<PAGE>

                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   FORM 10-KSB

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

         For the fiscal year ended December 31, 1999.

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the transition period from     to

         Commission file number: 000-27821

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                            LAKOTA TECHNOLOGIES, INC.
------------------------------------------------------------------------------

     4828 LOOP CENTRAL  DRIVE, SUITE 150 HOUSTON, TEXAS            77081
         (Address of principal executive offices)                (Zip Code)

         Issuer's telephone number, including area code: (713) 838-8853

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

                                      None.

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

                           COMMON STOCK, NO PAR VALUE
                                (Title of class)

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

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         Issuer's revenues for the fiscal year ended December 31, 1999 were
$257,316.

         As of March 3, 2000, the aggregate market value of the registrant's
common stock (based on the closing sales price for the common stock as reported
on the OTC Bulletin Board on such date) held by non-affiliates of the registrant
was approximately $117,002,678. (Aggregate market value has been estimated
solely for the purpose of this report. For the purpose of this report it has
been assumed that all officers and directors are affiliates of the registrant.
The statements made herein shall not be construed as an admission for the
purposes of determining the affiliate status of any person.) As of March 3,
2000, the registrant had 63,501,339 shares of common stock issued and
outstanding.

         Transitional Small Business Disclosure Format (check one):  Yes   No  X
                                                                        ---  ---
         Documents incorporated by reference:
                           None.


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                   <C>
PART I ............................................................................................... 3
         ITEM 1.  DESCRIPTION OF BUSINESS .............................................................3
         ITEM 2.  DESCRIPTION OF PROPERTY .............................................................9
         ITEM 3.  LEGAL PROCEEDINGS ...................................................................9
         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .................................9

PART II  9 ............................................................................................9
         ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ............................9
         ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION ..........................13
         ITEM 7.  FINANCIAL STATEMENTS ...............................................................15
         ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                  ON ACCOUNTING AND FINANCIAL DISCLOSURE. ............................................15

PART III 15 ..........................................................................................15
         ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS ...................................................15
         ITEM 10.  EXECUTIVE COMPENSATION ............................................................16
         ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                   OWNERS AND MANAGEMENT .............................................................17
         ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ....................................18

SIGNATURES ...........................................................................................21

</TABLE>

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

FORWARD-LOOKING INFORMATION

         In accordance with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company notes that certain
statements in this Form 10-KSB and elsewhere which are forward-looking and which
provide other than historical information, involve risks and uncertainties that
may impact the Company's results of operations. These forward-looking statements
include, among others, statements concerning the Company's general business
strategies, financing decisions, and expectations for funding capital
expenditures and operations in the future. When used herein, the words
"believe," "plan," "continue," "hope," "estimate," "project," "intend,"
"expect," and similar expressions are intended to identify such forward-looking
statements. Although the Company believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, no statements
contained in this Form 10-KSB should be relied upon as predictions of future
events. Such statements are necessarily dependent on assumptions, data or
methods that may be incorrect or imprecise and may be incapable of being
realized. The risks and uncertainties inherent in these forward-looking
statements could cause actual results to differ materially from those expressed
in or implied by these statements.

         Important risk factors that could cause actual results to differ
materially from the expectations reflected in any forward-looking statement
herein include among other things: (1) the ability of the Company to quickly
penetrate the market with its current method of technology against larger,
well-financed competitors within the marketplace; (2) the ability of the Company
to generate revenues is substantially dependent upon continued growth in the use
of the Internet and the infrastructure for providing Internet access and
carrying Internet traffic; (3) the ability of the Company to attract and retain
key officers, knowledgeable sales and marketing personnel and highly trained
technical personnel; (4) to the extent that our activities or third-party
contractors involve the storage and transmission of proprietary information,
such as credit card numbers, or personal data information, the ability of the
Company to reduce exposure to a risk of loss or litigation and possible
liability; (5) the ability of the Company to minimize expenses and exposures
related to oil and gas properties in which other Companies have control over the
manner in which operations are conducted on such properties, including
compliance with safety and environmental standards; (6) the ability of the
Company to obtain additional financing from public and private equity markets to
fund operations and future growth; and (7) the ability of the Company to
generate revenues to cover operating losses and position the Company to achieve
positive cash flow.

         Readers are cautioned not to place undue reliance on the
forward-looking statements contained herein, which speak only as of the date
hereof. The information contained in this Form 10-KSB is believed by the Company
to be accurate as of the date hereof. Changes may occur after that date, and the
Company will not update that information except as required by law in the normal
course of its public disclosure practices.

THE COMPANY OVERVIEW

         The Company, through the operations of it's wholly owned subsidiaries,
has diversified into two very distinct business sectors. The primary business is
involved in the technology sectors of Internet access and voice and data product
sales and services. The secondary business, which the Company has been involved
in since 1995, is oil and gas exploration and operations.

         In May and June 1999, the Company acquired two entities that provided
the entrance into the technology sector. The Company's subsidiary,
2-Infinity.com, Inc., is a provider of digital bundled services to the
commercial and residential market. Current services include digital subscriber
line (DSL), Internet protocol (IP), virtual private networking (VPN) and real
private networking (RPN). Digital cable and RPN are projected for release in the
3rd quarter of 2000. A predecessor business that has been merged into
2-Infinity.com., AirNexus, Inc., is a retail provider of commercial voice and
data products and services with an emphasis on LAN based telephony solutions.

         2-Infinity.com, as a result of this merger, now possesses a direct
sales force to market digital bundled services to commercial building tenants.
2-Infinity and AirNexus merged on January 27, 2000 and formed the "2-I Voice
Solutions" division to continue the business formerly conducted by AirNexus.

                                       3

<PAGE>

         The Company's subsidiary, Lakota Oil and Gas, Inc., has historically
invested in oil and gas exploration projects with joint partners.

HISTORICAL BUSINESS AND EVOLUTION OF THE BUSINESS STRATEGY

         On November 14, 1995, the Company formed Lakota Energy, Inc. ("Lakota
Energy") in the State of Colorado for the purpose of engaging in oil and gas
exploration and operations. On November 6, 1996, Lakota Energy was merged with
and into Chancellor Trading Group, Inc., a Colorado corporation. As part of the
merger agreement, Chancellor issued 9,187,500 shares to the shareholders of
Lakota Energy in exchange for 4,593,750 shares of Lakota Energy common stock and
an additional 118,000 shares were issued to third parties who assisted in
closing the transaction. Chancellor was a publicly traded corporation and had no
significant operations prior to the merger with the Company. Immediately
following the merger, the shareholders of Chancellor approved the name change to
Lakota Energy, Inc.

         Historically, the strategic plan of the Company was to participate in
oil and gas exploration projects that have been developed by other successful,
well-financed companies. The Company narrowed its interest to projects in
certain confined geological areas, primarily in Texas and Louisiana, since they
were able to work with consultants that were familiar with the nuances of these
geological provinces. However, as a result of continued losses from these
ventures, the Company decided to diversify into other markets, primarily
technology and the Internet.

         On August 4, 1999, the Company changed its name to Lakota Technologies,
Inc. to further promote its new diversified strategies.

         On May 28, 1999, the Company acquired all of the outstanding stock of
2-Infinity.com, Inc. ("2-Infinity"), a Texas corporation. As consideration for
the acquisition, the Company issued 3,000,000 shares of its common stock to
Majed Jalali, the sole shareholder of 2-Infinity. The acquisition of 2-Infinity
triggered the beginning of the Company's desire to diversify into the technology
and Internet markets. 2-Infinity offers digital bundled services, focusing on
the Texas market during the next 12 months, and with plans to expand into six
additional markets in the near future.

         On June 8, 1999, the Company acquired Voice Design, Inc., a Texas
corporation which later changed its name to AirNexus, Inc. ("AirNexus"). As
consideration for the acquisition, the Company issued 3,000,000 shares of its
common stock and $60,000 cash to the owners of AirNexus. This acquisition of a
Houston-based provider of business telephone and voice mail systems furthered
the business strategy to diversify into technology and Internet markets. The
Company also resells equipment manufactured by third parties, such as 3Com,
Panasonic and Estech Systems, Inc. through its 2-I Voice Solutions division.
Currently, 2-I Voice Solutions has approximately 130 customers.

         On June 9, 1999, the Company organized a wholly owned Texas corporation
named Lakota Oil and Gas, Inc. ("Lakota Oil"). Subsequently, on June 14, 1999,
the Company transferred its interest in two oil exploration projects, which
constituted all of the Company's oil and gas related assets at the time, to
Lakota Oil. The purpose of forming Lakota Oil was to organize the oil and gas
related business into one operating subsidiary, separate and distinct from the
other operating subsidiaries, in order to more accurately reflect the
diversified operations. The Company is currently reviewing all existing
interests in oil and gas related projects and determining its strategy and
related prospects for the year 2000.

         On January 18, 2000, the Company entered into an agreement with the
majority shareholders of AGM, Inc., a Nevada corporation ("AGM"), pursuant to
which the Company issued 2,200,000 shares of common stock to acquire 100% of
AGM. The Company acquired AGM in order to become a reporting company with the
SEC. As part of the acquisition, the Company elected to have successor issuer
status under Rule 12g-3 of the Securities Exchange Act of 1934, to be a SEC
reporting entity.

         On January 27, 2000, AirNexus and 2-Infinity merged, with 2-Infinity
being the surviving corporation. Although the merger is expected to result in a
reduced amount of overhead expenses, it is not expected to have a material
effect on operations. The voice and data products and services originally sold
by AirNexus now constitute the 2-I Voice Solutions division.

                                       4

<PAGE>

INDUSTRY OVERVIEW.

         The DSL industry is still in its infancy. Industry analysts estimate
that there are less than 1 million DSL subscribers nationwide. Projections
estimate an approximate 180 percent growth rate by the end of year 2000.
Therecent Telecommunications Act of 1996 and the demand for a cost-effective
solution for high-speed dedicated access have spawned a new bread of Competitive
Local Exchange Carriers (CLECs). These new facility-based providers known as
data CLECs are leveraging DSL to obtain market share and increase margins.
Companies such as Covad, Rhythms and Northpoint have deployed DSL networks in
more than 25 major US cities. As a result, traditional local Internet service
providers have forged agreements to resell DSL services in an attempt to
increase margins and curtail the high rate of churn amongst existing dial-up
customers.

         We anticipate the market for new DSL technologies will increase. The
Company believes the amount of data business and residential customers pass
across the Internet will be a major growth factor. Another is the recent surge
in telecommuters who demand broadband access to support desktop voice, data and
video applications. An effect of the 1996 Telecommunications Act has been an
increase of companies ready to deliver services to this market. Incumbent local
exchange carriers (ILECs), interexchange carriers (IXCs), Internet service
providers (ISPs), CLECs, and satellite and cable companies have restructured to
meet the demand. The need for affordable broadband transmission rates, and a
competitive telecom service environment all contribute to making DSL attractive.
DSL will dramatically increase the speed of copper wire-based transmission
systems without a major overhaul to the existing telephone infrastructure. New
DSL services are in the process of development that will require lower capital
requirements and generate a higher return on investment.

         The recent trend of converging voice and data is reshaping the telecom
industry. National and local telephone equipment resellers have seen the demand
for integrated systems continue to grow. Traditional voice solution providers
have been slow to incorporate the newer technology into their product lines.
Data value added resellers (VARs) and network integrators have historically
remained isolated from voice services. With the introduction of Voice over IP
and Computer Telephony, network integrators have been drawn into the demand to
provide integrated applications. Today's voice solution providers are required
to be versed in network topology and telephone application programming interface
(TAPI).

