SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

    (Mark One)
       [X]       ANNUAL  REPORT  UNDER  SECTION  13 OR 15(D)  OF THE  SECURITIES
                 EXCHANGE ACT OF 1934 For fiscal year ended June 30, 2000.

       [ ]       TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE
                 SECURITIES  EXCHANGE ACT OF 1934
                 For the transition period from ___________  to ____________.

                        Commission file number: 0-23769


                               AMERICOM USA, INC.
             (Exact name of registrant as specified in its charter)


              Delaware                                           52-2068322
   (State of other jurisdiction of                            (I.R.S. Employer
   incorporation or organization)                           Identification No.)

          825 Buckley Road, Suite B, San Luis Obispo, California 93401
              (Address of principal executive offices) (zip code)

                     Issuer's Telephone Number: 805/542-6705


Securities  registered  under Section  12(g) of the Exchange Act:  Common Stock,
$.0001 par value per share.

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the last 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  files 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. [X]

Revenues for the year ended June 30, 2000, were $1,115,297.

As of August 31, 2000,  the  aggregate  market value of the voting stock held by
non-affiliates,  computed  using the issuer's book value of ($568,622) or ($.01)
per share, was $0.

As of September 18, 2000, the number of shares of Common Stock  outstanding  was
42,696,746.

Documents incorporated by reference:  None.

Transitional Small Business Disclosure Format (check one): Yes _____   No  X  .
                                                                          -----

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                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

Overview

         AmeriCom  USA,  Inc.  ("AmeriCom",  and together  with its wholly owned
subsidiaries,  the  "Company")  is an  emerging  technology  company  focused on
developing  innovative  systems to facilitate  advertising and commerce over the
Internet. The Company has recently decided to focus its resources primarily on a
proprietary  Internet  messaging  technology  known and marketed  under the name
AdCast.

         The  AdCast  system is an  integrated  message  delivery  system  which
displays  within  a web  browser  non-scrollable  messaging  frames  capable  of
providing a full spectrum of rich media content  including  streaming  audio and
video. The AdCast system can be used for a variety of purposes including:

                  o     Internet advertising;
                  o     B2B e-commerce;
                  o     Content delivery; and
                  o     Streaming media applications.

         The Company believes its immediate commercial opportunity for AdCast is
in the Internet advertising  industry.  AmeriCom believes that AdCast, when used
with  TrueManagement(TM),  the Company's advertising campaign management system,
and when deployed on the Company's Direct and Interactive  Network (the "DAI.Net
Network"),   a  virtual  Internet  advertising  network  made  up  of  small  to
medium-sized  member  websites,  constitutes a unique  Internet  solution  which
provides  enhanced  services to companies that advertise or conduct business via
the Internet.

         In addition to  maintenance,  enhancement and support of AdCast and the
DAI.Net  Network,  the Company's  technology  group has an ongoing  research and
development  mission to design and develop new  technologies in keeping with its
overall corporate mission. The Company has recently completed initial design and
prototyping of a new programming and peer to peer networking  technology  called
VOSX. In the coming months,  the Company will examine the business case for VOSX
and determine its viability as a commercial product.

Company Background

         AmeriCom was  incorporated  in Delaware in 1994 under the name AmeriCom
USA, Inc. to market MyLine. MyLine is a telecommunication system developed under
contract by RMC Diversified Associates International, Ltd. ("RMC"), a California
company,  with Americom Ltd., a Turks and Caicos  corporation  ("Americom Ltd.")
unaffiliated  with  either  AmeriCom  or RMC.  RMC was owned by Robert M. Cezar,
Chairman of the Board of  Directors of AmeriCom.  In April 1996,  Americom  Ltd.
sold the  MyLine  technology  to  Enhanced  Service  Providers  LLC  ("ESP"),  a
Massachusetts   corporation.   As  part  of  the  sale,  AmeriCom  released  its
international  marketing  rights to the MyLine  technology  to Americom  Ltd. As
consideration,  AmeriCom

<PAGE>

received  $540,000 in cash and 161,000 shares of ESP common stock,  which shares
were valued at $0 in AmeriCom's  financial  statements at the time of sale.  The
MyLine  technology  has  subsequently  been acquired by AmeriCom.  (See "Company
Acquisitions--MyLine  Technology" below.) Following the release of the marketing
rights to the MyLine technology,  AmeriCom was inactive until July 1998, when it
acquired, as a wholly-owned subsidiary,  RMC, which had developed the AdCast and
TrueManagement(TM) technologies.

Corporate Restructuring

         On  December  4, 1998,  AmeriCom  merged  with  Chatsworth  Acquisition
Corporation  ("Chatsworth"),  a Delaware  corporation  and a public shell,  with
Chatsworth  being the  surviving  corporation  (the  "Chatsworth  Merger").  The
Chatsworth  Merger took the form of a share  exchange in which all of the shares
of AmeriCom were  exchanged for  27,550,000  shares,  or (91.8%),  of the common
stock of Chatsworth.  The Chatsworth  Merger was accounted for under the reverse
take-over method of accounting.  Thereafter,  the name of Chatsworth was changed
to AmeriCom USA, Inc.

         The primary  objective of the Chatsworth  Merger was to make AmeriCom a
public  corporation  and have its shares listed on the National  Association  of
Securities  Dealers  Over-The-Counter  Bulletin  Board  system  ("NASD  OTCBB").
Subsequent  to the  Chatsworth  Merger,  application  was  made to the  National
Association of Securities  Dealers,  Inc.  ("NASD") for  AmeriCom's  stock to be
tradable on the NASD OTCBB.  The NASD has not approved  AmeriCom's  application,
primarily due to concerns related to an insufficient  number of shares of common
stock of Chatsworth being freely tradable prior to the merger with AmeriCom.

Company Acquisitions

         Kiosk  Software,  Inc. On January 24,  1999,  AmeriCom  entered into an
Agreement and Plan of  Reorganization  with Kiosk  Software,  Inc., a California
corporation,  pursuant to which Kiosk Software,  Inc. merged with and into Kiosk
Acquisition  Inc., a newly  formed  corporation  wholly  owned by AmeriCom.  The
merger was consummated on February 8, 1999, at which time Kiosk Acquisition Inc.
changed its name to Kiosk  Software,  Inc.  and Kiosk  Software,  Inc.  became a
wholly owned subsidiary of AmeriCom.  In the merger,  the outstanding  shares of
Kiosk Software,  Inc. were exchanged for 1,000,000  shares of AmeriCom's  common
stock at an exchange ratio of one-for-one.  The outstanding  options to purchase
shares of Kiosk  Software,  Inc. were exchanged for options to purchase the same
number of shares of AmeriCom's  common stock under  AmeriCom's 1999 Stock Option
Plan.  Options to  purchase  248,834  shares of  AmeriCom's  common  stock at an
exercise price of $0.35 per share,  132,245 shares at an exercise price of $1.15
per  share,  and  65,539  shares at an  exercise  price of $1.04 per share  were
granted to the former Kiosk Software, Inc. optionholders.  In addition, AmeriCom
advanced Kiosk Software, Inc. $629,950 to pay its outstanding liabilities.  Lori
S. Fisher,  the  principal  shareholder  of Kiosk  Software,  Inc.  prior to the
merger,  was appointed a director,  president and chief operating officer of the
post merger Kiosk Software, Inc. subsidiary.

         Kiosk Software, Inc. specializes in complete kiosk development services
including custom cabinet design and multimedia  software  development for a wide
variety of applications using its proprietary kiosk operating software.  In June
2000, the Company  completed the

                                      -2-

<PAGE>

enhancement and extension of its current kiosk  operating and remote  management
systems and is now evaluating alternatives for marketing the software.

         Jim and Jon Tech. On February 26, 1999,  AmeriCom and its  wholly-owned
subsidiary,  RMC, entered into an Agreement and Plan of Reorganization  with Jim
and Jon Tech, a California corporation ("J&J Tech"), to acquire J&J Tech and its
assets,  including  the J-Engine Tool (see "Company  Technologies"  below).  The
agreement  provided  for  the  following  consideration  to be  paid  to the two
shareholders  of J&J Tech,  Jon Iverson and Jim  Heintz:  (i) 200,000  shares of
AmeriCom's  common stock were divided pro rata between the two  shareholders  in
accordance  with  their  original  shareholdings  in J&J Tech;  (ii)  options to
purchase  300,000  shares of AmeriCom's  common stock were issued to each of the
two  shareholders at an exercise price of $2.00 per share; and (iii) $100,000 in
cash was paid to each of the two  shareholders.  In  addition,  Jon  Iverson was
elected  president of RMC and Jim Heintz was elected  RMC's chief  technological
officer.  RMC was  subsequently  liquidated  in August 1999.  The J-Engine  Tool
technology is currently utilized by the Company through DAI.Net, Inc.

         MyLine Technology.  Effective March 11, 1999,  AmeriCom entered into an
agreement  with Americom  Ltd.  pursuant to which  AmeriCom  acquired all right,
title and interest to the MyLine  technology from Americom Ltd. for an aggregate
consideration of (i) $538,000 in cash payable over a two year term, (ii) 500,000
shares of AmeriCom's  common stock, and (iii)  re-conveyance to Americom Ltd. of
all shares of ESP common stock owned by AmeriCom. The agreement was subsequently
amended to  provide  for  payment  of  $503,000  in cash and  517,500  shares of
AmeriCom's  common stock.  The  acquisition was completed on April 30, 1999. See
"Company Technologies" below.

         Telespace,  Ltd.  On July  1,  1999,  AmeriCom  entered  into a  Merger
Agreement and Plan of Reorganization with Telespace Ltd., a Delaware corporation
("Telespace").  The agreement  provided that AmeriCom would merge into Telespace
and the  stockholders of the Company would exchange shares of AmeriCom's  common
stock for 99.3% of the shares of Telespace.  In addition, the holders of options
to purchase shares of AmeriCom would receive options to purchase the same number
of Telespace shares. If fully exercised,  AmeriCom optionholders would have been
entitled  to  purchase,  in the  aggregate,  approximately  24%  of  Telespace's
outstanding  common  stock  (on a fully  diluted  basis).  It was  the  parties'
intention that upon completion of the Telespace merger, all outstanding stock of
AmeriCom would be tradable on the NASD OTCBB.

         The  Telespace  merger was  conditioned  on the  occurrence  of several
events,  including  the  receipt  of a  limited  offering  merger  permit  and a
determination  by the Department of Corporations of the State of California (the
"DOC"),  following a Fairness  Hearing,  making  available the Section  3(a)(10)
exemption under the Securities Act of 1933, as amended (the  "Securities  Act"),
and permitting  AmeriCom's common stock to be freely tradable. On July 23, 1999,
an application for a limited offering merger permit and a request for a Fairness
Hearing before the DOC was submitted. However, due to various concerns raised by
the DOC relating to  Telespace,  the Telespace  merger was  terminated by mutual
consent and the DOC application was voluntarily withdrawn by Telespace.

                                      -3-

<PAGE>

         DigiCities,  Inc. On July 1, 1999,  AmeriCom  executed a Memorandum  of
Understanding with DigiCities,  Inc., a California  corporation  ("DigiCities"),
pursuant  to which (i)  AmeriCom  would  acquire all of  DigiCities  outstanding
shares of common stock in exchange for  3,500,000  shares of  AmeriCom's  common
stock;  (ii) AmeriCom would  allocate  options to purchase  1,500,000  shares of
AmeriCom's  common stock to  DigiCities  employees;  and (iii) Scott Carni would
remain a director  and  president  of  DigiCities  and Chad Lems would  remain a
director and vice  president of  DigiCities.  The  memorandum  provided that the
DigiCities  merger would be completed one day prior to the effective date of the
then  proposed  Telespace  merger,  but in any case no later than  September 30,
1999.  The parties  executed a formal  Agreement and Plan of  Reorganization  on
August 2, 1999.

         However,  in light  of the  termination  of the  Telespace  merger,  on
September 27, 1999, AmeriCom and DigiCities entered into a new Merger Agreement,
pursuant  to which  DigiCities  merged  with and into  AmeriCom.  The  agreement
provided for the following:  (i) AmeriCom's  Certificate  of  Incorporation  was
amended to change its authorized  capital stock to 120,000,000  shares, of which
99,000,000  shares were  designated as Class A common  stock,  $.0001 par value,
1,000,000 shares were designated as Class B common stock,  $.0001 par value, and
20,000,000  shares were designated as preferred  stock,  $.0001 par value;  (ii)
each  outstanding  share of AmeriCom's  common stock was converted and exchanged
for one share of the new  Class A common  stock;  (iii)  all of the  outstanding
shares of common stock of DigiCities  were converted  into  3,500,000  shares of
AmeriCom's Class A common stock;  and (iv) options to purchase  1,500,000 shares
of  AmeriCom's  Class A common stock were issued to DigiCities  employees  under
AmeriCom's  1999 Stock Option Plan.  AmeriCom's new Class A common stock has the
same rights and status as AmeriCom's old common stock. The DigiCities merger was
consummated on January 1, 2000.

         In connection with the DigiCities  merger,  AmeriCom received a limited
offering merger permit following a Fairness Hearing with the DOC, permitting the
free  trading of all of the then  issued and  outstanding  shares of  AmeriCom's
Class A common stock under federal securities laws.

