  of  these  acquisitions  represent
approximately   77%  of  our  total  assets  and   approximately   115%  of  our
stockholders'  equity.  Further  amortization of these intangible assets will be
the largest single expense item in our statement of operations. If we are unable
to recover the costs of these intangible assets,  our financial  performance may
be negatively  impacted in the coming periods  through a write down or write off
of these intangible assets.


                                       32
<PAGE>

          We May Not Have  Opportunities  to  Acquire  Interests  in  Additional
     Companies

     We may be unable to identify  companies that  complement our strategy,  and
even if we identify a company that complements our strategy, we may be unable to
acquire an interest in the company for many reasons, including:

     o    failure to agree on the terms of the  acquisition,  such as the amount
          or price of our acquired interest;

     o    incompatibility between us and management of the company;

     o    competition from other acquirers of e-commerce companies;

     o    a lack of capital to acquire an interest in the company; and

     o    the unwillingness of the company to operating with us.

     If we cannot  acquire  interests in attractive  companies,  our strategy to
build a collaborative network of operating companies may not succeed.

          Our  Resources  and Our  Ability to Manage  Newly  Acquired  Operating
     Companies  May Be  Strained  As We  Acquire  More and Larger  Interests  in
     E-Commerce Companies

     We have acquired, and plan to continue to acquire, significant interests in
both  Business to Consumer and Business to Business  e-commerce  companies  that
complement  our  business  strategy.  In  the  future,  we  may  acquire  larger
percentages or larger interests in companies than we have in the past, or we may
seek to acquire  100%  ownership  of  companies  as we have done in our  initial
stages of development. These larger acquisitions may place significantly greater
strain on our  resources,  ability  to manage  such  companies  and  ability  to
integrate them into our collaborative  network.  Future acquisitions are subject
to the following risks:

     o    Our  acquisitions may cause a disruption in our ongoing support of our
          operating  companies,  distract our management and other resources and
          make it difficult to maintain our standards, controls and procedures.

     o    We may acquire  interests in companies in e-commerce  markets in which
          we have little experience.

     o    We may not be able to facilitate  collaboration  between our operating
          companies and new companies that we acquire.

     o    To fund future  acquisitions we may be required to incur debt or issue
          equity securities, which may be dilutive to existing shareholders.

                                       33
<PAGE>


Risks Particular to Our Operating Companies

     Sitestar and our operating companies' result of operations, and accordingly
the price of its  common  stock,  may be  adversely  affected  by the  following
factors:

     o    lack of acceptance of the Internet as an advertising medium;

     o    inability  to  develop  a large  base of  users of its Web  sites  who
          possess demographic characteristics attractive to advertisers;

     o    lower advertising rates;

     o    slow development of the e-commerce market;

     o    lack of acceptance of its Internet content;

     o    loss of key content providers;

     o    intense competition;

     o    loss of key personnel; and

     o    inability to manage growth.

          The Success of Our Operating  Companies  Depends on the Development of
     the E-Commerce Market, Which is Uncertain

     All of our  operating  companies  rely on the  Internet  for the success of
their  businesses.  The  development  of the  e-commerce  market is in its early
stages. If widespread commercial use of the Internet does not develop, or if the
Internet  does not develop as an effective  medium for the provision of products
and services, our operating companies may not succeed.

     Our  long-term   success   depends  on  widespread   market-acceptance   of
e-commerce.  A number of factors  could prevent such  acceptance,  including the
following:

     o    the unwillingness of businesses to shift from traditional processes to
          e-commerce processes;

     o    the necessary network  infrastructure  for substantial growth in usage
          of e-commerce may not be adequately developed;

     o    increased  government  regulation or taxation may adversely affect the
          viability of e-commerce;

     o    insufficient availability of telecommunication  services or changes in
          telecommunication  services could result in slower  response times for
          the users of e-commerce; and

     o    concern  and  adverse  publicity  about  the  security  of  e-commerce
          transactions.

                                       34
<PAGE>

          Our Operating Companies May Fail If Their Competitors Provide Superior
     Internet-Related  Offerings or Continue to Have Greater  Resources Than Our
     Operating Companies Have

     Competition  for Internet  products and services is intense.  As the market
for e-commerce  grows, we expect that  competition  will intensify.  Barriers to
entry  are  minimal,  and  competitors  can offer  products  and  services  at a
relatively  low  cost.  Our  operating  companies  compete  for  a  share  of  a
customer's:

     o    purchasing  budget for  services,  materials  and supplies  with other
          online providers and traditional distribution channels;

     o    dollars spent on consulting services with many established information
          systems and management consulting firms; and

     o    advertising  budget  with online  services  and  traditional  off-line
          media, such as print and trade associations.

     In addition,  some of our operating companies compete to attract and retain
a critical  mass of buyers and  sellers.  Several  companies  offer  competitive
solutions  that compete with one or more of our operating  companies.  We expect
that  additional  companies will offer  competing  solutions on a stand-alone or
combined basis in the future. Furthermore,  our operating companies' competitors
may develop Internet  products or services that are superior to, or have greater
market acceptance than, the solutions offered by our operating companies. If our
operating   companies   are  unable  to  compete   successfully   against  their
competitors, our operating companies may fail.

     Many of our operating companies' competitors have greater brand recognition
and  greater  financial,  marketing  and  other  resources  than  our  operating
companies.  This  may  place  our  operating  companies  at  a  disadvantage  in
responding to their competitors'  pricing  strategies,  technological  advances,
advertising campaigns, strategic partnerships and other initiatives.

          Dependence on Vendor Relationships

     Our operating  subsidiaries are currently,  and expect to be in the future,
dependent  on a number  of vendor  relationships.  These  relationships  include
arrangements  relating  to the  creation of traffic on  Sitestar-affiliated  Web
sites and resulting generation of advertising and commerce-related  revenue. The
termination of, or the failure of such Sitestar-affiliated Web sites to renew on
reasonable  terms,  such  relationships  could  have an  adverse  effect  on our
business, results of operations and financial condition. Our operating companies
also are generally  dependent on other vendor  relationships  with  advertisers,
sponsors and partners.  Most of these arrangements do not require future minimum
commitments  to use  our  services,  are  often  not  exclusive  and  are  often
short-term or may be terminated at the convenience of the other party. There can


                                       35
<PAGE>

be no assurance  that these  vendors will not reassess  their  commitment to our
operating  companies  at any time in the  future,  or that they will not develop
their own competitive services or products.  Further,  there can be no assurance
that  the  services  of  these  companies  will  achieve  market  acceptance  or
commercial  success and  therefore  there can be no assurance  that our existing
relationships  will result in sustained or successful  business  partnerships or
significant revenues for us.

          Some  of Our  Operating  Companies  May Be  Unable  to  Protect  Their
     Proprietary Rights and May Infringe on the Proprietary Rights of Others

     Proprietary rights,  particularly in the form of copyrights,  are important
to the success and  competitive  position  of many of our  operating  companies.
Although our operating companies seek to protect their proprietary rights, their
actions  may be  inadequate  to protect  any  trademarks,  copyrights  and other
proprietary rights. In addition,  effective  copyright and trademark  protection
may be unenforceable or limited in certain  countries,  and the global nature of
the Internet makes it impossible for some of our operating  companies to control
the dissemination of their work and use of their services. Some of our operating
companies  also license  content from third parties and it is possible that they
could become  subject to  infringement  actions based upon the content  licensed
from  those  third   parties.   Our   operating   companies   generally   obtain
representations  as to the  origin  and  ownership  of  such  licensed  content;
however,  this may not  adequately  protect them.  Any of these claims,  with or
without merit,  could subject our operating  companies to costly  litigation and
the diversion of their  technical  and  management  personnel.  If our operating
companies  incur  costly  litigation  and their  personnel  are not  effectively
deployed  the  expenses  and losses  incurred by our  operating  companies  will
increase and their profits, if any, will decrease.

          Sources of Supply For Greattools.com

     Since 1999, Greattools.com has been operating pursuant to an oral agreement
with Global Sourcing Group ("GSG"),  a power tool wholesaler located in Thousand
Oaks, California, which supplies 100% of the products sold by the Company in its
Web site. While the Company  anticipates  that it will continue  operating under
the oral  agreement,  it intends to enter into a written  exclusive  fulfillment
agreement  with GSG as soon as it's  practicable.  The Company  intends to enter
into this  fulfillment  arrangement to assure it could continue to source all of
its products.

     Gateway  Holdings,  Inc.  The private  equity fund  managed by our Chairman
Frederick  T.  Manlunas  beneficially  owns  and  controls  14.6%  of the  total
outstanding  shares of Global  Sourcing  Group.  The  Company  is reliant on Mr.
Manlunas' relationship with GSG for its Greattools.com's fulfillment needs.


                                       36
<PAGE>

          Source of Supply For Holland-American.com

     Since September 1999,  Holland-American.com  has been operating pursuant to
an oral agreement with Holland American  International  Specialties  ("HAIS"), a
specialty foods wholesaler and retailer located in Bellflower, California, which
supplies  100% of the  products  sold by the Company in its Web site.  While the
Company anticipates that it will continue operating under the oral agreement, it
intends to enter into a written  exclusive  fulfillment  agreement  with HAIS as
soon as it's practicable.  We intend to enter into this fulfillment  arrangement
to assure it could continue to source all of its products.

     IFCO Group, LLC ("IFCO"),  whose members consist of certain shareholders of
the Company,  including  Frederick T.  Manlunas  owns HAIS.  Our Chairman of the
Board,  Mr.  Manlunas,  beneficially  owns  and  controls  32.75%  of the  total
outstanding  membership interest of IFCO Group, LLC. However, the Company is not
reliant on Mr. Manlunas'  relationship with HAIS for its  Holland-American.com's
fulfillment needs.

          Our Operating  Companies  That Publish or Distribute  Content Over the
     Internet May Be Subject to Legal Liability

     Some of our operating  companies may be subject to legal claims relating to
the content on their Web sites,  or the  downloading  and  distribution  of this
content.  Claims could involve  matters such as defamation,  invasion of privacy
and  copyright  infringement.  Providers of Internet  products and services have
been sued in the past, sometimes successfully, based on the content of material.
In addition,  some of the content  provided by our operating  companies on their
Web sites is drawn from data compiled by other parties,  including  governmental
and commercial sources, and our operating companies re-enter the data. This data
may  have  errors.  If any of our  operating  companies'  Web  site  content  is
improperly  used  or  if  any  of  our  operating   companies  supply  incorrect
information,  it could  result in  unexpected  liability.  Any of our  operating
companies that incur this type of unexpected liability may not have insurance to
cover the claim or its insurance  may not provide  sufficient  coverage.  If our
operating  companies incur  substantial  cost because of this type of unexpected
liability,  the expenses  incurred by our operating  companies will increase and
their profits, if any, will decrease.

          Our Operating Companies' Computer and Communications Systems May Fail,
     Which May Discourage Content Providers From Using Our Operating  Companies'
     Systems

     All of our  operating  companies'  businesses  depend on the  efficient and
uninterrupted  operation of their computer and communications  hardware systems.
Any system  interruptions  that cause our operating  companies'  Web sites to be
unavailable  to Web  browsers  may reduce the  attractiveness  of our  operating
companies'  Web sites to third party content  providers.  If third party content
providers are unwilling to use our operating companies' Web sites, our business,
financial   condition  and  operating  results  could  be  adversely   affected.
Interruptions  could  result  from  natural  disasters  as well as  power  loss,
telecommunications failure and similar events.


                                       37
<PAGE>

          Our Operating  Companies' Business May Be Disrupted If They Are Unable
     To Upgrade Their Systems To Meet Increased Demand

     Capacity limits on some of our operating companies' technology, transaction
processing systems and network hardware and software may be difficult to project
and they may not be able to expand and upgrade their  systems to meet  increased
use.