         Tomorrow's business phone systems will integrate with PCs and networks
and provide the highest level of integration between voice and data.
Manufacturers such as 3COM, Cisco, Nortel and AT&T have already unveiled their
versions of integrated solutions. Today's businesses have the ability to route
voice traffic across multiple broadband technologies. The corporate intranet
must be robust enough to support the bandwidth requirements of integrated
business phone systems.

         The demand for LAN based business phone systems will continue to
generate phenomenal growth in the telecom industry. Resellers are now able to
offer organizations with multiple locations a true voice and data intranet for a
minimum monthly expense. As the cost of expensive leased network lines continues
to drop, small businesses are able to take advantage of technology and compete
at higher levels.

THE MARKET

High Speed Internet Access

         2-Infinity has entered into a Channel Partners Agreement with Tut
Systems, Inc., which gives us the non-exclusive right to sell Tut System's
products. Under the terms of that agreement, 2-Infinity has the right to
purchase Tut's products at prices according to regularly published price lists
from Tut Systems and re-sell them to their customers. There are no limits on the
re-sale prices 2-Infinity can charge on the products. The agreement is
automatically renewed for successive one year terms, but can be terminated by
either party on 90 days notice or by Tut Systems if 2-Infinity fails to purchase
a minimum of $1,000,000 in products per year.

         Tut's is in the business of delivering plug-and-play network solutions
across standard telephone lines. Tut's products deliver high-speed data over
normal telephone wires using their FastCopper -TM- technology. Tut's products
are easy to install and use, providing customers with a dedicated connection 24
hours a day, while still allowing full use of the telephone line for voice use.
More importantly, Tut's products require no additional wiring or modifications
to

                                       5

<PAGE>

the telephone lines. Through the Channel Partners Agreement, 2-Infinity can
offer its clients Tut's-enhanced Internet access at what we believe to be a
very reasonable price.

         2-Infinity will market the Tut's products through existing contacts and
personal introductions, and is seeking to enter into agreements with the owners
and managers of multi-dwelling units, such as commercial properties, apartment
complexes, hotels, high rise apartment buildings, and residential developers to
become the Internet service provider for the entire developments.

         2-Infinity offers its digital bundled services in two different
packages. The first option allows the subscriber to rent equipment monthly on
a low cost-per-unit basis. The second option allows the subscriber to
purchase the equipment. In addition to the basic high speed Internet access,
subscribers can purchase services including:

         --       Local dial tone
         --       Voice over IP
         --       Creation of web sites

Voice and Data Products and Services

         2-I Voice Solutions continues to market the 3COM NBX 100 LAN based
business phone system. INTERNET TELEPHONY magazine deemed the NBX 100
communications system one of the "Products of the Year." In November 11, 1999,
PC MAGAZINE awarded the NBX 100 communications system with the "1999 Technical
Excellence Award." Because the NBX 100 uses standard network cabling to support
voice traffic, it affords businesses the ability to consolidate voice, video and
data on one single cable. We believe computers, telephone networks and the
Internet to be integrated in a more functional manner.

         Under the terms of an agreement between 3COM and the Company, the
Company has the non-exclusive rights to license and distribute specific 3COM
products in Houston, Texas and surrounding areas. 3COM may terminate the
agreement under certain circumstances, including after our breach of the
agreement or our failure to purchase a minimum of $200,000 of product per year.

         The target market for 2-I Voice Solutions are businesses between 20-100
employees. This sector of the market typically does not have a systems manager
or network administrator on staff and requires outsourcing of the expertise to
maintain these services. A high percentage of these companies have a network in
place and are receptive to new advancements and technology. We intend to provide
this sector with a convenient and easily acceptable avenue to outsource voice,
data and Internet services by utilizing our product line and by continually
seeking business solutions the customer desires.

         We obtain leads for potential customers in the following ways:

         --       Manufacturers provide leads from their customers;
         --       Internal sales force;
         --       Outside telemarketers are utilized;
         --       Referrals from existing customers;
         --       Marketing lists are purchased;
         --       Yellow Pages advertising; and
         --       Print advertising.

         All leads are given to individual account managers to follow-up with
each customer. Once a customer has agreed to purchase the equipment and
services, 2-I Voice Solutions does the installation and provides all the
follow-up customer support.

         2-I Voice Solutions has designed the following strategy intended to
make the Company a leader in the telephone marketplace:

         --       Market product lines which give clients the latest features at
                  a discount over competing systems.

                                       6

<PAGE>

         --       Focus on LAN based business phone systems
         --       Build an interactive demonstration room that provides
                  potential clients a hands-on approach to the products and
                  services.

Oil and Gas Exploration Projects and Operations

         The Company is currently reviewing all existing interests in oil and
gas related projects and determining its strategy and related prospects for the
year 2000.

         The Company invested in the South Halter Island Prospect, located in
St. Mary and Tennebonne Parishes, Louisiana, in which the Company is under
contract with Panaco, Inc., York Resources, Inc., Janivo Realty, Inc., and
Carson Energy, Inc., which entitles the Company to a 7.5% working interest and a
75% net revenue interest in a specific oil well. The Company's initial
investment into the project was $24,000, plus an additional $163,748, which
represented the Company's share of the operating expenses. On July 27, 1999,
this well was plugged and abandoned. The Company accrued an additional $17,772
at December 31, 1999 for it's portion of the costs to complete the plug and
abandonment of the well.

         The Company invested in the Union Central Life Insurance Co. Well No.
1, located in Colorado County, Texas, in which the Company contracted with
Everest Minerals Corporation and Cummins & Walker Oil Company, Inc. The Company
owns a 20% working interest and a 75% net revenue interest in this oil well. The
Company's initial investment into the project was $57,225, plus an additional
$36,649, which represented the Company's share of the operating expenses.
Development of this well is currently ongoing.

         The Company invested in the VUA: Bernard #1 Well, located in Lafayette
Parish, Louisiana, and owns a 100% working interest and a 73.74% net revenue
interest in this oil well. The Company's initial investment in this project was,
$35,000, plus an additional $55,112, which represented the operating and
work-over expenses. The Company received $8,765 for its portion of the revenue
from production in 1999. Production on the well has ceased and the Company plans
to plug and abandon the well in 2000.

COMPETITION.

         The markets in which we operate are highly competitive and we believe
that competition is increasing. We may not be able to compete in those markets
effectively, especially against established industry leaders competitors with
greater marketplace presence and financial resources. The competitive
environments for our different sectors are as follows:

Internet Access and Voice and Data Product Sector

         Presently, there are no direct competitors in the Houston, Texas market
to our approach to digital bundled services. However, there are many competitors
offering DSL services in the Houston, Texas market and elsewhere. For instance,
two of our competitors outside the Houston, Texas market would include CAIS
Internet, Inc. and LMKI, Inc. Additionally, we compete with many other companies
offering alternative forms of Internet access, such as coaxial cable, wireless
facilities and fiber optic cable. Lastly, we also compete with smaller, regional
Internet service providers and cable companies that operate in the same
geographical areas that we serve. The lack of substantial barriers to entry into
the Internet services market will likely result in additional competition. There
can be no assurance that the public will accept, on a widespread basis, our
products and services over the available alternatives. Likewise, it is not
certain that we will be able to compete in our current marketplace against some
of our competitors who are larger, well-financed, and currently hold stronger
market positions.

Oil and Gas Exploration Sector

         All phases of the oil and gas industry are highly competitive. Our
competitors include major oil and gas companies, as well as numerous other
independent oil and gas concerns and individual producers and operators. Many of
these competitors have financial and other resources that are substantially
greater than those available to us. Oil and gas producers also compete with
other industries that supply energy and fuel.

                                       7
<PAGE>

GOVERNMENT REGULATIONS.

Internet Access and Voice and Data Product Sector

         As an Internet service provider, we are not currently subject to direct
regulation by the Federal Communications Commission ("FCC"). Nevertheless,
Internet-related regulatory policies are continuing to develop and vigorous
public debates regarding the costs and benefits of regulating the Internet have
emerged in federal, state and local legislative, executive and regulatory agency
forums. It is possible that we could be exposed to regulation in the future. For
example, the FCC has stated its intention to consider whether to regulate voice
and fax telephony services provided over the Internet as "telecommunications"
even though Internet access itself would not be regulated; and the FCC recently
initiated a Notice of Inquiry to examine this issue. The FCC is also considering
whether such Internet-based telephone service should be subject to universal
service support obligations, or pay carrier access charges on the same basis as
traditional telecommunications companies.

         A decision by Congress or the FCC to regulate Internet telephony or
Internet access services may limit the growth of the Internet, increase our cost
of doing business or increase our legal exposure, any of which could cause our
revenues to decrease.

         We also face government regulation regarding the content and
communications provided by third parties and carried over, or hosted on, our
facilities. For instance, we are obligated to comply with the requirements of
the Digital Millennium Copyright Act concerning responses to claims of copyright
infringement. We also are required to comply with state and federal privacy
requirements, including the Electronic Communications Privacy Act ("ECPA") and
the Children's Online Privacy Protection Act ("COPPA"). The ECPA imposes
limitations on the interception, disclosure and use of communications
transmitted over and stored on our facilities. COPPA, and the Federal Trade
Commission rules implementing that statute, requires us to safeguard personal
information that we know to be transmitted to our web site by children under 13.

         We also are subject to federal and state laws that regulate the
advertising and sale of certain products and services over the Internet. In
addition to existing statutes of this kind, such as state statutes that prohibit
advertisement of gambling, a number of bills are pending in the Congress and
state legislatures that would prohibit or regulate particular marketing
practices (such as the transmission of unsolicited commercial email) or the
advertisement or sale of certain goods and services.

Oil and Gas Exploration Sector

         The oil and gas industry is extensively regulated by federal, state and
local authorities. Legislation affecting the oil and gas industry is under
constant review for amendment or expansion. Numerous departments and agencies,
both federal and state, have issued rules and regulations binding on the oil and
gas industry and its individual members, some of which carry substantial
penalties for the failure to comply. Because these laws and regulations are
frequently amended, reinterpreted or expanded, we are unable to predict the
future cost or impact of complying with such laws and regulations.

         The production of oil and gas in Texas is regulated by The Texas
Railroad Commission, and in Louisiana, by The Louisiana Department of Natural
Resources. Both agencies have enacted various levels of regulations governing
various actions in the oil and gas industry, such as requiring permits for the
drilling of wells, maintaining bonding requirements in order to drill or operate
wells, regulating the location of wells, the method of drilling and casing
wells, the surface use and restoration of properties upon which wells are
drilling and the plugging and abandonment of wells.

         Our operations are also subject to various conservation laws and
regulations. These include the regulation of the size of drilling and spacing
units or proration units and the density of wells which may be drilled and
unitization or pooling of oil and gas properties. In addition, conservation laws
establish maximum rates of production requirements regarding the ratability of
production.

         Our oil and gas operations are subject to extensive federal, state and
local laws and regulations dealing with environmental protection, including, but
not limited to, the Comprehensive Environmental Response, Compensation


                                       8


<PAGE>

and Liability Act ("CERCLA"), also known as "Superfund," and similar state
statutes. Failure to comply with these laws and regulations may result in the
assessment of administrative, civil, or criminal penalties.

         Our onshore operations are subject to numerous laws and regulations
controlling the discharge of materials into the environment or otherwise
relating to the protection of the environment. These laws and regulations, among
other things, may: impose absolute liability on the lessee under a lease for the
cost of clean-up of pollution resulting from a lessee's operations; subject the
lessee to liability for pollution damages; require suspension or cessation of
operations in affected areas; and impose restrictions on the injection of
liquids into subsurface aquifers that may contaminate groundwater. Persons who
are or were responsible for releases of hazardous substances under CERCLA may be
subject to joint and several liability for the remediation and clean-up costs
and for damages to natural resources.

