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

                                   FORM 10-KSB

(Mark one)

         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                  For the fiscal year ended December 31, 2000

                                       OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                  For the transition period from ________ to _________

                  Commission file number     000-29113
                                         -------------------


                                SYCONET.COM, INC.
                 (Name of Small Business Issuer in its charter)

           Delaware                                              54-1838089
-------------------------------                              -----------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


310 Dominion Road, Vienna, Virginia                                 22180
--------------------------------------                      -------------------
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number:  (703) 281-9607

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

         Title of each class                     Name of each exchange on which
         to be so registered                     each class is to be registered

                N/A                                            N/A

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

                                  Common Stock
                                (Title of Class)






<PAGE>



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

Yes   X     No __
     ---

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

State issuer's revenues for its most recent fiscal year. $713,837
                                                         --------

State the aggregate market value of the voting and non-voting common equity held
by  nonaffiliates  computed by reference to the price at which the common equity
was sold,  or the  average bid and asked  prices of such  common  equity as of a
specified date within the past 60 days.  (See definition of an affiliate in Rule
12b-2 of the Exchange Act.) $349,664.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable  date.  31,168,848 shares of Common Stock,
                                              ----------------------------------
$.0001 par value, outstanding as of April 17, 2000.
---------------------------------------------------

                   DOCUMENTS INCORPORATED BY REFERENCE - None


 Transitional Small Business Disclosure Format:    Yes     ;   No   X
                                                      -----       -----




                                        2

<PAGE>



                                     PART I

     Unless the context  otherwise  requires,  all  references in this Report to
"us," "we," "our" or "SyCo" mean SyCoNet.Com, Inc.

Item 1.   Description of Business.

General.
--------

     SyCoNet.Com,  Inc.  was formed in Delaware in June 1997 under the name SyCo
Comics and Distribution Inc. and is the successor to a limited partnership named
SyCo  Comics  and  Distribution  formed  under the laws of the  Commonwealth  of
Virginia  on January  15,  1997,  by Sy Robert  Picon and  William  Spears,  the
co-founders and principal  shareholders  of  SyCoNet.Com.  On February 17, 1999,
SyCo Comics and Distribution Inc. changed its name to SyCoNet.Com, Inc.

     Our common  stock is listed on  NASDAQ's  Over-the-Counter  Bulletin  Board
under the symbol "SYCD".

     SyCoNet.Com,  Inc. was engaged  principally in the  distribution and direct
marketing  of Anime --  animated  cartoons  produced in Japan and shipped to the
United  States  where  English  subtitles  or  dialogue  are  inserted  prior to
distribution on videocassettes -- and Anime-related  toys and other merchandise.
However,  as a result  of the  winding  down of our  business,  we are no longer
engaged in any business operations and are now considered a "shell" corporation.
As a "shell"  corporation,  we will attempt to acquire a business in an industry
as  yet   undetermined.   We  presently  have  no  specified  type  of  business
contemplated to be acquired.

     We are seeking the acquisition of or merger with an existing company. Given
our limited  assets,  we are likely to acquire or merge with a company  which is
not  seeking  immediate  substantial  amounts  of cash but one which  desires to
establish a public trading market for its shares.

     There are numerous  reasons why an existing  privately-held  company  would
seek to become a public  company  through a merger or  acquisition  rather  than
doing its own public  offering.  Such reasons  include  avoiding the time delays
involved in a public offering, retaining a larger share of voting control of the
publicly-held  company,  reducing the cost factors incurred in becoming a public
company and avoiding any dilution  requirements  set forth under various states'
blue sky laws.


     We  do  not  propose  to  restrict  our  search  for   potential   business
acquisitions  to any particular  industry or any particular  geographic area and
may, therefore,  engage in essentially any business to the extent of our limited
resources.

     We anticipate that we will learn of potential  business  acquisitions  from
various   sources,   including   our  officers  and   directors,   shareholders,
professional   advisors   such  as   attorneys   and   accountants,   securities
broker-dealers, venture capitalists, members of the financial community, and


                                        3

<PAGE>



others who may present unsolicited proposals.  In certain circumstances,  we may
agree to pay a finder's fee or to otherwise compensate such persons for services
rendered in bringing about a transaction. However, no cash finder's fee shall be
paid to any of our officers or directors or their affiliates or associates.  The
amount of any such finder's fee or other  compensation which may be paid to such
persons for  services  rendered in bringing  about a  transaction  is subject to
future negotiation between us, the entity to be acquired and the finder.

Selection of Opportunities.
---------------------------

     The analysis of new business  opportunities  will be undertaken by or under
the  supervision of our officers and  directors,  none of whom is a professional
business analyst or has any previous training or experience in business analysis
or in selecting or hiring business analysts. We have unrestricted flexibility in
seeking, analyzing and participating in potential business opportunities. In our
efforts to analyze potential  acquisition targets, we may consider the following
factors, among others:

     (a) Potential for growth,  indicated by new technology,  anticipated market
expansion or new products;

     (b)  Competitive  position as  compared to other firms of similar  size and
experience  within the  industry  segment as well as within  the  industry  as a
whole;

     (c) Strength and diversity of management,  either in place or scheduled for
recruitment;

     (d) Capital requirements and anticipated availability of required funds, to
be provided by us through joint ventures or similar  arrangements  or from other
sources;

     (e) The cost of our participation as compared to the perceived tangible and
intangible values and potentials;

     (f) The extent to which the business opportunity can be advanced; and

     (g) The  accessibility of required  management  expertise,  personnel,  raw
materials, services, professional assistance and other required items.

     Management  will  attempt to analyze all factors in the  circumstances  and
make a determination based upon reasonable  investigative measures and available
data.  Potentially available business  opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of  comparative  investigation  and  analysis  of  such  business  opportunities
extremely  difficult  and  complex.  Due to our limited  capital  available  for
investigation and management's  limited experience in business analysis,  we may
not discover or adequately  evaluate  adverse facts about the  opportunity to be
acquired.




                                        4

<PAGE>





Form of Acquisition.
--------------------

     The manner in which we participate  in an opportunity  will depend upon the
nature  of the  opportunity,  the  respective  needs and  desires  of us and the
promoters of the opportunity,  and the relative  negotiating  strength of us and
such promoters.

     It  is  likely  that  we  will  acquire  our  participation  in a  business
opportunity  through  the  issuance  of our  common  stock or other  securities.
Although the terms of any such  transaction  cannot be  predicted,  it should be
noted that in certain  circumstances the criteria for determining whether or not
an acquisition is a so-called "tax-free"  reorganization under Section 368(a)(1)
of the Internal  Revenue Code of 1986, as amended,  depends upon the issuance to
the  shareholders  of the acquired  company of at least 80 percent of the common
stock of the combined entities  immediately  following the reorganization.  If a
transaction  were structured to take advantage of these  provisions  rather than
other "tax free" provisions  provided under the Internal Revenue Code, all prior
shareholders would in such circumstances  retain 20% or less of the total issued
and outstanding shares. This could result in substantial  additional dilution to
the equity of our shareholders prior to such reorganization.

     Our present  shareholders will likely not have control of a majority of our
voting  shares  following  a  reorganization  transaction.  As  part  of  such a
transaction, all or a majority of our directors may resign and new directors may
be appointed without any vote by shareholders.

     In the case of an acquisition, the transaction may be accomplished upon the
sole  determination of management  without any vote or approval by shareholders.
In the case of a statutory merger or consolidation,  it will likely be necessary
to call a  shareholders'  meeting  and obtain the  approval  of the holders of a
majority of the  outstanding  shares.  The necessity to obtain such  shareholder
approval may result in delay and additional  expense in the  consummation of any
proposed  transaction  and will also give rise to  certain  appraisal  rights to
dissenting shareholders. Most likely, management will seek to structure any such
transaction so as not to require shareholder approval.

     It is anticipated that the investigation of specific business opportunities
and the negotiation,  drafting and execution of relevant agreements,  disclosure
documents and other  instruments  will require  substantial  management time and
attention and  substantial  costs for  accountants,  attorneys and others.  If a
decision is made not to  participate  in a specific  business  opportunity,  the
costs  theretofore   incurred  in  the  related   investigation   would  not  be
recoverable.  Furthermore, even if an agreement is reached for the participation
in a specific business  opportunity,  the failure to consummate that transaction
may result in the loss to us of the related costs incurred.

Acquisition Restrictions.
-------------------------

     We do not intend to pursue any business  opportunity or  transaction  which
would render us an "investment company" as the term is defined in the Investment
Company Act of 1940. In this


                                       5

<PAGE>



regard,  we have not engaged and do not intend to engage in the  business of (1)
investing,  reinvesting,  or trading in securities as our primary business,  (2)
issuing  face amount  certificates  of the  installment  type or (3)  investing,
reinvesting,  owning,  holding,  or  trading  in  securities.  Being  deemed  an
"investment  company" under such Act, without registration as such, could result
in certain  instances in civil  liability and criminal  penalties to controlling
persons of us, as well as civil  liabilities and  unenforceability  of contracts
with regard to us.

     We have not  engaged  and do not  intend  nor do we have the  authority  to
engage  in  the  business  of  advising  others,   either  directly  or  through
publications  or  writings,  as  to  the  value  of  securities  or  as  to  the
advisability of investing in, purchasing, or selling securities for compensation
nor as a part of our regular business to issue or promulgate analyses or reports
concerning securities. We do not intend, nor do we have any authority, to pursue
any course of business  which would  render us an  "investment  advisor" as that
term is defined in the Investment Advisors Act of 1940.

Daily Operations and Employees.
-------------------------------

     Currently we have no, and until an active business is commenced or acquired
we will have no,  employees or  day-to-day  operations.  Management is unable to
make any estimate as to the future  number of employees  which may be necessary,
if any, to work for us. If an existing  business is acquired it is possible that
its existing staff would be hired by us. At the present time it is the intention
of  management to meet or be in telephone  contact as needed to review  business
opportunities,   evaluate  potential  acquisitions  and  otherwise  operate  our
affairs.  Management will not be compensated for these services  rendered on our
behalf.