     As traffic on our  operating  companies'  Web sites  continues to increase,
they must expand and upgrade their technology,  transaction  processing  systems
and network  hardware and  software.  Our  operating  companies may be unable to
accurately  project the rate of increase in use of their Web sites. In addition,
our operating  companies may not be able to expand and upgrade their systems and
network hardware and software capabilities to accommodate increased use of their
Web sites. If our operating companies are unable to appropriately  upgrade their
systems and network  hardware and software,  the operations and processes of our
operating companies may be disrupted.

          Our  Operating  Companies  May Not Be Able To  Attract A Loyal Base of
     Users To Their Web Sites

     While content is important to all our operating  companies' Web sites,  our
operating  companies are particularly  dependent on content to attract business.
Our success  depends  upon the ability of these  operating  companies to deliver
compelling  Internet content to their targeted users. If our operating companies
are unable to develop  Internet  content  that  attracts a loyal user base,  the
revenues  and  profitability  of our  operating  companies  could  be  impaired.
Internet users can freely navigate and instantly  switch among a large number of
Web sites. Many of these Web sites offer original  content.  Thus, our operating
companies may have difficulty  distinguishing  the content on their Web sites to
attract a loyal base of users.

          Our Operating  Companies  May Be Unable To Acquire Or Maintain  Easily
     Identifiable Web Site Addresses or Prevent Third Parties From Acquiring Web
     Site Addresses Similar to Theirs

     Some of our operating companies hold various Web site addresses relating to
their brands. These operating companies may not be able to prevent third parties
from  acquiring Web site addresses  that are similar to their  addresses,  which
could  adversely  affect the use by businesses of our operating  companies'  Web
sites. In these  instances,  our operating  companies may not grow as we expect.
The acquisition and maintenance of Web site addresses  generally is regulated by
governmental agencies and their designees.  The regulation of Web site addresses
in the United States and in foreign countries is subject to change. As a result,
our operating companies may not be able to acquire or maintain relevant Web site
addresses  in all  countries  where  they  conduct  business.  Furthermore,  the
relationship  between  regulations  governing such addresses and laws protecting
trademarks is unclear.


                                       38
<PAGE>

          Some of Our Operating  Companies Are Dependent On Barter  Transactions
     That Do Not Generate Cash Revenue.

     Our operating  companies' plans to enter into barter  transactions in which
they  provide   advertising  for  other  Internet   companies  in  exchange  for
advertising  for the operating  company.  In a barter  transaction the operating
company will reflect the sales of the advertising received as an expense and the
value of the  advertising  provided,  in an equal amount,  as revenue.  However,
barter  transactions  also do not generate  cash  revenue,  which may  adversely
affect the cash flows of some of our operating companies. Limited cash flows may
adversely affect an operating  company's  abilities to expand its operations and
satisfy its liabilities.

Risks Relating To The Internet Industry

          Concerns   Regarding   Security  of  Transactions   and   Transmitting
     Confidential  Information  Over the Internet May Have An Adverse  Impact on
     Our Business

     We believe that concern regarding the security of confidential  information
transmitted over the Internet prevents many potential customers from engaging in
online transactions. If our operating companies that depend on such transactions
do not add sufficient  security features to their future product  releases,  our
operating  companies'  products may not gain market  acceptance  or there may be
additional legal exposure to them.

     Despite the  measures  some of our  operating  companies  have  taken,  the
infrastructure  of each  of  them  is  potentially  vulnerable  to  physical  or
electronic  break-ins,  viruses or similar problems. If a person circumvents the
security measures imposed by any one of our operating companies, he or she could
misappropriate  proprietary  information or cause  interruption in operations of
the operating  company.  Security breaches that result in access to confidential
information  could damage the  reputation of any one of our operating  companies
and expose the operating  company affected to a risk of loss or liability.  Some
of our operating  companies may be required to make significant  investments and
efforts  to  protect  against  or remedy  security  breaches.  Additionally,  as
e-commerce  becomes more  widespread,  our operating  companies'  customers will
become more concerned about security.  If our operating  companies are unable to
adequately  address these  concerns,  they may be unable to sell their goods and
services.



                                       39
<PAGE>

          Rapid  Technological  Changes May Prevent Our Operating Companies From
     Remaining   Current  With  Their   Technical   Resources  and   Maintaining
     Competitive Product and Service Offerings

     The markets in which our operating  companies  operate are characterized by
rapid technological  change,  frequent new product and service introductions and
evolving  industry  standards.  Significant  technological  changes could render
their existing Web site technology or other products and services obsolete.  The
e-commerce market's growth and intense competition  exacerbate these conditions.
If  our  operating  companies  are  unable  to  successfully  respond  to  these
developments or do not respond in a cost-effective way, our business,  financial
condition and operating  results will be adversely  affected.  To be successful,
our  operating  companies  must  adapt  to their  rapidly  changing  markets  by
continually  improving  the  responsiveness,  services  and  features  of  their
products and services and by developing  new features to meet the needs of their
customers. Our success will depend, in part, on our operating companies' ability
to  license  leading  technologies  useful in their  businesses,  enhance  their
existing  products and services and develop new  offerings and  technology  that
address the needs of their customers.  Our operating companies will also need to
respond  to  technological   advances  and  emerging  industry  standards  in  a
cost-effective and timely manner.

          Government  Regulations  and Legal  Uncertainties  May Place Financial
     Burdens  On Our  Business  and the  Businesses  and the  Businesses  Of Our
     Operating Companies

     As of  March  31,  2000,  there  were  few  laws  or  regulations  directed
specifically at e-commerce.  However,  because of the Internet's  popularity and
increasing  use,  new  laws  and  regulations  may be  adopted.  These  laws and
regulations  may cover  issues such as the  collection  and use of data from Web
site visitors and related privacy issues, pricing, content,  copyrights,  online
gambling,  distribution and quality of goods and services.  The enactment of any
additional  laws or  regulations  may  impede  the  growth of the  Internet  and
e-commerce,  which could  decrease the revenue of our  operating  companies  and
place  additional  financial  burdens on our business and the  businesses of our
operating companies.

     Laws  and  regulations   directly  applicable  to  e-commerce  or  Internet
communications  are becoming  more  prevalent.  For example,  Congress  recently
enacted laws  regarding  online  copyright  infringement  and the  protection of
information  collected online from children.  Although these laws may not have a
direct adverse effect on our business or those of our operating companies,  they
add to the legal and regulatory burden faced by e-commerce companies.


                                       40
<PAGE>

Risks Relating To Future Offerings

          Shares  Eligible  For  Future  Sale By Our  Current  Shareholders  May
     Decrease the Price of Our Common Stock

     If our shareholders sell substantial amounts of our common stock, including
shares  issued upon the exercise of  outstanding  options,  in the public market
following  future  offerings,  then the market  price of our common  stock could
fall.  Restrictions  under the securities  laws and certain  lock-up  agreements
limit the  number of shares of common  stock  available  for sale in the  public
market.

          Our Common Stock Price Is Likely to Be Highly Volatile

     The market  price for our common  stock is likely to be highly  volatile as
the stock market in general and the market for  Internet-related  stocks and the
stock. The trading prices of many technology and Internet-related company stocks
have reached  historical highs within the last year and have reflected  relative
valuations  substantially  above historical levels.  During the same period, the
stocks of these  companies have also been highly volatile and have recorded lows
well below such  historical  highs.  We cannot  assure you that our common stock
will trade at the same levels of other Internet  stocks or that Internet  stocks
in general will sustain their current market prices.

     The following factors will add to our common stock price's volatility:

     o    actual or anticipated  variations in our quarterly  operating  results
          and those of our operating companies;

     o    new sales  formats  or new  products  or  services  offered by us, our
          operating companies and their competitors;

     o    changes  in  our  financial  estimates  and  those  of  our  operating
          companies by securities analysts;

     o    conditions  or trends in the  Internet  industry  in  general  and the
          e-commerce industry in particular;

     o    announcements  by our  operating  companies and their  competitors  of
          technological innovations;

     o    announcements  by us or our operating  companies or our competitors of
          significant acquisitions, strategic partnerships or joint ventures;

     o    changes in the market valuations of our operating  companies and other
          Internet companies;

     o    our capital commitments;

     o    additions or  departures of our key personnel and key personnel of our
          operating companies; and

     o    sales of our common stock.

     Many of these  factors are beyond our control.  These  factors may decrease
the market price of our common stock, regardless of our operating performance.

                                       41
<PAGE>

Employees
---------

     As of March 31, 2000,  we employed 26 full time  individuals.  We have 7 in
management, 2 in sales and marketing and 17 in administration. Our employees are
not unionized, and we consider our relations with our employees to be favorable.


Item 2. Description of Property

     We lease our principal  executive  offices,  as well as our  administrative
offices,  which are located in a 1,084  square  feet office  facility in Encino,
California  at an annual  rent of  $24,715.20.  This  facility  also  houses our
customer service, administrative and corporate center functions. This lease will
expire in June 2001.

     We also lease 2,100  square feet of office  space in  Annapolis,  Maryland.
This facility houses Sitestar.net's, Greattools.com's and Holland-American.com's
executive offices, customer service, and administrative functions. This lease is
currently on a month-to-month basis with a rental fee of $33,072 per annum.

     In  addition,   we  now  own  a  12,000  square  feet  office  building  in
Martinsville, Virginia, which serves as Neocom's principal executive offices. We
acquired  this  property  along with the  acquisition  of Neocom.  This facility
houses  Neocom's  customer  service,  administrative  and  corporate  functions.
Neocom's principal  noteholders have a senior lien on the property.  The lien on
the property was a result of the working capital credit facility taken by Neocom
against the property. The bank note is payable in monthly principal and interest
installments of $6,400 or $76,800 per annum with the balance due September 2003.

     Our annual rents are subject to  adjustments.  We  anticipate  that we will
require  additional  space for our ISP  operations as we expand,  and we believe
that we will  be  able to  obtain  suitable  space  as  needed  on  commercially
reasonable terms.


Item 3. Legal Proceedings

     The Company is not involved in any material pending legal proceedings.


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

         Not Applicable



                                       42
<PAGE>

                                     PART II


Item 5.  Market for Common Equity and Related Stockholder Matters

     Our  Common  Stock was  traded  over-the-counter  and was quoted on the OTC
Bulletin  Board (symbol  "SYTE") until  December 15, 1999. On December 16, 1999,
our common stock was  temporarily  de-listed  from the NASD OTC  Bulletin  Board
pending  the  effective  date of our Form  10-SB  registration  statement.  From
December 16, 1999,  our Common  Stock has been traded  over-the-counter  and was
currently  quoted  on  the  National  Quotations  Board's  Electronic  Quotation
Service.  On July 14, 1999 we effected a 3-for-1 stock split.  All prices listed
below reflect this split.

     Set forth  below are the high and low  closing  bid  prices  for the Common
Stock of the Company for each quarterly period commencing September 30, 1998:

                                                         High         Low
                                                         -----       ----
                1998
     For the quarter ended December 31, 1998             $1.00       $1.03

               1999
     For the quarter ended March 31, 1999                $1.00       $1.03
     For the quarter ended June 30, 1999                 $1.00       $1.03
     For the quarter ended September 30, 1999            $0.88       $3.75
     For the quarter ended December 31, 1999             $0.45       $2.19


     Such  quotations  reflect  inter-dealer  prices,  without  retail  mark-up,
markdown or commissions and may not necessarily represent actual transactions.

Record Holders
--------------
     The closing bid price for the Common Stock was $1.00 on March 31, 1999.  As
of March 31, 2000 the Company had 116 shareholders of record.