         DigiCities specialized in the marketing and development of websites for
small-to-medium  sized businesses.  DigiCities had commenced business in January
1999 by developing  websites for business customers using a standardized  layout
and format,  and  maintaining  those websites on its own web servers  located in
Santa Monica,  California.  As a result of the highly  competitive nature of the
industry and developments not foreseen by AmeriCom at the time of the DigiCities
merger,  the Company's  revenues from website  development and hosting  services
have been significantly lower than expected.  For these reasons, and due as well
to the Company's  revision of its operating  strategy to focus  resources on the
AdCast system, the Company decided to discontinue its DigiCities  activities and
to write down its DigiCities  investment,  resulting in a goodwill impairment of
approximately $6 million.  In connection with such  reorganization,  the Company
was able to  substantially  reduce its  workforce to 34 full-time  employees and
close its San Francisco and Los Angeles  facilities,  resulting in a significant
reduction in expenses. As of June 30, 2000, DigiCities maintained  approximately
24 websites  and had no  employees,  and  generated  revenues  of  approximately
$18,909 since the merger.

                                      -4-

<PAGE>

         Marketing Agreement for Russia with Nicola Savoretti.  On September 22,
1999,  AmeriCom entered into a Memorandum of Understanding with Nicola Savoretti
(the  "Savoretti  MOU")  providing  for  the  appointment  of Mr.  Savoretti  as
exclusive  licensee to market AmeriCom's  products in Russia.  The Savoretti MOU
called for a term of 10 years with a renewal  option for an  additional  10-year
term.  In  consideration,  Mr.  Savoretti  paid the Company a  licensing  fee of
$100,000,  and the Company  granted Mr.  Savoretti an option to purchase  20,000
shares of the  Company's  common stock at an exercise  price of $2.00 per share,
exercisable  within one year.  These options were never exercised and have since
expired.

The Company's Operations

         The Company's  operations  currently are conducted through AmeriCom and
an  operating  subsidiary,  DAI.Net,  Inc.  ("DAI.Net").  The  Company  recently
consolidated its operations, and the technologies, operations and employees of a
second wholly owned  subsidiary,  Kiosk  Software  Inc.,  have been brought into
AmeriCom.  The Company is currently  evaluating  its plans for the K/OS suite of
kiosk operating software, Kiosk Software, Inc.'s principal product.

         AmeriCom  USA,  Inc.  Responsibility  for the  Company's  research  and
development,   engineering,   quality  assurance,   corporate   marketing,   and
administration is with the parent company AmeriCom.  The technical operations of
DAI.Net are managed by the AmeriCom  technology  group.  Pursuant to an Internet
Services  and   Co-Location   Agreement  with  AboveNet   Communications,   Inc.
("AboveNet"),  AmeriCom's  server  equipment  is  located at the  facilities  of
AboveNet in San Jose,  California  and  AboveNet  provides  AmeriCom  with basic
server maintenance and network provisioning.

         Efforts  with  respect  to  the  further  development,  evaluation  and
implementation  of the new programming  and peer to peer  networking  technology
VOSX, and the re-engineering  and expansion of the MyLine remotely  programmable
personal  communications system currently used by the Company and a small number
of customers,  are being carried out by the AmeriCom  technology group under the
leadership of Robert M. Cezar, the principal inventor of the technologies.  This
group is also  engaged in  development  of new  technologies  for the purpose of
enhancing and expanding the Company's principal Internet messaging capabilities.

         DAI.Net,  Inc.  Until  recently a division  of  AmeriCom,  DAI.Net  was
incorporated as a wholly owned subsidiary in September 2000. DAI.Net handles all
operational  tasks associated with the acquisition of websites and the sales and
delivery of AdCast  advertising to these sites,  including the DAI Link Exchange
program   ("DAILinx")   (formerly   e-Billboard   Exchange   program)   and  the
TrueManagement(TM) system. DAI.Net is organized into two divisions:  Advertising
Sales  Division,  which  is  responsible  for  advertising  sales,  and  Network
Operations Division,  which is responsible for site acquisition and the delivery
of advertising to the sites.

         AdCast  advertisements are placed only on websites owned by persons who
have  entered  into  agreements  to carry the AdCast  message  window  ("DAI.Net
Members")  and  participate  in the DAI.Net  Network.  The Company is  currently
displaying  in excess of 5 million ads per day through the DAI.Net  Network.  Of
these, 74% are ads which promote  products of advertisers and sponsors,  and the
balance  are unpaid ads which  cross-promote  the  DAI.Net  Network  pursuant to

                                      -5-

<PAGE>

DAILinx.  The pricing  structure for advertisers and sponsors is based on either
the number of visitors to a site where the ad is being  displayed  or the number
of responses to an ad by such visitors.  Where pricing is based on the number of
visitors,  it is generally measured in terms of cost per thousand ads served, or
"CPM." Pricing based on viewer  response is typically  measured in click through
events, such as cost per click, or "CPC."

         In developing the DAI.Net Network,  the Company initially  concentrated
on websites focused on targeted  audiences.  The Company has since broadened the
type of websites on which it places AdCast advertising and, as of June 30, 2000,
had grown the DAI.Net Network to include over 1,100 websites with  approximately
6.7  million   unique   visitors   per  month  as  reported  by  the   Company's
TrueManagement(TM)  system. DAI.Net Members receive a fee based on the number of
visitors  to their  website  and/or  advertising  credits  which  may be used to
promote their websites on the DAI.Net Network.

         The Company receives revenue from (i) sale of advertising  space on the
DAI.Net  Network  and  (ii)  commissions  from  sales  of  merchandise  from ads
displayed.  The Company realized  approximately $761,537 in Internet advertising
revenues in the fiscal year ended June 30, 2000.

Company Technologies

         AdCast  Technology.  AdCast is a proprietary  message  delivery  system
which displays, within a web browser,  non-scrollable message frames. The AdCast
frameset  occupies the bottom 10% of the  viewer's  screen.  The AdCast  message
window  remains  visible on the screen as the user  navigates the website,  both
within a page and from page to page,  providing  timed  exposure  to a  targeted
series of 30-120  second  messages  containing  a full  spectrum  of rich  media
including streaming audio and video. The AdCast system facilitates four distinct
categories of Internet messaging,  including (i) Internet advertising,  (ii) B2B
e-commerce,  (iii) content delivery, and (iv) streaming media applications.  The
Company  believes  its  immediate  commercial  opportunity  for AdCast is in the
Internet advertising industry.

         AdCast  advertisements  are placed only on websites of DAI.Net Members.
In addition,  if a viewer transfers to a non-member website via a link displayed
on any DAI.Net Member's website,  the  advertisement  will carry over to the new
website.  The Company compensates DAI.Net Members for placing the AdCast message
window on their  websites,  and the Company sells the space to  advertisers  and
sponsors.  The pricing  structure for DAI.Net  advertising  is either CPM or CPC
based. Similar to television, AdCast ads can vary in length and can be viewed as
long as the  viewer  is "tuned  in" to the same  "channel"  (website).  However,
unlike  television  AdCast ads play only when the viewer or web surfer  stays on
the DAI.Net Network.

         Internet  advertisers  currently  rely heavily on banner ads which have
well-publicized performance problems, some of which are listed below:

                  o     Banners  scroll  off the  screen  and  disappear  as the
                        viewer moves down the web page below the fold.

                                      -6-

<PAGE>

                  o     Banners are tied to the web page and therefore disappear
                        as  the   viewer   navigates   the  site  from  page  to
                        page--often  before  they have had a chance  to  deliver
                        their message.

                  o     Banner  ad-servers  charge the advertiser when the ad is
                        pulled  from the  server  whether  or not the viewer has
                        actually seen the ad.

                  o     As a creative  format,  banners  offer limited space and
                        lack the  flexibility  to deliver a complete  commercial
                        message.

                  o     Banners  that  attempt  to  deliver  rich  media,  i.e.,
                        sophisticated  animation,  audio, or video content,  bog
                        down  websites  and  require   cost-prohibitive  network
                        support  to  serve  them  on   conventional   ad-serving
                        architecture.

         Unlike conventional banners which are typically embedded within the web
page,  the AdCast  message  window sits on top of the viewer's web browser,  and
therefore  remains  visible as long as the viewer remains on the member website,
regardless of the viewer's page scrolling or site navigation activities.

         TrueManagement(TM).  TrueManagement(TM) provides a series of management
tools  that  enable  users of the  AdCast  system  to manage  accounts,  control
advertising campaign and view usage reports.

         Some of the features of the TrueManagement(TM) system are:

                  o     TrueManagement(TM)  controls the number of exposures for
                        each ad per day and the  number  of  times a given ad is
                        viewed by unique  visitors.  This helps create an evenly
                        distributed campaign by allowing the campaign manager to
                        control the number of times an ad is displayed.

                  o     TrueManagement(TM)   controls  the  sequencing  of  ads.
                        Although it is not  possible to control the  playlist by
                        exact sequencing, ads can be placed in priority levels.

                  o     TrueManagement(TM)  controls the distribution of ads. An
                        ad can be  targeted  to a specific  site or page  within
                        that site.

                  o     TrueManagement(TM)   lets   administrators   control  ad
                        performance.  Ad information can be changed at any time.
                        Ads that  perform  poorly can be replaced or turned off,
                        and campaigns can be recalculated.

         TrueManagement(TM)  also provides various audience measurements such as
the number of click-throughs, the number of times an advertisement is viewed and
the duration on a website. This data is provided to both advertisers and DAI.Net
Members,  enabling them to make adjustments to their advertisements or websites,
respectively, to increase effectiveness by providing them with:

                                      -7-

<PAGE>

                  o     reliable  audience  measurement  and historical data for
                        analysis and review;

                  o     easy  on-line  access to the  information  generated  by
                        DAI.Net Members and advertisers; and

                  o     real-time  visitor  information,  including  information
                        concerning  the  total  number  of new  visitors,  daily
                        visitors,  cumulative  repeat  visitors  and  cumulative
                        total visitors.

         VOSX. The Company has recently completed initial design and prototyping
of a new  programming and peer to peer  networking  technology  called VOSX. The
Company believes VOSX will be a major advance in computer technology that allows
individuals  with  little  or  no  computer  programming  background--educators,
artists and entertainers,  business owners or anyone with knowledge to share--to
create comprehensive computer applications. Initially invented and prototyped by
Robert M. Cezar,  VOSX was conceived as a new  operating  layer to run on top of
Windows,  Linux,  Palm-OS  or any  other  operating  system  and  execute  a new
generation  of simple,  yet powerful  computer  directives  through which people
without   extensive   computer  training  would  be  able  to  write  their  own
applications.  The  Company  intends to file  patent  applications  for VOSX and
preliminary  documentation  is being prepared for use in the patent  application
process.  In the meantime,  the Company is relying on trade secret protection to
protect its proprietary interest in the product.

         Kiosk Software  Technology.  Kiosk Operating Suite ("K/OS").  K/OS is a
fully developed kiosk developer tool kit which includes remote management, usage
and event  logging,  read/write  access for standard Open Database  Connectivity
(ODBC/JDBC) databases and program interfaces to common peripherals. K/OS enables
software programmers to easily create interactive  business solutions,  maintain
hardware and remotely manage public access kiosks.  The system is designed to be
steadfastly  reliable and easy to customize.  K/OS can deliver any  interactive,
multimedia  content  that can be  viewed  or  played  using  Microsoft  Internet
Explorer.  The product provides system flexibility  through its Java and ActiveX
interfaces.

         TerraVista(TM),  a  significant  component of K/OS,  is an extension of
Microsoft's  Internet  Explorer  and controls  public  access on the Internet by
serving as a programmable  gateway to selected  Internet  sites.  TerraVista(TM)
gives the system  administrator  the tools to focus a user's  attention on those
portions  of  the   Internet   that  have  been   pre-selected   and   approved.
TerraVista(TM)  constrains  the hardware to prevent the user from  circumventing
the system.  TerraVista(TM) is a fail-safe  solution,  ideal for use in academic
environments,  libraries, correctional facilities, corporate visitor centers and
other public areas.

         J-Engine Technology.  Pursuant to the reorganization agreement with J&J
Tech, the Company acquired the J-Engine Tool to extend the Company's  networking
services.  The  J-Engine  Tool is a  portable,  scalable,  modular  approach  to
building and managing  websites.  The J-Engine  Tool provides  Internet  Service
Providers  ("ISPs")  with the ability to sell  turnkey  systems  such as content
management  and  e-commerce  to an  unlimited  number  of users  with  unlimited
customization. The J-Engine Tool can be used to target both business-to-consumer
and business-to-business  clients. This is achieved with the implementation of a
powerful layout function that allows customization,  via on-line interface,  all
the way from final web page  design

                                      -8-

<PAGE>

down to the look of the program interface layouts themselves.  The J-Engine Tool
also  allows the  website  manager to control  access to the  management  system
developed for their website through specified password protection.