         Our oil and gas operations are also subject to the Clean Water Act and
the Clean Air Act, as amended, and comparable state statutes. Our operations may
generate or transport both hazardous and nonhazardous solid wastes that are
subject to the requirements of the Resource Conservation and Recovery Act
("RCRA") and comparable state laws and regulations. In addition, we currently
own or lease, and have in the past owned or leased, properties that have been
used for oil and gas operations for many years. Although we have utilized
operating and disposal practices that were standard in the industry at the time,
hydrocarbons or other wastes may have been disposed of or released on or under
the properties owned or leased by us or on or under other locations where such
wastes have been taken for disposal. Many of these properties have been operated
by third parties whose operations were not under our control. These properties
and the wastes disposed thereon may be subject to CERCLA, RCRA, and analogous
state laws, and we could be required to remove or remediate previously disposed
wastes or property contamination or perform remedial plugging operations to
prevent future contamination.

EMPLOYEES.

         As of April 12, 2000, the Company had 28 full-time employees. None of
our employees is covered by any collective bargaining agreement. We believe that
our relations with our employees are good.

ITEM 2. DESCRIPTION OF PROPERTY.

         The Company's principal executive offices are located at 4828 Loop
Central Drive, Suite 150, Houston, Texas 77081, which is occupied under a lease
ending October 31, 2007 for $8,722.13 per month. At the end of such term, we
believe that we can lease the same or comparable offices at approximately the
same monthly rate.

         AirNexus maintains executive offices located at 333 N. Sam Houston
Parkway East, Suite 870, Houston, Texas 77060, which they occupy under a lease
ending October 1, 2004 for $5,492.00 per month. The Company is currently
involved in negotiations to sublease this space.

         Lakota Oil maintains executive offices located at 3303 FM 1960 West
Suite F, Houston, Texas 77068, which they occupy under a lease ending July 31,
2000 for $495.00 per month. At the end of such term the lease will be terminated
and all operations will move to the executive offices.

ITEM 3. LEGAL PROCEEDINGS.

         The Company filed a complaint in December 1999 in the 80th District
Court of Harris County, Texas against Tiger Petroleum, Inc. and Mr. Kenny
Vincent. This claim is based on a breach of a settlement agreement entered into
by the Company and the defendants on March 25, 1999. The Company is seeking the
return of 300,000 shares of common stock, plus attorneys' fees and court costs.
Discovery has been commenced and it is anticipated that if this case is not
resolved in mediation, it will be docketed for trial in the last quarter of
2000.

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

      None.
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

                                       9

<PAGE>

         In January 1999 and April 1999, the Company sold an aggregate of
1,040,000 units in a private placement under Rule 506 of Regulation D and
Section 4(2) of the Securities Act of 1933 to the following accredited
investors:

<TABLE>
<CAPTION>
                                                                                   A Warrant          B Warrant
Person                                   Shares              Share Price        Exercise Price     Exercise Price
------                                   ------              -----------        --------------     --------------
<S>                                     <C>                  <C>                <C>                <C>
Michael A. Hancock                      125,000                 $.10                  .10                .15
Steven Morrison                         125,000                 $.10                  .10                .15
Dipak Bhatt                             750,000                 $.10                  .15                .20
Michael McGrey                           40,000                 $.09                  .12                .15

</TABLE>

         Each Unit consisted of one share of restricted common stock, one "A"
warrant to acquire one share of common stock within twelve (12) months from the
date of purchase, and one "B" warrant to acquire one share of common stock
within twenty four (24) months of the date of purchase.

         In February 1999, the Company issued an aggregate of 1,000,000 shares
of restricted common stock under Rule 506 of Regulation D and Section 4(2) of
the Securities Act of 1933 to Cactus Petroleum, Inc., an entity controlled by
John B. Hayes, a former Director of the Company. These shares were issued as
consideration for the services provided pursuant to an agreement with Optima
Investments, Inc. in connection with the private placement of securities under
Rule 504 of Regulation D. Mr. Hayes assisted in the identification, negotiation,
and closing of the transaction with Optima. Mr. Hayes was also issued 300,000
shares of restricted common stock in July 1999 as consideration under a verbal
employment agreement with the Company.

         In March 1999, the Company issued an aggregate of 18,520 shares of
common stock under Rule 504 of Regulation D to MRC Legal Services Corporation
(16,668 shares) and Brian Lebrecht, Esq. (1,852 shares), accredited investors
acting as securities counsel to the Company, in exchange for legal services
rendered. In July 1999, an aggregate of 75,000 shares of restricted common stock
was issued to MRC Legal Services Corporation under Section 4(2) of the
Securities Act of 1933 for legal services rendered. In September 1999, an
aggregate of 400,000 shares of restricted common stock was issued to MRC Legal
Services Corporation (300,000 shares) and Brian Lebrecht, Esq. (100,000 Shares)
under Section 4(2) of the Securities Act of 1933 for legal services rendered.

         In March 1999, the Company sold $10,000 aggregate principal amount of
convertible debentures to Southwest Securities, an accredited entity under Rule
504 of Regulation D. The debenture was convertible into shares of common stock
of the Company at the discretion of the holder thereof. The entire debenture was
converted into an aggregate of 100,000 shares of common stock.

         In March and April 1999, the Company issued an aggregate of 160,000
shares of common stock under Rule 504 of Regulation D to PMR & Associates, an
accredited entity providing public relations services to the Company, in
exchange for services rendered.

         In March 1999, the Company sold aggregate principal amount of $550,000
aggregate principal amount of convertible debentures to the following three
individuals located outside the United States under Rule 504 of Regulation D:

                                       10


<PAGE>

<TABLE>
<CAPTION>

Person                                                  Shares                        Conversion Price Range
------                                                  ------                        ----------------------
<S>                                                   <C>                             <C>
Y. L. Hirsch                                          3,062,609                            $.05 - $.10

Amram Rothman                                         2,739,842                            $.05 - $.10

Joshua Heimlich                                       1,883,130                            $.05 - $.10

</TABLE>

         The debentures were convertible into shares of common stock of the
Company at the discretion of the holder thereof. All of the debentures have been
converted into an aggregate of 7,685,581 shares of common stock.

         In April 1999, the Company issued 1,676,429 and 1,229,643 shares of
common stock to Robert Kent Honeyman and Howard Wilson, respectively, in
exchange for deferred compensation due to them under verbal employment
agreements with the Company. The issuance was exempt under Section 4(2) of the
Securities Act of 1933.

         In June 1999, the Company issued an aggregate of 3,000,000 shares at
$.38 per share of restricted common stock to Majed Jalali, the sole shareholder
of 2-Infinity.com, Inc., pursuant to the acquisition agreement between the
Company and Jalali. The issuance was exempt under Section 4(2) of the Securities
Act of 1933.

         In June through November 1999, the Company issued an aggregate of
365,000 of restricted shares as follows:

<TABLE>
<CAPTION>

Person                                                  Shares                             Share price
------                                                 -------                             -----------
<S>                                                    <C>                                 <C>
Jaime Benrey                                           160,000                                 $.12
Abraham Halpern                                         30,000                                 $.30
Donald Murray                                          100,000                                 $.30
William Kohler                                          20,000                                 $.30
Douglas Chadwick                                        10,000                                 $.10
Chrespin Noches                                          5,000                                 $.30
Michael McGrey                                          40,000                                 $.12
</TABLE>

         The shareholders exercised warrants acquired in the previous unit
offering. As a result of the exercise, the Company received $79,700. The
issuance was exempt under Rule 506 and Section 4(2) of the Securities Act of
1933.

         In June 1999, the Company issued an aggregate of 3,000,000 shares at
$.32 per share of restricted common stock to Patrick Cody Morgan, Charles H.
Downey, Jr. and Candus Morgan in connection with the acquisition of Voice
Design, Inc. The issuance was exempt under Section 4(2) of the Securities Act of
1933.

         In July 1999, the Company sold $74,000 aggregate principal amount of
convertible debentures to HLKT Holdings, LLC, a Colorado limited liability
company, under Rule 504 of Regulation D. The debentures were ultimately
converted into an aggregate of 793,966 shares of common stock of the Company.

         In July 1999, the Company issued 300,000 shares of common stock to John
B. Hayes in exchange for deferred compensation owed to him under a verbal
employment arrangement with the Company.

         In July 1999, the Company issued an aggregate of 495,385 shares of
restricted common stock to Brent Cavazos, an accredited investor and litigation
counsel to the Company, in exchange for legal services rendered. The issuance
was exempt under Rule 506 and Section 4(2) of the Securities Act of 1933.

                                      11

<PAGE>

         In August 1999, the Company sold $23,500 aggregate principal amount of
convertible debentures to HLKT Holdings, LLC an accredited Colorado limited
liability company, under Rule 504 of Regulation D. The debentures were
ultimately converted into an aggregate of 391,250 shares of common stock of the
Company.

         In August 1999, the Company issued $750,000 aggregate principal amount
of 8% convertible debentures exercisable at 75% of the fair market value of the
Company's common stock on the date of conversion. In addition, the Company
issued 5,000,000 warrants at an exercise price of 50% of the fair market value
of the Company's stock on the date of exercise. In addition, $250,000 of the
$750,000 of proceeds was held in escrow until all
covenants under the subscription agreements were met, including an effective
registration statement for the resale of the shares, which the Company did not
fulfill. Effective January 18, 2000, the Company completed a settlement with the
debenture holders, canceling all previous agreements in exchange for 1,500,000
shares of the Company's common stock to the investors listed below and $324,750
of 8% convertible debentures exercisable at 50% of the fair market value of the
Company's stock on the date of conversion. The debentures were subsequently
converted into 3,392,857 shares of common stock and issued to the investors
listed below. Total proceeds to the Company was $500,000 relating to the
transaction.


<TABLE>
<CAPTION>

Investor                                                Shares                           Price per Share
--------                                                ------                           ---------------
<S>                                                   <C>                                <C>
HLKT Holdings, LLC                                      500,000                                .17

HLKT Holdings, LLC                                    1,328,571                                .081

DVH Holdings, LLC                                      500,000                                 .17

DVH Holdings, LLC                                     1,033,334                                .105

M&B Trading                                            500,000                                 .17

M&B Trading                                           1,030,952                                .105
</TABLE>

         In September 1999, the Company issued 1,500,000 shares at $.14 per
share of restricted common stock to Mathew Hensley, an accredited investor, for
$210,000. Mr. Hensley also received warrants to acquire 500,000 shares of common
stock at $0.28 per share, exercisable until September 28, 2001. The issuance was
pursuant to an exemption under Rule 506 of Regulation D.

         Currently, our common stock is traded on the OTC Bulletin Board. As
such, the market price of our common stock may be subject to significant
fluctuations in response to numerous factors, including: variations in our
annual or quarterly financial results or those of our competitors; changes by
financial research analysts in their estimates of our earnings or our failure to
meet such estimates; conditions in the economy in general or in the software and
other technology industries; announcements of key developments by competitors;
loss of key personnel; unfavorable publicity affecting our industry or us;
adverse legal events affecting us; and sales of our common stock by existing
shareholders.

         From time to time, the stock market experiences significant price and
volume fluctuations, which may affect the market price of our common stock for
reasons unrelated to our performance. Recently, such volatility has particularly
impacted the stock prices of publicly-traded technology companies. In the past,
securities class action litigation has been instigated against companies
following periods of volatility in the market price of the companies'
securities. If similar litigation were instituted against us, it could result in
substantial costs and a diversion of our management's attention and resources,
which could have an adverse effect on our business.