Dividends
---------
     The Company has never  declared  or paid any cash  dividends  on its Common
Stock.  The Company  currently  intends to retain all available funds for use in
its business and therefore does not anticipate  paying any cash dividends in the
foreseeable future. Any future determination relating to dividend policy will be
made in the  discretion of the Board of Directors of the Company and will depend
on a number of factors,  including the future  earnings,  capital  requirements,
financial  condition and future  prospects of the Company and such other factors
as the Board of Directors may deem relevant.


                                       43
<PAGE>

Item 6.  Management's Discussions and Analysis or Plan of Operations

General
-------
     The following  discussion and analysis  should be read in conjunction  with
the Company's  consolidated  financial  statements and related footnotes for the
year ended December 31, 1999 included in this Annual Report on Form 10-KSB.  The
discussion  of results,  causes and trends  should not be construed to imply any
conclusion that such results or trends will necessarily continue in the future.

Overview
--------
     We changed our  corporate  focus from that of a food holding  company to an
Internet  holding company with the  acquisition of Sitestar,  Inc. in July 1999.
Soon after  concluding this  acquisition,  we started  focusing on acquiring and
investing in Internet-based enterprises.  Our mission is to develop our Internet
operating subsidiaries and future investments in other Internet enterprises into
highly  focused and successful  stand-alone  Internet  businesses.  We intend to
achieve a fast-track  development  process by tapping the services,  support and
knowledge of individuals  and  organizations  that have extensive  experience in
developing Internet concepts and technologies.

     In July 1999, we began to implement  our current  strategy of acquiring and
investing in emerging  Internet based  enterprises to create a broad and diverse
set of core Internet businesses which deliver a variety of online solutions.  In
addition to developing and integrating Internet-based technologies,  our primary
objective   is  to   create  a  mix  of   Internet   operating   companies   and
Internet-related  portfolio  investments that will enhance the value of its core
holdings.

     Our Internet services  subsidiary began providing  Internet services to its
customers  in 1996 by  providing  Internet  access  and  enhanced  products  and
services to small and medium sized  enterprises in selected high growth markets.
We target  primarily  small and medium  sized  enterprise  customers  located in
selected high growth secondary markets.  We currently provide our customers with
Internet access and enhanced  products and services in the mid-Atlantic  area of
the United States. We have designed our comprehensive suite of enhanced products
and services to meet the  expanding  needs of our  customers and to increase our
revenue per customer. The products and services we provide include:

     o    Internet access services;
     o    Web design services;
     o    Web hosting services;
     o    End to end e-commerce solutions;
     o    Online marketing consulting; and
     o    Management of mission critical Internet applications.


                                       44
<PAGE>

RESULTS OF OPERATION

     On September  30, 1999,  the Company sold all of the assets  related to the
Company's  international  food  distribution  business,  also  known as  Holland
American International  Specialties ("HAIS"). The assets represent approximately
99% of the Company's  assets as of December 31, 1998. The acquirer of the assets
is a partnership with the partners being a group of stockholders of the Company.
Given that the sale was not an  arms-length  transaction,  the  Company  had the
business valued by an independent appraiser to determine the fair value purchase
price. The sales price was $900,000, which is to be paid as follows: 1) $200,000
is to be  offset  against  the  Company's  liability  to the a  stockholder,  2)
$654,000  for the buyer's  assumption  of all trade,  short-term  and  long-term
liabilities,  and 3) the remaining  $46,000 in the form of a note payable to the
Company in three annual installments of $15,333 each plus accrued interest at 8%
per annum. The Company has accounted for this sale by deferring the gain on sale
until such time as the $46,000 note  receivable  is collected and by leaving the
assets and liabilities of HAIS on the Company's balance sheet under the captions
"Assets  of  business   transferred   under  contractual   arrangements   (notes
receivable)"  and  "Liabilities  of  business   transferred   under  contractual
arrangements,"  respectively  since the risk of loss has not been transferred to
the new owners as the  Company is still the debtor for  certain  obligations  of
HAIS. The historical  operations of HAIS have been presented in the statement of
operations under the caption "Loss from operations of business transferred under
contractual  arrangements."  To the extent that the  operations of HAIS report a
net loss in periods  after  September  30,  1999,  the Company  will record such
losses in the statement of operations under the caption "Loss from operations of
business transferred under contractual  arrangements." The Company will continue
to  account  for the  sale of HAIS in this  manner  until  such  time  that  the
liabilities of HAIS have been refinanced an are no longer contingent obligations
of the Company or the Company is properly capitalized by the new owners.

     On December 15, 1999,  we completed  the  acquisition  of another  Internet
Company,  Neocom  Microspecialists,   Inc.  ("Neocom").   With  the  two  recent
acquisitions of Internet companies,  the intangible assets purchased as a result
of these  acquisitions  represent  approximately  77% of our  total  assets  and
approximately 115% of our stockholders' equity.  Further,  amortization of these
intangible  assets will be the largest  single  expense item in our statement of
operations  and  will be  approximately  $1.4  million  in 2000.  This  material
concentration  of  intangible  assets  increases  the risk of a large  charge to
earnings  in the event that the  recoverability  of these  intangible  assets is
impaired.  If we are unable to recover the costs of these intangible assets, our
financial performance may be negatively impacted in the coming periods through a
write down or write off of these intangible assets. In addition,  the intangible
assets could increase,  thus increasing the yearly  amortization,  if any of the
2,000,000 contingent shares are issued in connection with the Neocom acquisition
(see Note 4 to our financial statements contained herein).


                                       45
<PAGE>

     Prior to our change in corporate  focus from that of a food holding company
to that of an Internet  holding  company,  we generated all of our revenues from
sales of specialty food products. We have historically derived a majority of our
revenues from small independent specialty food retail customers.  From inception
until July 1999, we generated  revenues  exclusively  from  wholesale and retail
sales of our food  products.  We derived  income from our  wholesale  and retail
sales  from the  excess  of the  wholesale  and  retail  prices we  charged  our
customers  over the  product  costs we paid our  suppliers.  We had a  wholesale
program  in  which  we sold  bulk  quantities  of  specialty  food  products  to
registered retailers at wholesale prices. In this program, we purchased products
from suppliers at a distributor's  discounted  price and derived income from the
difference  between this  discounted  price and the wholesale  price we charged.
Additionally,  our retail customers paid for orders by cash or credit card while
we paid our suppliers on extended terms.  As a result,  we were able to increase
our working capital between the time we received payment for orders and the time
we were required to pay suppliers.

     As a result of our change in corporate focus from a food holding company to
an  Internet  holding  company,  we now have two other  sources of  income.  Our
e-commerce operating subsidiaries now derive our income from commissions. We are
agents  of our  fulfillment  centers  and  merely  generate  our  revenues  from
commissions per transaction,  which represent the gross selling price charged to
our customers less the amount we pay to the  fulfillment  center.  Our customers
pay us directly  and we remit the cost of the goods to our  fulfillment  centers
less our agreed upon commission  amount.  As a result of this  arrangement,  the
extent of our financial  agreement with our fulfillment centers are relegated to
the periodic  transfer and remittance of our product costs. We do not take title
to the goods sold on our e-commerce sites,  which eliminates any inventory risks
on our part. We forward all orders  directly to our fulfillment  centers,  which
eliminates the need to take possession of the goods and merchandise  sold on our
e-commerce  sites.  Our fulfillment  centers ship the purchased good directly to
our  customers on our behalf.  The shipping and handling  costs related to every
transaction  are added to the total cost of the goods  sold which the  customers
have to bear.

     Our Internet service provider  operating  subsidiaries  derive their income
from the excess of the Internet  service prices we charge our customers over the
cost of service we pay our suppliers. Additionally, our retail customers pay for
services by cash or credit card while we pay our suppliers on extended terms. As
a result,  we are able to  increase  our  working  capital  between  the time we
receive payment for services and the time we are required to pay suppliers.

     We are operating under an oral agreement with our  fulfillment  centers and
have no long-term obligations to continue the relationship with them if we deem,
solely  at our own  discretion,  that it is no longer  in our best  interest  to
continue the current  arrangements.  However,  we intend to  formalize  official
written fulfillment agreements with them as soon as practicable.


                                       46
<PAGE>

     Net revenues for our e-commerce  subsidiaries consist of commissions earned
per  transaction  upon  shipment of products and  acceptance  of products by our
customers net of any allowance for future returns.

     We have a limited  operating  history on which to base an evaluation of our
business and  prospects.  You must consider our prospects in light of the risks,
expenses and  difficulties  frequently  encountered  by companies in their early
stage of development, particularly companies in new and rapidly evolving markets
such as online  commerce.  To address  these  risks,  we must obtain  sufficient
operating capital,  maintain and expand our customer base,  continue to increase
our product  offerings,  successfully  implement  our  business,  marketing  and
promotional  strategies,  continue to develop our order  processing  technology,
respond to competitive  developments in the specialty food market,  and attract,
retain and motivate  qualified  personnel.  We cannot assure you that we will be
successful  in  addressing  these risks and our failure  could be harmful to our
business, prospects, financial condition and results of operations.

Food Distribution Operations

     Our food  distribution  operations  represented our specialty gourmet foods
business which we divested effective September 30, 1999. The net revenues of our
food distribution  operations were $2,175,867 in 1998. Specialty food sales were
inherently  seasonal,  with highest  volumes during the fourth  quarter  holiday
season.  Additionally,  the business  had a large  gift-giving  component.  As a
result of these two factors,  approximately  46% of the 1998 sales were realized
in the fourth  quarter.  We had taken steps  intended to reduce the magnitude of
this trend such as expanding our product selection,  and emphasizing non-holiday
occasions and personal consumption. However, we expected fourth quarter sales to
continue to represent a disproportionate amount of annual sales in the future.

Internet Operations

     Our Internet  operations are  represented by our current  Internet  service
provider and  e-commerce  operating  subsidiaries.  Due to our change in primary
corporate  focus,  these will be the industry  segments in which we are going to
focus.  Our costs would  include  expenses  associated  with running an Internet
holding  company.  These expenses are mainly  related to the  maintenance of the
corporate  office,  payroll,  legal,  accounting,  public  relations  and  other
administrative expenses.

     REVENUES.  Net  revenues  for our Internet  service  provider  subsidiaries
consist of service sales to customers.  Revenues are recognized upon delivery of
service.  Net revenues for our  e-commerce  subsidiaries  consist of commissions
earned per  transaction  upon shipment of products and acceptance of products by
our  customers net of any  allowance  for future  returns.  Revenue for the year
ended  December  31, 1999 was  $223,749.  This  included  revenue  generated  by
Sitestar,  Inc.  from July 15, 199 to December 31, 1999 and Neocom from December
15, 1999 to December 31, 1999. As a result of our  acquisition  strategy and our
recent acquisitions of Internet service providers and e-commerce  companies,  we
expect to experience strong revenue growth in the coming years.


                                       47
<PAGE>

     COST OF GOODS SOLD.  Cost of goods sold consists  primarily of the costs of
products  and  services  sold to  customers  and actual  outbound  shipping  and
handling  costs.  Cost of goods sold for the year ended  December  31,  1999 was
$124,859. As a result of our acquisition strategy and our recent acquisitions of
Internet  service  providers  and  e-commerce  companies,  we  expect  to have a
substantial increase in our cost of goods sold as our revenues increase.