         Fields  can be added or  deleted  at will  because  the  J-Engine  Tool
technology is based on an object database. Java Servlets allow the program to be
implemented in virtually any  environment  and as a result,  the J-Engine Tool's
modular  architecture  makes it easy to add new  functionality  as needed.  This
could allow for example,  a web polling or statistics module to be added to help
a user  create a more  compelling  website.  This  means  that not only will the
program meet today's  e-commerce  needs,  it can be fashioned into any number of
new uses, virtually without limit.

         The layout section allows for virtually unlimited control over commerce
page layouts, text and graphics,  checkout screens, product layouts and even the
layout of the  program  and editor  itself.  This  includes  complete  access to
database variables and programming constructs such as "if", "while", and others.
Complete control of all HTML elements is also possible.

         Components of this  technology  have been integrated into the Company's
core technologies.

         MyLine.  MyLine is a  programmable  personal  telecommunication  system
which  enables  users  to be  reached  at any  telephone  by  means  of a single
telephone   number.   The  associated   InstAccount   product  is  a  real  time
communication  accounting and management tool. The Company is considering  plans
to  re-engineer  the MyLine  technology  to exploit the cost savings  offered by
Internet  Protocol  Telephony  and thus create a price and  service  competitive
product.

Marketing

         The  Company  has  determined  that for the  immediate  future the most
effective way to market the AdCast system is through DAI.Net. Successful network
development and Internet advertising sales are synergistically related. That is,
to attract websites to the DAI.Net  Network,  the Company must be able to fill a
substantial  portion  of  their  inventory  with  paid  advertising.   Likewise,
advertising  sales will depend on the number and quality of unique viewers these
websites represent.

         The  Company has hired  marchFIRST,  the  world's  largest  interactive
advertising  agency,  as an  outsourced  marketing  group to assist in  strategy
development  for  growing  DAI.Net  and  effectively  marketing  the  network to
advertisers.  The marketing  campaign will be geared to optimize the synergistic
relationship between network development and advertising sales.

Advertising Sales

         On February 7, 2000,  AmeriCom entered into a representation  agreement
with Interep  Interactive,  Inc. ("Interep") for the sale of advertising for the
DAI.Net  Network.  Interep is the  Internet ad selling arm of Interep,  Inc.,  a
major radio  advertising  firm with offices  throughout  the U.S. This agreement
will  expire on  November  7,  2000.  The  Company  and  Interep  are  currently
negotiating a new agreement.

                                      -9-

<PAGE>

Research and Development

         The Company has begun development of additional technologies.  There is
no assurance that such technologies will ever become viable products or that the
Company  will be able to market  such  products.  In fiscal  year ended June 30,
2000,  the Company spent  approximately  $1,832,143 on research and  development
activities as compared to approximately $168,510 in the prior year.

         In August 1998,  AmeriCom  entered into a  joint-development  agreement
with  Systeam  SpA,  an  Italian  company  engaged  in  information  technology,
consulting,  software  development and software support  ("Systeam").  Under the
terms of the agreement, Systeam contracted to provide ongoing development of and
support for AmeriCom's technologies. In consideration, AmeriCom agreed to pay an
annual royalty equal to 8% of the worldwide revenues of AmeriCom for a period of
10  years,  renewable  for  successive  10 year  terms,  provided  that  Systeam
continued to develop, implement,  support and upgrade the technology during such
periods. AmeriCom has terminated this agreement with Systeam. A new agreement is
currently being negotiated.

         In addition to  maintenance,  enhancement and support of AdCast and the
DAI.Net  Network,  the Company's  technology  group has an ongoing  research and
development  mission to design and develop new technologies  consistent with the
overall corporate mission. The Company has recently completed initial design and
prototyping of a new programming and peer to peer networking  technology  called
VOSX. In the coming months,  the Company will examine the business case for VOSX
and determine its viability as a commercial product.

Proprietary Rights

         Three U.S. patents and one international patent have been filed for the
AdCast  technology.  Two of the Company's  three claims have been awarded "first
action allowance" and the third claim is pending. Following is a summary of each
patent and its primary claims:

                  o     The simultaneous launch of a non-scrollable  advertising
                        frame (message  window) in  conjunction  with a website,
                        and the delivery of timed display, rich media ad content
                        from  a  centralized   system--first   action  allowance
                        awarded and U.S. patent (No. 6,128,651) issued effective
                        October 3, 2000;

                  o     The   use  of  the   browser   to  host   the   list  of
                        advertisements to be shown and to compute the processing
                        logic to  determine  and  retrieve  the  next  ad--first
                        action allowance awarded; and

                  o     The ability to control,  centrally,  the  frequency  and
                        target demographics of an advertisement based on ad play
                        information  computed and relayed by the browser--patent
                        pending.

         There can be no assurance that the Company's awarded and pending patent
applications  will afford protection  against a competitor,  or that any patents
issued to the Company could not be challenged,  invalidated or  circumvented  by
others.  Further,  since patent applications in the

                                      -10-

<PAGE>

United States are maintained in secrecy until patents issue,  the Company cannot
be certain  that  others  have not filed  patent  applications  directed  toward
inventions  covered by its remaining  pending patent  application or that it was
the  first to file the  claims  covered  by that  patent.  There  also can be no
assurance  that  the  Company's   technologies  will  not  infringe  patents  or
proprietary  rights of others or that  licenses  that might be required  for the
Company's  processes or products  would be available on  reasonable  terms.  The
extent to which the  Company  may be  required  to obtain  licenses  under other
proprietary  rights,  and the cost and the  availability  of such  licenses  are
unknown.

         The Company also makes use of its trade secrets or "know-how" developed
in the course of its  research and  development.  To the extent that the Company
relies  upon  trade  secrets,   un-patented  know-how  and  the  development  of
improvements  in  establishing  and  maintaining a competitive  advantage in the
market  for  the  Company's  products,  there  can  be no  assurance  that  such
proprietary  technology  will  remain a trade  secret  or that  others  will not
develop  substantially  equivalent  or superior  technology  to compete with the
Company's products.

         The  Company  intends  to  file  patent   applications   for  VOSX  and
preliminary  documentation  is being prepared for use in the patent  application
process.  In the meantime,  the Company is relying on trade secret protection to
protect its proprietary interest in the product.

Competition

         The Company faces  competition from numerous  companies,  some of which
are  more  established,  have  greater  market  recognition,  and  have  greater
financial  and marketing  resources  than the Company.  The  Company's  services
compete  on the  basis  of  certain  factors,  including  a  variety  of  viewer
demographics,  price, duration of exposure of each advertisement, and the number
of visual impact of each advertisement. The market for the Company's services is
competitive,  subject to rapid change and  evolution  as the Internet  grows and
matures.

         The Company's  competitors include Doubleclick,  Inc., 24/7 Media, Inc.
and Flycast,  Inc., as well as other traditional banner advertising networks and
portals.  More general  competition  for  advertising  revenues  also comes from
conventional, non-internet advertising media such as television and radio.

Employees

         As of September 30, 2000, the Company and its  subsidiaries had a total
of 34  employees.  This  number  includes 22  technicians/engineers  and support
personnel, 7 marketing personnel and 5 administrative/management personnel.

Recent Developments Subsequent To Year End

         On July 25, 2000, the Company and certain co-founders  (including Lorne
Cezar, Robert M. Cezar, Helen E. Cooper,  Winston Lee, David H. Loomis, Craig D.
Machado and Jayson  Schwartz)  entered into the  Agreement  to  Terminate  Stock
Options and Warrants whereby such stockholders  agreed to surrender all of their
options to purchase  6,015,000  shares of the Company's Class A common stock and
warrants to purchase 800,000 shares of the Company's Class A common stock.

                                      -11-

<PAGE>

         On August 3, 2000, AmeriCom executed and delivered a promissory note in
favor of Sterling National Bank (the "Bank")  evidencing a loan in the aggregate
principal amount of $1,000,000 (the "Note"). The Note will mature on November 1,
2000 and will bear interest,  payable monthly,  at a rate of 1% above the Bank's
base loan rate on the principal  amount of the Note. As collateral for the Note,
the Company entered into a General Loan and Security Agreement,  dated August 3,
2000 (the "Bank Security Agreement"), between the Company and the Bank, pursuant
to which the Company granted to the Bank a first priority  security  interest in
and lien on substantially all of the assets of the Company.  As further security
for the Note, and at the request of the Company and the Bank,  Giacomo Torrente,
a  director  of the  Company,  entered  into a  guaranty  in favor of the  Bank,
pursuant to which Mr.  Torrente (i)  guaranteed  the  obligations of the Company
under the Note and the Bank Security  Agreement and (ii) deposited with the Bank
the sum of $1,000,000 (the "Deposit").  In consideration for Mr. Torrente making
the Deposit and  entering  into the  guaranty,  the Company and Kiosk  Software,
Inc., a subsidiary of the Company, entered into a security agreement in favor of
Mr.  Torrente,  as  secured  party,  dated as of August  3, 2000 (the  "Torrente
Security  Agreement"),  pursuant to which the Company and Kiosk  Software,  Inc.
granted  to Mr.  Torrente a second  priority  security  interest  in and lien on
substantially  all of the assets of the  Company  and Kiosk  Software,  Inc.  On
September  15,  2000,  the  principal  amount  of  the  Note  was  increased  to
$1,660,000.  In  connection  with  that  increase,  Mr.  Torrente  deposited  an
additional  $660,000  with the  Bank and the  Torrente  Security  Agreement  was
amended to reflect this increase.

         In September 2000, certain officers and employees  (including Thomas J.
Hopfensperger,  James  Heintz,  Trone L. Miller,  Lori S. Fisher and Gary Hogue)
agreed to surrender  options to acquire an aggregate of 2,350,000  shares of the
Company's Class A common stock.

ITEM 2.  DESCRIPTION OF PROPERTY

         AmeriCom's principal executive offices are located at 825 Buckley Road,
Suite B, San Luis  Obispo,  California  93401,  where it leases an  aggregate of
approximately 5,000 square feet of space.  Accounting and administration,  sales
and marketing and DAI.Net  management  are located in the San Luis Obispo space.
The lease  for this  space  commenced  on  January  1,  2000 and  terminated  on
September 30, 2000.  AmeriCom  currently occupies this space on a month-to-month
basis with a monthly rent payment of $6,000.

         AmeriCom's  technology  offices are located at 124 South  Halcyon Road,
Arroyo Grande,  California 93420,  where it leases an aggregate of approximately
3,500  square  feet of space.  The  lease is a  month-to-month  lease  with rent
payments of $2,600 per month.

         As  a  result  of  the   DigiCities   merger,   AmeriCom   also  leases
approximately  6,224  square feet of space at 5855 Green Valley  Circle,  Culver
City,  California  90230.  The lease for this space commenced on August 12, 1999
and  terminates  on August 11, 2003 with a monthly  lease  payment of  $8,860.2.
AmeriCom  currently is negotiating with the landlord for an early termination or
assignment of this lease.

         AmeriCom also leases  approximately  1,431 square feet of space at 1901
South  Bascom  Avenue,  Campbell,  California  95008.  The lease for this  space
commenced on May 1, 1999 and

                                      -12-

<PAGE>

terminates of April 30, 2002 with a monthly  lease  payment of $4,293.  AmeriCom
sublets this space together with certain AmeriCom  computer  equipment and other
furnishings,  to Systeam on a month-to-month  basis with a monthly lease payment
of approximately $5,000.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a party to any pending legal proceeding.

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

         No  matter  was  submitted  to a vote  of the  Company's  stockholders,
through the  solicitation of proxies or otherwise,  during the period covered by
this report.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         AmeriCom's  Class A common stock is not currently listed for trading on
any stock  exchange.  On December 23, 1998,  following  the  Chatsworth  merger,
AmeriCom  applied to the NASD for  quotation of  AmeriCom's  common stock on the
NASD OTCBB.  The NASD granted  AmeriCom the trading symbol "AMUS" on January 30,
1999, but has not yet cleared AmeriCom's common stock for trading.

         As  of  September  18,  2000,   the  Company  had   approximately   385
shareholders.

         The Company has not paid or declared any  dividends on its common stock
and it  does  not  anticipate  paying  dividends  on  its  common  stock  in the
foreseeable future.

Recent Sale of Unregistered Securities

         In July 1999,  AmeriCom  issued an aggregate  of 131,373  shares of its
common stock in connection with the conversion of three  convertible  promissory
notes it issued  during 1999 having an aggregate  principal  amount of $260,000.
Those shares were issued at a  conversion  price of $2.00 per share and included
1,371 shares for accrued  interest.  The shares were issued  pursuant to Section
4(2) of the  Securities  Act, as a  transaction  by an issuer not  involving any
public offering.

         On July 29, 1999, AmeriCom entered into a subscription agreement with a
foreign investor providing for the sale of 1,250,000 shares of its common stock.
The shares were sold at an offering price of $2.00 per share,  with net proceeds
to AmeriCom of $2,500,000. The agreement provided for the proceeds to be held in
escrow,  and  conditioned  release of the funds and  completion of the sale upon
AmeriCom's  stock being listed for trading on the NASD OTCBB.  The  condition to
the  release  of  the  funds  was   subsequently   waived  and  the  final  cash
consideration  was received by AmeriCom on February  16, 2000.  The issuance was
made pursuant to Regulation S promulgated under the Securities Act.