         The following table presents the high and low sales price of our common
stock for the listed quarters:

                                       12

<PAGE>

<TABLE>
<CAPTION>

                                                                            SALES PRICE
                                                                            -----------
YEAR             QUARTER                                  HIGH                                      LOW
----             -------                                  ----                                      ---
<S>              <C>                                      <C>                                      <C>
1999             First Quarter                            0.27                                     0.07
                 Second Quarter                           0.62                                     0.06
                 Third Quarter                            0.37                                     0.14
                 Fourth Quarter

1998             First Quarter                            1.22                                     0.31
                 Second Quarter                           0.44                                     0.06
                 Third Quarter                            0.38                                     0.04
                 Fourth Quarter                           0.38                                     0.02

</TABLE>

              The number of beneficial holders of record of the common stock of
    the Company as of the close of business on March 3, 2000 was approximately
    195. The Company has never paid dividends on its common stock.

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

General

         Since inception through May 1999, the Company devoted substantially all
of its efforts to invest with joint partners in oil and gas exploration
projects. However, as a result of minimal revenue and continued losses from
these ventures, the Company decided to diversify into other markets, primarily
technology and the Internet. The Company's acquisition of 2-Infinity and
AirNexus provided the ability to enter into the technology and Internet markets.
However, the Company has not operated profitably to date and there are no
assurances that there will be future profitable operations.

         In January 2000, new board members and senior management were appointed
in connection with running operations and raising additional capital through a
private placement. The new management adopted new strategies for the Company and
developed a plan of action as follows:

         --       The Company is pursuing additional strategic alliances to
                  expand the development and marketing of its core technological
                  products and services surrounding high-speed Internet access.

         --       The Company is obtaining customers and a monthly revenue
                  stream by waiving activation fees and hardware costs in return
                  for long-term contracts.

         --       The Company is implementing an aggressive marketing and sales
                  program targeting commercial customers with DSL high-speed
                  Internet access and with the ability to additionally deliver
                  other related products and services.

         --       The Company is raising additional equity through private
                  placements to cover costs associated with its initial
                  marketing plan and the necessary infrastructure to effect its
                  business plan.

         Management believes the successful completion of its plans, will
produce increased revenues and cash flows. However, no assurance can be given
that the Company will be successful in the implementation of its plans or that
the Company will be able to raise additional funds.

Results of Operations

         Revenues for the year ended December 31, 1999 increased $257,316 from
no revenues reported for the year ended December 31, 1998. This increase was
primarily due to the acquisition of AirNexus and the sales of commercial voice
and data products and services.

                                      13

<PAGE>

         Cost of Sales for the year ended December 31, 1999 increased $159,209
from no such costs reported for the year ended December 31, 1998. This increase
was due to the acquisition of AirNexus and the cost of the commercial voice and
data products.

         Amortization expense for the year ended December 31, 1999 increased
$2,172,528 from no amortization expense reported for the year ended December 31,
1998. This increase is due to the write-off of goodwill associated with
2-Infinity and the AirNexus acquisitions, which was determined to be impaired
because of the circumstances that exist indicating the carrying amount of those
assets may not be recoverable. The total goodwill was amortized because of the
impairment.

         Oil and gas properties expenditures for the year ended December 31,
1999 increased to $341,444 from no such expenditures reported for the year ended
December 31, 1998. This increase was primarily due to the increase in activity
in 1999 in investments with joint partners in oil and gas exploration projects,
primarily in the following three projects:

         --       The South Halter Island Prospect, located in St. Mary and
                  Terrebonne Parishes, Louisiana, in which the well was
                  non-producing and was plugged and abandoned in July 1999.
                  Total costs expensed relating to this well in 1999 were
                  $205,520.

         --       The Union Central Life Insurance Co. Well No. 1, located in
                  Colorado County, Texas, in which the development of this well
                  is currently ongoing and production commenced at the end of
                  December 1999. Total costs expensed relating to this well in
                  1999 were $36,649.

         --       The VUA: Bernard #1, located in Lafayette Parish, Louisiana,
                  in which the well produced $8,765 in 1999 and subsequent to
                  year-end it was determined that future costs to continue
                  production will exceed any potential revenue. As such, the
                  well will be plugged and abandoned in 2000. Total costs
                  expensed relating to this well in 1999 were $90,112.

         General and administrative expenses for the year ended December 31,
1999, increased $9,383,149 or 2,672% to $9,734,288 from $351,139 in the year
ended December 31, 1998. The increase is primarily due to $7,934,529 of
additional compensation as a result of salary increases and stock awards issued
to current and former officers and employees for services performed in 1999,
$688,653 for the additional amount of general and administrative expense as a
result of acquiring 2-Infinity and AirNexus, and $547,959 of additional legal,
consulting and professional fees to complete the convertible debt and equity
financings and oil and gas related transactions in 1999.

         Interest Expense for the year ended December 31, 1999, increased
$431,551 or 7,859% to $437,042 from $5,491 in the year ended December 31, 1998.
The increase is primarily due to the additional interest of $404,500 recorded as
a result of the settlement with the holders of $750,000 aggregate principal
amount of 8% convertible debentures completed in January, 2000. The Company
completed a settlement with the debenture holders, canceling all previous
agreements in exchange for 1,500,000 shares of the Company's common stock and
$324,750 aggregate principal amount of 8% convertible debentures exercisable at
50% of the fair market value of the Company's stock on the date of exercise. The
debentures were subsequently converted into 3,392,857 shares. Total proceeds to
the Company, net of the original $40,000 fee, was $460,000 relating to the
transaction. The Company recorded the transaction as if the settlement occurred
prior to year-end.

         Net loss for the year ended December 31, 1999 increased by $12,231,681
to $12,588,149 from $356,468 for the comparable period in the prior year. The
Company expects to incur additional losses until its revised business strategy
results in sufficient revenues to offset its investment and operating expenses.

Liquidity and Capital Resources

         The Company raised $1,147,500 from the sale of convertible debentures
during the year ended December 31, 1999. In addition the company raised $323,400
in private placements of common stock to accredited investors and $179,700 from
the exercise of common stock warrants.

         In the fiscal year ended December 31, 1998, the Company raised $344,378
in private placements of common stock of accredited investors.

                                      14
<PAGE>

         The Company is currently operating at a loss and expects to continue to
depend on cash generated from the sale of debt and equity securities to fund its
operating deficit. There can be no assurance that the company will be able to
generate sufficient revenues to meet its operating cash and growth needs or that
any equity or debt funding will be available or at terms acceptable to the
Company in the future to enable it to continue operating in its current form.

         The Company's loss for the fiscal year ended December 31,1999 was
$(12,588,150). The Company expects to incur losses for the foreseeable future
due to the ongoing activities of the Company to develop a network operations
center and continue its strategy of installing and maintaining DSL equipment
in facilities such as commercial buildings and multi-tenant dwellings. The
Company believes that this strategy, while initially requiring additional
cash outlays, will result in higher margins and longer customer retention.
The Company expects its existing operations to continue to result in negative
cash flow and working capital deficiencies that will require the Company to
continue to obtain additional capital.

         Based on current commitments and on going working capital needs, the
Company believes that it will require substantial additional debt or equity
funding to continue to implement its revised business strategy, including
acquisitions. The Company's cash needs and usage may vary based on the outcome
of these initiatives. There can be no assurance that the necessary financing
will be available to the Company or, if available, that the same will be on
terms satisfactory or favorable to it. It is possible that additional equity
financing will be highly dilutive to existing shareholders.

ITEM 7. FINANCIAL STATEMENTS.



<PAGE>










                                 C O N T E N T S

<TABLE>
<S>                                                                                                     <C>
Independent Auditors' Report............................................................................ F-3

Consolidated Balance Sheet.............................................................................. F-4

Consolidated Statements of Operations................................................................... F-6

Consolidated Statements of Stockholders' Equity (Deficit)............................................... F-7

Consolidated Statements of Cash Flows..................................................................  F-10

Notes to the Consolidated Financial Statements.........................................................  F-12

</TABLE>

<PAGE>







                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Lakota Technologies, Inc. and Subsidiaries
(A Development Stage Company)
Atlanta, Georgia

We have audited the accompanying consolidated balance sheet of Lakota
Technologies, Inc. and Subsidiaries (a development stage company) as of December
31, 1999 and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the years ended December 31, 1999 and 1998
and from inception on November 14, 1995 through December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 financial position of Lakota Technologies,
Inc. and Subsidiaries (a development stage company) as of December 31, 1999 and
the results of their operations and their cash flows for the years ended
December 31, 1999 and 1998 and from inception on November 14, 1995 through
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 4 to the
consolidated financial statements, the Company is a development stage company
with no significant operating results to date, which raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 4. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

/s/ Jones, Jensen & Company

Jones, Jensen & Company
Salt Lake City, Utah
April 14, 2000


<PAGE>



                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                           Consolidated Balance Sheet


                                     ASSETS

<TABLE>
<CAPTION>
                                                                                                  December 31,
                                                                                                      1999
                                                                                               -----------------

CURRENT ASSETS
<S>                                                                                            <C>
   Cash                                                                                        $          65,413
   Accounts receivable, net of allowance for doubtful accounts
     of $1,268                                                                                            17,044
   Loan receivable employees                                                                               1,290
   Security deposit                                                                                       16,191
                                                                                               -----------------
     Total Current Assets                                                                                 99,938
                                                                                               -----------------
PROPERTY AND EQUIPMENT

   Furniture and fixtures                                                                                 44,951
   Equipment                                                                                              39,140
   Less: accumulated depreciation                                                                        (12,263)
                                                                                               -----------------
     Total Property and Equipment                                                                         71,828
                                                                                               -----------------
OIL AND GAS PROPERTIES (Notes 1 and 2)                                                                    57,225
                                                                                               -----------------
     TOTAL ASSETS                                                                              $         228,991
                                                                                               =================

</TABLE>



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


                                        F-4

<PAGE>



                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                     Consolidated Balance Sheet (Continued)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                                                                  December 31,
                                                                                                      1999
                                                                                               -----------------
<S>                                                                                            <C>
CURRENT LIABILITIES

   Accounts payable                                                                            $         110,795
   Notes payable (Note 6)                                                                                545,000
   Accrued expenses                                                                                      126,739
   Accrued compensation                                                                                7,509,459
   Accrued interest payable                                                                              419,500
                                                                                               -----------------
     Total Current Liabilities                                                                         8,711,493
                                                                                               -----------------
STOCKHOLDERS' EQUITY (DEFICIT)

   Preferred stock 25,000,000 shares authorized,
    no par value; no shares outstanding                                                                   -
   Common stock 100,000,000 shares authorized, no par
    value; 41,278,482 shares issued and outstanding                                                    5,662,968
   Deficit accumulated during the development stage                                                  (14,145,470)
                                                                                               -----------------
     Total Stockholders' Equity (Deficit)                                                             (8,482,502)
                                                                                               -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                               $228,991
                                                                                               ==================

</TABLE>

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


                                        F-5

<PAGE>



                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>

                                                                                                             From
                                                                                                          Inception on
                                                                        For the Years                     November 14,
                                                                      Ended December 31,                  1995 Through
                                                              ------------------------------------        December 31,
                                                                    1999                1998                 1999
                                                              ----------------    ----------------    -----------------
<S>                                                           <C>                 <C>                 <C>
REVENUES                                                      $        257,316    $         -         $         257,316

COST OF SALES                                                          159,209              -                   159,209
                                                              ----------------    ----------------    -----------------