     SELLING,  GENERAL AND ADMINISTRATIVE.  Sales and marketing expenses consist
primarily of advertising  and promotional  expenditures  and payroll and related
expenses  for  personnel  engaged in sales and  marketing  activities.  Selling,
general and administrative  expenses were $3,217,247 for the year ended December
31, 1999.  This  represents an increase of $2,846,597 or 7,680% from the general
and  administrative  expense incurred for the year ended December 31, 1998. This
increase is primarily attributable to the increase in general and administrative
personnel  and an  increase  in  corporate  expenses as a result of our shift in
corporate  focus.  During the year ended  December 31, 1999, we took a charge to
earnings  for  $2,000,000  for common  stock  given to our  President  and Chief
Executive  Officer.  We also took a charge to earnings  for  $549,242 for common
stock given to consultants for services  rendered.  Excluding these two one-time
charges to earnings, we expect our selling,  general and administrative  expense
to increase in 2000 as a result of the recent acquisition.


LIQUIDITY AND CAPITAL RESOURCES

     Our  business  plan has  required,  and is expected to continue to require,
substantial capital to fund operations,  capital expenditures,  and expansion of
sales and marketing capabilities and acquisitions.

     To date,  we have  financed  our  operation  primarily  through  short-term
borrowings and internally generated cash flow form our operations.

     We  believe  that the net  cash  position  on a pro  forma  basis  with the
acquisition  of Sitestar,  Inc. and Neocom,  together with our existing cash and
cash  equivalents,  will be sufficient  to meet our working  capital and capital
expenditure requirements for at least the next 6 months.  Thereafter,  we may be
required to seek  additional  sources of  financing.  We may also be required to
raise  additional  financing  before such time.  If additional  funds are raised
through  the  issuance  of equity  securities,  our  existing  shareholders  may
experience  significant dilution.  Furthermore,  additional financing may not be
available  when  needed or, if  available,  such  financing  may not be on terms
favorable  to  our  shareholders  or  us.  If  such  sources  of  financing  are
insufficient  or  unavailable,  or if we experience  shortfalls  in  anticipated
revenue or increases in anticipated  expenses,  we may need to slow down or stop
the  expansion of our  e-commerce  business,  including  our ISPs and reduce our
marketing and development  efforts. Any of these events could harm our business,
financial condition or results of operations.


                                       48
<PAGE>

Impact of Year 2000

The Company  instituted a comprehensive  program to address  potential Year 2000
impacts and as a result,  critical systems and infrastructure  operated smoothly
through the  arrival of Year 2000 and leap year  boundaries.  Additionally,  the
Company  experienced  no Year  2000  related  disruptions  in the  products  and
services  provided by its significant  suppliers or other  third-party  business
relationships.  Many of the  improvements  made in preparation for the Year 2000
are expected to provide the Company with long-term benefits.

Forward looking statements

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the ability of us to install new kiosks, general market conditions,
and competition and pricing.  Although we believe the assumptions underlying the
forward-looking   statements  contained  herein  are  reasonable,   any  of  the
assumptions could be inaccurate,  and therefore,  there can be no assurance that
the  forward-looking  statements  contained  in  the  report  will  prove  to be
accurate.



                                       49
<PAGE>

Item 7.  Financial Statements


                                      INDEX


                                                                         Page

INDEPENDENT AUDITORS' REPORT                                              51

FINANCIAL STATEMENTS

 Consolidated Balance Sheet as of December 31, 1999                      52-53

 Consolidated Statements of Operations for the Years
    Ended December 31, 1999 and 1998                                      54

 Consolidated Statements of Stockholders' Equity for the Two
    Years Ended December 31, 1999                                         55

 Consolidated Statements of Cash Flows for the Years
    Ended December 31, 1999 and 1998                                     56-57

 Notes to Consolidated Financial Statements                              58-73






                                       50
<PAGE>


                          INDEPENDENT AUDITORS' REPORT




TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
SITESTAR CORPORATION


We  have  audited  the  accompanying  consolidated  balance  sheet  of  Sitestar
Corporation and  subsidiaries  (formerly  Interfoods  Consolidated,  Inc.) as of
December  31,  1999,  and the related  consolidated  statements  of  operations,
stockholders'  equity  and cash  flows for each of the two  years in the  period
ended 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 audits.

We  conducted  our  audits  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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Sitestar Corporation and subsidiaries (formerly Interfoods  Consolidated,  Inc.)
as of December 31, 1999,  and the results of their  consolidated  operations and
their  consolidated  cash  flows for each of the two years in the  period  ended
December 31, 1999, in conformity with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going  concern.  As discussed in note 1, the
Company's  recurring  losses  and  negative  cash flow from  operations  and its
negative working capital raise  substantial  doubt about its ability to continue
as a going  concern.  Management's  plans  concerning  these  matters  are  also
discussed in Note 1. The  consolidated  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.



                          MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
                          Certified Public Accountants



Los Angeles, California
April 8, 2000





                                       51
<PAGE>




                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999


                                     ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                          $   45,328
   Accounts receivable, less allowance for
     doubtful accounts of $127,000                                       134,274
  Other current assets                                                    64,178
                                                                      ----------

     Total current assets                                                243,780

PROPERTY AND EQUIPMENT, net                                              500,451
ASSETS OF BUSINESS TRANSFERRED
   UNDER CONTRACTUAL ARRANGEMENTS
   (NOTE RECEIVABLE)                                                     584,475
CUSTOMER LIST, net of accumulated amortization
   of $36,417                                                          2,585,583
EXCESS OF COST OVER FAIR VALUE OF
   NET ASSETS ACQUIRED, net of accumulated
   amortization of $23,352                                             2,778,955
INVESTMENTS                                                              160,000
OTHER ASSETS                                                              35,489
                                                                      ----------

TOTAL ASSETS                                                          $6,888,733
                                                                      ==========



                                       52
<PAGE>




                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                      CONSOLIDATED BALANCE SHEET, Continued
                                DECEMBER 31, 1999

                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES
   Accounts payable                                                 $   288,527
   Accrued expenses                                                      25,890
   Deferred revenue                                                     158,959
   Due to stockholders                                                  274,759
   Note payable - stockholders, current portio                          238,681
   Notes payable, current portion                                        66,089
   Capital lease obligations, current portion                            51,102
                                                                    -----------

     Total current liabilities                                        1,104,007

LIABILITIES OF BUSINESS TRANSFERRED
 UNDER CONTRACTUAL ARRANGEMENTS                                         925,774
NOTES PAYABLE - STOCKHOLDERS, less current portion                       68,707
NOTES PAYABLE, less current portion                                     474,503
CAPITAL LEASE OBLIGATIONS, less current portion                          63,677
                                                                    -----------

TOTAL LIABILITIES                                                     2,636,668
                                                                    -----------
COMMITMENTS AND CONTINGENCIES (Note 8)

STOCKHOLDERS' EQUITY
   Preferred Stock, $001 par value, 10,000,000 shares
     authorized, 0 shares issued and outstanding                           --
   Common Stock, $.001 par value, 75,000,000
    shares authorized, 24,159,826 shares issued
   and outstanding                                                       24,160
   Additional paid-in capital                                         8,347,174
   Note receivable - stockholder                                        (69,017)
   Accumulated deficit                                               (4,050,252)
                                                                    -----------

     Total stockholders' equity                                       4,252,065

TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                             $ 6,888,733
                                                                    ===========



                                       53
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

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


REVENUE                                          $    223,749      $       --

COST OF REVENUE                                       124,859              --
                                                 ------------      ------------

GROSS PROFIT                                           98,890              --

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES                            3,217,247           370,650

LOSS FROM OPERATIONS OF BUSINESS
 TRANSFERRED UNDER CONTRACTUAL
 OBLIGATIONS                                          239,653           113,844
                                                 ------------      ------------

LOSS FROM OPERATIONS                               (3,358,010)         (484,494)

INTEREST EXPENSE                                       13,679              --
                                                 ------------      ------------

LOSS BEFORE INCOME TAXES                           (3,371,689)         (484,494)

 INCOME TAXES                                            --                --
                                                 ------------      ------------

NET LOSS                                         $ (3,371,689)     $   (484,494)
                                                 ============      ============

BASIC AND DILUTED LOSS PER SHARE                 $      (0.18)     $      (0.03)
                                                 ============      ============

WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC AND DILUTED               18,932,268        17,081,430
                                                 ============      ============


                                       54
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                              Additional     Note
                                                       Common Stock             Paid-in     Receivable    Accumulated
                                                   Shares         Amount        Capital     Stockholder      Deficit       Total
                                                 ----------    -----------   -----------    -----------   -----------   ----------
<S>                                              <C>           <C>           <C>            <C>           <C>           <C>
Balance at December 31, 1997                     16,740,000    $    16,740   $   611,060    $      --     $  (194,069)  $  433,731

Increase in note receivable - stockholder                                                      (71,657)                    (71,657)
Issuance of Shares in Merger with
 White Dove Systems, Inc.                         1,860,036          1,860        (1,860)                                       --
Net loss                                                                                                     (484,494)    (484,494)
                                                 ----------    -----------   -----------    -----------   -----------   ----------

Balance at December 31, 1998                     18,600,036         18,600       609,200        (71,657)     (678,563)    (122,420)

Cash contribution                                                                110,275                                   110,275
Sale of common stock                                 53,362             54        49,946                                    50,000
Common stock issued for services                    564,075            564       548,678                                   549,242
Common stock issued for investment                  160,000            160       159,840                                   160,000
Contribution of Sitestar Inc.'s net asset                                         91,664                                    91,664
Payment on note receivable - stockholder                                                          2,640                      2,640
Shares issued by principal stockholders
    to employee for compensation                                               2,000,000                                 2,000,000
Shares issued in connection with acquisition
    of Neocom Microspecialists, Inc.              4,782,353          4,782     4,777,571                                 4,782,353
Net loss                                                                                                  (3,371,689)   (3,371,689)
                                                 ----------    -----------   -----------    -----------   -----------   ----------

Balance at December 31, 1999                     24,159,826    $    24,160   $ 8,347,174    $   (69,017)  $(4,050,252)  $4,252,065
                                                 ==========    ===========   ===========    ===========   ===========   ==========
</TABLE>


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




                                       55
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                        1999           1998
                                                    -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                          $(3,371,689)   $  (484,494)
   Adjustments to reconcile net loss
   to net cash used in operating activities:
   Allowance for doubtful accounts                          --            6,378
   Depreciation and amortization expense                 118,775          1,678
   Loss from operations of business transferred
     under contractual arrangements                      239,653           --
   Common stock issued for services rendered             549,242           --
   Compensation expense paid by principal
     shareholders                                      2,000,000           --
   (Increase) decrease in:
     Accounts receivable                                  (2,205)       154,234
     Inventories                                            --           87,805
     Other assets                                        (43,350)       (14,394)
   Increase (decrease) in:
     Accounts payable and accrued expenses               150,398       (320,078)
     Deferred revenue                                       (733)
     Advances from stockholder                           194,459        263,000
                                                     -----------    -----------

Net cash used in operating activities                   (165,450)      (305,871)
                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Purchase of property and equipment                     (8,982)       (17,441)
   Cash acquired with acquisition of subsidiaries         27,026           --
   Repayment of advances from business
     transferred under contractual arrangements           90,721
   Investment                                               --         (125,000)
                                                     -----------    -----------

Net cash provided by (used in)
  investing activities                                   108,765       (142,441)
                                                     -----------    -----------



                                       56
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

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

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in book overdraft                               --           29,546
   Advance from stockholder, net                            --           39,960
   Proceeds from line of credit                             --          200,000
   Proceeds from notes payable                              --          169,500
   Repayment of notes payable                            (56,427)       (50,000)
   Repayment of stockholder loan                           2,640           --
   Payment on capital lease obligation                    (4,475)          --
   Proceeds from sale of common stock                     50,000           --
   Capital contribution                                  110,275           --
                                                       ---------      ---------

Net cash provided by financing activities                102,013        389,006
                                                       ---------      ---------

NET (DECREASE) INCREASE  IN CASH
   AND CASH EQUIVALENTS                                   45,328        (59,306)

CASH AND CASH EQUIVALENTS -
   BEGINNING OF PERIOD                                      --           59,306
                                                       ---------      ---------

CASH AND CASH EQUIVALENTS -
   END OF PERIOD                                       $  45,328      $    --
                                                       =========      =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

During the years ended  December  31, 1999 and 1998,  the Company paid no income
taxes and interest of approximately $14,000 and $15,000, respectively.