Item 2.  Description of Property.

     We occupy  approximately  600 square feet of office  space at 310  Dominion
Road, Vienna, Virginia which has been provided at no cost to us.


Item 3.  Legal Proceedings.

     In January 2001, we received a demand letter from an investor in one of our
private placements.  Such demand was made pursuant to Massachusetts General Laws
Chapter 93A, alleging that we engaged in unfair or deceptive business practices,
and seeks a return of the investor's  $50,000  investment,  with  interest,  and
payment of his attorneys'  fees and expenses.  We believe we have not engaged in
such  practices  and intend to  vigorously  contest  any action  that is brought
against us.



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


     No matters were  submitted to a vote of security  holders during the fourth
quarter of the fiscal year covered by this Report.


                                        6

<PAGE>


                                     PART II

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

     (a) Market information.

     Our common stock is listed on the Over-the-Counter Bulletin Board under
the symbol "SYCD".

     The  following  table  sets  forth  the range of high and low  closing  bid
quotations  for our  common  stock for each  quarter  within the last two fiscal
years. These quotes were provided by Pink Sheets,  LLC and reflect  inter-dealer
prices  without  retail  mark-up,  mark-down or commission and may not represent
actual transactions.

                 Period                             Closing Bid
                 ------                        -----------------------
                                               High             Low
                                               ----             ---

           January 4 through
           March 31, 1999                      0.56             0.19

           April 1 through
           June 30, 1999                       0.73             0.22

           July 1 through
           September 30, 1999                  2.40             0.42

           October 1 through
           December 31, 1999                   2.69             1.19

           January 3 through
           March 31, 2000                      2.91             1.44

           April 3 through
           June 30, 2000                       1.94             0.16

           July 3 through
           September 29, 2000                  0.31             0.08

           October 2 through
           December 29, 2000                   0.15             0.04




     (b) Holders

         As of April 17, 2001, there were 123 holders of record of our common
stock.

                                        7

<PAGE>

     (c) Dividends

     Since our inception, we have not declared any dividends on our common stock
and we intend to retain earnings, if any, for use in our activities.  Payment of
cash  dividends  in the  future  will be  wholly  dependent  upon  the  board of
directors and upon our earnings,  financial condition,  capital requirements and
other factors  deemed  relevant by the board.  It is not likely that we will pay
cash dividends in the foreseeable future.

     In the event of our acquisition of or merger with a business, control of us
and our board of  directors  may pass to others.  In that event,  the payment of
dividends would be wholly dependent upon such persons.

     (d) Recent Sales of Unregistered Securities

     From  November  1999  through  February  2000,  we  sold  to 34  accredited
investors  927,053  shares of common stock at a price of $.85 per share,  for an
aggregate  price of  $787,995,  in a  private  placement  made  pursuant  to the
exemption from registration  provided by Section 4(2) and 4(6) of the Securities
Act of 1933 (the "1933 Act") and Rule 506 of Regulation D promulgated  under the
1933 Act.

     In January 2000, we issued 10,000 shares to Jamie Graham in connection with
his  1998   appointment  as  a  director  in  reliance  on  the  exemption  from
registration under Section 4(2) of the 1933 Act.

     In January  2000, we sold to 12 accredited  investors  units  consisting of
726,250 shares of our common stock and 181,562 redeemable warrants at a price of
$1.00 per unit, for an aggregate price of $726,250,  in a private placement made
pursuant to the exemption from registration provided by Section 4(2) and 4(6) of
the 1933 Act and Rule 506 of Regulation D  promulgated  under the 1933 Act. Each
redeemable warrant entitles the holder to purchase one share of our common stock
at a price of $1.00 per share until December 31, 2001.

     In February  2000, we sold to one  accredited  investor  343,000  shares of
common stock at a price of $1.00 per share for an  aggregate  price of $343,000,
in a private placement made pursuant to the exemption from registration provided
by  Section  3(b)  and  Rule  504 of the  1933  Act and  Section  203(t)  of the
Pennsylvania Securities Act of 1972.

     In February  2000, we issued  280,000 shares of common stock to a director,
J. Larry  Hineline,  who exercised  certain stock options at a price of $.51 per
share for 250,000  shares,  $1.02 per share for 15,000 shares and $.01 per share
for 15,000  shares,  for an aggregate  price of $142,950.  This  issuance was in
reliance on the exemption from  registration  under Section 4(2) and 4(6) of the
1933 Act.

     In June 2000,  pursuant to a funding  agreement dated December 16, 1999, we
issued to Alliance Equities,  Inc.  ("Alliance")  1,869,492 shares of our common
stock, of which 600,000 were issued upon the exercise of Alliance's common stock
purchase  warrant and  1,269,492  shares were issued as  repayment  of the first
$500,000 due to Alliance by us under the agreement. From August through November
2000,  pursuant to an amendment to the funding agreement,  we issued to Alliance
an aggregate of 8,033,162 shares of common stock as repayment of $500,000 due to
Alliance by us under the amended funding  agreement.  All issuances were made in
reliance on the exemption from  registration  provided by Sections 4(2) and 4(6)
of the 1933 Act.

                                        8

<PAGE>

     In June 2000, we sold to two accredited  investors  60,000 shares of common
stock at a price of $.35 per  share  for an  aggregate  price of  $21,000,  in a
private placement made pursuant to the exemption from  registration  provided by
Sections 4(2) and 4(6) of the 1933 Act.

     In June 2000, pursuant to a lease agreement with Diversified Leasing,  Inc.
("Diversified"),  we granted  Diversified a warrant to purchase 94,554 shares of
our common stock at a price of $1.21875.  The warrant may not be exercised until
after the closing  price of our common stock shall been equal to or greater than
$10.00 for 15 consecutive trading days and only until December 31, 2003.

     In June 2000,  pursuant to a sponsorship  agreement dated March 3, 2000, we
issued 13,793 shares of our common stock to  Dragon*con,  Inc. This issuance was
made in reliance on the exemption  from  registration  provided by Sections 4(2)
and 4(6) of the 1933 Act.

     In August 2000, in connection  with services  rendered to us related to the
closing on our facilities  leases, we granted a certain  individual a redeemable
warrant to purchase  25,000  shares of our common  stock at a price of $0.12 per
share until August 14, 2005.

     In August 2000, in consideration  for the cancellation of the lease for our
property at 9105A and 9105C Owens Drive, we granted two  individuals  redeemable
warrants to  purchase an  aggregate  of 36,563  shares of our common  stock at a
price of $0.16 per share until August 14, 2005.

     In September  2000, we issued  204,546  shares of our common stock to seven
individuals  at an  average  price  of  $.14  per  share  in  consideration  for
cancellation of indebtedness to certain investors.  These issuances were made in
reliance on the exemption from  registration  provided by Sections 4(2) and 4(6)
of the 1933 Act and Rule 506 promulgated thereunder.

     In November 2000,  pursuant to a consulting  agreement  dated September 25,
2000, we issued 200,000 shares of our common stock to a certain individual. This
issuance was made in reliance on the  exemption  from  registration  provided by
Section 4(2) of the 1933 Act.

     In  December  2000,  we issued  the  following  shares in  reliance  on the
exemption  from  registration  provided  by  Section  4(2) of the 1933 Act:  (i)
pursuant to an investor  relations  agreement dated November 22, 2000, we issued
200,000 shares of our common stock to Integrity Capital,  Inc.; (ii) pursuant to
a financial  consulting  agreement  dated  November 22, 2000, we issued  200,000
shares of our common stock to Market Surveys International, Inc.; (iii) pursuant
to an advertising  agreement dated December 14, 2000, we issued 2,000,000 shares
of our common stock to Gamesboro.com,  Inc.; (iv) 5,000,000 shares of our common
stock were issued to Ross  Rojek,  in  connection  with his  appointment  as our
co-chief executive

                                        9

<PAGE>



officer;  and (v) we issued  320,000  shares of our common  stock to  Selenetix,
Inc., pursuant to a letter of intent dated September 13, 2000. In February 2001,
the  5,000,000  shares  issued to Ross Rojek were  returned to us when Mr. Rojek
resigned as our co-chief executive officer.

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

                           Forward-Looking Statements

     This item contains  forward-looking  statements (as such term is defined in
the Private  Securities  Litigation Reform Act of 1995). Such statements involve
significant  risks and  uncertainties and are subject to change based on various
important  factors.  The  following  factors,  among  others,  could  affect our
performance  and could cause actual results for fiscal 2001 and beyond to differ
materially  from  those  expressed  or  implied  in  any  such   forward-looking
statements:  loss of personnel or outside professionals necessary to maintaining
our public status;  inability to obtain, or delay in obtaining,  the substantial
additional  capital we need;  inability to timely enter into an  arrangement  to
sell or merge our company.  Investors are cautioned not to place undue  reliance
on  these  forward-looking  statements  that  speak  only as of the date of this
filing.  Syconet is not  obliged  to release  publicly  any  revisions  to these
forward-looking  statements because of events that transpire  subsequent to this
filing.

Business Strategy

     During 2000,  substantial  marketing  efforts were expended to extend Anime
into  the  mainstream  culture  rather  than  relying  on it as a niche  market.
However,  these efforts were concurrent with various other business  strategies,
such as obtaining  exclusive rights to complete production in the United States,
obtaining various  trademarks,  seeking out investor capital for future business
ventures,  and developing  technology for e-commerce  business  distribution and
virtual  ISP  (Internet  Service  Provider)  platforms.  The  rapid  growth  and
diversification  of the business could not be sustained  simultaneously,  and in
the second quarter,  we ran out of operating capital.  At that time, we lost the
majority of our personnel, with most of the losses coming from senior executives
and management and technological specialists.  In the third and fourth quarters,
we focused our  energies on  rebuilding  the core Anime  business,  scaling back
operations,  and negotiating reasonable repayment terms with creditors. While we
have  successfully  scaled back  operations  and in most cases have been able to
negotiate with our creditors,  we have not had the resources to rebuild our core
Anime business.  We have not had the operating  capital to maintain an inventory
that  satisfies the market's  demand for the latest  product and we have not had
the  personnel to create a  successful  advertising  strategy to  recapture  old
customers and attract new ones.