GROSS MARGIN                                                            98,107              -                    98,107

EXPENSES

  Depreciation expense                                                  14,449            1,200                  16,849
  Amortization expense                                               2,172,528              -                 2,172,528
  Loss on disposal of assets                                             3,520              -                      -
  Oil and gas properties expenditures                                  341,444              -                   342,644
  General and administrative                                         9,730,768           351,139             10,496,143
                                                               ---------------    ----------------     -------------------

     Total Expenses                                                 12,262,709           352,339             13,028,164
                                                              ----------------    ----------------    -----------------
     Loss from Operations                                          (12,164,602)         (352,339)           (12,930,057)
                                                              ----------------    ----------------    -----------------

OTHER INCOME (EXPENSE)

  Interest expense                                                    (437,042)             (5,491)          (1,230,670)
  Interest income                                                       13,495               1,362               15,257
                                                              ----------------    ----------------    -----------------

     Total Other Income (Expense)                                     (423,547)             (4,129)          (1,215,413)
                                                              ----------------    ----------------    -----------------

NET LOSS                                                      $    (12,588,149)   $       (356,468)   $     (14,145,470)
                                                              ================    ================    =================

BASIC LOSS PER SHARE                                          $          (0.36)   $          (0.03)
                                                              ================    ================

WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING                                                        34,569,693          13,371,602
                                                              ================    ================

</TABLE>



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


                                        F-6

<PAGE>



                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
            Consolidated Statements of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>

                                                                                                           Deficit
                                                                                                          Accumulated
                                                                         Common Stock                      During the
                                                          ---------------------------------------         Development
                                                                 Shares                Amount                Stage
                                                          -----------------     -----------------    ------------------
<S>                                                       <C>                   <C>                  <C>
Balance at inception on
 November 14, 1995                                                   -          $          -         $           -

Net loss for the period ended
 December 31, 1995                                                   -                     -                     (1,683)
                                                          -----------------     -----------------    ------------------

Balance, December 31, 1995                                           -                     -                     (1,683)

Issuance of common stock to founders
 at approximately $0.00 per share                             9,187,500                  1,250                   -

Issuance of common stock in merger with
 Chancellor Trading Group, Inc. at $0.002                     1,801,000                  3,908                   -

Issuance of common stock for cash                               108,000                108,000                   -
 at $1.00 per share

Issuance of common stock for services                            20,000                 20,000                   -
 at $1.00 per share

Net loss for the year ended
 December 31, 1996                                                   -                     -                   (458,412)
                                                          -----------------     -----------------    ------------------

Balance, December 31, 1996                                       11,116,500               133,158              (460,095)

Common stock issued for cash at $1.00
 per share                                                          212,500               212,500                -

Conversion of preferred stock to common
 stock at $1.00 per share                                           812,500               812,500                -

Net loss for the year ended
 December 31, 1997                                                   -                     -                   (740,758)
                                                          -----------------     -----------------    ------------------

Balance, December 31, 1997                                       12,141,500     $       1,158,158    $       (1,200,853)
                                                          -----------------     -----------------    ------------------

</TABLE>


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


                                        F-7

<PAGE>



                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


<TABLE>
<CAPTION>

                                                                                                            Deficit
                                                                                                           Accumulated
                                                                        Common Stock                        During the
                                                             ---------------------------------------       Development
                                                                 Shares                Amount                Stage
                                                             -----------------     -----------------    ------------------
<S>                                                          <C>                   <C>                  <C>
Balance, December 31, 1997                                       12,141,500        $    1,158,158       $    (1,200,853)

Common stock issued for cash at
 approximately $0.10 per share                                    3,608,800               344,378                -

Common stock issued for services
 at approximately $0.03 per share                                 4,928,433               147,853                -

Net loss for the year ended
 December 31, 1998                                                   -                     -                   (356,468)
                                                             -----------------     -----------------    ------------------

Balance, December 31, 1998                                       20,678,733             1,650,389            (1,557,321)

Common stock issued for cash
 at approximately $0.05 per share                                 1,520,000                77,600                -

Common stock issued for debt
 at approximately $0.07 per share                                 7,685,581               550,000                -

Common stock issued in business
 combination at $0.35 per share                                   6,000,000             2,100,000                -

Common stock issued  for services
 at approximately $0.14 per share                                 4,894,977               688,538                -

Options issued for cash at approximately
 $0.10 per share                                                     -                    100,000                -

Stock issued for debt at approximately
 $0.08 per share                                                  1,185,216                97,500                -

Funds received for stock to be issued                               200,000                20,000                -
 subsequent to year end, 200,000 shares at
 $0.10 per share

Stock issued for cash at approximately
 $0.12 per share                                                  2,560,300               318,030                -
                                                          -----------------     -----------------    ------------------

Balance forward                                                  44,724,807     $       5,602,057    $       (1,557,321)
                                                          -----------------     -----------------    ------------------

</TABLE>

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


                                        F-8

<PAGE>



                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)


<TABLE>
<CAPTION>

                                                                                                            Deficit
                                                                                                           Accumulated
                                                                        Common Stock                        During the
                                                             ---------------------------------------       Development
                                                                 Shares                Amount                Stage
                                                             -----------------     -----------------    ------------------
<S>                                                          <C>                   <C>                  <C>
Balance forward                                                  44,724,807        $    5,602,057       $    (1,557,321)

Stock issued for services at approximately
 $0.14 per share                                                    400,000                60,911                -

Common stock canceled (Note 11)                                  (3,846,325)               -                     -

Net loss for the year ended
 December 31, 1999                                                         -               -                (12,588,149)
                                                          -----------------      ----------------    ------------------

Balance, December 31, 1999                                       41,278,482        $    5,662,968       $   (14,145,470)
                                                          =================     =================    ==================

</TABLE>

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


                                        F-9

<PAGE>



                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>

                                                                                                           From
                                                                                                       Inception on
                                                                          For the Years                 November 14,
                                                                        Ended December 31,             1995 Through
                                                              -------------------------------------    December 31,
                                                                     1999              1998                1999
                                                              ------------------  -----------------  ------------------
<S>                                                           <C>                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net (loss)                                                 $      (12,588,149) $        (356,468) $      (14,145,470)
   Adjustments to reconcile net d(loss to net
    cash flows from operating activities:
     Depreciation expense                                                 14,449              1,200              16,849
     Loss on disposal of assets                                            3,520             -                    3,520
     Amortization expense                                              2,172,528             -                2,174,156
     Common stock issued for services                                  8,600,566            147,853           8,768,419
   Changes in operating assets and liabilities:
     (Increase) decrease in accounts receivable                         (71,044)             -                  (17,044)
     Increase (decrease) in accounts payable                            108,691               2,104             108,691
     Increase (decrease) in accrued expenses                            106,924               6,476             126,739
     (Increase) decrease in other assets                                 (2,295)             -                  (17,481)
     Increase in related party receivable                                    -              (33,870)                 -
                                                              ------------------  -----------------  ------------------
       Net Cash (Used) by Operating Activities                       (1,600,810)            (22,705)         (2,979,517)
                                                              ------------------  -----------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of property and equipment                                    (8,397)             -                 (100,518)
                                                              ------------------  -----------------  ------------------
       Net Cash (Used) by Investing Activities                           (8,397)             -                 (100,518)
                                                              ------------------  -----------------  ------------------
CASH FLOWS FROM FINANCING ACTIVITIES

   Payment from notes payable                                            (44,600)           (22,098)            (95,132)
   Proceeds from notes payable/debenture                               1,187,500             -                1,242,414
   Conversion of preferred stock to common stock                             -               -                  812,500
   Issuance of common stock and options                                  515,630            344,378           1,185,666
                                                              ------------------  -----------------  ------------------
       Net Cash Provided by Financing Activities                       1,658,530            322,280           3,145,448
                                                              ------------------  -----------------  ------------------
NET INCREASE (DECREASE) IN CASH                                          (26,677)            89,575              65,413

CASH AT BEGINNING OF PERIOD                                               92,090              2,515              -
                                                              ------------------  -----------------  ------------------

CASH AT END OF PERIOD                                         $           65,413  $          92,090  $           65,413
                                                              ==================  =================  ==================

</TABLE>

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


                                       F-10

<PAGE>


                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)


<TABLE>
<CAPTION>
                                                                                                           From
                                                                                                       Inception on
                                                                          For the Years                 November 14,
                                                                        Ended December 31,             1995 Through
                                                              -------------------------------------    December 31,
                                                                     1999              1998                1999
                                                              ------------------  -----------------  ------------------
<S>                                                           <C>                 <C>                <C>
CASH PAID DURING THE PERIOD FOR:

   Interest                                                   $            4,739  $          -       $            4,739
   Income taxes                                               $           -       $          -       $           -

NON-CASH TRANSACTIONS

   Common stock and debt issued for services                  $        8,600,566  $         147,853  $        8,804,962
   Organization costs paid by related party                   $           -       $          -       $            5,472
   Issuance of preferred stock for oil and
     gas properties                                           $           -       $          -       $          812,500
   Common stock issued for business
    acquisition                                               $        2,100,000  $          -       $        2,100,000
   Common stock issued for debt                               $          647,500  $          -       $          647,500

</TABLE>


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


                                       F-11




<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 1  -  HISTORY AND ORGANIZATION

           The consolidated financial statements presented are those of
           Lakota Technologies, Inc. (formerly Lakota Energy, Inc.) ("the
           Company" or "Lakota") (a development stage company) and its wholly
           owned subsidiaries, 2- Infinity.com, Inc., Air Nexus, Inc., and
           Lakota Oil and Gas, Inc. Lakota was incorporated in the State of
           Colorado on July 14, 1995 to engage in the acquisition and
           exploration of oil and gas properties. In 1999, management
           diversified into the technology and Internet markets, acquiring
           two companies 2-Infinity.com, Inc. (2-Infinity") and AirNexus,
           Inc. ("AirNexus").

           On May 28, 1999, the Company acquired all of the outstanding stock
           of 2-Infinity, a Texas Corporation. As consideration for the
           acquisition, the Company issued 3,000,000 shares of its common
           stock to the sole shareholder and founder of 2-Infinity.
           2-Infinity provides digital bundled services, including high-speed
           Internet access. The acquisition was accounted for as a purchase.

           On June 8, 1999, the Company acquired all of the shares of Voice
           Design, Inc., a Texas Corporation that later changed its name to
           AirNexus. As consideration for the acquisition, the Company issued
           3,000,000 shares of its common stock and $60,000 cash to the
           shareholders of AirNexus. AirNexus is a retail provider of
           commercial voice and data products and services. The acquisition
           was accounted for as a purchase.

           On June 9, 1999, the Company formed Lakota Oil & Gas, Inc.
           ("Lakota Oil"), a 100% owned subsidiary. The Company transferred
           the Company's interest in two active oil exploration projects into
           Lakota Oil. As of December 31, 1999, Lakota Oil had minimal
           operations with only one well in production.

NOTE 2 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           a.   Basis of Presentation

           Principles of consolidation - The consolidated financial
           statements include the accounts of Lakota Technologies, Inc. and
           its wholly owned subsidiaries. All inter-company balances and
           transactions have been eliminated in the consolidation.

           Accounting for oil and gas producing activities - The Company uses
           the successful efforts method of accounting for oil and gas
           producing activities. Costs to acquire mineral interests in oil
           and gas properties, to drill and equip exploratory wells that find
           proved reserves, and to drill and equip development wells are
           capitalized. Costs to drill exploratory wells that do not find
           proved reserves, geological and geophysical costs, and costs of
           carrying and retaining unproved properties are expensed.