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS

In 1998, the Company sold its gift basket business,  Wrap-It Up, for $71,657.  A
note receivable was received for the total sales price.

During the year ended December 31, 1999, the Company acquired equipment totaling
$18,000 with capital lease obligations.

During the year ended December 31, 1999, a group of stockholders contributed net
assets of $91,664 from their acquisition of Sitestar Inc. as additional  paid-in
capital.

During the year ended  December 31, 1999,  the Company  issued 564,075 shares of
common stock for services  valued at $548,678.  The Company also issued  160,000
shares of common  stock for a 9%  investment  in Qliq-on  Corporation  valued at
$160,000,  and 4,782,353  shares of common stock for the  acquisition  of Neocom
valued at $4,782,353.

                                       57
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

         Organization and Line of Business
         ---------------------------------
          Sitestar Corporation (formerly Interfoods Consolidated, Inc. and prior
          to  that  was  formerly  known  as  Holland   American   International
          Specialties  ("HAIS")),  (the "Company"),  began operations on June 1,
          1997,  under  a  partnership   agreement,   and  was  incorporated  in
          California on November 4, 1997. On July 26, 1999, the Company restated
          its  Articles  of  Incorporation  to change the name of the Company to
          "Sitestar Corporation." The Company was in the international specialty
          foods distribution business. The Company's customers are specialty and
          ethnic  grocery  stores,  gift shops and hotels  located  primarily in
          California.  In 1999 through the  acquisition of two Internet  Service
          Providers,  the  Company  changed  its focus from a food  distribution
          company  to  an  Internet  holding  company.  The  operations  of  the
          Company's Internet subsidiaries are located in the Mid-Atlantic region
          of the United  States.  The Company's  corporate  office is located in
          Encino, California.

         Mergers
         -------
         The Company is the successor by merger,  which was effective on October
         25, 1998, to White Dove Systems,  Inc., a Nevada corporation  ("WDVE").
         The exchange rate in the  reincorporating  merger was one and one fifth
         shares of WDVE's  common  stock for one share of the  Company's  common
         stock. Due to WDVE's lack of business  activity prior to the merger, no
         excess cost over fair value of net assets acquired was recorded.

         On March 20, 1998,  HAIS completed a stock purchase  agreement with DHS
         Industries,  Inc. ("DHS") whereby DHS issued  31,942,950  shares of its
         common stock in exchange for all of the issued and  outstanding  common
         stock of HAIS.  The  acquisition  was  accounted  for as a  pooling  of
         interest.  However,  on September  30, 1998 the agreement was rescinded
         and the  stockholders  of HAIS  returned  the  shares  of DHS for their
         shares of HAIS.

         Basis of Presentation
         ---------------------
          The accompanying  consolidated financial statements have been prepared
          assuming that the Company will continue as a going  concern.  As shown
          in the accompanying consolidated financial statements, the Company has
          recurring  losses  and  negative  cash  flow from  operations  and its
          negative working captial.  These issues raise  substantial doubt about
          its ability to continue as a going concern.

                                       58
<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 1 -  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, continued

          Basis of Presentation, continued
          ---------------------
          In  view  of  the  matters  described  in  the  preceding   paragraph,
          recoverability  of a major portion of the recorded asset amounts shown
          in the  accompanying  consolidated  balance  sheet is  dependent  upon
          continued  operations of the Company,  which in turn is dependent upon
          the Company's ability to generate positive cash flows from operations.
          The consolidated  financial statements do not include any adjustments,
          relating to the  recoverability  and  classification of recorded asset
          amounts and  classifications  of  liabilities  that might be necessary
          should the Company be unable to  continue  its  existence.  Management
          plans to take the following  steps that it believes will be sufficient
          to provide the Company with the ability to continue in  existence  and
          alleviate the concerns:

          o    Line of Credit
               --------------
          The Company is  currently  in  discussions  for a proposed  $10 to $15
          million "best effort"  underwriting.  The proposed financing structure
          is through an Equity Line,  which the Company would propose to achieve
          through a shelf  registration  using Form SB-2.  Once  effective,  the
          Equity Line would  allow the Company to draw down the capital  through
          the sale of its common  stock.  This funding would be used to pay down
          debt, for acquisition growth and for working capital.

          o    Net losses and cash flow deficiencies
               -------------------------------------
          On December 15, 1999 the Company consummated the acquisition of Neocom
          Microspecialists,   Inc.  ("Neocom").  On  an  annualized  basis,  the
          Company's  management has projected to generate sales of approximately
          $2.0 million and cash flows from  operations  of $444,000 in the first
          twelve months of the Company's  ownership of Neocom.  Management  will
          achieve these targets in the first twelve months through an aggressive
          marketing  campaign to increase  sales and an aggressive  cost cutting
          program, which they will implement on their first month of operations.
          These cost  reductions  will come from the reduction in personnel from
          22 to 12 and  the  reduction  of  their  telecommunications  costs  by
          replacing our current  telecom  provider to another  national  telecom
          provider.  Management has estimated  annual  savings of  approximately
          $195,000  from the  reduction of personnel and achieves as much as 18%
          savings on our  telecommunications  costs,  which would  translate  to
          approximately $107,000 in annual savings.

         Also, the Company intends to acquire other Internet  service  providers
         in the mid-Atlantic region that are cash flow positive,  which would be
         accretive to the Company's  earnings.  They intend to consummate  these
         transactions as  stock-for-stock  exchanges  combined with some form of
         cash  consideration,  after the  completion of the Company's  secondary
         stock offering, to achieve their aggressive growth strategy.

                                       59
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 1 -  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, continued

          Principles of Consolidation
          ---------------------------
          The  accompanying   consolidated   financial  statements  include  the
          accounts  of the  Company  and its wholly  owned  subsidiaries,  HAIS,
          Sitestar,  Inc.  and Neocom  Microspecialists,  Inc.  from the date of
          acquisition.  All  intercompany  accounts and  transactions  have been
          eliminated.

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

          Fair Value of Financial Instruments
          -----------------------------------
          For certain of the Company's  financial  instruments  including  cash,
          accounts receivable, accounts payable and accrued expenses and advance
          from stockholders,  the carrying amounts approximate fair value due to
          their short maturities. The amounts shown for line of credit and notes
          payable also approximate fair value because current interest rates and
          terms  offered to the Company for similar debt are  substantially  the
          same.

          Cash and Cash Equivalents
          -------------------------
          For purposes of the statements of cash flows, the Company defines cash
          equivalents  as all highly liquid debt  instruments  purchased  with a
          maturity of three months or less, plus all certificates of deposit.

          Concentration of Credit Risk
          ----------------------------
          Financial  instruments,  which  potentially  subject  the  Company  to
          concentrations   of  credit   risk,   consist  of  cash  and  accounts
          receivables.  The Company places its cash with high quality  financial
          institutions  and at times  may  exceed  the FDIC  $100,000  insurance
          limit.  The  operations of the  Company's  Internet  subsidiaries  are
          located in the Mid-Atlantic  region of the United States.  The Company
          extends  credit based on an  evaluation  of the  customer's  financial
          condition,  generally  without  collateral.   Exposure  to  losses  on
          receivables  is  principally  dependent on each  customer's  financial
          condition.  The Company  monitors its  exposure for credit  losses and
          maintains allowances for anticipated losses, if required.

                                       60
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, continued


          Property and Equipment
          ----------------------
          Property and  equipment are stated at cost.  Depreciation  is computed
          using the straight-line  method based on estimated useful lives from 3
          to 7 years and 39 years for the building. Expenditures for maintenance
          and repairs are charged to operations as incurred  while  renewals and
          betterments  are  capitalized.  Gains  and  losses  on  disposals  are
          included in the results of operations.

          Impairment of Long-Lived Assets
          -------------------------------
          In accordance  with  Financial  Accounting  Standards  Board  ("FASB")
          Statement  of  Financial   Accounting   Standard   ("SFAS")  No.  121,
          "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets  to be  Disposed  of",  long-lived  assets  are  evaluated  for
          impairment  whenever events or changes in circumstances  indicate that
          the carrying amounts of such assets may not be recoverable. Impairment
          losses  would be  recognized  if the  carrying  amounts  of the assets
          exceed the fair value of the assets.

          Intangible Assets
          -----------------
          The Company  continually  monitors its intangible  assets to determine
          whether any impairment has occurred. In making such determination with
          respect to these assets,  the Company  evaluates the performance on an
          undiscounted  cash flow basis,  of the  intangible  assets or group of
          assets,  which gave rise to assets carrying amount.  Should impairment
          be  identified,  a loss  would  be  reported  to the  extent  that the
          carrying value of the related  intangible asset exceeds the fair value
          of that intangible asset using an undiscounted  cash flow method.  The
          Company's  intangible  assets  which  consist of a  customer  list and
          excess cost over fair value of net assets acquired are being amortized
          over three and five years, respectively.  Amortization expense for the
          customer  list and excess cost over fair value of net assets  acquired
          was $36,417 and $23,352, respectively, for the year ended December 31,
          1999.


                                       61
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


NOTE 1 -  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, continued

          Software Development Costs
          --------------------------
          Software  development costs, which are included in Other Assets in the
          accompanying  consolidated balance sheet are capitalized in accordance
          with  Statement of  Financial  Accounting  Standards  ("SFAS") No. 86,
          "Accounting for the Cost of Computer  Software to Be Sold,  Leased, or
          Otherwise  Marketed."  Capitalization  of software  development  costs
          begins upon the  establishment  of  technological  feasibility  and is
          discontinued when the product is available for sale. The establishment
          of   technological   feasibility   and  the  ongoing   assessment  for
          recoverability  of  capitalized  software  development  costs  require
          considerable  judgment by management with respect to certain  external
          factors,  including,  but not limited to,  technological  feasibility,
          anticipated  future  gross  revenues,  estimated  economic  life,  and
          changes in software and hardware  technologies.  Capitalized  software
          development  costs are  comprised  primarily  of salaries  and payroll
          costs.

          Amortization of capitalized  software development costs is provided on
          a  product-by-product  basis  on the  straight-line  method  over  the
          estimated  economic  life of the products (not to exceed three years).
          Management  periodically  compares  estimated net realizable  value by
          product to the amount of software  development  costs  capitalized for
          that product to ensure the amount  capitalized is not in excess of the
          amount  to  be  recovered  through   revenues.   Any  such  excess  of
          capitalized  software  development  costs over expected net realizable
          value is expensed  at that time.  At December  31,  1999,  capitalized
          software   development   costs  were  $14,310,   net  of   accumulated
          amortization of $938.

          Deferred Revenue
          ----------------
          Deferred revenue represents  collections from customers in advance for
          services not yet performed and are  recognized as revenue in the month
          service is provided.