     At this time,  our most valuable  asset is our status as a  publicly-traded
company,  and we intend to focus our efforts on maintaining  this status through
continued legal and professional  services.  All other operational  expenditures
are suspended.  We have laid off all personnel,  have completely ceased shipment
of product, and are trying only to remain current with our required SEC filings.
We are actively seeking a business  partnership,  merger,  or acquisition as our
only  alternative to remain in business,  and we are seeking such an arrangement
without  regard  to the  nature  of the  new  business.  The  effect  of  such a
transaction to the shareholders cannot be predicted.



                                       10

<PAGE>

Financial Overview

     The following is a discussion of certain factors  affecting our results for
fiscal  years ended  December  31, 2000 and 1999 and our  liquidity  and capital
resources. Keep in mind that this discussion relates solely to 2000 and 1999 and
is not applicable to 2001as the sale and  distribution of Anime is no longer our
primary  focus.  This  discussion  and  analysis  should be read  along with our
financial statements and their notes, contained elsewhere in this Form 10KSB.

     Concurrent with e-commerce industry practice,  we present  distribution and
fulfillment costs on the financial statements as a component of selling, general
and  administrative   expenses.   The  SEC  may  later  decide  to  require  the
classification of certain  distribution costs as costs of sales. If this occurs,
we will  reclassify  these costs pursuant to the new SEC  requirements,  and our
gross  profit  will  be   negatively   impacted   accordingly.   However,   such
reclassification  will not have any impact on our sales,  operating loss, or net
loss.

     Since inception,  we have incurred losses,  and as of December 31, 2000, we
had an accumulated  deficit of approximately $7 million. An influx of capital in
the  first  quarter  due to the  Company's  registration  with  the SEC  allowed
development of our marketing and technology  plans,  including an e-commerce and
V-ISP  platform.  During the second  quarter,  we lost most of our  officers and
senior  management,  including  our former CEO, Sy Picon.  Our new CEO,  William
Spears,  was charged with the  responsibility of  re-establishing  our operating
structure and re-focusing on our core business.  The net effect of this activity
on the  financial  statements  is a  decrease  in  sales  due  to the  company's
inability to secure new product in a timely fashion.

     Operating  margins  were  significantly  impacted  by (a)  our  ability  to
maintain  and  satisfy our  existing  repeat  customers,  as well as attract new
customers with the same level of loyalty; (b) competitive pricing pressures; (c)
the  effectiveness  of advertising and marketing  expenditures  and management's
ability to measure and evaluate results; (d) the effectiveness of our web design
and content in attracting and leading  consumers to complete  on-line sales; (e)
shipping  efficiencies;  (f)  proportion  of  distributor  sales in  relation to
consumer  sales;  (g)  general   economics  of  scale;  (h)  overall   operating
efficiencies  as well as cost  reduction  measures;  (i)  overall  sales of high
margin product which normally appeals to certain segments or niche markets;  and
(j) effective inventory management  techniques,  including our ability to select
and market highly sellable titles.

Results of Operations

Comparison of the years ended December 31, 2000 and 1999

     Net sales, consisting of the selling price of VHS and DVD products, trading
cards, toys and apparel,  net of discounts and customer  returns,  were $713,972
for the year ended December 31, 2000, a 38% decline over net sales of $1,153,536
for the year ended December 31, 1999.  This decrease  occurred  primarily in the
second half of the year,  during  which time lack of working  capital  prevented
restocking of inventory.



                                       11

<PAGE>


     Our  sales  have  also  been  negatively  impacted  by the  absence  of any
significant  print or web advertising on our part. The type of print advertising
in which the Company  typically engages is the publication of a catalog entitled
S.C.A.N.S.,  highlighting new products and trends. This catalog requires a great
deal of  up-to-date  research,  which  our  staff is not  currently  capable  of
managing.  Due to a lack of working capital, all of our advertising  commitments
on-line have expired or been terminated, resulting in a substantial slow-down in
our  web  traffic  click-throughs  and  sell-throughs.  We  lack  the  financial
wherewithal to fund any major advertising effort,  thereby further hampering our
ability to attract new customers and potential buyers to our site.

     The  following  table  sets  forth  certain  financial  data  for  us  as a
percentage of net sales for the indicated periods:



                                                    Year Ended December 31

                                                    2000            1999

Net sales                                             100.00%         100.00%
Cost of goods sold                                     78.58%          73.81%
                                               --------------   -------------

          Gross profit (loss)                          21.42%          26.19%

Operating expenses:
  Selling, general and
      administrative expenses                         466.15%         485.42%
  Stock-based compensation expense
  Restructuring & other non-recurring charges          30.97%           0.00%
  Reversal of stock compensation expense             -425.79%           0.00%

     Operating Expenses                                98.91%         485.42%
                                               --------------   -------------
          Operating (loss)                            -77.49%        -459.23%

Nonoperating income (expense), net
Other nonoperating expense, net                        -3.29%          -0.05%
                                               --------------   -------------

Net (loss)                                            -80.78%        -459.28%
                                               ==============   =============

     Gross profit is defined as sales less cost of sales,  which consists of the
cost of product sold to the customers and inbound  shipping costs as well as any
adjustments  to  inventory.  Our gross  margin  percentage  is  affected  by the
proportion  of consumer  sales  relative to retail sales,  the former  generally
yielding  higher margins than sales from our  distribution  business.  Our gross
profit was $152,947 for the year ended  December 31, 2000, a 49.37% decline over
the $302,058 gross profit for the year ended December 31, 1999. Our gross profit
declined in terms of absolute dollars due to reduced sales and to the impairment
of our inventory,  which has also affected our gross  margins.  During the first
and second quarters of 2000,  marketing personnel tried to significantly  expand
the Company's product line. Various toys, collectible figurines,  trading cards,


                                       12

<PAGE>

etc. were purchased in bulk. These items proved to be highly sensitive to market
fluctuations,  and their  turnover is now  negligible.  Therefore,  the value of
these  items was reduced in the third  quarter of 2000 to 10% of their  original
cost,  impacting the Company's gross profit.  In addition,  the Company's severe
cash flow  shortage  hampered its ability to purchase  new product.  Without new
product  fluctuations,  the older product in stock has been impaired was written
down to reflect its market value.

     Selling,  general and  administrative  (SG&A) expenses include the costs of
personnel  involved  in  product  distribution,   customer  service,   financial
administrative  and executive  functions in addition to travel,  advertising and
investor relations,  legal and professional  services,  stock compensation,  and
other operating  costs. In conjunction  with the expansion of our Anime business
and the  development  of new  business  strategies,  our  SG&A  costs  increased
significantly,  from  $1,753,423  in 1999  to  $3,328,214  in  2000,  an  89.81%
increase.

     Operating  expenses  for  the  year  were  mitigated  by  the  reversal  of
previously  recognized stock  compensation costs as a result of the cancellation
of 12,500,000 options previously granted to our two co-founders.

     As a result of the  restructuring  and downsizing of our operations as well
as our technology  plans,  we have decided to write off certain  prepayments and
assets  acquired from vendors that we may not recover or from which we may never
benefit in the future. Examples of these restructuring and unusual items include
forfeitures  due to early lease  terminations,  payments made towards  partially
utilized  software and equipment,  and licenses that have since been returned or
cancelled.  In the aggregate,  these restructuring and unusual items amounted to
$221,148.

Deferred Compensation

     We recorded total deferred stock  compensation  of $196,854  during 2000 in
connection with the  amortization of compensatory  stock options granted in 1999
and $48,320 in connection with the  amortization  of compensatory  stock options
granted in 2000. We had no recognizable deferred compensation costs during 1999.
Deferred stock  compensation is amortized to expense over the vesting periods of
the applicable  options.  The amortization cost represents the vested portion of
the difference  between the exercise price of stock option grants and the deemed
fair  value  of our  common  stock at the time of such  grants.  Although  stock
options were granted in 2000 subsequent to the  cancellation of certain previous
options, mainly to our CEO, key employees and Board of Directors,  these options
were  noncompensatory  owing to the exercise price being set at the price of the
stock  as of the date of the  award  and  accordingly  have no  effect  upon the
financial  statements.  For detailed  information  regarding these transactions,
please see Note 8 of the Notes to the  Financial  Statements  elsewhere  in this
10KSB.

Income Taxes

     We made no provision for any current or deferred U.S. federal, state income
tax or benefit for any of the periods presented. We cannot provide any assurance
as to when profits will  materialize,  if at all.  Therefore,  we cannot predict
when we can use the net operating loss carry-forwards, which begin to

                                       13

<PAGE>



expire in 2017,  and which may be subject to certain  limitations  imposed under
Section  382 of the  Internal  Revenue  Code  of  1986.  Due to the  uncertainty
concerning  our ability to realize the related tax benefit,  we have  provided a
full valuation  allowance on the deferred tax asset, which consists primarily of
net operating loss carry-forwards.

Liquidity and Capital Resources

     As of December 31,  2000,  our cash  position  consisted of $18,732 in cash
compared to $587,559 in cash as of December 31, 1999.

     We have funded our operations  primarily  through private equity  financing
from accredited investors pursuant to Regulation D, which is a limited offer and
sale of securities without registration under the Securities Act of 1933. During
2000,  net cash  provided  by  financing  included  $2,910,683,  as  compared to
$1,565,328  provided by financing during 1999. This increase is due primarily to
the securities registration during the first quarter of 2000.