                                        F-12

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999

           b.   Revenue Recognition

           The Company has recorded revenues from its percentage interest in
           the oil production from the producing oil and gas wells. Revenue
           from the production of oil is recognized when the oil is removed
           from the well. Revenues for 1999 also include revenues from the
           Company's newly acquired technology subsidiary, AirNexus since
           June 8,1999. 2-Infinity reported no revenues in 1999. Revenue from
           business telephone and voice mail systems products are recorded
           when shipped and any related services revenue are recorded when
           the services are rendered to the customer.

           c.   Basic and Diluted Loss Per Share

           Basic loss per share excludes dilution and was computed by
           dividing net loss by the weighted average number of shares of
           common stock outstanding during the Period. Dilutive loss per
           share reflects the potential dilution that could occur if
           securities or other obligations to issue common stock were
           exercised or converted into common stock or resulted in the
           issuance of common stock that then shared in the earnings or
           losses of the Company. For all periods presented, basic and
           diluted loss per share were equal, as the inclusion of dilutive
           securities would be antidilutive. Total warrants outstanding as of
           December 31, 1999 were 5,002,500. There were no warrants
           outstanding at December 31, 1998.

           d.   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 disclosure of contingent assets and
           liabilities at the date of the financial statements and the
           reported amounts of revenues and expenses during the reporting
           period. Actual results could differ from those estimates.

           e. Provision for Taxes

           At December 31, 1999, the Company had net operating loss
           carryforwards of approximately $5,375,000 that may be offset
           against future taxable income through 2017. No tax benefit has
           been reported in the consolidated financial statements. The
           related benefit has been offset by a valuation allowance due to
           historical operating losses and the uncertainty if the net loss
           carryforwards will be utilized in future periods.

                                        F-13

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


           f. Amortization

           Oil and gas wells will be amortized using the units-of-production
           method on the basis of total estimated units of proven reserves.
           Amortization will not be recorded until reserves are extracted.

           g. Property and Equipment

           Property and equipment are stated at cost. Expenditures for small
           tools, ordinary maintenance and repairs are charged to operations
           as incurred. Major additions and improvements are capitalized.
           Depreciation is computed using the straight-line method over
           estimated useful lives of the assets of 3 to 5 years.

           Depreciation expense for the years ended December 31, 1999 and
           1998 was $14,449 and $1,200, respectively.

           h.   Advertising

           The Company follows the policy of charging the costs of
           advertising to expense as incurred.

           i.   Goodwill

           The Company assesses long-lived assets for impairment under FASB
           Statement No. 121, Accounting for the Impairment of long-Lived
           Assets. Under those rules, goodwill associated with assets
           acquired in a purchase business combination where determined to be
           impaired because circumstances exist that indicate the carrying
           amount of those assets may not be recoverable. The total goodwill
           was amortized because of the impairment and recognized in 1999.

NOTE 3  -  BUSINESS COMBINATIONS

           On May 28, 1999, the Company acquired all of the outstanding
           shares of 2-Infinity, a provider of high-speed Internet access
           products and services, for 3,000,000 shares of the Company's
           common stock. 2-Infinity had only been in existence for a short
           period of time and had no prior operations. The acquisition has
           been accounted for as a purchase. The agreement also provides
           additional consideration based upon achieving certain revenue
           performance goals for up to an additional 6,000,000 shares. In
           January 2000, the additional consideration was cancelled.

           On June 9, 1999, the Company acquired all of the outstanding
           shares of Air Nexus, a retail provider of commercial voice and
           data products and services. The Company issued 3,000,000 shares of
           common stock in exchange for all of the outstanding shares of Air
           Nexus. The acquisition has been accounted for as a purchase. The
           agreement also provides additional consideration based upon
           achieving certain revenue performance goals

                                        F-14

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


           for up to an additional 3,000,000 shares. In January 2000, the
           additional consideration was cancelled.

           Allocation of the purchase price for the acquisitions is as follows:

<TABLE>
<CAPTION>
                                                                   2-Infinity          AirNexus
                                                                ------------------ -----------------
<S>                                                            <C>                 <C>
                 Goodwill                                             $ 1,139,000  $  1,020,000
                 Cash                                                     104,479           515
                 Property and equipment                                     5,731             -
                 Other assets                                               1,669         9,238
                 Liabilities assumed                                      (50,879)     (129,753)
                                                                ------------------ -----------------

                 Total Purchase Price                           $       1,200,000  $    900,000
                                                                ================== =================
</TABLE>

           The following pro forma financial information gives effect to the
           2-Infinity and AirNexus acquisitions as if they had been acquired
           at the beginning of fiscal years 1998 and 1999. The pro forma
           results were prepared for comparative purposes only and are not
           indicative of the results of operations which actually would
           result had the acquisitions occurred on the date indicated, or
           which may result in the future:

<TABLE>
<CAPTION>
                                                                    For the years ended December 31,
                                                           --------------------------------------------
                                                                   1999                   1998
                                                           ---------------------  ---------------------
<S>                                                       <C>                    <C>
             Revenues                                      $         351,226      $         201,451
             Loss from operations                                (12,158,343)              (295,051)
             Net loss                                            (12,581,854)              (298,470)
             Basic and diluted loss per share              $          ( 0.53)     $           (0.02)
             Basic and diluted weighted average
                common shares outstanding                         34,613,638             13,371,602
</TABLE>


NOTE 4  -  GOING CONCERN

           Since inception through May 1999, the Company devoted
           substantially all of its efforts to invest with joint partners in
           oil and gas exploration projects. However, as a result of minimal
           revenue and continued losses from these ventures, the Company
           decided to diversify into other markets primarily technology and
           the Internet. The Company's acquisition of 2-Infinity and AirNexus
           provided the ability to enter into the technology, Internet
           markets. However, the Company has

                                        F-15

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


           not operated profitably to date and there are no assurances that
           future operations will be profitable.

           The Company incurred net losses of $(12,588,149) and $(356,468)
           for the years ended December 31, 1999 and 1998, respectively. The
           Company's ability to operate as a going concern is contingent upon
           its ability to effectively market its newly acquired technology
           products and services and get it to the marketplace. Future
           success is also dependent on the Company's ability to obtain
           additional equity financing. The aforementioned factors raise
           substantial doubt about the Company's ability to continue as a
           going concern.

           In January 2000, new board members and senior management were
           appointed in connection with running operations and raising
           additional capital through the private placement (Note 13). The
           new management adopted new strategies for the Company and
           developed a plan of action as follows:

               -        The Company is pursuing additional strategic
                        alliances to expand the development and marketing of
                        its core technological products and services
                        surrounding high-speed Internet access.

               -        The Company is obtaining customers and monthly
                        revenue stream by waiving activation fees and
                        hardware costs in return for long-term contracts.

               -        The Company is implementing an aggressive marketing
                        and sales program targeting commercial customers with
                        DSL ("Digital Subscriber Line"), high-speed Internet
                        access with the ability to additionally deliver other
                        related products and services.

               -        The Company is raising additional equity through
                        private placements to cover the initial marketing plan
                        and infrastructure to acquire and maintain
                        anticipated revenue stream.

           Management believes the successful completion of its plans, will
           produce revenues and cash flows. However, no assurance can be
           given that the Company will be successful in the implementation of
           its plans or that the Company will be able to raise additional
           funds. In the event the Company's activities do not result in
           increased revenues and cash flows and the Company is not able to
           raise additional financing to meet its operating needs, the
           Company may no longer be able to continue as a going concern. The
           financial statements do not include any adjustments that might be
           necessary should the Company be unable to continue as a going
           concern.

                                        F-16

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 5 - RELATED PARTY TRANSACTIONS

           In February 1999, the Company issued 1,000,000 shares of
           restricted common stock to an entity controlled by the President
           of Lakota Oil, as consideration for services valued at $100,000
           related to the negotiation and consummation of a transaction with
           an oil and gas project.

           In April 1999 and July 1999, the Company issued a total of
           3,206,072 shares of restricted common stock to three officers of
           the Company as consideration for compensation of past services
           valued at $328,486.

           In January and February 2000, the Company mutually separated from
           three officers and directors, its CEO, CFO and the President of
           Lakota Oil. Included in the settlement agreements with the former
           CEO, the Company issued 5,000,000 shares to compensate him for
           past service, the Company paid, subsequent to year-end, total cash
           of $140,000 for future consulting and the execution of the
           agreement and each party mutually discharged any indebtedness owed
           to the other and Cam Am Resources, Inc, a related party of the
           CEO. As a result, the Company has accrued in the 1999 financial
           statements, $500,000 of additional compensation expense for the
           fair market value of the shares issued as a result of this
           agreement. In addition, at December 31, 1999, all related notes
           payable, notes receivable and any related accrued interest were
           written-off, the amounts offsetting. In addition, included in the
           settlement agreements with the former CFO and the President of
           Lakota Oil, the Company issued 6,500,000 shares to compensate them
           for past service and the Company paid subsequent to year-end,
           total cash of $165,000 for future consulting and the execution of
           the agreements. As a result, the Company has accrued in the 1999
           financial statements, $2,660,500 of additional compensation
           expense at the fair market value of the shares issued as a result
           of these agreements.

           Effective August 1, 1999, the Company approved and implemented the
           Omnibus Stock Option Plan ("the Plan") and the board of directors
           granted 2,000,000 options to purchase the Company's common stock
           under the plan. In January 2000, the options granted under the
           plan were cancelled as part of the settlement and separation
           agreements with the option holders and the Plan was terminated.

           In April 2000, the board of directors approved the issuance of
           4,040,000 common shares to employees and directors of the Company
           as compensation for services performed in 1999. The Company has
           accrued in the 1999 financial statements, $4,141,960 of additional
           compensation expense, which represents the fair market value of
           the shares on the date the shares, were granted by the board.


                                        F-17
<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 6  -  NOTES PAYABLE

          Notes payable as of December 31, 1999 are detailed in the following
summary:

<TABLE>
           <S>                                                                                    <C>
              $750,000, 8% Convertible Debentures, $250,000
                 held in escrow  (see Note 9)                                                      $          500,000

              Notes payable to individuals; convertible to stock at the option
               of the holder within one to three years; interest at 9.75%, paid quarterly
               until converted; unsecured.                                                                     40,000

             Notes payable, due on demand, unsecured, non-interest bearing.                                     5,000
                                                                                                   ------------------

                  Total notes payable                                                                         545,000

                  Less: current portion                                                                      (545,000)
                                                                                                   ------------------
                  Long-term portion                                                                $               -
                                                                                                   ==================
</TABLE>


NOTE 7 -   COMMITMENTS AND CONTINGENCIES

           Operating Leases

           As a result of the acquisitions in 1999, the Company leases four
           offices under lease agreements accounted for as operating leases,
           three in Houston and one in Atlanta. Real estate taxes, insurance
           and maintenance expenses are obligations of the Company.

           Minimum rental payments under the non-cancelable operating leases are
           as follows:

<TABLE>
<CAPTION>
                                   Periods ended
                                   December 31,
                                --------------------
                               <S>                                       <C>
                                       2000                               $        175,861
                                       2001                                        173,693
                                       2002                                        159,258
                                       2003                                         72,597
                                       2004                                         55,607
                                                                          -------------------

                                                                           $       637,016
                                                                          ===================
</TABLE>

           Rent expense was $89,652 and $26,013 for the years ended December 31,
           1999 and 1998, respectively.