                                      -13-

<PAGE>

         During the three months ended  September 30, 1999,  AmeriCom issued (i)
an aggregate of 523,996 shares of its common stock to non-U.S.  persons pursuant
to Regulation S promulgated under the Securities Act, at offering prices ranging
from $1.50 to $2.00 per share,  with net proceeds to AmeriCom of $786,773;  (ii)
an  aggregate  of 433,062  shares of its  common  stock in  connection  with the
conversion of two  promissory  notes having an aggregate  outstanding  principal
amount of $473,913; and (iii) an aggregate of 101,000 shares of its common stock
for various legal and contracting services valued at $202,000.

         During the three months ended December 31, 1999, AmeriCom issued (i) an
aggregate  of 1,191,045  shares of its Class A common stock to non-U.S.  persons
and accredited  investors  pursuant to Regulations S and D promulgated under the
Securities Act, at offering  prices ranging from $2.00 to $4.00 per share,  with
net proceeds to AmeriCom of  $2,279,278;  and (ii) an aggregate of 60,000 shares
of its common stock to various  contractors and services  suppliers for services
valued at $120,000.

         On March 27, 2000, AmeriCom completed the sale of 100,000 shares of its
Class A common stock to an  investment  fund managed by D-Brain  Capital Ltd. of
Tokyo,  Japan,  at an offering  price of $5.00 per share,  with net  proceeds to
AmeriCom  of  $500,000.   The  shares  were  issued  pursuant  to  Regulation  S
promulgated under the Securities Act.

         On May 18, 2000,  AmeriCom  completed the sale of 550,000 shares of its
Class A common stock to Megaweb Trading Ltd., a private  financial  company,  of
which 520,000 shares are beneficially owned by Mr. Giacomo Torrente,  a director
of  AmeriCom,  at an offering  price of $5.00 per share.  AmeriCom  received net
proceeds  of  $2,750,000.  The shares  were  issued  pursuant  to  Regulation  S
promulgated under the Securities Act.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Overview

         Having  completed the proof of concept  phase of its AdCast  technology
development,  and having grown the DAI.Net  Network to reach  approximately  6.7
million unique viewers per month, as reported by the TrueManagement(TM)  system,
the Company  believes that it is now poised to  aggressively  market the DAI.Net
Network  to  Internet  advertisers  as a  next-generation  alternative  to major
websites.   DAI.Net's  unique  selling  proposition  will  be  based  on  giving
advertisers  and their  creative  talent  the time and  space to  deliver a more
effective  commercial  message than is currently  possible using  conventionally
served banners.  In developing its marketing plan for the DAI.Net  Network,  the
Company has consulted with a major Internet  advertising  agency and two leading
interactive advertising sales representative firms.

         The Company believes that in order to succeed,  DAI.Net must promulgate
the  culture  of  an  advertising  network  -- a  media  company  --  a  culture
substantially  different  from that of a  technology  company.  The  Company has
therefore  established  DAI.Net,  as a wholly owned  subsidiary  with a separate
Board of Directors and a focus all its own. The Company's  current  strategy for
DAI.Net is to: (i) continue  enhancement  of its existing  AdCast and networking
technologies; (ii) aggressively expand the DAI.Net Network; and (iii) market the
DAI.Net Network to advertisers  based on its documented  superior  click-through
performance and unique

                                      -14-

<PAGE>

ability to serve rich media ads without  disrupting  website  performance.  With
DAI.Net  focused on the Internet  advertising  business,  AmeriCom will continue
with existing and new  technology  development  as well as technical  support of
DAI.Net.

         Based on the  experience  of the past 12  months  of beta  testing  and
market  exploration,  The Company believes this strategy is the most direct path
to value for the AdCast technology.  The Company  anticipates  revenue growth in
the fiscal year ending June 30, 2001; no earnings are  anticipated.  The Company
plans to  finance  continuing  operating  losses  by  means  of debt and  equity
securities offerings.

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

         Fiscal Year Ended June 30, 2000  Compared to Fiscal Year Ended June 30,
1999

         In the fiscal year ended June 30,  2000  ("fiscal  2000"),  the Company
recognized  revenues of  $1,023,297  from  business  operations as compared with
$143,591 for the fiscal year ended June 30, 1999 ("fiscal  1999").  The increase
in revenue in fiscal 2000 was largely  attributable  to the Company's  increased
efforts at selling advertising on the DAI.Net Newwork,  with advertising revenue
coming to $761,537 as compared to  virtually  no  advertising  sales  revenue in
fiscal 1999. The Company's cost of sales  increased to $1,010,980 in fiscal 2000
from $121,873 in fiscal 1999,  leaving a gross profit for fiscal 2000 of $12,317
as compared to $21,718 for fiscal 1999.

         In fiscal 2000, the Company had total operating expenses of $19,213,029
resulting  in a loss from  operations  of  $19,200,712,  as compared  with total
operating  expenses of  $7,620,819  and a loss from  operations of $7,599,101 in
fiscal 1999. The increase in operating expenses in fiscal 2000 was due primarily
to an increase in payroll costs from  $1,612,659 in fiscal 1999 to $5,551,018 in
fiscal 2000, an increase in amortization expense from $353,206 in fiscal 1999 to
$2,037,537  in fiscal  2000,  an  increase in other  general and  administrative
expenses from  $977,979 in fiscal 1999 to  $3,513,449 in fiscal 2000,  and a one
time  charge of  $5,970,848  for  goodwill  impairment  in  connection  with the
shutting down of DigiCities in fiscal 2000 as compared to no goodwill impairment
in fiscal 1999.

         The  Company's  net loss for fiscal 2000 was  $19,769,002  or $0.51 per
share as compared to $7,700,999 or $0.26 per share for fiscal 1999.  Included in
the net loss for fiscal 2000 was an extraordinary  loss on the extinguishment of
debt of $347,408 as opposed to an extraordinary  gain on the  extinguishment  of
debt for the previous year of $5,000.

         Fiscal Year Ended June 30, 1999  Compared to Fiscal Year Ended June 30,
1998

         In fiscal 1999 the Company recognized  revenues of $143,591 as compared
with no revenues for the fiscal year ended June 30, 1998 ("fiscal  1998") during
which period the AdCast  delivery system was being  re-engineered  to ensure its
ability to accommodate a large volume of advertising  transactions.  The Company
began beta testing of AdCast in February 1999.

         Operating expenses increased substantially from $237,698 in fiscal 1998
to  $7,620,819  in fiscal  1999 as the  Company  prepared  the launch of AdCast,
resulting in a loss from  operations that increased from $237,698 in fiscal 1998
to $7,599,101 in fiscal 1999. The increase in operating  expenses in fiscal 1999
reflected primarily an increase in payroll costs from $163,289

                                      -15-

<PAGE>

in fiscal 1998 to $1,612,659  in fiscal 1999,  an increase in contract  services
from $0 in fiscal  1998 to $717,623 in fiscal  1999,  an increase in  consulting
expense from $2,000 in 1998 to  $3,417,418  in fiscal 1999, an increase in legal
fees from $28,100 in fiscal 1998 to $487,310 in fiscal 1999,  and an increase in
other general and  administrative  costs from $39,116 in fiscal 1998 to $977,979
in fiscal 1999.

         The  Company's  net loss for fiscal  1999 was  $7,700,999  or $0.26 per
share as compared to $272,569 or $0.01 per share for fiscal 1998.

         The following table provides a summary of selected  financial data from
the Company's statement of operations:
<TABLE>
<CAPTION>

                    (in US$ thousands, except per share data)

                                           Fiscal Year Ended     Fiscal Year Ended    Fiscal Year Ended
                                             June 30, 2000         June 30, 1999        June 30, 1998
                                             -------------         -------------        -------------
<S>                                          <C>                      <C>                <C>
Revenues                                     $  1,023,297            $  143,591         $          0

Income (loss) from operations                 (19,200,712)           (7,599,101)            (272,569)

Income (loss) per share                             (0.51)                (0.26)               (0.01)

Total Assets                                    4,354,429             4,458,559               51,586

Long term debt, less current portion                    0               200,000                    0

Stockholder equity (deficiency)                  (568,622)           (1,155,641)          (1,726,543)
</TABLE>


Liquidity and Capital Resources

         The Company's  operations in future  periods will be dependent upon the
availability  of adequate  liquid funds for continuing  technology  development,
capital expenditures and its ability to meet income deficits associated with the
operational  roll-out of DAI.Net and its  associated  advertising  services.  In
order to meet its need for  sufficient  liquid  funds,  the Company has made the
following arrangements.

         On January 29,  1999,  the Company  completed  an offering of 2,350,000
shares of its  common  stock  for an  aggregate  sales  price of  $3,687,500  to
investors  located  outside the United States through Asia Pacific Finance Group
Ltd.,  a British  Virgin  Island  Corporation,  pursuant to  Regulation S of the
Securities Act. An additional  1,350,000 shares were sold to non-U.S.  residents
prior to the formal Regulation S offering,  at a total price of $485,000. Of the
combined total number of shares sold to non-U.S.  residents,  subscriptions  for
300,000 shares were subsequently  canceled because of the delay in arranging for
the Company's stock to be traded on the NASD OTCBB. Consequently, as of June 30,
1999,  the final  Regulation  S  offering  included  2,050,000  shares  sold for
$2,948,064  (after  costs).  Subsequent to June 30, 2000,  an additional

                                      -16-

<PAGE>

72,000  shares  (aggregating  $129,600  after  costs)  previously  sold  in  the
Regulation S offering were canceled. As a result of these cancellations, the net
amount raised by the Regulation S offering, after costs, was $2,818,464.

         On February  12, 1999,  the  Company's  Board of  Directors  authorized
issuance of up to $5,000,000 of Convertible  Subordinated  Promissory  Notes for
the purpose of raising liquid funds for working capital. These notes, payable in
full two years  after  issue,  with  annual  interest  of 6%,  bear the right to
convert to shares of the Company's  common stock at a conversion  price of $2.00
per share.  To date,  $1,323,500  has been invested by way of purchases of these
promissory notes by individuals who qualify as accredited investors.  As of June
30, 1999,  notes  totaling  $1,187,422,  including  accrued  interest,  had been
converted into 593,711 shares of common stock. As of September 23, 1999, all the
notes issued had been  converted to common  stock.  The sale and  conversion  of
these Notes was made pursuant to exemption  provided by Section 4(2) and 4(6) of
the Securities Act.

         During the fiscal year ending June 30,  1999,  the Company sold a total
of 213,680  shares of common stock to other  accredited  investors for aggregate
consideration of $88,417, at an average price of $0.41 per share.

         On July 29, 1999,  the Company  entered into a  subscription  agreement
with Giacomo Torrente,  an accredited  investor.  The agreement provided for the
sale of  1,250,000  shares of the  Company's  common  stock for a total price of
$2,500,000.  The agreement provided for the sale price to be held in escrow, and
conditioned  release of the funds and  completion  of the sale on the  Company's
stock being listed for trading on the NASD OTCBB.  The  condition to the release
of the funds  was  subsequently  waived  and the final  cash  consideration  was
received by AmeriCom on February  16, 2000.  The  issuance was made  pursuant to
Regulation S promulgated under the Securities Act.

         On March 27, 2000, the Company  completed the sale of 100,000 shares of
its Class A common stock to an investment  fund managed by D-Brain  Capital Ltd.
of Tokyo, Japan. The total consideration for the placement, which was subject to
Regulation S of the Securities Act, was $500,000, or $5.00 per share.

         On May 18, 2000,  the Company  completed the sale of 550,000  shares of
its Class A common stock to Megaweb Trading Ltd., a private  financial  company,
of which  520,000  shares are  beneficially  owned by Mr.  Giacomo  Torrente,  a
director  of  AmeriCom.  The  aggregate  consideration  for  the new  issue  was
$2,750,000,  or $5.00 per share. The shares were issued pursuant to an exemption
from the registration  requirements of the Securities Act pursuant to Regulation
S promulgated under the Securities Act.

         On August 3, 2000, the Company executed and delivered a promissory note
in favor  of  Sterling  National  Bank  (the  "Bank")  evidencing  a loan in the
aggregate  principal amount of $1,000,000 (the "Note").  The Note will mature on
November 1, 2000 and will bear interest,  payable monthly, at a rate of 1% above
the Bank's base loan rate on the principal amount of the Note. As collateral for
the Note, the Company entered into a General Loan and Security Agreement,  dated
August 3, 2000 (the "Bank  Security  Agreement"),  between  the  Company and the
Bank,  pursuant  to which  the  Company  granted  to the  Bank a first  priority
security interest in

                                      -17-

<PAGE>

         and lien on substantially all of the assets of the Company.  As further
security for the Note,  and at the request of the Company and the Bank,  Giacomo
Torrente,  a director of the  Company,  entered  into a guaranty in favor of the
Bank,  pursuant to which Mr.  Torrente (i)  guaranteed  the  obligations  of the
Company under the Note and the Bank Security  Agreement and (ii)  deposited with
the  Bank  the sum of  $1,000,000  (the  "Deposit").  In  consideration  for Mr.
Torrente  making the Deposit and  entering  into the  guaranty,  the Company and
Kiosk  Software,  Inc.,  a subsidiary  of the  Company,  entered into a security
agreement in favor of Mr. Torrente, as secured party, dated as of August 3, 2000
(the  "Torrente  Security  Agreement"),  pursuant to which the Company and Kiosk
Software,  Inc. granted to Mr. Torrente a second priority  security  interest in
and lien on  substantially  all of the assets of the Company and Kiosk Software,
Inc. On September 15, 2000,  the  principal  amount of the Note was increased to
$1,660,000.  In  connection  with  that  increase,  Mr.  Torrente  deposited  an
additional  $660,000  with the  Bank and the  Torrente  Security  Agreement  was
amended to reflect this increase.