                                       62
<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 1 -  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, continued

          Revenue Recognition
          -------------------
          The  Company  recognizes  revenue  related to  software  licenses  and
          software  maintenance  in  compliance  with the American  Institute of
          Certified  Public  Accountants  ("AICPA")  Statements  of Position No.
          97-2,  "Software Revenue  Recognition."  Product revenue is recognized
          when the Company  delivers the product to the customer and the Company
          believes  that  collectibility  is probable.  The Company  usually has
          agreements  with its customers to deliver the requested  product for a
          fixed price. Any insignificant  post-contract  support obligations are
          accrued for at the time of the sale.  Post-contract  customer  support
          ("PCS") that is bundled with an initial  licensing  fee and is for one
          year or less is  recognized at the time of the initial  licensing,  if
          collectability of the resulting receivables is probable. The estimated
          cost  to  the  Company  to  provide  such   services  is  minimal  and
          historically, the enhancements offered during the PCS period have been
          minimal.  The  Company  sells  PCS  under a  separate  agreement.  The
          agreements  are for a one to two years with a fixed number of hours of
          service for each month of the  contract.  The  contract  stipulates  a
          fixed monthly payment,  nonrefundable,  due each month and any service
          hours  incurred  above the  contractual  amount  is bill as  incurred.
          Revenue is recognized under these agreements  ratably over the term of
          the  agreement.  Revenue for services  rendered in excess of the fixed
          monthly hours  contained in the contracts are recognized as revenue as
          incurred.

          The Company  sells ISP services  under  annual and monthly  contracts.
          Under the annual contracts,  the subscriber pays a one-time fee, which
          is recognized as revenue ratably over the life of the contract.  Under
          the monthly contracts, the subscriber is billed monthly and revenue is
          recognized ratably over the month.

          Sales of computer hardware are recognized as revenue upon delivery and
          acceptance of the product by the customer.  Sales are adjusted for any
          future returns or allowances.

          Advertising and Marketing Costs
          -------------------------------
          The Company  expenses costs of  advertising  and marketing as they are
          incurred.  Advertising  and  marketing  expense  for the  years  ended
          December  31,  1999  and  1998  was  approximately   $11,000  and  $0,
          respectively..


                                       63
<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 1 -  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, continued

          Income Taxes
          ------------
          The Company accounts for income taxes in accordance with SFAS No. 109,
          "Accounting  for  Income  Taxes".  Deferred  taxes are  provided  on a
          liability  method  whereby  deferred  tax  assets are  recognized  for
          deductible  temporary  differences,  and deferred tax  liabilities are
          recognized for taxable temporary  differences.  Temporary  differences
          are the  differences  between  the  reported  amounts  of  assets  and
          liabilities and their tax bases.  Deferred tax assets are reduced by a
          valuation  allowance  when, in the opinion of  management,  it is more
          likely than not that some  portion or all of the  deferred  tax assets
          will be realized. Deferred tax assets and liabilities are adjusted for
          the effects of changes in tax laws and rates on the date of enactment.

          Loss Per Share
          ------------------
          In accordance with SFAS No. 128,  "Earnings Per Share", the basic loss
          per common share is computed by dividing net loss  available to common
          stockholders   by  the  weighted   average  number  of  common  shares
          outstanding.  Diluted  loss per common  share is  computed  similar to
          basic loss per common share except that the  denominator  is increased
          to include the number of additional common shares that would have been
          outstanding if the potential  common shares had been issued and if the
          additional common shares were dilutive. The Company has no potentially
          dilutive securities.

          Investment
          ---------
          In  December  1999,  the  Company  purchased  a 9% equity  interest in
          Qliq-on  Corporation for 160,000 shares of the Company's  common stock
          valued at $160,000.  This  investment is being accounted for using the
          cost method.

          Comprehensive Income
          --------------------
          SFAS No. 130, "Reporting Comprehensive Income",  establishes standards
          for  the  reporting  and  display  of  comprehensive  income  and  its
          components  in the financial  statements.  As of December 31, 1999 and
          1998,  the Company  has no items that  represent  other  comprehensive
          income and,  therefore,  has not included a schedule of  comprehensive
          income in the consolidated financial statements.

          Recently Issued Accounting Pronouncements
          -----------------------------------------
          In June 1999,  the FASB issued SFAS No. 136,  "Transfer of Assets to a
          Not-for-Profit  Organization or Charitable  Trust that Raises or Holds
          Contributions for Others" and SFAS No. 137, "Accounting for Derivative
          Instruments  and  Hedging   Activities."   These  statements  are  not
          applicable to the Company.

                                       64
<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 2 - PROPERTY AND EQUIPMENT

          The cost of property and  equipment at December 31, 1999  consisted of
          the following:


               Land                                     $    10,000
               Building                                     200,000
               Computer equipment                           321,854
               Furniture and fixtures                        27,603
                                                        -----------
                                                            559,457
               Less accumulated depreciation                (59,006)
                                                        -----------
                                                        $   500,451
                                                        ===========

          Depreciation  expense  was  $59,006  and  $1,678  for the years  ended
          December 31, 1999 and 1998, respectively.


NOTE 3 -  NOTE RECEIVABLE - STOCKHOLDER

          In 1997, the Company  purchased for $2,800 the trade name "Wrap-It Up"
          and operated  the  business  through  April 1998.  In April 1998,  the
          Company sold the business to a stockholder of the Company for $71,657,
          which was equal to the amount of the Company's  investment  (which was
          the cost of inventories  used in the  operations) at the time of sale.
          The sales price was consummated by the stockholder's  issuance, to the
          Company,  of a  promissory  note for the full  sales  price.  The note
          receivable  is due on  demand,  and  secured  by  common  stock of the
          Company, owned by the stockholder.  During 1999, this note was reduced
          to  $69,017.  The note  receivable  is  presented  as a  reduction  to
          stockholders'  equity  in  the  accompanying   consolidated  financial
          statements.


NOTE 4 - ACQUISITIONS

          Sitestar, Inc.
          --------------
          On  July  27,  1999,  a group  of  stockholders  acquired  100% of the
          outstanding common stock of Sitestar, Inc., a Delaware corporation, in
          exchange for 3,491,428  shares of their issued and outstanding  shares
          of  the  Company's  common  stock.  Simultaneously,  they  contributed
          Sitestar  Inc.'s net assets to the Company  with the fair market value
          of the net assets acquired  credited to additional  paid-in capital on
          behalf of the stockholders  who purchased the Sitestar,  Inc. The fair
          market  value of the  acquisition  was  determined  by the net  assets
          acquired.  The Company did not record any  goodwill  since the Company
          was essentially a non-operating  shell holding company at this time as
          a result of the approval to sell HAIS on July 15, 1999.


                                       65
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 4 - ACQUISITIONS, continued

          Sitestar, Inc., continued
          -------------
          The  transaction was accounted for in a manner similar to a pooling of
          interest. The assets acquired and liabilities assumed is summarized as
          follows:

                  Cash                                  $          14,063
                  Equipment, net                                   95,579
                  Other assets                                       8,048
                  Current liabilities                             (13,118)
                  Capital lease obligations                       (12,908)
                                                         ----------------
                  Purchase price                         $          91,664
                                                         =================

          Neocom Microspecialists, Inc.
          -----------------------------
          On December 15, 1999, the Company  completed the acquisition of Neocom
          Microspecialists,  Inc., a Virginia corporation ("Neocom") in exchange
          for  6,782,353  shares of the  Company's  common stock for 100% of the
          outstanding  shares  of  Neocom.  Effective  upon the  closing  of the
          acquisition,  the Company issued 4,782,353 shares of its common stock.
          In addition the Company is required to issue an  additional  2,000,000
          shares  of  its  common  stock  on  the  second   anniversary  of  the
          acquisition   date.  The  shares  are  held  back  for  any  potential
          unrecorded  liabilities.  Of the  4,782,353  shares issued for Neocom,
          900,000  shares  were  issued  in  exchange  for  certain  liabilities
          amounting  to  approximately  $900,000  that the  majority of Neocom's
          selling  shareholders have agreed to assume based on a debt assumption
          agreement.  The Company is  currently in  negotiations  to rescind the
          agreement which would result in the Company being primarily liable for
          approximately  $900,000  of notes  payable  assumed as a result of the
          acquisition and the Company being able to retire 900,000 shares of its
          Common  Stock.  The  initial  purchase  price  was  $4,782,353  and is
          calculated  by  multiplying  the number of shares  issued times $1.00,
          which approximates the market value of the Company's stock at the date
          of acquisition.  The purchase price will be adjusted, when and if, any
          of the 2,000,000 shares are issued.

          The   transaction   was  accounted  for  by  the  purchase  method  of
          accounting;  accordingly, the purchase price has been allocated to the
          assets  acquired and  liabilities  assumed based on the estimated fair
          values at the date of  acquisition.  The excess of the purchase  price
          over the  estimated  fair value of tangible net assets  acquired  will
          first be attributed to the customer list valued at  $2,622,000,  which
          will be amortized over its three-year life, and then to excess of cost
          over fair value of net assets  acquired  which will be amortized  over
          five years.  The customer list has been  determined by multiplying the
          current  market  value  per  customer  times the  number  of  customer
          purchased at the time of the acquisition.


                                       66
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 4 - ACQUISITIONS, continued

          Neocom Microspecialists, Inc., continued

          The  fair  value  of  assets  acquired  and  liabilities   assumed  is
          summarized as follows:


                  Cash                                   $        12,963
                  Other current assets                           146,719
                  Equipment, net                                 360,096
                  Customer list                                2,622,000
                  Excess cost over fair value of
                    net assets acquired                        2,862,307
                  Other assets                                    31,614
                  Current liabilities                           (315,705)
                  Notes payable                                 (854,407)
                  Capital lease obligations                      (83,234)
                                                          --------------
                  Purchase price                         $     4,782,353
                                                         ===============

         The  following   table  presents  the  unaudited  pro  forma  condensed
         statement  of  operations  for the year  ended  December  31,  1999 and
         reflects  the  results  of   operations   of  the  Company  as  if  the
         acquisitions of Sitestar,  Inc. and Neocom  Microspecialists,  Inc. had
         been  effective  January  1,  1999.  The  pro  forma  amounts  are  not
         necessarily  indicative of the combined  results of operations  had the
         acquisition  been  effective  as of that  date,  or of the  anticipated
         results  of   operations,   due  to  cost   reductions   and  operating
         efficiencies that are expected as a result of the acquisition.

          Net sales                                        $     1,946,776
          Gross profit                                     $       814,494
          Selling, general, and administrative expenses    $     5,473,530
          Net loss                                         $    (5,019,376)

          Basic loss per share                             $         (0.21)



                                       67
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 5 -  SALE OF ASSETS

          On July  15,  1999,  the  Company's  board  of  directors  approved  a
          resolution to discontinue the Company's  business of food distribution
          as a result of its  anticipated  acquisition  of its Internet  related
          activities  (the purchase of Sitestar,  Inc. as described  above).  On
          September 30, 1999,  the Company sold all of the assets related to the
          Company's  international  food  distribution  business,  also known as
          Holland  American  International   Specialties  ("HAIS").  The  assets
          represent approximately 99% of the Company's assets as of December 31,
          1998.  The acquirer of the assets is a  partnership  with the partners
          being a group of stockholders of the Company.  Given that the sale was
          not an arms-length transaction, the Company had the business valued by
          an independent  appraiser to determine the fair value purchase  price.
          The  sales  price was  $900,000,  which is to be paid as  follows:  1)
          $200,000  is  to  be  offset  against  the  Company's  liability  to a
          stockholders,  2) $654,000  for the buyer's  assumption  of all trade,
          short-term and long-term liabilities,  and 3) the remaining $46,000 in
          the form of a note payable to the Company in three annual installments
          of $15,333 each plus accrued interest at 8% per annum. The Company has
          accounted  for this sale by  deferring  the $46,000 gain on sale until
          such time as the $46,000 note  receivable  is collected and by leaving
          the assets and  liabilities  of HAIS on the  Company's  balance  sheet
          under the captions "Assets of business  transferred  under contractual
          arrangements   (notes   receivable)"   and  "Liabilities  of  business
          transferred under contractual  arrangements,"  respectively  since the
          risk of loss has not been transferred to the new owners as the Company
          is still the debtor for certain  obligations  of HAIS.  The historical
          operations of HAIS have been  presented in the statement of operations
          under the caption "Loss from operations of business  transferred under
          contractual  arrangements."  To the extent that the operations of HAIS
          report a net loss in periods  after  September  30, 1999,  the Company
          will record  such  losses in the  statement  of  operations  under the
          caption   "Loss  from   operations  of  business   transferred   under
          contractual  arrangements."  The Company will  continue to account for
          the sale of HAIS in this manner until such time that the net assets of
          HAIS  have  been  reduced  to $0 or the net  assets  of HAIS have been
          realized by the Company in cash.