     Net cash  used in  operations  was  $2,968,902  during  2000,  compared  to
$939,279  during  1999.  The  use of  cash  was  due  primarily  to a loss  from
operations, absent the effect of stock options as shown below:

                                              For the year ended December 31,
                                                   2000            1999
                                                   ----            ----

     Net (loss)                                 ($576,724)     ($5,297,973)
     Plus:  Amortization of deferred
       compensation                               196,854        3,846,014
     Less:  Reversal of stock compensation
       expense                                 (3,040,000)             -
                                              ------------     ------------

     Total                                    ($3,419,870)     ($1,451,959)
                                              ============     ============

         Net cash used in investing activities increased in 2000 to $510,608
over $59,166 in 1999 due primarily to purchases geared towards the enhancement
of our e-commerce platform.


     Currently,  we do not have access to sufficient committed capital that will
enable us to maintain operations for any significant period. Absent an agreement
for a partnership, merger, or acquisition, we cannot remain in business.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

     The  "Overview"  and  "Liquidity  and  Capital  Resources"  sections of the
Management's  Discussion  and  Analysis  cover risk  factors that may impact the
Company's  operating  results.  We have  identified  additional  risk factors as
listed below.

WE CURRENTLY  HAVE A SEVERE CASH SHORTAGE  AND, AS A RESULT,  WE HAVE HAD TO LAY
OFF ALL PERSONNEL




                                       14

<PAGE>

     Day-to-day  operations have been suspended due to our lack of funding,  and
we  anticipate  that  they  will  remain  suspended  until we can  enter  into a
partnership, merger, or acquisition. We are actively seeking such an arrangement
however,  we cannot provide assurance that such an arrangement will materialize,
that the core Anime  business will continue under such an  arrangement,  or that
our investors will not be severely negatively impacted by such an arrangement.

OUR CONTINUED OTC BULLETIN BOARD LISTING IS NOT ASSURED

     Absent any financing in the  immediate  term, we will not be able to afford
professional   experts   required  for  SEC   regulatory   compliance,   thereby
jeopardizing our ability to file our SEC reports on a timely basis and impairing
our eligibility for continued  listing on the OTC Bulletin Board. If we lose our
OTC Bulletin  Board status,  our common stock would trade as pink sheets on Pink
Sheets, LLC, which would be viewed by most investors as a less liquid market for
trading purposes. The loss of our OTC Bulletin Board status would further impede
our ability to raise any financing.

WE COULD ISSUE  SUBSTANTIAL  AMOUNTS OF ADDITIONAL  SHARES  WITHOUT  SHAREHOLDER
APPROVAL

     We have a  substantial  number of shares of common  stock  unissued and not
reserved  for  specific  issuances  which could be issued  without any action or
approval  by  our  shareholders,  thus  substantially  diluting  the  percentage
ownership  of Syconet  held by  purchasers  of the  securities  and  potentially
adversely affecting the market price of our common stock.

WE HAVE NOT PAID ANY DIVIDENDS.

     We have never paid any  dividends  on our common stock and we do not intend
to pay any in the foreseeable  future.  This has affected our ability to attract
qualified investors, and may continue to affect such ability in the future.


OUR STOCK DOES NOT QUALIFY FOR NASDAQ AND IS QUOTED ONLY ON THE BULLETIN BOARD

     Under the criteria of the National Association of Securities Dealers, Inc.,
which  administers the NASDAQ system,  our common stock does not now qualify for
inclusion in the NASDAQ system and is quoted only on the Bulletin  Board.  Since
our common stock is being quoted only on the  Bulletin  Board,  the price of our
common  stock could be very  volatile.  In addition,  the trading  volume in our
common stock is relatively low.  Therefore,  the market for our stock may not be
able  to  efficiently   accommodate   significant   trades  on  any  given  day.
Consequently,  sizable  trades of our common stock may cause  volatility  in the
market  price of our  common  stock to a greater  extent  than in more  actively
traded  securities.   These  broad   fluctuations,   in  addition  to  generally
unfavorable stock market conditions,  have adversely affected,  and may continue
to affect, the market price of our common stock.




                                       15

<PAGE>



Item 7.  Financial Statements.






                                 C O N T E N T S

                                                                            Page

INDEPENDENT AUDITOR'S REPORT
   ON THE FINANCIAL STATEMENTS                                              F-1

FINANCIAL STATEMENTS

   Consolidated balance sheets                                              F-2
   Consolidated statement of operations                                     F-3
   Consolidated statements of stockholders' equity                          F-4
   Consolidated statements of cash flows                                    F-5
   Notes to consolidated financial statements                               F-6



                   [Balance of page left blank intentionally]




                                       16
<PAGE>




                          INDEPENDENT AUDITOR'S REPORT







To the Board of Directors
Syconet.com, Inc.
Vienna, Virginia


     We  have  audited  the   accompanying   consolidated   balance   sheets  of
Syconet.com,  Inc. and  Subsidiaries  as of December 31, 2000 and 1999,  and the
related  consolidated  statements of operations,  stockholders' equity (deficit)
and cash flows for the three years ended  December  31,  2000.  These  financial
statements  are  the  responsibility  of  the  Corporation's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.


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


     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the financial position of Syconet.com,
Inc. and Subsidiaries as of December 31, 2000 and 1999, and the results of their
operations  and their cash flows for the three years ended December 31, 2000, in
conformity with generally accepted accounting principles.


     The accompanying  financial statements have been prepared assuming that the
Corporation  will  continue as a going  concern.  As discussed in Note 14 to the
financial statements,  the Corporation has suffered substantial operating losses
since inception, the Corporation has used substantial amounts of working capital
in its operations,  and its total  liabilities  exceeds its total assets.  These
conditions raise substantial  doubt about the Corporation's  ability to continue
as a going  concern.  Management's  plans in  regard to these  matters  are also
described in Note 14. The financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.


/s/ Yount, Hyde & Barbour, P.C.

Winchester, Virginia
April 5, 2001

                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                                    SYCONET.COM, INC.

                               Consolidated Balance Sheets
                               December 31, 2000 and 1999

                                                                      December 31,
                                                             -----------------------------
  Assets                                                         2000            1999
                                                             -------------   -------------
<S>                                                          <C>             <C>
Current Assets
  Cash and cash equivalents                                  $      18,732   $     587,559
  Accounts receivable, net of allowance for
    doubtful accounts of $41,746 and $15,000 at
    December 31, 2000 and 1999, respectively                        35,965          63,233
  Due from officers                                                 40,000          65,000
  Prepaid expenses                                                    --             4,324
  Inventories                                                       91,328         352,176
  Other current assets                                               5,156           1,930
                                                             -------------   -------------
      Total current assets                                   $     191,181   $   1,074,222
                                                             -------------   -------------
Property and Equipment, at cost                              $     663,111   $      84,869
  Less accumulated depreciation                                   (132,078)        (12,679)
                                                             -------------   -------------
      Total property and equipment                           $     531,033   $      72,190
                                                             -------------   -------------
Other Assets                                                 $        --     $       5,000
                                                             -------------   -------------
      Total assets                                           $     722,214   $   1,151,412
                                                             -------------   -------------
  Liabilities and Stockholders' Equity

Current Liabilities
  Current maturities of long-term debt                       $      44,041   $      31,974
  Current maturities of capital lease obligations                  109,017            --
  Accounts payable and accrued expenses                            932,750       1,020,428
  Stock subscriptions refund payable                                18,700          22,500
                                                             -------------   -------------
      Total current liabilities                              $   1,104,508   $   1,074,902
                                                             -------------   -------------
Long-Term Liabilities,
  capital lease obligations, less current maturities         $      42,066   $        --
                                                             -------------   -------------

      Total liabilities                                      $   1,146,574   $   1,074,902
                                                             -------------   -------------

Commitments and contingencies                                $        --     $        --
                                                             -------------   -------------
Stockholders' Equity (Deficit)
  Preferred stock, authorized 500,000 shares; no shares
     outstanding                                             $        --     $        --
  Common stock, $0.0001 par value, authorized 80,000,000
    shares in 2000 and 1999; issued and outstanding
    31,733,848 and 11,795,429 shares in 2000 and 1999,
    respectively                                                     3,173           1,180
  Additional paid-in capital                                     6,714,203       7,245,967
  Deferred compensation                                           (116,275)       (721,900)
  Retained earnings (deficit)                                   (7,025,461)     (6,448,737)
                                                             -------------   -------------
      Total stockholders' equity (deficit)                   $    (424,360)  $      76,510
                                                             -------------   -------------
      Total liabilities and stockholders' equity (deficit)   $     722,214   $   1,151,412
                                                             =============   =============



See Notes to Consolidated Financial Statements.






</TABLE>
                                      F-2
<PAGE>
<TABLE>
<CAPTION>





                                       SYCONET.COM, INC.

                              Consolidated Statement of Operations
                              Three Years Ended December 31, 2000



                                                      2000            1999            1998
                                                  ------------    ------------    ------------
<S>                                               <C>             <C>             <C>
Net sales                                         $    713,972    $  1,153,536    $    625,955

Cost of goods sold                                $    561,025    $    851,478    $    512,024
                                                  ------------    ------------    ------------
    Gross profit                                  $    152,947    $    302,058    $    113,931

Operating expenses:
  Selling, general and administrative expenses    $  3,328,214    $  1,753,423    $    771,395
  Amortization of deferred compensation related
    to stock options                              $    196,854    $  3,846,014    $       --
  Reversal of stock compensation expense          $ (3,040,000)   $       --      $       --
  Restructuring and other non-recurring charges   $    221,148    $       --      $       --
                                                  ------------    ------------    ------------
    Operating (loss)                              $   (553,269)   $ (5,297,379)   $   (657,464)
                                                  ------------    ------------    ------------
Nonoperating income (expense):
  Interest income                                 $    23,818     $      1,722    $       --
  Interest expense                                    (36,314)          (2,316)        (3,722)
  Other income (expense)                              (10,959)            --              157
                                                  ------------    ------------    ------------
                                                  $   (23,455)    $       (594)   $     (3,565)
                                                  ------------    ------------    ------------
    Net (loss)                                    $   (576,724)   $ (5,297,973)   $   (661,029)
                                                  ============    ============    ============
Loss per common share, basic and diluted          $      (0.03)   $      (0.55)   $      (0.12)
                                                  ============    ============    ============
Weighted average shares outstanding, basic        $ 16,796,363    $  9,682,754    $  5,625,507
                                                  ============    ============    ============
Weighted average shares outstanding, diluted      $ 17,301,363    $  9,682,754    $  5,625,507
                                                  ============    ============    ============

See Notes to Consolidated Financial Statements










                                      F-3

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                              SYCONET.COM, INC.