         The Company  considers  that existing  commitments  and  indications of
intent for equity and debt  financing  will be  adequate  to meet the  Company's
operational  funding  requirements  for the next 12 months.  The Company  cannot
guarantee,  however,  that those  sources of funding will be  realized,  or that
internally  generated funds will be developed  sufficiently  quickly to meet the
Company's  needs if  externally  generated  funds  are  exhausted.  The  Company
continues to incur  liability for payment of goods and services  supplied to the
Company  which  are not met in full  within  normal  credit  terms,  and is thus
reliant on the continued goodwill and confidence of those vendors.

         Through June 30, 2000, the Company has funded its operations  primarily
through private placements of its securities. As of June 30, 2000, June 30, 1999
and June 30,  1998,  the  Company's  working  capital  deficit  was  $4,105,781,
$2,776,554 and $1,741,377,  respectively.  Proceeds from private placements were
used for working capital.

                   FACTORS AFFECTING FUTURE OPERATING RESULTS

         AmeriCom has incurred  significant  losses  historically and may likely
incur future losses.

         AmeriCom  may not  become  profitable  or  significantly  increase  its
revenue.  AmeriCom  incurred a net loss of $272,569 and recorded no revenues for
the year ended June 30, 1998, a net loss of $7,700,999 with revenues of $143,591
in the year ended June 30, 1999, and a net loss of $19,769,002  with revenues of
$1,023,297 in the year ended June 30, 2000.

         If use of the  Internet  and  other  communications  networks  based on
Internet protocols does not continue to grow, demand for AmeriCom's products may
not increase.

         Increased  demand for products  depends in large part on the  continued
growth of the Internet and Internet  protocol-based  networks and the widespread
acceptance and use of these mediums for electronic  commerce and communications.
Because electronic commerce and communications over these networks are evolving,
it is  impossible to predict the size of the market and its  sustainable  growth
rate. A number of factors may affect market size and growth rate.  These factors
include the following:

                                      -18-

<PAGE>

                  o     The demand for  electronic  commerce and  communications
                        may not  increase,  or may  increase  more  slowly  than
                        expected.

                  o     The Internet  infrastructure and communications services
                        to  support  electronic  commerce  may  not be  able  to
                        continue  to  support  the  demands  placed  on  them by
                        continued growth.

                  o     The growth and  reliability  of electronic  commerce and
                        communications  could be harmed by delays in development
                        or adoption of new  standards  and  protocols  to handle
                        increased   levels   of   activity   or   by   increased
                        governmental regulation.

         If  AmeriCom  does not  respond  to rapid  technological  changes,  its
products and service offerings could become obsolete.

         The markets served are  characterized by rapidly  changing  technology,
emerging  industry  standards and frequent  introduction  of new  products.  The
introduction  of products  embodying new  technologies  and the emergence of new
industry standards may render products obsolete or less marketable.  The process
of  developing   products  and  services  is  extremely   complex  and  requires
significant,  continuing  development  efforts.  If  AmeriCom  fails  to  modify
existing  products  and develop new  products  that are  responsive  to changing
technology  and standards and meet customer needs in a timely and cost effective
manner, business could be adversely affected.

         If AmeriCom  fails to establish and maintain  strategic  relationships,
its ability to develop and market products could be adversely affected.

         The loss of any of existing strategic  relationships,  or the inability
to create new strategic  relationships  in the future,  could  adversely  affect
AmeriCom's  ability to  develop  and market  products.  AmeriCom  depends on its
partners  to  develop  and  market  products  and  to  fund  and  perform  their
obligations as contemplated  by agreements with them.  AmeriCom does not control
the time and resources devoted by partners to these activities.

         These  relationships  may not continue or may require AmeriCom to spend
significant financial, personnel and administrative resources from time to time.
Resources  may not be  available  to satisfy  commitments,  which may  adversely
affect strategic relationships.  Further, products and services may compete with
the products and services of AmeriCom's strategic partners. This competition may
adversely  affect  relationships  with those  strategic  partners,  which  could
adversely affect business.

         AmeriCom depends on key management personnel.

         The Company's success will depend largely on the continuing  efforts of
AmeriCom's executive officers and senior management,  especially those of Robert
M. Cezar, Chairman of the Board of Directors. Business may be adversely affected
if the services of any key personnel become unavailable.

                                      -19-

<PAGE>

         There is  significant  competition  in the industry for highly  skilled
employees and failure to attract and retain technical  personnel would adversely
affect business.

         It may be impossible to  successfully  attract or retain highly skilled
employees.  The inability to hire or retain  highly  qualified  individuals  may
impede  AmeriCom's  ability to  develop,  install,  implement  and  service  its
software  and  hardware  systems,   retain  its  customers,   attract  potential
customers,  and otherwise  efficiently  conduct its operations.  The information
technology  industry is characterized by a high level of employee mobility,  and
the market for highly qualified  individuals in the  computer-related  fields is
intense.

         This  competition  means  there are fewer  highly  qualified  employees
available to hire and the costs of hiring and retaining  these  individuals  are
high. Even if it is possible to hire these  individuals,  it may be difficult to
retain them.  Furthermore,  there is  increasing  pressure to provide  technical
employees  with  stock  options  and other  equity  interests,  which may dilute
earnings per share.

         Potential  product  defects  could  subject  AmeriCom  to  claims  from
customers.

         Products as complex as those offered by AmeriCom may contain undetected
errors or result in failures  when first  introduced  or when new  versions  are
released.  Despite AmeriCom's product testing efforts and testing by current and
potential customers, it is possible that errors will be found in new products or
enhancements after commencement of commercial shipments.

         The  occurrence  of product  defects or errors  could result in adverse
publicity,  delay in product  introduction,  diversion  of  resources  to remedy
defects,  loss of or a delay in market acceptance or claims by customers against
us, or could  cause  AmeriCom  to incur  additional  costs,  any of which  could
adversely affect business.

         There may be exposure to  potential  liability  for actual or perceived
failure to provide required products or services.

         Because  AmeriCom's   customers  rely  on  its  products  for  critical
applications,  there may be exposure to  potential  liability  claims for damage
caused to an  enterprise  as a result of an actual or  perceived  failure of its
products.  An  actual or  perceived  breach of the  enterprise  network  or data
security systems of a customer, regardless of whether the breach is attributable
to AmeriCom's products or solutions,  could adversely affect AmeriCom's business
reputation.  Furthermore, failure or inability to meet a customer's expectations
in the  performance  of services,  or to do so in the time frame required by the
customer,  regardless of responsibility for the failure, could result in a claim
for  substantial  damages by the customer,  discourage  customers  from engaging
AmeriCom for these services, and damage AmeriCom's business reputation.

         In  addition,   as  a  professional  service  provider,  a  portion  of
AmeriCom's  business involves employing people and placing them in the workplace
of other businesses.  Therefore, there is also exposure to liability for actions
taken by employees while on assignment.

                                      -20-

<PAGE>

         AmeriCom operates in a market with intense competition from a number of
sources.

         The  markets  for  AmeriCom's   products  and  services  are  intensely
competitive and, as a result,  significant  competition  exists from a number of
different  sources.  It may be  impossible  to compete  successfully  as many of
AmeriCom's   competitors  are  more  established,   benefit  from  greater  name
recognition and have substantially  greater  financial,  technical and marketing
resources.

         In addition,  there are several  competitive  start-up  companies  with
which AmeriCom  competes from time to time. It is also expected that competition
will increase as a result of consolidation in the industry.

         Third parties could obtain access to AmeriCom's proprietary information
or independently  develop similar technologies because of the limited protection
for intellectual property.

         AmeriCom's business, financial condition and operating results could be
adversely affected if any of AmeriCom's proprietary  information or technologies
are appropriated by others. Notwithstanding the precautions taken, third parties
may copy or obtain and use AmeriCom's proprietary technologies,  ideas, know-how
and other proprietary information without authorization or independently develop
technologies similar or superior to AmeriCom's technologies.

         In addition, the confidentiality and non-competition agreements between
AmeriCom and its employees,  contractors, and clients may not provide meaningful
protection of the proprietary technologies or other intellectual property in the
event of unauthorized use or disclosure.

         Policing  unauthorized  use  of  technologies  and  other  intellectual
property is  difficult,  particularly  because the global nature of the Internet
makes it difficult to control the ultimate  destination  or security of software
or other data  transmitted.  Furthermore,  the laws of other  jurisdictions  may
afford little or no effective protection of intellectual property rights.

         AmeriCom may face claims of infringement of proprietary rights.

         AmeriCom  knows of no  challenge  that has been made against any of its
technologies  or against  its rights to such  technologies  and has no reason to
believe that any such  challenge  could be made, but whether or not its products
infringe on  proprietary  rights of third  parties,  infringement  or invalidity
claims may be asserted or prosecuted against AmeriCom and significant expense in
defending them could be incurred.

         If any claims or  actions  are  asserted  against  AmeriCom,  it may be
required to modify  products or seek  licenses for these  intellectual  property
rights.  It  may  be  impossible  to  modify  products  or  obtain  licenses  on
commercially  reasonable  terms, in a timely manner or at all.  Failure to do so
could adversely affect business.

         Efforts to expand  international  operations are subject to a number of
risks.

                                      -21-

<PAGE>

         AmeriCom is  currently  seeking to increase  international  sales.  The
ability  to expand  international  operations  could be  subject  to a number of
risks,  any of which could  adversely  affect  AmeriCom's  future  international
sales, including increased collection risks and uncertain political,  regulatory
and economic developments.

         Stock prices could be extremely volatile.

         The trading price of AmeriCom's  common stock may be highly volatile as
a result of  factors  specific  to  AmeriCom  or  applicable  to the  market and
industry in general. These factors include:

                  o     variations in the annual or quarterly  financial results
                        of AmeriCom or its competitors;

                  o     changes  by   financial   research   analysts  in  their
                        recommendations or estimates of earnings;

                  o     conditions in the economy in general or in the industry;

                  o     announcements  of   technological   innovations  or  new
                        products or services by AmeriCom or its competitors; and

o                     unfavorable  publicity or changes in  applicable  laws and
                      regulations,   or   their   judicial   or   administrative
                      interpretations, affecting the industry.

         In  addition,  the stock  market has been  subject  recently to extreme
price and volume  fluctuations.  This volatility has significantly  affected the
market prices of securities  issued by many  companies for reasons  unrelated to
the operating performance of these companies.  In the past, following periods of
volatility in the market price of a company's  securities,  some  companies have
been sued by their  stockholders.  If  AmeriCom  were sued,  it could  result in
substantial costs and a diversion of management's attention and resources, which
could adversely affect business.

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements for the Company are attached beginning on page
F-1.

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

         None.

                                      -22-

<PAGE>

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

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

Name                            Age     Title
----                            ---     -----

Robert M. Cezar                 58      Chairman of the Board of Directors
Thomas J. Hopfensperger         49      Director and Chief Executive  Officer of
                                        AmeriCom  USA,  Inc.  and  President  of
                                        DAI.Net, Inc. Advertising Sales Division
Giacomo Torrente                43      Director
Lawrence M. Gress               54      Chief Financial Officer
Lori S. Fisher                  45      President of Kiosk Software, Inc.
James Heintz                    36      Chief Technology Officer
Trone L. Miller                 55      Chief Operating Officer of AmeriCom USA,
                                        Inc.  and  President  of  DAI.Net,  Inc.
                                        Network Operations Division

         There are no agreements or understandings  for any executive officer or
director to resign at the request of another person and none of the  above-named
directors  or  executive  officers  is  acting  on  behalf of or will act at the
direction of any other person.

         Set forth below are the names of the directors  and executive  officers
of the Company,  all positions and offices held with the Company,  the period of
service, and business experience during at least the last five years:

         ROBERT M.  CEZAR has been  Chairman  of the Board of  Directors  of the
Company since 1994.  Mr. Cezar was the Company's  Chief  Executive  Officer from
1994 to 2000.  From 1994 to 1998,  Mr.  Cezar also served as a  Director,  Chief
Executive  Officer and President of RMC  Diversified  Associates  International,
Ltd., a California  company.  From 1996 to 1998, Mr. Cezar was Vice President of
Engineering for Enhanced Service  Providers LLC, a  telecommunications  company.
Mr. Cezar is the principal inventor of the AdCast and TrueManagement concepts.