          On January 8, 1999,  the  Company  acquired  for  $200,000 a 9% equity
          interest in Sierra Madre Foods,  Inc.  ("SMF") formerly known as Queen
          International  Foods  ("QIF") a manufacture  and  wholesaler of frozen
          Mexican food products such as frozen  burritos and  chimichangas.  The
          Company acquired its 9% interest from QIF bankruptcy proceedings along
          with the Debtor-in-Possession as its joint venture partners.

                                       68
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 5 - SALE OF ASSETS, continued

          On September 30, 1999,  the Company sold its 9% interest in SMF for an
          amount equal to the Company's investment of $200,000. The purchaser of
          the  assets  is a  partnership  with  the  partners  being a group  of
          stockholders  of  the  Company.   Given  that  the  sale  was  not  an
          arms-length  transaction,  the Company had the  business  valued by an
          independent  appraiser to determine the fair value purchase price. The
          sales price of $200,000 is to be paid as follows:  1) $160,000 for the
          buyer's  assumption  of debt  related  to the  investment,  and 2) the
          remaining  $40,000  in the form of a note  payable  to the  Company in
          three annual  installments of $13,333 each plus accrued interest at 8%
          per annum.

          Since the assets and  liabilities  have been sold to a group of former
          employees  of the Company,  the cash  consideration  was minimal,  the
          Company  is still  liable  for the  outstanding  liabilities,  and the
          acquirers have limited financial  investment in the acquiring company,
          the  Company  has not  successfully  severed  itself  from the risk of
          ownership.  The  divestiture  has been presented with the gross assets
          and liabilities sold denoted on the face of the financial  statements.
          Also,  since the  acquiring  company  is a highly  leveraged  company,
          Company has not recognized the  corresponding  gain on the sale of the
          net assets.

          On January 1, 2000, the party that acquired the assets of HAIS entered
          into an agreement to sell HAIS to the current general manager,  who is
          also an  insignificant  stockholder of the Company.  At such time that
          the  liabilities  of  HAIS  are  refinanced  by the  purchaser  or the
          purchaser  properly  capitalizes  HAIS,  the Company will  discontinue
          accounting for HAIS in its financial statements and recognize the gain
          on sale of assets.

NOTE 6 -  RELATED PARTY ADVANCES/LOANS

          A majority  stockholder  of the  Company  has  advanced  $227,609  for
          operating  funds.  An officer of Sitestar,  Inc.  advanced the Company
          $47,150 for operating funds. The advances are non-interest bearing and
          due on demand.

          Also, a group of significant  stockholders  consummated  the Company's
          merger  with WDVE by  providing  access to the  merger  candidate  and
          consulting  services.  The activities relate to identifying the merger
          candidate,  the  negotiation as to the cost of the acquisition and the
          acquisition  costs.  The  stockholder has charged the Company a fee of
          $200,000,  which has been  recorded  as a  liability  included  in the
          accompanying  consolidated balance sheet under liabilities of business
          transferred under contractual arrangements.

                                       69
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 6 -  RELATED PARTY ADVANCES/LOANS, continued

          As part of the  acquisition of Neocom,  the Company  assumed six notes
          payable to the former  owners,  who are  current  stockholders  of the
          Company,  in the amount of $307,388.  The notes bear interest  ranging
          from 8.13% to 10.0%.  Principle  payments on the notes in 2000,  2001,
          2002,  2003  and 2004  are  $238,681,  $19,764,  $19,764  and  $9,415,
          respectively.

NOTE 7 - NOTES PAYABLE

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

          13.0% - Bank note payable in monthly interest
          and principal payments of $1,784 and
          balance  due  December  2002.  The note
          is  guaranteed  by a stockholder  of the
          Company  and  secured by a deed of trust
          against personal  residencies of three
          stockholders and the Company's building.
          Also, the bank has a blanket lien against all
          other current and future assets of Neocom.              $    135,302

          Prime plus 1.5% - Bank note payable in monthly
          interest and  principal payments of $6,400
          and balance due September  2003. The note is
          secured by a deed of trust against personal
          residencies of three  stockholders and the
          Company's building. Also, the bank has a blanket
          lien against all other current and future assets
          of Neocom.                                                   388,669

          5.1% - Asset  purchase note payable in monthly
          installments  of $2,050 for 10 months
          and $1,700 for 12 months                                      16,621
                                                                  ------------
          Total                                                        540,592
          Less current portion                                          66,089
                                                                  ------------
          Long-term portion                                       $    474,503
                                                                  ============

          The future principal maturities of these notes are as follows:

           Year ending December 31,
                2000                                              $     66,089
                2001                                                    49,124
                2002                                                   177,630
                2003                                                   247,749
                                                                  ------------
                Total                                             $    540,592
                                                                  =============
                                       70
<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 8 -  COMMITMENTS AND CONTINGENCIES

          The Company leases certain  facilities for its corporate offices under
          a  non-cancelable  operating  lease.  Total rent  expense for the year
          ended December 31, 1999 and 1998 was $23,119 and $14,038.

          During the year ended  December  31,  1999,  the Company  entered into
          non-cancelable capital lease agreements for the purchase of equipment.
          The equipment purchased secures the obligations.  Future minimum lease
          payments  under  non-cancelable  capital  and  operating  leases  with
          initial or remaining terms of one year or more are as follows:

                                                    Capital        Operating
                                                    Leases           Leases
                                                  ---------       ----------
          Year ending December 31,
          2000                                    $  69,557       $  25,038
          2001                                       43,920          12,684
          2002                                       30,461               -
          2003                                        3,113               -
                                                  ---------       ---------
          Net Minimum Lease Payments                147,051       $  37,722
                                                                  =========
          Less: Amounts Representing Interest        32,272
                                                  ---------
          Present Value of Net Minimum
            Lease Payments                          114,779
          Less: Current Portion                      51,102
                                                  ---------
          Long-Term Portion                       $  63,677
                                                  =========

          Included in property and equipment is capitalized  lease  equipment of
          $152,122 with accumulated amortization of $1,405 at December 31, 1999.

          Litigation
          ----------
          The Company is involved in certain legal  proceedings  and claims that
          arise in the normal  course of business.  Management  does not believe
          that the outcome of these matters will have a material  adverse effect
          on the Company's financial position or results of operations.

          Neocom Acquistion
          -----------------
          In connection with the Neocom acquisition,  the Company is required to
          issue an additional 2,000,000 shares of its common stock on the second
          anniversary of the  acquisition  date, if no unforeseen  contingencies
          arise.  The purchase  price will be adjusted,  when and if, any of the
          2,000,000 shares are issued.

                                       71
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 9 - STOCKHOLDERS' EQUITY

         Classes of Shares
         -----------------
          On July 6, 1999, the Company's Articles of Incorporation authorize the
          issues of up to 85,000,000 shares,  consisting of 10,000,000 shares of
          Preferred  Stock,  which  have a par  value of  $.001  per  share  and
          75,000,000 shares of common stock, which have a par value of $.001.

         Preferred Stock
         ---------------
          Preferred  Stock,  any  series,  shall have the  powers,  preferences,
          rights,  qualifications,  limitations and restrictions as fixed by the
          Company's  Board of Directors in its sole  discretion.  As of December
          31,  1999,  the  Company's  Board  of  Directors  had not  issued  any
          Preferred Stock.

         Common Stock Splits
         -------------------
          On July 6, 1999,  the Company's  Board of Directors  approved a 3-to-1
          stock split increasing the number of shares outstanding from 6,200,012
          to  18,600,036.  On May 1,  1998,  the  Company's  Board of  Directors
          declared a 100 to 1 common stock split. Also, on October 26, 1998, the
          Company's  Board of Directors  declared a 3 to 1 reverse  common stock
          split.  All  applicable  share and per share data  presented have been
          adjusted for the stock splits.

          Common Stock
          ------------
          During 1998, the Company issued  1,860,036  shares of its common stock
          for the acquisition of White Dove Systems, Inc. (See Note 1).

          In  August  1999,   three   principal   stockholders  of  the  Company
          transferred  1,926,170 shares of their issued and outstanding  Company
          common stock to a Company employee for  compensation.  The Company has
          recorded  the  transaction  as  compensation  expense  and  additional
          paid-in capital at the fair market value of the Company's common stock
          on the date of the transfer which was approximately $2,000,000.

                                       72
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                    (FORMERLY INTERFOODS CONSOLIDATED, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE 9 -  STOCKHOLDERS' EQUITY

          Common Stock, continued
          -----------------------
          On December  15,  1999,  the Company  issued  4,782,353  shares of its
          common stock in connection  with the  acquisition  of Neocom valued at
          $4,782,353, which was the fair market  value of the  Company's  common
          stock at the date of acquisition times the number of shares issued..

          On December 27, 1999,  the Company issued 160,000 shares of its common
          stock for a 9% investment in Qliq-on  Corporation  valued at $160,000,
          which was the fair market value of the  Company's  common stock on the
          transaction date times the number of shares issued..

          During  1999,  the Company  sold 53,362  shares of common  stock to an
          investor for $50,000 and received  $110,275 as a capital  contribution
          from  existing  stockholders.  Also during  1999,  the Company  issued
          564,075  shares of common stock for services  valued at $549,242.  The
          issuance of these  shares were valued at the fair market  value of the
          Company's common stock at the date shares were issued.


NOTE 10 - INCOME TAXES

          The  reconciliation  of the  effective  income tax rate to the federal
          statutory rate as of December 31, 1999 and 1998 is as follows:

                                                     1999           1998
                                               -------------  -----------
            Federal income tax rate                   34.0%         34.0%
            Effect of valuation allowance            (34.0)%       (34.0)%
                                               ------------   -----------
            Effective income tax rate                  0.0%          0.0%
                                               ===========    ==========

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

            Loss carry forwards                         $   1,308,000
            Less valuation allowance                       (1,308,000)
                                                        -------------
                                                        $           -
                                                        =============

          At December 31, 1999,  the Company has provided a valuation  allowance
          for the  deferred  tax  asset  since  management  has not been able to
          determine that the  realization of that asset is more likely than not.
          The net change in the valuation  allowance for the year ended December
          31,  1999  and  1998,  was an  increase  of  $1,145,000  and  $97,000,
          respectively.  Net operating  loss carry forwards  expire  starting in
          2012.


                                       73
<PAGE>


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

     Not Applicable


                                    PART III

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

     The following  table sets forth the name, age and position with the Company
of each officer and director of the Company as of the date of this Report.

     The current directors,  executive officers and key employees of the Company
are as follows:


      Name                   Age              Position
      ----                   ---              --------
 Frederick T. Manlunas       31     Chairman of the Board and Managing Director
 Clinton J. Sallee           27     President and Chief Executive Officer
 Kevorak Zoryan              26     Director


FREDERICK T. MANLUNAS,  has been a Director of the Company since October of 1998
and has served as the  Company's  Chairman  of the Board  since  July 1999.  Mr.
Manlunas  manages  Gateway  Holdings,  Inc., a private  equity fund based in Los
Angeles since 1995.  Prior to founding  Gateway,  Mr.  Manlunas was an Associate
with Arthur Andersen LLP's Retail  Management  Consulting  division from 1991 to
1995.  Mr.  Manlunas  also serves as Director for  MenuDirect,  Inc., a Delaware
corporation,  and Xcel Medical Pharmacy, a California corporation.  Mr. Manlunas
received a Bachelor of Science degree in Journalism  from Florida  International
University  and he earned a  Masters  of  Business  Administration  degree  from
Pepperdine University.