                               Consolidated Statements of Stockholders' Equity
                                     Three Years Ended December 31, 2000




                                                                 Additional                     Retained
                                                     Common       Paid-In        Deferred       Earnings
                                                      Stock       Capital      Compensation     (Deficit)
                                                  ------------  ------------   ------------   -------------
<S>                                               <C>           <C>            <C>            <C>
Balance, December 31, 1997                        $       515   $   511,273    $      --      $  (489,735)
  Net (loss)                                      $      --     $      --      $      --      $  (661,029)
  Issuance of 1,347,000 shares of common stock    $       135   $   522,615    $      --      $      --
                                                  ------------  ------------   ------------   -------------
Balance, December 31, 1998                        $       650   $ 1,033,888    $      --      $(1,150,764)
  Net (loss)                                      $      --     $      --      $      --      $(5,297,973)
  Issuance of 5,290,376 shares of common stock    $       529   $ 1,643,915    $      --      $      --
  Exercise of 5,000 common stock options          $         1   $       250    $      --      $      --
  Deferred compensation related to
    common stock options                          $      --     $ 4,567,914    $(4,567,914)   $      --
  Amortization of deferred compensation
    related to common stock options               $      --     $      --      $ 3,846,014    $      --
                                                  ------------  ------------   ------------   -------------
Balance, December 31, 1999                        $     1,180   $ 7,245,967    $  (721,900)   $(6,448,737)
  Net (loss)                                      $      --     $      --      $      --      $  (576,724)
  Issuance of 19,658,419 shares of common stock   $     1,965   $ 2,774,085    $      --      $      --
  Exercise of 280,000 common stock options        $        28   $   142,922    $      --      $      --
  Deferred compensation related to
    common stock options                          $      --     $    48,320    $   (48,320)   $      --
  Amortization of deferred compensation
    related to common stock options forfeited     $      --     $  (457,091)   $   457,091    $      --
  Amortization of deferred compensation
    related to common stock options               $      --     $      --      $   196,854    $      --
  Cancellation of stock options                   $      --     $(3,040,000)   $      --      $      --
                                                  ------------  ------------   ------------   -------------
Balance, December 31, 2000                        $     3,173   $ 6,714,203    $  (116,275)   $(7,025,461)
                                                  ============  ============   ============   =============

See Notes to Consolidated Financial Statements.










</TABLE>
                                      F-4

<PAGE>
<TABLE>
<CAPTION>




                                                 SYCONET.COM, INC.
                                       Consolidated Statements of Cash Flows
                                        Three Years Ended December 31, 2000

                                                                           2000           1999           1998
                                                                       ------------   ------------   ------------
<S>                                                                    <C>            <C>            <C>
Cash Flows From Operating Activities
  Net (loss)                                                           $  (576,724)   $(5,297,973)   $  (661,029)
  Adjustments to reconcile net (loss) to net cash
    (used in) operating activities:
      Depreciation                                                     $   133,634    $     7,204    $     4,552
      Amortization of deferred compensation
        related to stock options                                       $   196,854    $ 3,846,014    $      --
      Loss on disposal of property and equipment                       $   114,598    $      --      $      --
      Reversal of stock compensation                                   $(3,040,000)   $      --      $      --
      Changes in assets and liabilities:
        (Increase) decrease in accounts receivable                     $    27,268    $   (22,727)   $   (22,494)
        (Increase) decrease in prepaid expenses                        $     4,324    $    (4,324)   $     5,000
        (Increase) decrease in inventory                               $   260,848    $  (184,669)   $  (167,507)
        (Increase) in other current assets                             $    (3,226)   $    (1,930)   $      --
        Decrease in other assets                                       $     5,000    $      --      $      --
        Increase (decrease) in accounts payable and accrued expenses   $   (87,678)   $   719,126    $   232,401
        Increase (decrease) in stock subscription refund payable       $    (3,800)   $      --      $    22,500
                                                                       ------------   ------------   ------------
          Net cash (used in) operating activities                      $(2,968,902)   $  (939,279)   $  (586,577)
                                                                       ------------   ------------   ------------
Cash Flows From Investing Activities,
  purchase of property and equipment                                   $  (510,608)   $   (59,166)   $   (16,473)
                                                                       ------------   ------------   ------------
Cash Flows From Financing Activities
  Proceeds from issuance of stock                                      $ 2,919,000    $ 1,644,695    $   522,750
  Short-term loans from officers                                       $      --      $   (10,000)   $    10,000
  Short-term loans to officers                                         $    25,000    $   (65,000)   $      --
  Short-term loans to employees                                        $      --      $     2,000    $    (2,000)
  Principal payments on capital leases                                 $   (45,384)   $      --      $      --
  Proceeds from long-term borrowing                                    $    29,061    $      --      $      --
  Principal payments on long-term debt                                 $   (16,994)   $    (6,367)   $   (10,289)
                                                                       ------------   ------------   ------------
          Net cash provided by financing activities                    $ 2,910,683    $ 1,565,328    $   520,461
                                                                       ------------   ------------   ------------
          Increase (decrease) in cash and cash
            equivalents                                                $  (568,827)   $   566,883    $   (82,589)

Cash and Cash Equivalents
  Beginning                                                            $   587,559    $    20,676    $   103,265
                                                                       ------------   ------------   ------------
  Ending                                                               $    18,732    $   587,559    $    20,676
                                                                       ============   ============   ============
Supplemental Disclosures of Cash Flow Information,
  cash payments for interest                                           $    30,645    $     1,173    $     2,712
                                                                       ============   ============   ============
Supplemental Disclosures of Noncash Investing
  and Financing Activities,
  property and equipment acquired through capital leases               $   196,467    $     --       $     --
                                                                       ============   ============   ============

See Notes to Consolidated Financial Statements.





                                      F-5
</TABLE>

<PAGE>


                                SYCONET.COM, INC.

                   Notes to Consolidated Financial Statements



Note 1.    Nature of Business and Significant Accounting Policies

     Syconet.com, Inc. (the "Corporation") is a distributor of Japanese Anime to
     retailers and customers worldwide.  Sales are made in the United States and
     internationally  through several websites on the Internet,  the publication
     of a catalog and attendance at conventions across the United States.

     A summary of the Corporation's accounting policies is as follows:

          Cash and Cash Equivalents

               For  purposes of  reporting  the  statements  of cash flows,  the
               Corporation includes all cash accounts,  which are not subject to
               withdrawal restrictions or penalties,  and all highly liquid debt
               instruments  purchased with a maturity of three months or less as
               cash and cash equivalents. Certificates of deposit, regardless of
               maturities,  are  included  as cash and cash  equivalents  on the
               accompanying balance sheets.

          Accounts Receivable

               Accounts  receivable  are  shown  net of  related  allowance  for
               doubtful accounts. The allowance for doubtful accounts is $41,746
               and $15,000 for December 31, 2000 and 1999, respectively.

          Inventories

               Inventories are stated at the lower of cost (first-in,  first-out
               method) or market.  Inventories  at  December  31,  2000 and 1999
               consisted  of  goods,  primarily  anime  videos,   purchased  for
               redistribution.  The Corporation's  severe cash flow shortage has
               hampered its ability to purchase new product. Without new product
               purchases,  the older  product in stock was impaired and has been
               written  down during 2000 in the amount of $58,789 to reduce it's
               carrying  value to  $91,328,  which  reflects  the  lower of cost
               (first-in, first-out method) or market at December 31, 2000.

          Property and Equipment

               Property  and  equipment,   principally   computer  hardware  and
               software,   are  stated  at  historical  cost  less   accumulated
               depreciation.   The  costs  of  additions  and  improvements  are
               capitalized,   while  maintenance  and  repairs  are  charged  to
               expense.  Depreciation is provided using the straight-line method
               over a three to five-year  estimated life.  Depreciation  expense
               totaled $133,634,  $7,204 and $4,552 for the years ended December
               31, 2000, 1999 and 1998, respectively.


                                      F-6
<PAGE>


                          Notes to Financial Statements


          Loss Per Share

               Per  Financial  Accounting  Standards  Board  Statement  No. 128,
               "Earnings Per Share," basic earnings per share is computed on the
               weighted  average number of shares  outstanding  and excludes any
               dilutive effects of options, warrants and convertible securities.
               Diluted  earnings  per share is computed  in a manner  similar to
               basic EPS,  except for certain  adjustments  to the numerator and
               the  denominator.  Diluted  EPS  gives  effect  to  all  dilutive
               potential common shares that were outstanding  during the period.
               Dilution  reduces  EPS  and  results  from  the  assumption  that
               convertible  securities were converted,  that options or warrants
               were  exercised,  or that  other  shares  were  issued  upon  the
               satisfaction of certain conditions.  Common equivalent shares are
               excluded from the computation if their effect is antidilutive.

          Revenue Recognition

               The Corporation recognizes revenue from product sales, net of any
               discounts  that  range  from 28% to 50%,  when the  products  are
               shipped to customers.  Outbound shipping and handling charges are
               included in net sales. The Corporation  provides an allowance for
               sales returns, which has been insignificant,  based on historical
               experience.

          Principles of Consolidation

               The  consolidated  financial  statements  include the accounts of
               Syconet.com,  Inc. and its non-operating subsidiaries.  There are
               no inter-company balances and transactions.

          Advertising Costs

               Advertising  costs are  expensed as incurred.  Advertising  costs
               were  $635,885,  $72,762 and $17,030 for the years ended December
               31, 2000, 1999 and 1998, respectively.