         THOMAS J.  HOPFENSPERGER  has been Chief Executive  Officer since April
2000  and  Director  of the  Company  since  December  1999.  In  addition,  Mr.
Hopfensperger is President of DAI.Net,  Inc.'s Advertising Sales Division and is
responsible  for building a direct sales team and  managing the  performance  of
outsource sales representatives. He previously served as President of the AdCast
Division and  President  and Chief  Operating  Officer of the Company.  Prior to
AmeriCom,  Mr.  Hopfensperger  served  as a  Director  of New Media for ABC's Go
Network

                                      -23-
<PAGE>

affiliates in San Francisco.  After serving in the Public  Information Office of
the United States Air Force, Mr. Hopfensperger  graduated from the University of
Wisconsin with a Bachelor of Arts degree in Communications Arts.

         GIACOMO  TORRENTE  has been a Director  of the Company  since  February
2000.  Mr.  Torrente  previously  served as Vice  Chairman  and Chief  Executive
Officer of GAMMA CROMA S.p.A, a European  manufacturer of cosmetic products.  In
addition,  Mr.  Torrente was a Director of GEMINA S.p.A.  He is also a corporate
finance and investment  banking  consultant  with offices in Milan,  Italy.  Mr.
Torrente received his degree from the School of Law,  University of Genoa, where
he graduated cum laude.

         LAWRENCE M. GRESS has been Chief Financial Officer of the Company since
June 2000. For the previous five years, Mr. Gress headed ClearPath Resources,  a
management  consultancy  specializing in business startups and turnarounds.  For
the past year he has served on the Board of Directors of NTM Productions,  Inc.,
a New York cable  television  programming  startup.  Mr. Gress received his M.A.
from the  University  of  Northern  Colorado  where he was  awarded  a  graduate
teaching fellowship.

         LORI S. FISHER has been President of Kiosk  Software,  Inc. since 1993.
Ms.  Fisher  founded  Kiosk  Software,  Inc. in 1993 and served as President and
Chairman until the company was acquired by AmeriCom in February 1999. Ms. Fisher
has 16 years  managing  software  product  development  for IBM,  University  of
California at Davis and Dega  Technology.  Ms.  Fisher has a Master's  Degree in
Computer Science from the University of California at Davis,  where she received
numerous professional development and academic achievement awards.

         JAMES HEINTZ has been Chief  Technology  Officer  since March 2000.  As
co-inventor  of the  Company's  systems  and  products  he has  co-authored  the
Company's patent applications. Prior to joining AmeriCom, he served as Principle
of  WayOutWare   where  he  developed   the  J-Engine,   a  Java  Servlet  based
web-content/e-commerce  engine.  He  consulted  for Sun  Microsystems  under the
direction  of  Miko  Matsumura  on  a  Jini  technology  demonstration  project.
Additionally, he developed Formbuster for Windows for Virtual Reality Labs, Inc.

         TRONE L.  MILLER has been the Chief  Operating  Officer of the  Company
since April 2000.  In addition,  he has been the  President  of DAI.Net,  Inc.'s
Network Operations Division since August 2000, the team responsible for all site
acquisition,  advertising  delivery  management and virtual network  development
activities.  Prior to joining the Company,  Mr.  Miller  served as President and
Chief  Executive  Officer of  Gateway  USA, a  telecommunications  company,  and
managed several other startup companies.

Family Relationship

         There are no family  relationships  between  any of the  directors  and
executive officers.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's  directors and  executive  officers,  and persons who own
more than 10% of the  Company's  common  stock,  to file reports of ownership on
Form 3 and changes in ownership on

                                      -24-

<PAGE>

Form 4 or 5 with the  Securities  and  Exchange  Commission  (the  "SEC").  Such
directors,  executive  officers and 10%  stockholders  are also  required by SEC
rules to furnish the Company  with copies of all Section  16(a) forms they file.
Based  solely  upon its  review of copies of such  forms  received  by it, or on
written  representations  from certain  reporting  persons that no other filings
were required for such persons, the Company believes that, during the year ended
June  30,  2000,  all  Section  16(a)  filing  requirements  applicable  to  its
directors,  executive officers and 10% stockholders were complied with except as
follows:

                  o     Mr.  Robert M. Cezar  filed one late Form 3 and one late
                        Form 4 to disclose two stock transactions in March 2000;

                  o     Mr.  Thomas  J.  Hopfensperger  filed one late Form 3 to
                        report his appointment as Chief Executive Officer of the
                        Company;

                  o     Mr.  Giacomo  Torrente  has failed to file one Form 3 to
                        report his election as a director of the Company; and

                  o     Mr.  Lawrence  M. Gress has failed to file one Form 3 to
                        report his appointment as Chief Financial Officer of the
                        Company.

ITEM 10. EXECUTIVE COMPENSATION

         The  following  table  sets  forth all plan and  non-plan  compensation
awarded to,  earned by or paid to all  individuals  who served as the  Company's
chief executive officer and its other most highly compensated executive officers
whose total annual salary and bonus exceeded  $100,000 during the last completed
fiscal year  (collectively,  the "Named  Executive  Officers")  for all services
rendered in all capacities during the fiscal years ended June 30, 1998, 1999 and
2000.


                                      -25-

<PAGE>
<TABLE>
<CAPTION>


                                                  SUMMARY COMPENSATION TABLE

                                                       Annual Compensation                       Long-Term Compensation
                                                       -------------------                       ----------------------

                                                                                               Restricted       Securities
Name and                                           Salary        Bonus      Other Annual         Stock          Underlying
Principal Position                     Year          ($)          ($)      Compensation ($)   Award(s) ($)      Options (#)
-------------------------------------- --------- ------------ ------------ ---------------- ----------------- ----------------

<S>                                    <C>        <C>              <C>      <C>         <C>     <C>               <C>
Thomas J. Hopfensperger, Chief         2000       $128,333          0                    0          0            400,000(1)
Executive Officer of AmeriCom USA,
Inc. and President of DAI.Net,
Inc.'s Advertising Sales Division

Robert M. Cezar,                       2000        137,500                                                            (2)
Director                               1999        11,150
                                       1998

Lawrence M. Gress,                     2000         23,333          0                    0          0            230,000
Chief Financial Officer

Lori S. Fisher,                        2000        100,000          0                    0          0            443,762(3)
President of Kiosk Software, Inc.      1999         33,333          0                    0          0

James Heintz,                          2000         96,000          0                    0          0            150,000(4)
Chief Technology Officer               1999         40,000          0                    0          0

Trone L. Miller,                       2000         96,000          0                    0          0            200,000(5)
Chief Operating Officer of AmeriCom    1999         40,000          0                    0          0
USA, Inc. and President of DAI.Net,
Inc.'s Network Operations Division

</TABLE>

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

(1)    Excludes  options to acquire  1,000,000  shares of the Company's  Class A
       common stock which were surrendered in September 2000.
(2)    Excludes  options  to acquire  935,000  shares of the  Company's  Class A
       common stock which were surrendered in September 2000.
(3)    Excludes  options  to acquire  200,000  shares of the  Company's  Class A
       common stock which were surrendered in September 2000.
(4)    Excludes  options  to acquire  150,000  shares of the  Company's  Class A
       common stock which were surrendered in September 2000.
(5)    Excludes  options  to acquire  500,000  shares of the  Company's  Class A
       common stock which were surrendered in September 2000.


         The Company  and its  subsidiaries  do not  currently  have  employment
agreements in place with its executive officers. All executive officers serve at
the pleasure of the Board of Directors.

                                      -26-

<PAGE>

Stock Option Plan

         On March 26, 1999, the Company  established  the 1999 Stock Option Plan
(the "1999  Plan") to serve as a vehicle to attract  and retain the  services of
key  employees  and to help  such key  employees  realize  a direct  proprietary
interest in the Company.  The 1999 Plan was ratified by the  shareholders at the
annual meeting of Stockholders held on December 14, 1999. The 1999 Plan provides
for grants of up to 15,000,000  shares of the Company's  Class A common stock as
either non-statutory or incentive stock options.  Under the 1999 Plan, officers,
directors,   consultants   and   employees  of  the  Company  are  eligible  for
participation.  The exercise  price of any incentive  stock option granted under
the 1999 Plan may not be less than 100% of the fair market  value of the Class A
common  stock of the  Company on the date of grant.  The fair  market  value for
which an optionee may be granted  incentive  stock  options in any calendar year
may not exceed  $100,000.  Shares  subject to options under the 1999 Plan may be
purchased  for cash.  Unless a shorter  period is  established  by the Company's
Board of Directors,  an option granted under the 1999 Plan is exercisable  for a
term of ten years.  The 1999 Plan is  administered by the Board of Directors and
its Compensation  Committee,  which has discretion to determine  optionees,  the
number of shares to be covered by each option, the exercise schedule,  and other
terms of the options. The 1999 Plan may be amended,  suspended, or terminated by
the Board of Directors,  but no such action may impair rights under a previously
granted option.  Each option is exercisable only so long as the optionee remains
employed by the Company. No option is transferable by the optionee other than by
will or the laws of descent and distribution.  As of September 30, 2000, options
to  acquire  6,326,447  shares  of the  Company's  Class  A  common  stock  were
outstanding.

Options Granted in Last Fiscal Year

         The following  table sets forth  options  granted by the Company to the
Named Executive Officers during the last fiscal year.

                      Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>

                          Percentage of Total Options/
                             Options/       SARs Granted to Employees in    Exercise Price
Name                       SARs Granted           Fiscal Year (1)               $/share       Expiration Date
------------------------- ---------------- ------------------------------- ------------------ -----------------
<S>                           <C>                       <C>                      <C>                 <C>
Lawrence M. Gress             230,000                   69%                      $5.00          June 1, 2010
</TABLE>

----------------------
(1)      During the fiscal year ended June 30, 2000, the Company granted options
         to acquire an  aggregate  of 333,000  shares of the  Company's  Class A
         common stock to its employees.

         No  incentive  stock  options  were  exercised  by the Named  Executive
Officers during the fiscal year ended June 30, 2000.

Director Compensation

         At this time, the Company does not pay its directors  compensation  for
their attendance at board meetings.  Further, at this time, the Company does not
provide  pension,  retirement or similar benefits to its directors and executive
officers.

                                      -27-

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information, as of September 18,
2000,  with  respect  to (i) each  director  of the  Company,  (ii)  each  named
executive officer,  (iii) those persons known to the Company to beneficially own
more than 5% of the Company's  Class A common stock,  and (iv) all directors and
executive  officers of the Company as a group.  The information is determined in
accordance  with Rule  13d-3  promulgated  under  the  Exchange  Act.  Except as
indicated  below, the beneficial  owners have sole voting and dispositive  power
with respect to the shares beneficially owned.

                                                                 Percentage
  Name and Address                         Number of Shares   Beneficially Owned
  ----------------                         ----------------   ------------------
  Robert M. Cezar                             14,163,012(1)          28.8%
  1303 Grand Avenue, Suite 221
  Arroyo Grande, California 93420

  Thomas J. Hopfensperger                        400,000(2)           0.8%
  825 Buckley Road, Suite B
  San Luis Obispo, California  93401

  Giacomo Torrente                               520,000              1.1%
  825 Buckley Road, Suite B
  San Luis Obispo, California  93401

  Lawrence M. Gress                               70,000(3)           0.1%
  825 Buckley Road, Suite B
  San Luis Obispo, California  93401

  Lori S. Fisher                                 979,893(4)           2.0%
  825 Buckley Road, Suite B
  San Luis Obispo, California  93401

  James Heintz                                   247,000(5)           0.5%
  825 Buckley Road, Suite B
  San Luis Obispo, California  93401

  Trone L. Miller                                200,000(6)           0.4%
  825 Buckley Road, Suite B
  San Luis Obispo, California  93401

  All directors and executive officers        18,840,589(7)          38.3%
  as a group (7  persons)

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

  (1)      Includes 4,548,370 shares held in the Robert M. Cezar trust.
  (2)      Includes  400,000  shares  issuable  under stock options  exercisable
           within 60 days.
  (3)      Includes  70,000  shares  issuable  under stock  options  exercisable
           within 60 days.
  (4)      Includes  443,762  shares  issuable  under stock options  exercisable
           within 60 days.
  (5)      Includes  150,000  shares  issuable  under stock options  exercisable
           within 60 days.
  (6)      Includes  200,000  shares  issuable  under stock options  exercisable
           within 60 days.
  (7)      Includes  1,263,762  shares issuable under stock options  exercisable
           within 60 days.

                                      -28-

<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On July 1,  1999,  the  Company  signed  an  agreement  to  merge  with
Telespace  Ltd.  At the  time of the  transaction,  Mr.  Winston  Lee  was  Vice
President,  International  Corporate  Development,  of the Company and the Chief
Executive  Officer  and  majority  shareholder  of  Telespace  Ltd.  The  merger
transaction was terminated by mutual consent on September 8, 1999.

         In July 1998 the Company acquired,  as a wholly owned subsidiary,  RMC.
At the time of this transaction Robert M. Cezar, David Loomis, Craig Machado and
Helen  Cooper were  officers,  directors  and, in the case of Mr.  Cezar and Mr.
Loomis,  principal  stockholders  of the Company,  and  officers,  directors and
principal shareholders of RMC.

         As of June 30, 1999, officers and relatives of officers had outstanding
loans to the Company of $638,145,  representing  approximately  48% of the total
notes and loans owed by the Company at that time. Of this amount  $475,000 bears
interest at 10% per annum and is due March 27, 2000,  and $3,145 bears  interest
at 14% per annum and is  payable on  demand.  The  remaining  loan  amounts  are
non-interest bearing. All of the loans from affiliates are unsecured and, except
for the $475,000 loan, are payable on demand.