                                        F-18

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


           Contingencies

           The Company is arbitrating a claim arising in the ordinary
           course of business. In the opinion of the Company's legal counsel
           and management, any liability resulting from such litigation would
           not be material in relation to the Company's financial position

NOTE 8  -  INCOME TAXES

           The income tax benefit differs from the amount computed at federal
           statutory rates of approximately 38% as follows:

<TABLE>
<CAPTION>
                                                                       For the years ended December 31,
                                                              ------------------------------------------------
                                                                         1999                    1998
                                                              ------------------------  ----------------------
              <S>                                             <C>                      <C>
               Income tax benefit at statutory rate            $       4,783,000        $        135,000
               Change in valuation allowance                          (4,783,000)               (135,000)
                                                              ------------------------  ----------------------
                                                               $              -         $             -
                                                              ========================  ======================
</TABLE>
           Deferred tax assets (liabilities) at December 31, 1999 are
comprised of the following:

<TABLE>
<CAPTION>
                                                                     For the years ended December 31,
                                                              -----------------------------------------------
                                                                       1999                    1998
                                                              -----------------------  ----------------------
              <S>                                             <C>                      <C>
               Net operating loss carryforward                 $       5,375,000       $        592,000
               Valuation allowance                                    (5,375,000)              (592,000)
                                                              -----------------------  ----------------------
                                                               $              -        $              -
                                                              =======================  =======================
</TABLE>

           Due to the change in ownership provisions of the Tax Reform Act of
           1986, net operating loss carryforwards for Federal income tax
           reporting purposes are subject to annual limitations. Should a
           change in ownership occur, net operating loss carryforwards maybe
           limited as to use in future years.

NOTE 9  -  CONVERTIBLE DEBENTURES

           In March 1999, the Company issued $550,000 of 8% convertible and
           incurred a fee of $44,000 on the issuance. All the debentures were
           converted prior to December 31, 1999 into 7,685,581 shares of
           common stock.

                                        F-19

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


           In August 1999, the Company issued $23,500 of 3% Convertible
           Debentures and $74,000 of 1% Convertible Debentures. All the
           debentures were converted prior to December 31, 1999 into
           1,185,216 shares of common stock.

           In August 1999, the Company issued $750,000 of 8% convertible
           debentures exercisable at 75% of fair market value of the
           Company's common stock on the date of conversion. In addition, the
           Company issued 5,000,000 warrants at an exercise price of 50% of
           the fair market value of the Company's stock on the date of
           exercise. The Company incurred a fee of $40,000 for the
           transaction. In addition, $250,000 of the $750,000 was held in
           escrow until all requirements under the agreements were met, to
           include an effective registration statement, which the Company was
           in default on January 1, 2000. Effective January 18, 2000, the
           Company completed a settlement with the debenture holders,
           canceling all previous agreements in exchange for 1,500,000 shares
           of the Company's common stock and $324,750 of 8% convertible
           debentures exercisable at 50% of the fair market value of the
           Company's stock. The debentures were subsequently converted into
           3,392,857 shares. Total cash received, net of the original $40,000
           fee, was $460,000 relating to the transaction. The Company has
           recorded the transaction as if the settlement occurred prior to
           year-end. A charge to interest expense in the amount of $404,500
           has been recorded at December 31, 1999 relating to this
           transaction.

NOTE 10 -  WARRANTS & OPTIONS

           A summary of the status of the Company's warrants as of December 31,
          1999 and changes during the period ending December 31, 1999:

<TABLE>
<CAPTION>
                                                                                           Average
                                                                                           Exercise
                                                                         Shares             Price
                                                                ------------------   -------------------
            <S>                                                <C>                   <C>
             Outstanding, December 31 1998                                       -    $                -
                  Granted                                               14,505,000                  0.21
                  Expired                                               (3,132,200)                 0.18
                  Exercised                                             (1,370,300)                 0.13
                  Cancelled (note 9)                                    (5,000,000)   50% of share price
                                                                -------------------   ------------------

             Outstanding, December 31, 1999                              5,002,500    $             0.25
                                                                ==================    ==================

             Exercisable, December 31, 1999                              5,002,500    $             0.25
                                                                ==================    ==================
</TABLE>

           The Company issued 1,000,000 options to purchase the Company's
           common stock in June 1999 at $0.10 per share. The options expired
           December 31, 1999.

                                        F-20

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 11 -  COMMON STOCK TRANSACTIONS

           In 1997, the Company issued approximately 4,500,000 shares for
           services. In 1999, the Company renegotiated the number of shares
           since the services had not been performed as anticipated. The
           Company received back and canceled 3,846,325 shares.

NOTE 12 -  OPERATING SEGMENTS

           Effective June 30, 1999, the Company adopted SFAS No. 131,
           "Disclosure about Segments of an Enterprise and Related
           Information." The Company conducts its operations principally in
           the oil and gas industry through Lakota Oil and technology
           industry through 2-Infinity and Air Nexus.

           Certain financial information concerning the Company's operations
           in different industries is as follows:

<TABLE>
<CAPTION>
                                                                For the year ended December 31, 1999
                                                     ------------------------------------------------------------
                                                       Oil and Gas
                                                       Exploration          Technology          Consolidated
                                                     ---------------  ---------------------  --------------------
          <S>                                        <C>              <C>                   <C>
           Net sales                                  $       8,765    $          248,550     $     257,316

           Operating loss applicable to
              industry segment                         (5,260,100)             (6,904,502)      (12,164,602)

           Write-down of goodwill                               -              (2,159,000)       (2,159,000)

           Other income (expenses) -
              interest income                            (424,035)                     488         (423,547)

           Assets                                          92,605                  136,386          228,991

           Depreciation expense                             2,505                   11,944           14,449

           Property and equipment acquisition               3,815                   80,276           84,091
</TABLE>

           Prior to 1999, the Company only operated in the oil and gas
industry.

                                        F-21

<PAGE>

                   LAKOTA TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 13 -  SUBSEQUENT EVENTS

           In January 2000, the Company acquired all of the outstanding
           shares of AGM, Inc., a Nevada Corporation, a reporting public
           company with no operations. The Company elected to have successor
           issuer status to become a reporting public entity. The purchase
           price was 2,200,000 shares of the Company's common stock. In
           connection with this transaction, the Company also issued
           1,500,000 shares of stock and $50,000 for consulting services to
           another corporation that assisted in the negotiation and
           completion of the transaction.

           In the first quarter of 2000, the Company completed a private
           placement raising $2,000,000 by offering 20,000,000 shares of the
           Company's common stock at $.10 per share. The offering also
           includes for every two shares purchased, a warrant to acquire an
           additional share of common stock at $.50, exercisable for a period
           of one year from the date of issuance.

           On March 22, 2000, the Company acquired a CLEC license, a contract
           that entitles the Company to resale Southwestern Bell Telephone
           Company products and services at a 32% discount, for $217,000 and
           100,000 shares of common stock.

           On April 7, 2000, the Company amended its lease agreement relating
           to the primary office space in Houston. The agreement extends the
           original lease to the year 2007 and provides the terms for the
           expansion into additional office space commencing May 1, 2000. The
           additional lease commitment under this amendment to the
           non-cancelable operating lease is as follows:

<TABLE>
<CAPTION>
                             Periods ended
                             December 31,
                          --------------------
                         <S>                                      <C>
                                 2000                                     $   77,849
                                 2001                                        118,319
                                 2002                                        139,024
                                 2003                                        235,527
                                 2004                                        237,667
                              Thereafter                                     741,930
                                                                    -------------------

                                                                          $1,550,316
                                                                    ===================
</TABLE>

           On April 12, 2000, the shareholders of the Company approved the
           increase in the number of authorized shares of common stock
           outstanding to 300,000,000 shares and the Company's name changed
           to 2-Infinity.com.

                                        F-22

<PAGE>

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

        None.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth the names and ages of the current
directors and executive officers of the Company. Our executive officers are
elected annually by the Board of Directors. Our directors serve one year terms
until their successors are elected. The executive officers serve terms of one
year or until their death, resignation or removal by the Board of Directors.
There are no family relationships between any of the directors and executive
officers. In addition, there was no arrangement or understanding between any
executive officer and any other person pursuant to which any person was selected
as an executive officer.

         The directors and executive officers of the Company are as follows:


<TABLE>
<CAPTION>

Name                                   Age                             Positions
----                                   ---                             ---------
<S>                                    <C>                             <C>
Majed M. Jalali                        26                              Chairman of the
                                                                       Board, Chief Executive
                                                                       Officer and President

Patrick Cody Morgan                    33                              Director, Chief Technology
                                                                       Officer and Secretary

Kelly Nispel                           37                              Chief Financial Officer and
                                                                       Treasurer

</TABLE>

         MAJED M. JALALI has been the Chairman of the Board of Directors and
President and Chief Executive Officer of the Company since January 2000. Prior
to that he served as President of 2-Infinity.com beginning in March


                                     15
<PAGE>

1999. From January 1998 to March 1999, Mr. Jalali served as Chief Executive
Officer of Infinity International School. Prior thereto, Mr. Jalali was a
university student.

         PATRICK CODY MORGAN has been the Vice President and Chief Technology
Officer and Secretary of the Company since January 2000. Prior to that, he was
the President of AirNexus, Inc. beginning in May 1998, as well as a member of
the board of directors. From October 1996 until May 1998, Mr. Morgan was a
partner in Digiphone. From 1994 to October 1996, Mr. Morgan was the general
manager of Digitech Business Systems, a Houston, Texas company that provided
business telephones and voicemail systems.

         KELLLY NISPEL has been Chief Financial Officer and Treasurer for the
Company since March 2000. From 1997 to 2000, Ms. Nispel was employed by
Corporate Express Delivery Systems, Inc. (CEDS), recently acquired by United
Shipping and Technology, Inc., in a variety of positions from Director of
Finance to Vice President of Finance. Her responsibilities included SEC
financial reporting, senior lender reporting, banking relations and other
financial, tax and treasury matters. From 1996 to 1997, Ms. Nispel was employed
with Corporate Express, Inc., the parent company of CEDS, as a Regional
Assistant Controller. From 1993 to 1996, Ms. Nispel was the Chief Financial
Officer for Ovation Data Services, Inc., where she was responsible for all
financial related matters. Ms. Nispel is a certified public accountant in the
state of Texas and Colorado.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

         The directors have not received any compensation for serving in such
capacity, and we do not currently contemplate compensating our directors in the
future for serving in such capacity.

COMPENSATION OF EXECUTIVE OFFICERS

         The Summary Compensation Table shows selected compensation information
for services rendered in all capacities for the fiscal year ended December 31,
1999. Other than as set forth below, no executive officer's salary and bonus
exceeded $100,000 in any of the applicable years. The following information
includes the dollar value of base salaries and stock bonus awards, whether paid
or deferred.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                  Annual Compensation(1)             Long Term Compensation
                                                  -------------------                ----------------------
Name and
Principal Position                    Year              Salary ($)                   Restricted Stock Awards ($)
<S>                                  <C>                <C>                          <C>
R. K. ("Ken") Honeyman(2)            1999                222,328                           134,114(4)
 Former President and                1998                 96,240                               --
 Director

Howard N. Wilson(2)                  1999                123,746                           98, 371(5)
 Former Vice President and           1998                 46,250                               --
 Secretary

John B. Hayes(3)                     1999                 76,903                           196,000(6)
 Former President of                 1998                   --                                 --
 Lakota Oil & Gas

</TABLE>

(1)      Excludes any perquisites and other benefits that do not exceed the
         lesser of $50,000 or 10% of the total of annual salary and bonus
         reported for any executive officer.
(2)      No longer an executive of the company.
(3)      Former President of Lakota Oil and Gas, Inc., a subsidiary of the
         company.