          Software Development Costs

               In accordance  with  Statement of Position No. 98-1,  "Accounting
               for Costs of Computer Software Developed or Obtained for Internal
               Use," the Corporation  capitalizes  software development costs in
               the  application  development  stage of the software  development
               project. To date, all of the Corporation's costs for research and
               development  of  software   development  have  been  expensed  as
               incurred since the amount of software  development costs incurred
               subsequent to the preliminary product stage has been immaterial.

          Restructuring Charges and Other Unusual Items

               Restructuring  charges consist primarily of penalties  associated
               with early  terminations  of  various  leases on  facilities  and
               furniture  which the  Corporation is unable to use as a result of
               downsizing and  consolidation of operations.  Other unusual items
               consist of one-time write-downs for certain assets from which the
               Corporation may never benefit.  Following is a breakdown of these
               charges:

               Losses from facility exit and lease cancellations   $    106,150
               Asset write-downs                                        114,998
                                                                   ------------
                                                                   $    221,148
                                                                   ============

                                      F-7
<PAGE>


                          Notes to Financial Statements

          Income Taxes

               Deferred  taxes  are  provided  on  a  liability  method  whereby
               deferred  tax  assets are  recognized  for  deductible  temporary
               differences and operating loss and tax credit  carryforwards  and
               deferred tax  liabilities  are recognized  for taxable  temporary
               differences.  Temporary  differences are the differences  between
               the  reported  amounts  of asset  and  liabilities  and their tax
               bases.  Deferred tax assets are reduced by a valuation  allowance
               when,  in the opinion of  management,  it is more likely than not
               that some  portion or all of the  deferred tax assets will not be
               realized.  Deferred tax assets and  liabilities  are adjusted for
               the  effects  of  changes  in tax laws  and  rates on the date of
               enactment.

          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.

          Recent Accounting Pronouncements

               In September  2000, the Emerging  Issues Task Force (EITF) issued
               its final consensus on EITF Issue 00-10, "Accounting for Shipping
               and Handling  Fees and Costs." This  consensus  provided that all
               amounts billed for shipping and handling in a sale transaction be
               classified as revenue. The Corporation currently includes in cost
               of sales inbound  shipping  costs,  but  classifies  warehousing,
               order  fulfillment,  and outbound  shipping  costs under Selling,
               General and Administrative Expense.


Note 2.   Accounts Payable and Accrued Expenses

          The Corporation's accounts payable and accrued expenses consist of the
          following:

                                             December 31,
                                       -----------------------
                                          2000         1999
                                       ----------   ----------
               Accounts payable        $  698,714   $  330,151
               Professional services   $  198,936   $  461,103
               Salaries                $    4,596   $  123,480
               Payroll taxes           $       98   $   74,052
               Other                   $   30,406   $   31,642
                                       ----------   ----------
                                       $  932,750   $1,020,428
                                       ==========   ==========



                                      F-8

<PAGE>


                          Notes to Financial Statements


Note 3.   Long-Term Debt

           The Corporation's long-term debt is as follows:

                                                              December 31,
                                                         ---------------------
                                                           2000         1999
                                                         ---------   ---------
               Note payable, due in monthly
                 installments of $1,517, interest
                 at 9.25%, uncollateralized,
                 due on demand                           $  26,380   $  31,974

               Note payable, interest at 9.25%,
                 uncollateralized, due July 21, 2001        17,661        --
                                                         ---------   ---------
                                                         $  44,041   $  31,974
               Less current maturities                   $  44,041   $  31,974
                                                         ---------   ---------
                                                         $     --    $    --
                                                         =========   =========




Note 4.   Capital Lease Obligations

          The  Corporation   leases  certain  equipment  under  capital  leases.
          Following is an analysis of the leased assets included in property and
          equipment:


                                                               December 31,
                                                        -----------------------
                                                          2000           1999
                                                        ---------      --------
               Automobile                               $  28,065      $   --
               Computer equipment                         177,363          --
               Telephone equipment                          4,751          --
                                                        ---------      --------
                                                        $ 210,179      $   --
               Less accumulated depreciation              (32,536)         --
                                                        ---------      --------
                                                        $ 177,643      $   --
                                                        =========      ========

                                      F-9

<PAGE>


                          Notes to Financial Statements


          All of the  capital  leases are secured by the leased  equipment.  The
          following is a schedule of minimum lease payments under these leases:


                 Years Ended
                 December 31,
               ---------------
                    2001                                              $ 125,601
                    2002                                                 33,221
                    2003                                                  5,211
                    2004                                                  1,203
                                                                      ----------
               Total minimum lease payments                           $ 171,116
               Less amount representing interest                        (20,033)
                                                                      ----------
               Present value of minimum lease payments                $ 151,083
               Less current obligation on capital leases               (109,017)
                                                                      ----------
               Long-term obligations on capital leases                $  42,066
                                                                      ==========




Note 5.   Operating Lease

          The  Corporation  leases  an  automobile  under  an  operating  lease.
          Scheduled payments under this lease are as follows:




                 Years Ended
                 December 31,
               ---------------
                    2001                            $   6,075
                    2002                                2,531
                                                    ----------
                                                    $   8,606
                                                    ==========



          The total rent expense  included in the  statements of operations  for
          the years ended December 31, 2000, 1999 and 1998 was $79,295,  $50,566
          and $53,314, respectively.


Note 6.   Reversal of Stock Compensation

          During the first and second  quarter of 2000,  12,500,000  outstanding
          stock options were cancelled or forfeited,  resulting in a reversal of
          $3,040,000 of stock compensation expense.


Note 7.   Credit Risk

          The  Corporation  maintains  its cash  accounts  and  certificates  of
          deposit at various  commercial  banks.  At December 31, 2000 and 1999,
          all   deposits   were  covered  by  the  Federal   Deposit   Insurance
          Corporation.


                                      F-10
<PAGE>

                          Notes to Financial Statements


Note 8.   Related Party Transactions

          The amounts due from officers represent  short-term cash advances.  At
          December 31, 1999,  the  Corporation  had $65,000 due from an officer,
          which  was  collected  in  early  2000.  At  December  31,  2000,  the
          Corporation had $40,000 due from a former officer.  The former officer
          took an advance on a bonus  during the year ended  December  31, 2000,
          which the Board of  Directors  later  determined  was not earned.  The
          $40,000 is recorded in the financial  statements as a loan receivable.
          In February 2001, the former officer repaid the loan with free-trading
          stock with a $30,000  fair market  value as of the date of  repayment.
          The Corporation  charged the remaining  balance of $10,000 to bad debt
          expense in 2001.


Note 9.   Loss Per Share

          The effect on weighted  average number of shares of diluted  potential
          common stock are not included in the  computation  if their  inclusion
          would have an  antidilutive  effect (reduce the loss per common share)
          applicable to the loss from  operations  for the years ended  December
          31, 2000, 1999 and 1998.

          For the year ended December 31, 2000,  505,000 shares were included in
          computing loss per share assuming  dilution because their effects were
          dilutive. Options of 14,916,000 and 5,471,000 shares were not included
          in  computing  loss per share  assuming  dilution  for the years ended
          December 31, 1999 and 1998,  respectively,  because their effects were
          antidilutive  and the potential common stock did not have an effect on
          net loss.


Note 10.  Stock Options

          The  Corporation  authorized  the grant of 249,562  non-qualified  and
          2,446,117 qualified stock options in 2000, 3,320,000 non-qualified and
          6,130,000  qualified  stock options in 1999, and 86,000  non-qualified
          stock  options  in  1998  to key  employees,  directors,  vendors  and
          investors of the Corporation. Stock options that were forfeited during
          the year included  280,000 stock  options  granted in 2000,  8,880,000
          stock options  granted in 1999,  46,000 stock options granted in 1998,
          and 4,900,000  options granted in 1997. For the remaining  outstanding
          stock options, the vesting periods range from immediately to two years
          for the  options  granted  in 2000,  immediately  to two years for the
          options  granted in 1999,  immediately for the options granted in 1998
          and immediately for the options granted in 1997.  Financial Accounting
          Standards  Board  ("SFAS")  Statement No. 123,  "Accounting  for Stock
          Based  Compensation,"  provides for a fair value method of  accounting
          for employee options and measures compensation expense using an option
          valuation  model that takes into  account,  as of the grant date,  the
          exercise price and expected life of the options,  the current price of
          the underlying stock, and the risk-free interest rate for the expected
          term of the option. The Corporation has elected to continue accounting
          for employee  stock-based  compensation  under  Accounting  Principles
          Board  Opinion  ("APB")  No.  25 and  related  interpretations,  which
          generally  requires  that  compensation  cost  be  recognized  for the
          difference,  if any,  between the quoted market price of the stock and
          the amount an employee must pay to acquire the stock.



                                      F-11
<PAGE>

                          Notes to Financial Statements


          The Corporation  recorded aggregate  deferred  compensation of $48,320
          and $4,567,914 in 2000 and 1999,  respectively.  The amounts represent
          the  difference  between  the grant price and the deemed fair value of
          the  Corporation's  common stock for shares subject to options granted
          in 2000 and 1999. The  amortization of deferred  compensation  will be
          charged to operations  over the vesting  period of the options,  which
          range from one month to three years. Total amortization recognized was
          $196,854  and  $3,846,014  for the years ended  December  31, 2000 and
          1999,  respectively.  Amortization of deferred compensation related to
          common stock options  forfeited during the year 2000 totaled $457,091.
          The options that were granted in 2000 are not substantially  vested as
          of year-end.  At December 31, 2000,  863,679 stock options were vested
          and 1,252,000 were not vested.  The underlying stock options that were
          granted in the fourth quarter of 1999 were substantially  vested as of
          December 31, 1999. Under APB No. 25, because the exercise price of all
          outstanding options was equal to or greater than the fair value of the
          underlying  stock on the date of grant,  no  compensation  expense was
          recognized during the year ended December 31, 1998.