         On July 25, 2000, the Company and certain co-founders  (including Lorne
Cezar, Robert M. Cezar, Helen E. Cooper,  Winston Lee, David H. Loomis, Craig D.
Machado and Jayson  Schwartz)  entered into the  Agreement  to  Terminate  Stock
Options and Warrants whereby such stockholders  agreed to surrender all of their
options to purchase  6,015,000  shares of the Company's Class A common stock and
warrants to purchase 800,000 shares of the Company's Class A common stock.

         On August 1, 2000, AmeriCom, Robert M. Cezar, the Chairman of the Board
of Directors of the Company and certain  stockholders of the Company  (together,
the  "Stockholders")  and Giacomo Torrente,  a director of the Company,  entered
into a stockholders'  agreement whereby the Stockholders and Mr. Torrente agreed
to transfer, assign and deliver to an escrow agent certificates evidencing their
respective  shares in the  Company  upon the  earlier of (i) October 30, 2000 or
(ii) the consummation of the private  placement as contemplated and described in
the stockholders' agreement.

         On August 3, 2000, AmeriCom executed and delivered a promissory note in
favor of Sterling National Bank (the "Bank")  evidencing a loan in the aggregate
principal amount of $1,000,000 (the "Note"). The Note will mature on November 1,
2000 and will bear interest,  payable monthly,  at a rate of 1% above the Bank's
base loan rate on the principal  amount of the Note. As collateral for the Note,
the Company entered into a General Loan and Security Agreement,  dated August 3,
2000 (the "Bank Security Agreement"), between the Company and the Bank, pursuant
to which the Company granted to the Bank a first priority  security  interest in
and lien on substantially all of the assets of the Company.  As further security
for the Note, and at the request of the Company and the Bank,  Giacomo Torrente,
a  director  of the  Company,  entered  into a  guaranty  in favor of the  Bank,
pursuant to which Mr.  Torrente (i)  guaranteed  the  obligations of the Company
under the Note and the Bank Security  Agreement and (ii) deposited

                                      -29-

<PAGE>

with the Bank the sum of $1,000,000 (the "Deposit").  In  consideration  for Mr.
Torrente  making the Deposit and  entering  into the  guaranty,  the Company and
Kiosk  Software,  Inc.,  a subsidiary  of the  Company,  entered into a security
agreement in favor of Mr. Torrente, as secured party, dated as of August 3, 2000
(the  "Torrente  Security  Agreement"),  pursuant to which the Company and Kiosk
Software,  Inc. granted to Mr. Torrente a second priority  security  interest in
and lien on  substantially  all of the assets of the Company and Kiosk Software,
Inc. On September 15, 2000,  the  principal  amount of the Note was increased to
$1,660,000.  In  connection  with  that  increase,  Mr.  Torrente  deposited  an
additional  $660,000  with the  Bank and the  Torrente  Security  agreement  was
amended to reflect this increase.

         In September 2000, certain officers and employees  (including Thomas J.
Hopfensperger,  James  Heintz,  Trone L. Miller,  Lori S. Fisher and Gary Hogue)
agreed to surrender  options to acquire an aggregate of 2,350,000  shares of the
Company's Class A common stock.



                                      -30-

<PAGE>

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

(a)      The following documents are being filed as part of this report:

                                                                           PAGE
                                                                           ----
(1)      Financial Statements

Independent Auditor's Report - Weinberg & Company, P.A. .............F-1
Consolidated Balance Sheet as of June 30, 2000.......................F-2 to F-3
Consolidated Statements of Operations for the Years Ended
  June 30, 2000 and 1999.............................................F-4
Consolidated Statements of Changes in Stockholders'
  Deficiency for the Years Ended June 30, 2000 and 1999 .............F-5 to F-6
Consolidated Statements of Cash Flows for the Years Ended
  June 30, 2000 and 1999.............................................F-7 to F-8
Notes to Consolidated Financial Statements ..........................F-9 to F-31

(2)      Exhibits
         --------

3.1      Certificate of  Incorporation.  Incorporated  by reference from Exhibit
         2.1 of the  Registration  Statement on Form 10-SB filed on February 11,
         1998 (File No. 0-23769) (the "Form 10-SB).

3.2      By-Laws.  Incorporated by reference from Exhibit 2.2 of the Form 10-SB.

3.3      Amendments to By-Laws of AmeriCom USA, Inc.  Incorporated  by reference
         from Exhibit 1 of the Form 10-KSB for the year ended December 31, 1998.

10.1     Amended and Restated Stock Option Plan.

10.2     Stock   Exchange   Agreements,   dated  July  15,   1998,   between
         shareholders of RMC Diversified Associates International,  Ltd. and
         AmeriCom USA, Inc. Incorporated by reference from Exhibit 10 of the
         Form 10-KSB for the year ended June 30, 1999.

10.3     Software Development Agreement,  dated August 7, 1998, between AmeriCom
         USA, Inc. and Systeam SPA.  Incorporated by reference from Exhibit 1 of
         the Form 8-K/A filed on February 18, 1999.

10.4     Agreement  and Plan of Merger,  dated  November 23,  1998,  between
         Chatsworth Acquisition Corporation and AmeriCom USA, Inc.

                                      -31-

<PAGE>

10.5     Agreement and Plan of Reorganization, dated January 24, 1999, among KSI
         Acquisition,  Inc., Kiosk Software, Inc., Lori Fisher and AmeriCom USA,
         Inc.  Incorporated by reference from Exhibit 1 of the Form 8-K filed on
         February 23, 1999.

10.6     Agreement and Plan of Reorganization,  dated February 26, 1999, between
         Jim and Jon Tech and AmeriCom USA, Inc.

10.7     Internet  Services  and  Co-Location  Agreement,  dated  April 7, 1999,
         between AmeriCom USA, Inc. and AboveNet Communications, Inc.

10.8     Agreement  of  Purchase  and  Sale  and   Exclusive   Licensing  of
         Technology  dated March 11, 1999 between Americom Ltd. and AmeriCom
         USA, Inc.  Incorporated by reference from Exhibit 1 of the Form 8-K
         filed on May 17, 1999.

10.9     Merger  Agreement  and  Plan of  Reorganization,  dated  July 1,  1999,
         between  AmeriCom USA, Inc. and  Telespace,  Limited.  Incorporated  by
         reference from Exhibit 2 of the Form 8-K filed on July 12, 1999.

10.10    Merger and  Recapitalization  Agreement and Plan of Reorganization,
         dated   September  27,  1999,   between   AmeriCom  USA,  Inc.  and
         DigiCities,  Inc.  Incorporated  by reference from Exhibit 2 of the
         Form 8-K filed on October 12, 1999.

10.11    Representation Agreement, dated February 7, 2000, between AmeriCom USA,
         Inc. and Interep Interactive, Inc.

10.12    Assignment,  effective  as of June 28,  2000,  from  Robert M. Cezar to
         AmeriCom USA, Inc.

10.13    Intellectual Property License Agreement,  dated as of June 28, 2000, by
         and between AmeriCom USA, Inc. and Robert M. Cezar.

10.14    Agreement to Terminate  Stock Options and Warrants,  dated July 25,
         2000, by and among certain stockholders and AmeriCom USA, Inc.

10.15    Stockholders'  Agreement,  dated  August  1,  2000,  by  and  among
         AmeriCom USA, Inc., Robert M. Cezar and the other  stockholders and
         beneficial  owners  of  the  Company  party  thereto,  and  Giacomo
         Torrente.

10.16    General Loan and Security  Agreement,  dated August 3, 2000, by and
         between Sterling National Bank and AmeriCom USA, Inc.  Incorporated
         by reference  from Exhibit 10.1 of the Form 8-K filed on August 31,
         2000.

10.17    Secured Note issued by AmeriCom  USA, Inc. to the order of Sterling
         National Bank, in the principal amount of $1,000,000,  dated August
         3, 2000.  Incorporated  by reference  from Exhibit 10.2 of the Form
         8-K filed on August 31, 2000.

10.18    Security Agreement,  dated as of August 31, 2000, by and among AmeriCom
         USA, Inc., Kiosk Software, Inc. and Avv. Giacomo Torrente. Incorporated
         by  reference  from  Exhibit  10.3 of the Form 8-K filed on August  31,
         2000.

                                      -32-

<PAGE>

10.19    Lease  Agreement,  dated January 5, 2000, by and between  AmeriCom USA,
         Inc. and Richardson Properties.

10.20    Lease  Agreement,  dated October 29, 1999, by and between AmeriCom USA,
         Inc. and Richard R. Ramirez.

10.21    Lease  Agreement,  dated August 12, 1999, by and between  AmeriCom USA,
         Inc. and J&C Associates I.

10.22    Lease Agreement, dated April 9, 1999, by and between AmeriCom USA, Inc.
         and Pruneyard Associates, LLC.

22.1     Subsidiaries:
                  DAI.Net, Inc.
                  Kiosk Software, Inc.

23.1     Consent of Weinberg & Company, P.A.

27.1     Financial Data Schedule

(b)      Reports on Form 8-K:

         Form  8-K  filed  on  April  14,  2000  reporting  that  Thomas  J.
         Hopfensperger  has been appointed as the Company's  Chief Executive
         Officer and that Trone L. Miller has been  appointed  President and
         Chief Operating Officer of the Company.

         Form 8-K filed on May 5, 2000  reporting the completion of the sale
         of  100,000  shares  of the  Company's  Class A common  stock to an
         investment fund managed by D-Brain Capital Ltd. of Tokyo.

         Form 8-K filed on June 1, 2000  reporting the completion of the sale of
         550,000 shares of the Company's Class A common stock to Megaweb Trading
         Ltd., a private financial company.


                                      -33-
<PAGE>


                                   SIGNATURES

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

Dated:     October 13, 2000
                                         AMERICOM USA, INC.



                                         By: /s/  Thomas J. Hopfensperger
                                             ----------------------------------
                                             Name:  Thomas J. Hopfensperger
                                             Title: Chief Executive Officer



                                         By: /s/  Lawrence M. Gress
                                             ----------------------------------
                                             Name:  Lawrence M. Gress
                                             Title:  Chief Financial Officer

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

Name                                 Office                         Date
----                                 ------                         ----

                                  Chairman of the Board        October 13, 2000
----------------------------      of Directors
Robert M. Cezar


/s/ Thomas J. Hopfensperger       Chief Executive Officer      October 13, 2000
----------------------------      and Director
Thomas J. Hopfensperger


/s/ Giacomo Torrente              Director                     October 13, 2000
----------------------------
Giacomo Torrente


                                      -34-


<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES

                                    CONTENTS


 PAGE     F-1        INDEPENDENT AUDITORS' REPORT

 PAGES    F-2 - F-3  CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000

 PAGE     F-4        CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
                     JUNE 30, 2000 AND 1999

 PAGES    F-5 - F-6  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
                     DEFICIENCY FOR THE YEARS ENDED JUNE 30, 2000 AND 1999

 PAGES    F-7 - F-8  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
                     JUNE 30, 2000 AND 1999

 PAGES    F-9 - F-31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors of:
 AmeriCom USA, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of AmeriCom USA,
Inc. and Subsidiaries as of June 30, 2000 and the related consolidated
statements of operations, changes in stockholders' deficiency, and cash flows
for each of the two years in the period ended June 30, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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
misstatements. 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 AmeriCom USA, Inc.
and Subsidiaries as of June 30, 2000 and the results of their operations and
their cash flows for each of the two years in the period ended June 30, 2000, in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 17 to the
financial statements, the Company's significant operating losses and working
capital deficiency of $4,105,781 raise substantial doubt about its ability to
continue as a going concern. Management's plan in regards to these matters is
also described in Note 17. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



WEINBERG & COMPANY, P.A.

/s/ Weinberg & Company, P.A.