                                       16

<PAGE>

(4)      The Company issued as compensation 1,676,429 shares with a closing
         market price on the date of issue of $0.08 per share.
(5)      The Company issued as compensation 1,229,643 shares with a closing
         market price on the date of issue of $0.08 per share.
(6)      The Company issued as compensation 1,000,000 shares with a closing
         market price on the date of issue of $0.10 per share and 300,000 shares
         with a closing market price on the date of issue of $0.32 per share.

Employment Agreements

         In June 1999, the Company entered into an employment agreement with
Patrick Cody Morgan. The contract is for a term of three years at an annual
salary of $250,000 beginning on March 1, 2000 and may be terminated at any time
for cause or good reason, as defined in the agreement.

         In June 1999, the Company entered into an employment agreement with
Majed Jalali. The contract is for a term of three years at an annual salary of
$325,000 beginning on March 1, 2000 and may be terminated at any time for cause
or good reason, as defined in the agreement.

Restricted Stock Issuances

         In February 1999, we issued 1,000,000 shares of restricted common stock
to Cactus Petroleum, Inc., an entity controlled by John B. Hayes, a former
Director of the Company, as consideration for services provided pursuant to an
agreement with Optima Investments, Inc. in connection with the private placement
of securities under Rule 504 of Regulation D offering. Mr. Hayes assisted in the
identification, negotiation, and closing of the transaction with Optima.

         In April 1999, we issued 1,676,429 and 1,229,643 shares of restricted
common stock to Ken Honeyman and Howard Wilson, respectively, as consideration
for accrued compensation for past services rendered. Mr. Honeyman and Mr. Wilson
had each verbally agreed to forego any cash compensation up to the date of
issuance for their services as chief executive officer and secretary,
respectively, in exchange for the shares.

         In July 1999, we issued 300,000 shares of restricted common stock to
John B. Hayes as consideration for accrued compensation for past services
rendered. Mr. Hayes had verbally agreed to forego any cash compensation up to
the date of issuance for services rendered as president of the oil and gas
division of Lakota Energy, Inc., and subsequently as president of Lakota Oil and
Gas, Inc.

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

         The following table presents information regarding the beneficial
ownership of all shares of the common stock at March 3, 2000 by:

         --       each person who owns beneficially more than five percent of
                  the outstanding shares of the common stock;
         --       each director of the Company;
         --       each named executive officer of the Company; and
         --       all named executive officers and directors as a group.


                                       17

<PAGE>

<TABLE>
<CAPTION>

              Name and Address of                            Number of shares
              Beneficial Owner                                of Common Stock    Percent of Class
              ----------------                                ---------------    ----------------
              <S>                                            <C>                 <C>
              R. K. Honeyman (1)                                 3,606,429           5.7

              Howard N. Wilson (1)                               1,329,643           2.1

              John B. Hayes (1)                                  1,300,000           2.1

              Majed Jalali (1)                                   3,000,000           4.7

              Patrick Cody Morgan (1)(2)                         2,000,000           3.2

              Dipak Bhatt (2)(3)                                 4,200,000           6.6
               4107 Vaughn Creek Court
               Sugar Land, Texas 77479

              All officers and directors as a group             11,236,072          17.7
</TABLE>

(1)      The address for each of these shareholders is c/o Lakota Technologies,
         Inc., 4828 Loop Central Drive, Suite 150, Houston, Texas 77081.
(2)      Includes shares held as joint tenants with spouse, or directly in
         spouse's name.
(3)      Includes warrants to purchase an aggregate of 2,000,000 shares of
         common stock, 1,250,000 of which are exercisable until November 30,
         2000 at $0.15 per share and 750,000 of which are exercisable until
         December 22, 2000 at $0.20 per share.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In February 1999, the Company issued 1,000,000 shares of restricted
common stock to an entity controlled by John B. Hayes, as consideration for
services valued at $100,000 related to the negotiation and consummation of a
transaction with an oil and gas project.

         In April 1999 and July 1999, the Company issued 1,676,249, 1,229,643
and 297,000 shares of restricted common stock to R. K. Honeyman, Howard N.
Wilson and John B. Hayes, respectively, as consideration for compensation of
past services valued at $328,486. In January and February 2000, the Company
mutually separated from these three officers and directors.

         Included in the settlement agreements with Mr. Honeyman, the Company
also paid, subsequent to year-end, total cash of $140,000 for future
consulting and the execution of the agreement and each party mutually
discharged any indebtedness owed to the other and Cam Am Resources, Inc, a
related party to Mr. Honeyman. As a result, the Company has accrued in the
1999 financial statements, $500,000 of additional compensation expense for
the fair market value of the shares issued as a result of this agreement. In
addition, at December 31, 1999, all related notes payable, notes receivable
and any related accrued interest were written-off, the amounts offsetting.

         Included in the settlement agreements with Mr. Wilson and Mr. Hayes,
the Company also paid subsequent to year-end, total cash of $165,000 for
future consulting and the execution of the agreements. As a result, the
Company has accrued in the 1999 financial statements, $2,660,500 of
additional compensation expense for the fair market value of the shares
issued as a result of these agreements.

         Effective August 1, 1999, the Company approved and implemented the
Omnibus Stock Option Plan ("the Plan") and the board of directors granted
2,000,000 options to purchase the Company's common stock under the plan. In
January 1999, the options granted under the plan were cancelled as part of the
settlement and separation agreements with the option holders and the Plan was
terminated.


                                       18

<PAGE>

         In June 1999, the Company issued an aggregate of 3,000,000 shares at
$.38 per share of restricted common stock to Majed Jalali, the sole shareholder
of 2-Infinity.com, Inc., pursuant to the acquisition agreement between the
Company and Jalali.

         In June 1999, the Company issued an aggregate of 2,000,000 shares at
$.32 per share of restricted common stock to Patrick Cody Morgan and Candus
Morgan in connection with the acquisition of Voice Design, Inc.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(A)      Exhibits.

<TABLE>
<CAPTION>
<S>      <C>
2.1*     Agreement and Plan of Reorganization dated November 6, 1996 between
         Lakota Energy, Inc. and Chancellor Trading Group, Inc. (incorporated by
         reference from the Registration Statement on Form SB-2 of Lakota
         Technologies (Registration No. 333-88575)).

2.2*     Reorganization and Stock Purchase Agreement dated May 28, 1999 between
         Lakota Energy, Inc., 2-Inifinity.com, Inc., and Majed Jalali
         (incorporated by reference from the Registration Statement on Form SB-2
         of Lakota Technologies (Registration No. 333-88575)).

2.3*     Reorganization and Stock Purchase Agreement dated June 8, 1999 between
         Lakota Energy, Inc. and Voice Design, Inc. and its shareholders
         (incorporated by reference from the Registration Statement on Form SB-2
         of Lakota Technologies (Registration No. 333-88575)).

2.4*     Stock Transfer Agreement dated June 14, 1999 between Lakota Energy,
         Inc. and Lakota Oil and Gas, Inc. (incorporated by reference from the
         Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

3.1*     Articles of Incorporation of Chancellor Trading Group, Inc. filed July
         14, 1995 (incorporated by reference from the Registration Statement on
         Form SB-2 of Lakota Technologies (Registration No. 333-88575)).

3.2*     Articles of Merger between Lakota Energy, Inc. and Chancellor Trading
         Group, Inc. filed December 27, 1996 (incorporated by reference from the
         Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

3.3*     Articles of Amendment to the Articles of Incorporation of Lakota
         Energy, Inc. filed August 4, 1999 (incorporated by reference from the
         Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

3.4*     Bylaws of Lakota Energy, Inc., as amended (incorporated by reference
         from the Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

10.1*    Oil and Gas Lease dated October 21, 1995 (incorporated by reference
         from the Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

10.2*    Assignment of Oil, Gas and Mineral Lease dated March 15, 1996
         (incorporated by reference from the Registration Statement on Form SB-2
         of Lakota Technologies (Registration No. 333-88575)).

10.3*    Oil, Gas and Mineral Lease dated April 26, 1996.

10.4*    Employment Agreement between 2-Infinity.com, Inc. and Majed Jalali
         effective June 1, 1999 (incorporated by reference from the Registration
         Statement on Form SB-2 of Lakota Technologies (Registration No.
         333-88575)).


                                       19

<PAGE>

10.5*    Employment Agreement between Voice Design, Inc. and Patrick Cody Morgan
         effective June 14, 1999 (incorporated by reference from the
         Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

10.6*    Promissory Note payable to Paras Chokshi dated February 12, 1999
         (incorporated by reference from the Registration Statement on Form SB-2
         of Lakota Technologies (Registration No. 333-88575)).

10.7*    Promissory Note payable to Dipak Bhatt dated February 12, 1999
         (incorporated by reference from the Registration Statement on Form SB-2
         of Lakota Technologies (Registration No. 333-88575)).

10.8*    Tut Systems, Inc. Value Added Reseller Agreement dated May 20, 1999
         (incorporated by reference from the Registration Statement on Form SB-2
         of Lakota Technologies (Registration No. 333-88575)).

10.9*    Warrant executed in favor of Dipak Bhatt to purchase 1,250,000 shares,
         expiring November 30, 2000 (incorporated by reference from the
         Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

10.10*   Warrant executed in favor of Dipak Bhatt to purchase 750,000 shares,
         expiring December 22, 2000 (incorporated by reference from the
         Registration Statement on Form SB-2 of Lakota Technologies
         (Registration No. 333-88575)).

10.11*   Warrant executed in favor of Michael A. Hancock and Steven D. Morrison
         to purchase 500,000 shares, expiring December 10, 2000 (incorporated by
         reference from the Registration Statement on Form SB-2 of Lakota
         Technologies (Registration No. 333-88575)).

10.12*   Warrant executed in favor of Michael A. Hancock and Steven D. Morrison
         to purchase 250,000 shares, expiring December 17, 2000 (incorporated by
         reference from the Registration Statement on Form SB-2 of Lakota
         Technologies (Registration No. 333-88575)).

10.13    Letter Agreement and Amendment to Employment Agreement dated as of
         March 1, 2000 between Lakota Technologies, Inc. and Majed Jalali.

10.14    Letter Agreement and Amendment to Employment Agreement dated as of
         March 1, 2000 between Lakota Technologies, Inc. and Patrick Cody
         Morgan.

10.15    Voice Solutions Reseller Agreement dated as of November 23, 1999,
         between 3Com Corporation and Air Nexus, Inc.

10.16    Agreement for the Purchase and Sale of Assets dated as of March 22,
         2000, between 2-Infinity.com, Inc. and Afaneh, Inc.

23.1     Consent of Jones, Jensen & Company, Certified Public Accountants.

27       Financial Data Schedule
</TABLE>
---------------------
*Incorporated by reference as indicated

(B)      Reports on From 8-K.

         None.

                                       20

<PAGE>

                                   SIGNATURES

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

                                    LAKOTA TECHNOLOGIES, INC.

Dated April 13, 2000
                                    By: /s/ Majed Jalali
                                       -------------------------
                                    Name: Majed Jalali
                                    Title: President and Chief Executive Officer

         In accordance with the Exchange Act, this report has been signed below
on April 13, 2000 by the following persons on behalf of the registrant and in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>

               Signature                                Title                                  Date
               ---------                                -----                                  ----
<S>                                      <C>                                              <C>
/s/ Majed Jalali                         Chairman, President and Chief                    April 13, 2000
----------------------------             Executive Officer (principal
Majed Jalali                             executive officer)


/s/ Patrick Cody Morgan                  Director                                         April 13, 2000
---------------------------
Patrick Cody Morgan


/s/ Kelly Nispel                         Chief Financial Officer and                      April 13, 2000
---------------------------              Treasurer (principal accounting and
Kelly Nispel                             financial officer)

</TABLE>

                                       21