          If the fair value method of  accounting  for stock  options under SFAS
          123 had been applied there would have been no expense  relating to the
          stock options for 1998 since there was no determinable  fair value for
          the related stock at the grant date of the stock  options.  Net income
          would have been reduced in 2000 and 1999 as follows:

                                                2000             1999
                                           -------------     -------------
          Net loss
            As reported                    $   (576,724)     $ (5,297,973)
            Pro forma                          (603,037)       (8,511,679)



          In  determining  the pro forma amounts  above,  the fair value of each
          employee-related  grant is  estimated  at the  grant  date  using  the
          Black-Scholes option-pricing model with the following weighted-average
          assumptions  for grants in 2000:  Price  volatility of 85%,  risk-free
          interest  rate of 6.5%,  dividend  rate of 0% and expected  lives of 7
          years.


                                      F-12
<PAGE>

                          Notes to Financial Statements


          A summary of the status of the  outstanding  options at  December  31,
          2000,  1999 and 1998 and  changes  during the  periods  ended on those
          dates is as follows:
<TABLE>
<CAPTION>


                                             December 31, 2000           December 31, 1999         December 31, 1998
                                         ------------------------   -------------------------   ----------------------
                                                          Weighted                   Weighted                  Weighted
                                                          Average                    Average                   Average
                                                         Exercise                   Exercise                  Exercise
                                           Shares          Price      Shares          Price      Shares        Price
                                          -----------------------   -------------------------   ----------------------
                                          <S>           <C>         <C>          <C>            <C>          <C>
          Outstanding at beginning
            of year                       14,916,000      $ 0.74     5,471,000       $ 0.01     5,400,000    $   0.01
          Granted                          2,695,679        0.56     9,450,000         1.16        86,000        0.03
          Exercised                          280,000        0.51         5,000         0.05        15,000        0.01
          Forfeited                       14,106,000        0.76            --           --          --           --
                                          ----------                -----------                 ----------
          Outstanding at end of year       3,225,679                14,916,000                  5,471,000
                                          ==========                ===========                 ==========

          Exercisable at end of year       1,568,679                 5,916,000                  5,446,000

</TABLE>

          The  weighted-average  fair value of options  granted  during the year
          ended  December  31, 2000 was $0.42 and $2.44 for  options  granted at
          fair market value and for options  granted at below fair market value,
          respectively.  The weighted-average  exercise price of options granted
          during  the year  ended  December  31,  2000 was  $0.53  and $0.86 for
          options  granted at fair market value and for options granted at below
          fair market value, respectively.

          The following table summarizes  information about options  outstanding
          at December 31, 2000:

<TABLE>
<CAPTION>


                         Options Outstanding                       Options Exercisable
          ----------------------------------------------  ----------------------------------
                                              Weighted-
                                              Average     Weighted                  Weighted
                                             Remaining     Average                  Average
             Range of          Number       Contractual   Exercise     Number       Exercise
          Exercise Prices    Outstanding       Life         Price    Outstanding     Price
          ---------------   ------------  -------------   --------   -----------   ----------
          <S>               <C>           <C>            <C>         <C>           <C>
           $0.01 - 0.50      2,039,563         7.91       $ 0.14       592,563       $ 0.03
            0.51 - 1.42      1,186,116         5.21         1.18       976,116         1.14
                             ---------                              -----------
                             3,225,679                               1,568,679
                             =========                              ===========
</TABLE>



                                      F-13
<PAGE>
                          Notes to Financial Statements



Note 11.  Income Tax Matters

          Net  deferred tax assets  consist of the  following  components  as of
          December 31, 2000 and 1999:


                                                     2000              1999
                                                 -------------      ------------
          Deferred tax assets:
            Loss carryforwards                   $  1,077,000       $   867,000

            Less valuation allowance             $ (1,077,000)      $  (867,000)
                                                 -------------      ------------
                                                 $      --          $     --
                                                 =============      ============


          During the years ended  December  31, 2000 and 1999,  the  Corporation
          recorded a  valuation  allowance  of  $1,077,000  and  $867,000 on the
          deferred  tax assets to reduce the total to an amount that  management
          believes  will  ultimately  be realized.  Realization  of deferred tax
          assets is dependent upon  sufficient  future taxable income during the
          period that deductible  temporary  differences and  carryforwards  are
          expected to be available to reduce taxable income.  There was no other
          activity in the valuation allowance account during 2000 or 1999.

          Loss  carryforwards  for tax purposes as of December 31, 2000 have the
          following expiration dates:



          Expiration Date                     Amount
          ---------------                  ------------
               2017                        $   480,000
               2018                        $   630,000
               2019                        $ 1,440,000
               2020                        $   606,000
                                           ------------
                                           $ 3,156,000
                                           ============





          The income tax  provision  is less than would be  obtained by applying
          the statutory Federal corporate income tax rate to pre-tax  accounting
          income as a result of the following items:


                                               Years Ended December 31,
                                      ------------------------------------------
                                         2000           1999            1998
                                      ------------   ------------   ------------
Income tax (benefit) computed at
  federal statutory rates             $  (196,086)   $(1,801,311)   $  (224,750)
Increase (decrease) in income taxes
  resulting from:
    Nondeductible stock-based
      compensation expense            $    66,930    $ 1,307,645    $      --
    Valuation allowance               $    71,400    $   499,600    $   214,200
    Other                             $    57,756    $    (5,934)   $    10,550
                                      $      --      $       --     $      --
                                      ============   ============   ============



                                      F-14
<PAGE>

                          Notes to Financial Statements



Note 12.  Commitments and Contingencies

          The  Corporation  has  recorded on the  financial  statements  a lease
          liability for a vehicle  leased for a former  officer.  The vehicle is
          currently in the former officer's  possession.  The former officer has
          agreed to make payments and to remove the Corporation's  name from the
          lease.  The  Corporation has not made a payment on the lease since May
          2000.  Management  believes that the former officer is current on this
          obligation;  however,  no confirmation has been received that payments
          have been made or that the  Corporation's  name has been  removed from
          the lease. It may be possible that the Corporation  would owe interest
          and late fees in  addition to the  recorded  liability.  If owed,  the
          estimated interest and late fees would be $865.

          Sales tax reports  have not been filed in all  appropriate  states for
          the year 2000 in connection with convention sales. The Corporation has
          accrued  for the sales  tax  liability,  but may also have  associated
          penalties and interest, which cannot be estimated. It is possible that
          the associated states will file liens against the Corporation  causing
          the Corporation to be unable to operate conventions in those states.

          The Corporation has contracted out its order fulfillment and inventory
          storage.  Under  the  Corporation's  agreement,  the  cost  for  these
          services is the greater of $2.50 per shipment or $2,500 per month. The
          contract carries no time limit or expiration date.

          From time to time, the Corporation may be subject to legal proceedings
          and claims in the  ordinary  course of  business,  including  contract
          terminations,   employment   related  claims  and  claims  of  alleged
          infringement  of  trademarks,   copyrights,   and  other  intellectual
          property  rights.  The Corporation  currently is not aware of any such
          legal  proceedings or claims that it believes will have,  individually
          or in the  aggregate,  a  material  adverse  effect  on its  business,
          prospectus, financial condition and operating results.

          In January  2001,  the  Corporation  received a demand  letter from an
          investor  in one of their  private  placements.  Such  demand was made
          pursuant to Massachussetts General Laws Chapter 93A, alleging that the
          Corporation  engaged in unfair or deceptive  business  practices,  and
          seeks a return of the investor's $50,000 investment, with interest and
          payment  of his  attorney's  fee and  expenses.  Management  does  not
          believe  the  Corporation  engaged in such  practices  and  intends to
          vigorously contest any action that is brought against the Corporation.

Note 13.  Subsequent Events

          Issuance of Shares

          In December  2000,  5 million  shares of stock were issued in exchange
          for a possible  merger  agreement  in  anticipation  of an  equivalent
          amount  of  stock  from  the  merging  company.  In  early  2001,  the
          Corporation returned the stock and cancelled the merger agreement.  As
          of  December  31,  2000,  this  stock  is  reported  on the  financial
          statements as issued and  outstanding and its par value is included in
          common  stock.  However,  there is no value  imputed  to the shares in
          additional paid in capital.


                                      F-15
<PAGE>

                          Notes to Financial Statements



          Dispute with the Internal Revenue Service

          In January 2001, The Internal Revenue Service (IRS) indicated that the
          Corporation owed approximately  $4,800 for Federal  Unemployment taxes
          for the year ended December 31, 1998. It is the Corporation's position
          that there has been a  miscommunication  between the IRS and the State
          of Virginia.  The  Corporation has determined that the matter involves
          an  error  in  calculating   the  credit  to  be  applied  to  Federal
          Unemployment  taxes.  Unemployment taxes paid to the State of Virginia
          allows a credit for taxes paid for  Federal  Unemployment  taxes.  The
          Corporation is in the process of mitigating  the  assessment  with the
          IRS and expects no tax liability to be due.


Note 14.  Going Concern

          The accompanying financial statements have been prepared in conformity
          with generally  accepted  accounting  principles,  which  contemplates
          continuation  of the  Corporation  as a going  concern.  However,  the
          Corporation has sustained substantial operating losses since inception
          and the Corporation has used substantial amounts of working capital in
          its operations. The resulting cash flow shortage has seriously damaged
          the  Corporation's  working  relationships  with its suppliers and has
          limited the Corporation's  ability to obtain new product and the value
          of the inventory has been severely  impaired.  In addition,  there has
          been a loss of substantially all personnel,  all of which has caused a
          disruption to operations. The above conditions raise substantial doubt
          about the entity's ability to continue as a going concern.

          In view of these matters,  the  Corporation is seeking to enter into a
          business  partnership,  merger  or  acquisition  in order to remain in
          business.  The  Corporation  is actively  engaged in pursuing  such an
          arrangement;  however,  the Corporation  cannot assure that it will be
          able to find another  company  willing to take on the necessary  risks
          involved in such an arrangement.  Nor can the Corporation  assure that
          the resulting new business entity will continue in the sale of Anime.