CLINTON J. SALLEE has been a Director  of the Company  since May of 1999 and has
served as the Company's  President and Chief Executive  Officer since July 1999.
In 1996, Mr. Sallee founded Sallee Zoryan, a concept  development firm, where he
served as President since inception. Prior to founding Sallee Zoryan, Mr. Sallee
was an  Associate  with  W.E.  Myers &  Company,  a  boutique  investment  bank,
specializing in industry consolidations. Mr. Sallee earned a Bachelor of Science
degree in Business  Administration  from the Marshall  School of Business at the
University of Southern California in 1994.


                                       74
<PAGE>

KEVORK A.  ZORYAN has been a Director of the  Company  since July of 1999.  From
March 1997 to July 1999, Mr. Zoryan served on the acquisition team of the Morgan
Stanley  Real Estate Fund, a leading  international  private  equity real estate
investment fund. From March 1995 to May 1996, Mr. Zoryan served as an analyst of
the JE Robert Companies, and from June 1993 to February 1995, as a staff analyst
with Ernst & Young. Mr. Zoryan co-founded  Sallee Zoryan, a concept  development
firm in 1996,  and  currently  serves as its Partner.  Mr. Zoryan earned a BS in
Business  Administration  from the Marshall School of Business at the University
of Southern California in 1994. He currently attends the Harvard Business School
as a member of the MBA Class of 2001.

     None of our  directors,  executive  officers or key employees is related to
any other of our directors, executive officers or key employees.

     Pursuant to Section 16 (a) of the Securities  Exchange Act of 1934, and the
rules issued  thereunder,  the Company's  directors  and executive  officers are
required to file with the  Securities  and Exchange  Commission and the National
Association  of  Securities  Dealers,  Inc.  reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company.  Copies of
such reports are  required to be  furnished  to the  Company.  Based solely on a
review of the  copies of such  reports  furnished  to the  Company,  or  written
representations that no other reports were required,  the Company believes that,
during the Company's  fiscal year ended  December 31, 1999, all of its executive
officers and directors complied with the requirements of Section 16 (a).


Item 10.  Executive Compensation

     The following  table sets forth the annual  compensation  paid to executive
officers of the Company for the three fiscal years ended December 31, 1999.

                                                        Other      Long-term
  Name and                                              Annual     Compensation
 Principal Position    Year   Salary ($)   Bonus ($) Compensation     Awards
--------------------   ----   ---------    --------- ------------  ------------
Frederick T.           1999     91,500         -           -            -
Manlunas               1998     96,000         -           -            -
Chairman of the        1997        -           -           -            -
Board

Clinton J.             1999        -           -           -            -
Sallee                 1998        -           -           -            -
President & Chief      1997        -           -           -            -
Executive Officer



                                       75
<PAGE>


Item 11.  Securities Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain  information as of December 31, 1999
regarding  the record and  beneficial  ownership of the Common Stock by: (i) any
individual or group (as that term is defined in the federal  securities laws) of
affiliated  individuals  or  entities  who is  known  by the  Company  to be the
beneficial  owner of more than five  percent  of the  outstanding  shares of our
Common Stock; (ii) each executive officer and Director of the Company; and (iii)
the executive officers and Directors of the Company as a group.

Name and Address of                   Number of Shares             Percent
 Beneficial Owner                    Beneficially Owned (1)       of Class (2)
-----------------                    ----------------------       ------------


Frederick T. Manlunas                    3,039,255                  12.58%
16133 Ventura Blvd., Suite 635
Encino, CA  91436

Clinton J. Sallee                        1,926,170                   7.97%
16133 Ventura Blvd., Suite 635
Encino, CA  91436

Franklin Christopher                     1,483,857                   6.14%
326 First Street, Suite 26
Annapolis, MD  21403

Kevorak Zoryan                                  -0-                    *
16133 Ventura Blvd., Suite 635
Encino, CA  91436

All  directors  and  officers            6,449,282                  26.69%
as a  group  (4 persons)

* Less than 1%

(1)  Except as otherwise  indicated,  the Company  believes that the  beneficial
     owners of Common Stock listed above, based on information furnished by such
     owners,  have sole investment and voting power with respect to such shares,
     subject to community property laws where applicable.

(2)  Percent of class is based on 24,159,826  shares of Common Stock outstanding
     as of December 31, 1999.


                                       76
<PAGE>

Item 12.  Certain Relationships and Related Transactions

     Effective as of September 30, 1999 we sold the non-Internet  assets of HAIS
to IFCO Group,  LLC ("IFCO"),  whose members consist of certain  shareholders of
the Company,  including  Frederick T.  Manlunas,  our Chairman of the Board.  We
retained the assets  consisting  of the Internet web site  Holland-American.com.
HAIS will  continue  to serve as  Holland-American.com's  exclusive  fulfillment
center.  The purchase  consideration  for HAIS was $900,000 and was based upon a
business  appraisal by an independent  third party appraiser.  The consideration
included $200,000 which was to be offset against the Company's  liability to Mr.
Manlunas for services  rendered in  connection to the  acquisition  of Sitestar,
Inc.,  the assumption of $654,000 of  liabilities  and a promissory  note in the
amount of $46,000.  The note bears  interest  at a rate of 8% per annum,  and is
payable in annual  installments of $15,333,  and is due and payable on September
30, 2002. The note is secured by HAIS' accounts receivable and inventory.

     On September  30, 1999,  we sold our 9% equity  interest in SMF to IFCO for
$200,000.  The  consideration  was paid in the form of assumption of $160,000 of
debt related to the  investment  and the balance of $40,000 paid by a promissory
note  payable  in three  annual  installments  of $13,334  each.  The note bears
interest at a rate of 8% per annum. The purchase  consideration was equal to our
original investment in January 1999.

     On July 1999, a majority of IFCO  shareholders,  including our Chairman Mr.
Manlunas,  acquired  all the issued and  outstanding  shares of  Sitestar,  Inc.
("SYTE"), a Delaware corporation, in exchange for 3,491,428 shares of our Common
Stock owned by the majority IFCO shareholders.  Simultaneous with the closing of
this transaction,  the IFCO shareholders contributed SYTE to IFCO as contributed
capital.  SYTE is a Web  development;  design and hosting company formed in 1996
and is based in Annapolis,  Maryland.  This acquisition included  Soccersite.com
which is currently one of our operating subsidiaries.

     In  August  1999,   we  acquired   substantially   all  of  the  assets  of
Greattools.com  in exchange for 49,000 shares of our Common  Stock.  We acquired
the  assets of  Greattools.com  from  Global  Sourcing  Group,  Greattools.com's
current fulfillment center. Gateway Holdings, Inc., a private investment company
our Chairman  Frederick  Manlunas is managing,  has a 14.6% equity  ownership in
Global  Sourcing Group.  Greattools.com  is an online low cost retailer of power
tools.

     In January  1999,  Mr.  Manlunas,  a majority  stockholder  of the Company,
loaned  $80,300  to the  Company  for use as  working  capital  based on an oral
agreement.  The amounts owed to Mr. Manlunas are not accruing interest,  and are
due and payable  upon demand.  To date,  the Company has made no payments to Mr.
Manlunas in satisfaction of this obligation.


                                       77
<PAGE>

Item 13.  Exhibits and Reports on Form 8-K


                                  EXHIBIT INDEX

     The  following  exhibits  are filed as part of this  Annual  Report on Form
10-KSB or are incorporated herein by reference:



Exhibit                    Description                                     Filed

2.1.1     Agreement and Plan of Reorganization, dated October 25, 1998        *
2.2.1     Agreement and Plan of Reorganization, dated July 27, 1999           *
2.3       Asset Sale and Agreement re  divestiture of Holland  American
          Specialties, dated September 30, 1999                               *
2.4       Asset Sale and Agreement re divestiture of Sierra Madre Foods,
          Inc., dated September 30, 1999                                      *
2.5       Letter of Intent to Acquire Eastern Shore Net, dated August 17,
           1999                                                               *
2.6       Letter of Intent to Acquire Neocom  Microspecialists,  Inc.,
          dated September 2, 1999                                             *
2.7       Plan and Agreement of Share Exchange, re acquisition of Neocom
          Micro-specialists, Inc., dated December 15, 1999                    *
2.8       Neocom Debt Assumption Agreement dated December 15, 1999            *
3.1(i)    Articles of Incorporation of the Registrant (December 17, 1992)     *
3.1(ii)   Amended Articles of Incorporation (July 29, 1998)                   *
3.1(iii)  Amended Articles of Incorporation (October 26, 1998)                *
3.1(iv)   Amended Articles of Incorporation (July 14, 1999)                   *
3.1(v)    Amended Articles of Incorporation (July 28, 1999)                   *
3.2(I)    By-laws of the Registrant (December 17, 1992)                       *
21        Subsidiaries of the Registrant                                      *
27        Financial Data Schedule (Amended)                                   F
99        Lease for Corporate Office                                          *


*        Previously filed.
F        Filed herewith
A        Filed by amendment


Reports filed on Form 8-K

         None



                                       78
<PAGE>





                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Action of 1934, as amended,  the registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.


                              SITESTAR CORPORATION
Amendment No. 1
April 14, 2000           By:  /s/ FREDERICK T. MANLUNAS
                              ----------------------------
                              Frederick T. Manlunas
                              CHAIRMAN OF THE BOARD



     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.


         Signature                        Title                      Date
         ---------                        -----                      ----

 /s/ FREDERICK T. MANLUNAS
--------------------------------
   Frederick T. Manlunas              Chairman of the Board       April 11, 2000


 /s/ CLINTON J. SALLEE
--------------------------------
   Clinton J. Sallee                  President and Chief
                                      Executive Officer           April 11, 2000


  /s/ KEVORAK ZORYAN
--------------------------------
   Kevorak Zoryan                     Director                    April 11, 2000




                                       79
<PAGE>


                                  EXHIBIT INDEX

Exhibit                    Description                                     Filed

2.1.1     Agreement and Plan of Reorganization, dated October 25, 1998        *
2.2.1     Agreement and Plan of Reorganization, dated July 27, 1999           *
2.3       Asset Sale and Agreement re  divestiture of Holland  American
          Specialties, dated September 30, 1999                               *
2.4       Asset Sale and Agreement re divestiture of Sierra Madre Foods,
          Inc., dated September 30, 1999                                      *
2.5       Letter of Intent to Acquire Eastern Shore Net, dated August 17,
           1999                                                               *
2.6       Letter of Intent to Acquire Neocom  Microspecialists,  Inc.,
          dated September 2, 1999                                             *
2.7       Plan and Agreement of Share Exchange, re acquisition of Neocom
          Micro-specialists, Inc., dated December 15, 1999                    *
2.8       Neocom Debt Assumption Agreement dated December 15, 1999            *
3.1(i)    Articles of Incorporation of the Registrant (December 17, 1992)     *
3.1(ii)   Amended Articles of Incorporation (July 29, 1998)                   *
3.1(iii)  Amended Articles of Incorporation (October 26, 1998)                *
3.1(iv)   Amended Articles of Incorporation (July 14, 1999)                   *
3.1(v)    Amended Articles of Incorporation (July 28, 1999)                   *
3.2(I)    By-laws of the Registrant (December 17, 1992)                       *
21        Subsidiaries of the Registrant                                      *
27        Financial Data Schedule (Amended)                                   F
99        Lease for Corporate Office                                          *


*        Previously filed.
F        Filed herewith
A        Filed by amendment



                                       80