                                      F-16
<PAGE>


<PAGE>



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

     None.


                                    PART III

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

         (a) Officers and directors: The following table provides information
concerning each of our executive officers and directors as of April 17, 2001.
All directors hold office until the next annual meeting of shareholders or until
their successors have been elected and qualified, or until a director's death,
resignation or removal.

Name                            Age           Position
----                            ---           --------

William Spears                  38            president, chief executive officer
                                              and director

J. Larry Hineline               55            chairman of the board

     William  Spears:  Mr.  Spears has been our  president  and chief  executive
officer since June 2000 when our co-founder Sy Picon  resigned.  He has been one
of our directors since our inception.  He was our president from inception until
June 1998, when he became our executive vice  president,  and our secretary from
November  1999 until June 2000.  He was a  co-founder  of the  Virginia  limited
partnership formed on February 1, 1997 which is our predecessor.  He has been in
the comic book  industry  since 1989 when he created a comic book title which he
published. In 1995, he opened a retail comic book specialty store in San Carlos,
California and expanded onto the Internet in 1996.  Since 1982, he has owned and
operated  the  Perfect  Shirt & Sign  Company,  a  promotional  screen  printing
facility which in 1990 expanded into supplying computer accessories.

     J. Larry Hineline: Mr. Hineline has been one of our directors since January
1998 and chairman of the board since  September  2000. He was our secretary from
June  1998  until  November  1999.  From  1978 to 1991 he was  employed  at U.S.
Surgical, most recently as senior director of operations, a position he held for
seven years. From 1991 to 1992, he was the  vice-president of product operations
for Joint Medical Products Corporation. Since October 1993 he has been the owner
of JVR Systems Inc. and Bear Services Inc.,  computer and consulting  companies,
respectively.  Since  February  1997 he also has been the owner of  DavDez  Arts
Inc., a publisher of comic books, short stories and graphic novels. Mr. Hineline
received his  undergraduate  degree from Troy State  University  in 1976 and his
M.B.A from California Coast University in 1999. He is currently  working towards
a Ph.D. in business administration.



                                       17

<PAGE>



     (b) Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
our  officers,  directors  and  certain  shareholders  (collectively  "Reporting
Persons") to file  reports of  ownership  and changes in ownership of our common
stock with the Securities and Exchange  Commission within certain periods and to
furnish us with copies of all such reports. To our knowledge,  based on a review
of the copies of such reports furnished to us and written  representations  that
no reports on Form 5 were required by such Reporting  Persons,  we believe that,
during our fiscal  year ended  December  31,  2000,  all  Section  16(a)  filing
requirements  were complied  with,  except that the following  beneficial  owner
failed to file a Form 3: Ross Rojek,  and the following  beneficial owner failed
to file Form 4s and a Form 5: Alliance Equities Inc.


Item 10.  Executive Compensation.

     (a) Summary  Compensation:  The following table summarizes the compensation
for the  fiscal  year ended  December  31,  2000 and the prior two fiscal  years
earned by or paid to our former and current chief executive officer.  All of Mr.
Picon's  options  set  forth  below,  with  the  exception  of  250,000  options
exercisable at $0.01 per share,  were cancelled,  with Mr. Picon's  consent,  in
June 2000.

                                                        Long Term Compensation
                               Annual Compensation      -----------------------
                               -------------------                  Awards
                                                                   Securities
Name and                                                           Underlying
principal position              Year      Salary        Bonus    Options(#)/SARS
------------------              ----      ------        -----    ---------------

Sy R. Picon, former CEO         2000     $153,752         $0                0
                                1999     $103,955         $0        4,600,000
                                1998     $ 58,231         $0                0
William Spears, current CEO     2000     $175,308         $0          500,000


<TABLE>
<CAPTION>

                                      Option/SAR Grants in Last Fiscal Year

                                               Individual Grants
                 -------------------------------------------------------------------------------
                    Number of      % of Total
                   Securities      Options/SARS
                   Underlying       Granted to        Exercise or                  Market Price
                  Options/SARS      Employees         Base Price      Expiration   on  Date of
Name               Granted (#)    in Fiscal Year       ($/share)         Date      of Grant ($)
----             ---------------  --------------     -------------    ----------  -------------
<S>               <C>              <C>               <C>              <C>         <C>
Sy R. Picon             0              ----              ----             ----        ---
William Spears    500,000*              29%             $0.19           08/04/10     $0.19

*On January 9, 2001, the exercise price of these options was adjusted to $0.075
per share.
</TABLE>



                                       18

<PAGE>
<TABLE>
<CAPTION>



                                Aggregated Option/SAR Exercises in Fiscal Year 2000
                                    and Option/SAR Values at December 31, 2000

                                                 Number of Securities            Value of Unexercised
                                                 Underlying Unexercised           in-the-Money
                                                 Options/SARs                    Options/SARs at
                  Shares              Value      Fiscal Year-End (#)             Fiscal Year-End ($)
                  Acquired on        Realized    ----------------------------    ---------------------------
Name              Exercise (#)         ($)       Exercisable    Unexercisable    Exercisable    Unexercisable
----              ------------      ---------    -----------    -------------    -----------    -------------
<S>               <C>               <C>          <C>            <C>              <C>            <C>
Sy R. Picon            0              $---         250,000                 0     $ 13,125.00      ------
William Spears         0              $---         250,000           500,000     $ 13,125.00      ------

</TABLE>

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

     Unless otherwise indicated,  we believe that the individuals listed in this
Item have the sole  power to vote and  dispose  of the  number of shares  listed
opposite their respective names.

     (a) Security ownership of certain beneficial owners

     The following table contains information  regarding ownership of our common
stock, which are our only voting securities,  which are deemed under the current
rules of the Securities and Exchange  Commission to be beneficially owned by any
person -- including any "group" as that term is used in Instruction No. 4 to S-B
Item 403 -- known by us to be the  beneficial  owner of more than  five  percent
(5%) of our common stock as of April 17, 2001:

Name and address                      No. of
of beneficial owner                 Shares Owned             Percentage of Class
-------------------                 ------------            -------------------

William Spears                       2,507,236(1)                   8%
3524 Beale Court
Woodbridge, VA 22193

J. Larry Hineline                    3,420,753(2)                   11
9266 Oak Hammock Lane
Jupiter, FL 33478

Alliance Equities, Inc.              9,752,654                      31
12147 N.W. 9th Drive
Coral Springs, FL 33071

----------



                                       19

<PAGE>



(1)  Includes  options to purchase  1,250,000  shares of common stock,  of which
     250,000 are  exercisable at $0.01 per share,  and 1,000,000 are exercisable
     at $.075 per share.

(2)  Includes  options to purchase  745,000 shares of common stock, all of which
     are exercisable at $.075 per share.

     (b) Security Ownership of Management.

     The following table contains information  regarding ownership of our common
stock, which are our only voting securities,  which are deemed under the current
rules of the Securities and Exchange  Commission to be beneficially owned by our
directors,  our executive  officers named in Item 5 below, and our directors and
executive officers as a group, as of April 17, 2001:

                                                No. of
Name and Address         Office              Shares Owned   Percentage of Class
----------------         ------              ------------   -------------------

William Spears           president, chief    2,507,236(1)            8%
3524 Beale Court         executive officer
Woodbridge, VA 22193     and director

J. Larry Hineline        chairman of the     3,420,753(2)           11
9266 Oak Hammock Lane    board
Jupiter, FL 33478

All Officers and                             5,927,989              18
Directors as a Group
(2 individuals)
----------------

(1)  Includes  options to purchase  1,250,000  shares of common stock,  of which
     250,000 are  exercisable at $0.01 per share,  and 1,000,000 are exercisable
     at $.075 per share.
(2)  Includes  options to purchase  745,000 shares of common stock, all of which
     are exercisable at $.075 per share.


Item 12.  Certain Relationships and Related Transactions

     William Spears, our chief executive  officer,  has agreed to accept from us
all of our  Anime  inventory  in  settlement  of any and all  claims he may have
against us, including, but not limited to, back salary.




                                       20

<PAGE>



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

     (a) Exhibits.

          3.1  Certificate of Incorporation(1)

          3.1a Certificate  of Amendment of the  Certificate  of  Incorporation,
               dated March 11, 1998(1)

          3.1b Certificate of Amendment of Certificate of  Incorporation,  dated
               February 17, 1999(1)

          3.1c Certificate of Amendment of Certificate of  Incorporation,  dated
               June 21, 2000(2)

          3.2  By-Laws(1)

          4    Specimen Common Stock Certificate(3)

          10.1 1997 Incentive Compensation Program, as amended(4)

          21   Subsidiaries(2)

          23   Consent of Yount, Hyde & Barbour, P.C.(5)

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

(1)  Incorporated by reference on Form 10-SB, filed on January 25, 2000.
(2)  Incorporated by reference on Form SB-2,  Amendment No. 1, filed on June 27,
     2000.
(3)  Incorporated  by reference on Form 10-SB,  Amendment  No. 1, filed on March
     21, 2000.
(4)  Incorporated  by reference on Form SB-2,  Post  Effective  Amendment No. 1,
     filed on August 28, 2000.
(5)  Filed herewith.

     (b) Reports on Form 8-K.

     No  reports on Form 8-K were  filed  during the last  quarter of the period
covered by this report.



                                       21

<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.


                                                          SYCONET.COM, INC.
                                                     ---------------------------
                                                            (Registrant)


                                            By       /s/ William Spears
                                                     ---------------------------
                                                     William Spears
                                                     Principal Executive Officer

                                                     Date:  April 27, 2001



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


                                            By       /s/ William Spears
                                                     ---------------------------
                                                     William Spears
                                                     Director

                                                     Date:   April 27, 2001


                                            By       /s/ J. Larry Hineline
                                                     ---------------------------
                                                     J. Larry Hineline
                                                     Director

                                                     Date:   April 27, 2001


                                       22