Boca Raton, Florida
August 28, 2000

<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2000


         See accompanying notes to consolidated financial statements.
                                       F-2

                                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                           $  247,971
  Accounts receivable, net                                               249,400
  Due from employees                                                       5,410
  Prepaid insurance                                                      189,489
  Prepaid royalties                                                      125,000
                                                                      ----------
   Total Current Assets                                                  817,270
                                                                      ----------

PROPERTY AND EQUIPMENT, NET                                              627,595
                                                                      ----------

OTHER ASSETS
  Accounts receivable - long term, net                                   321,912
  Deposits                                                                47,968
  Kiosk computer software costs, net                                     883,276
  MyLine software cost, net                                              939,892
  J-Engine software cost, net                                            416,667
  Goodwill, net                                                          299,849
                                                                      ----------
   Total Other Assets                                                  2,909,564
                                                                      ----------

TOTAL ASSETS                                                          $4,354,429
------------                                                          ==========


         See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>


                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------

CURRENT LIABILITIES
  Cash overdraft                                                   $    121,445
  Accounts payable and accrued expenses                               1,203,179
  Payroll taxes payable                                                 469,583
  Accrued salaries and wages                                            871,930
  Deferred revenue                                                       92,000
  Factor payable                                                        663,115
  Obligation under capital lease                                          5,510
  Notes and loans payable - current portion                           1,496,289
                                                                   ------------
   Total Current Liabilities                                          4,923,051
                                                                   ------------

STOCKHOLDERS' DEFICIENCY
  Preferred stock, $0.0001 par value, 20,000,000 shares
   authorized,
   none issued and outstanding                                               --

  Common stock, Class A, $0.0001 par value, 99,000,000 shares
   authorized, 42,696,746 issued and outstanding                          4,270

  Common stock, Class B, $0.0001 par value, 1,000,000 shares
   authorized, none issued and outstanding                                   --
  Additional paid-in capital                                         28,771,159
  Accumulated deficit                                               (29,344,051)
                                                                   ------------

TOTAL STOCKHOLDERS' DEFICIENCY                                         (568,622)
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                     $  4,354,429
                                                                   ============


                                      F-3
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
                  ------------------------------------------

<TABLE>
<CAPTION>
                                                            2000            1999
                                                        ------------    ------------
<S>                                                     <C>             <C>
REVENUES                                                $  1,023,297    $    143,591

COST OF SALES                                              1,010,980         121,873
                                                        ------------    ------------

GROSS PROFIT                                                  12,317          21,718
                                                        ------------    ------------

OPERATING EXPENSES
  Salaries, wages and other compensation                   5,551,018       1,612,659
  Contract services                                          706,887         717,623
  Amortization expense                                     2,037,537         353,206
  Depreciation expense                                       162,517          54,624
  Consulting expense                                         369,321       3,417,418
  Legal fees                                                 901,480         487,310
  Goodwill Impairment                                      5,970,848            --
  Other general and administrative expenses                3,513,421         977,979
                                                        ------------    ------------
   Total Operating Expenses                               19,213,029       7,620,819
                                                        ------------    ------------

Loss From Operations                                     (19,200,712)     (7,599,101)
                                                        ------------    ------------

OTHER INCOME (EXPENSE)
  Other income                                                  --             1,752
  Interest income                                             13,901            --
  Loss on abandonment of assets                              (59,570)           --
  Interest expense                                          (108,662)        (97,448)
  Vendor finance charges                                     (16,158)         (1,505)
  Payroll tax penalties and interest                         (48,793)         (8,097)
                                                        ------------    ------------
   Net Other Expenses                                       (219,282)       (107,050)
                                                        ------------    ------------

Loss before income tax and extraordinary item            (19,419,994)     (7,706,151)
  Income Tax Expense                                           1,600           1,600
                                                        ------------    ------------

Loss before extraordinary item                           (19,421,594)     (7,707,751)

Extraordinary gain (loss) on extinguishment of debt         (347,408)          5,000
                                                        ------------    ------------

NET LOSS                                                $(19,769,002)   $ (7,700,999)
                                                        ============    ============

Weighted average number of shares outstanding during
  period - basic and diluted                              38,630,921      29,227,076
                                                        ============    ============

Net loss per common share and equivalents - basic and
diluted                                                 $      (0.51)   $      (0.26)
                                                        ============    ============
</TABLE>

         See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                   FOR THE YEARS ENDED JUNE 30, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                     Additional
                                           Common Stock Issued        Paid-In     Accumulated
                                          Shares        Amount        Capital      Deficit          Total
                                       ------------   ------------  -----------   -------------  ------------
<S>                                      <C>          <C>           <C>           <C>            <C>
Balance, June 30, 1998                   25,296,348   $     2,529   $   144,978   $(1,874,050)   $(1,726,543)

Conversion of promissory notes to
  common stock                              208,699            22        78,433          --           78,455
Stock sold prior to merger                2,044,981           204       541,561          --          541,765
Reverse merger with Chatsworth
  Acquisition Corporation                   350,000            35           833          --              868
Issuance of common stock as
  compensation                            2,100,000           210     3,149,790          --        3,150,000
Acquisition of Kiosk Software, Inc.
  by AmeriCom USA, Inc.                   1,000,000           100     1,499,900          --        1,500,000
Issuance of common stock as
  compensation                              180,000            18       359,982          --          360,000
Issuance of common stock for services         2,000             1         3,999          --            4,000
Stock options exercised                      43,545             4        49,388          --           49,392
Conversion of promissory notes into
  common stock                              593,711            59     1,187,362          --        1,187,421
Acquisition of MyLine Software              500,000            50       999,950          --        1,000,000
Common stock advanced for acquisition       200,000            20       399,980          --          400,000

Net loss 1999                                  --            --            --      (7,700,999)    (7,700,999)
                                        -----------   -----------   -----------   -----------    -----------
Balance, June 30, 1999                   32,519,284         3,252     8,416,156    (9,575,049)    (1,155,641)
</TABLE>

         See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                   FOR THE YEARS ENDED JUNE 30, 2000 AND 1999


<TABLE>
<CAPTION>
                                                      Common Stock Issued       Additional
                                                   --------------------------    Paid-In        Accumulated
                                                      Shares        Amount       Capital          Deficit         Total
                                                   -------------  -----------  -------------   --------------  -------------
<S>                                                   <C>                 <C>     <C>          <C>               <C>
Conversion of promissory notes to common stock        564,435             56      1,128,814           --         1,128,870

Issuance of common stock for services                 161,000             16        321,984           --           322,000

Acquisition of digiCities, Inc. by Americom
  USA, Inc.                                         3,500,000            350      6,999,650           --         7,000,000

Issuance of common stock for cash, net              4,063,027            407      9,370,682           --         9,371,089

Conversion of refundable common stock into
  Class A common stock                              1,889,000            189      2,533,873           --         2,534,062

Net Loss, 2000                                           --             --             --      (19,769,002)    (19,769,002)
                                                 ------------   ------------   ------------   ------------    ------------

Balance, June 30, 2000                             42,696,746   $      4,270   $ 28,771,159   $(29,344,051)   $   (568,622)
                                                 ============   ============   ============   ============    ============
</TABLE>


         See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEARS ENDED JUNE 30, 2000 AND 1999

<TABLE>
<CAPTION>
                                                              2000            1999
                                                          ------------    ------------
<S>                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                $(19,769,002)   $ (7,700,999)
  Adjustments to reconcile net loss to net cash used in
   operating activities:
   Depreciation                                                162,517          54,624
   Amortization                                              2,037,537         352,751
   Provision for doubtful accounts                           1,676,644          21,679
   Issuance of common stock for services                       322,000       3,514,000
   Loss on abandonment of assets                                59,570            --
   Impairment of goodwill                                    5,970,848            --
   Loss on extinguishment of debt                              347,408            --
  Changes in assets and liabilities:
   (Increase) decrease in:
    Accounts receivable                                       (724,584)        (25,453)
    Employee receivable                                          2,106          (7,516)
    Prepaid expenses and other assets                         (300,524)         (9,138)
    Deposits                                                   (26,977)        (20,079)
   Increase (decrease) in:
    Cash overdraft                                             121,445            --
    Accounts payable and accrued expenses                      (38,449)        813,725
    Deferred revenue                                            89,537           2,463
    Payroll taxes payable                                      277,932          97,303
    Accrued salaries and wages                                 643,257        (337,069)
                                                          ------------    ------------
      Net Cash Used In Operating Activities                 (9,148,763)     (3,243,709)
                                                          ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Due from officer                                             (53,586)        (39,647)
  Purchase of property and equipment                          (182,155)       (562,384)
  Advances related to merger and acquisition                  (470,194)       (173,000)
  Cash acquired in acquisition of Kiosk                           --             3,171
                                                          ------------    ------------
      Net Cash Used In Investing Activities                   (705,935)       (771,860)
                                                          ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from stock subscription                                --         2,534,062
  Proceeds from stock issuance                               9,371,089       1,820,401
  Proceeds from factor - net                                   123,955            --
  Payment of capital lease obligations                          (2,900)         (6,163)
  Payment of notes and loans payable                          (726,670)       (666,001)
  Proceeds from notes and loans payable                      1,331,698         310,000
                                                          ------------    ------------
      Net Cash Provided By Financing Activities             10,097,172       3,992,299
                                                          ------------    ------------
</TABLE>

         See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

                                                             2000        1999
                                                           --------    --------

Net Increase (Decrease) In Cash                             242,474     (23,270)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                5,497      28,767
                                                           --------    --------

CASH AND CASH EQUIVALENTS AT END OF YEAR                   $247,971    $  5,497
----------------------------------------                   ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for interest                   $ 37,365    $ 39,388
                                                           ========    ========

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
----------------------------------------------------------------------

During 2000, the Company converted 1,889,000 shares of refundable common stock
into Class A common stock valued at $2,534,062.

During 2000, the Company issued 3,500,000 shares of common stock valued at $2.00
a share to acquire digiCities.

During 2000, the Company converted $781,462 of convertible notes payable and
accrued interest into 564,435 shares of common stock.

During 1999, the Company converted $78,455 of convertible notes payable and
accrued interest into 208,699 shares of shares of common stock.

During 1999, the Company issued 1,000,000 shares of common stock valued at $1.50
a share to acquire Kiosk.

During 1999, the Company issued 500,000 shares of common stock valued at $2.00 a
share to acquire MyLine.

During 1999, the Company converted 1,187,422 of convertible notes payable and
accrued interest into 593,711 shares of common stock.

During 1999, the Company advanced 200,000 shares of common stock to an entity in
anticipation of closing on a pending acquisition.

During 1999, the Company issued 13, 313,800 shares (retroactively adjusted for
recapitalization) of common stock to acquire Diversified.

During 1999, the Company issued 350,000 shares of common stock in a reverse
merger with Chatsworth.

         See accompanying notes to consolidated financial statements.


                                      F-8
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

NOTE 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            (A) Description of Business

            AmeriCom USA, Inc. ("AmeriCom") has developed proprietary technology
            known as Adcast, e-CommPlus, TrueManagement, and My-Channel. The
            Company develops and markets software technology products that
            provide advertisers, web site owners, sponsors, and affiliates with
            advanced Internet technology, revenue sharing, commercial
            efficiency, commercial effectiveness, and operating savings.
            AmeriCom positions itself in the marketplace as an Internet
            Advertising Service Provider.

            In July, 1998 AmeriCom acquired its commonly controlled affiliate,
            RMC Diversified Associates International ("Diversified").
            Diversified subsequently became inactive. (See Note 11(A))

            On November 23, 1998, effective December 4, 1998, AmeriCom entered
            into an Agreement and Plan of Merger with Chatsworth Acquisition
            Corporation, a Delaware corporation and public shell ("Chatsworth")
            whereby the stockholders of AmeriCom exchanged all of their common
            stock in AmeriCom for shares of Chatsworth in a transaction
            accounted for as a recapitalization of AmeriCom.
            (See Note 11(B))

            Kiosk Software, Inc. ("Kiosk"), a wholly owned subsidiary of
            AmeriCom, was acquired by AmeriCom on February 8, 1999 (see Note
            11(C)). Kiosk specializes in complete kiosk development services
            including custom cabinet design and multimedia software development
            for a wide variety of applications using its proprietary Kiosk
            Operating Suite.

            On April 30, 1999, the Company acquired tangible and intangible
            assets relating to technology developed and marketed by the seller
            under the names "MyLine" and "InstAccount."

            Adcast Inc.,  Adcast  Canada,  LTD. and  Diversified  are inactive
            wholly owned  subsidiaries  of AmeriCom  USA,  Inc.  AmeriCom USA,
            Inc. and its  subsidiaries are hereinafter  collectively  referred
            to as the "Company."

            On July 31, 1999, the Company acquired intangible computer software
            (J--Engine) assets relating to technology developed by the seller
            (See Note 11(F)).

            On August 2, 1999, effective January 1, 2000, the Company entered
            into an


                                      F-9
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            Agreement and plan of acquisition with digiCities, Inc., a
            California corporation and internet service provider (digiCities)
            whereby the stockholders of digiCities exchanged all of their common
            stock in digiCities for shares of Americom in a transaction
            accounted for as a purchase of digiCities. digiCities has ceased to
            exist as an independent entity.

            (B) Principles of Consolidation

            The consolidated financial statements include the accounts of the
            Company and its wholly owned subsidiaries. All significant
            inter-company balances and transactions have been eliminated in
            consolidation.

            (C) Financial Statement Presentation

            Certain  amounts in the 1999 financial  statements have been
            reclassified to conform to the 2000 presentation

            (D) Use of Estimates

            In preparing financial statements in conformity with generally
            accepted accounting principles, management is required to make
            estimates and assumptions that affect the reported amounts of assets
            and liabilities and the disclosure of contingent assets and
            liabilities at the date of the financial statements and revenues and
            expenses during the reported period. Actual results could differ
            from those estimates.

            (E) Cash and Cash Equivalents

            For purposes of the cash flow statements, the Company considers all
            highly liquid investments with original maturities of three months
            or less at time of purchase to be cash equivalents.

            (F) Property and Equipment

            Property and equipment are stated at cost, less accumulated
            depreciation. Expenditures from maintenance and repairs are charged
            to expense as incurred. Depreciation is provided using the
            straight-line method over the estimated useful life of the assets
            from three to five years.

            (G) Computer Software Costs


                                      F-10
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

               (i) Software To Be Sold Leased Or Otherwise Marketed

               The Company accounts for the research and development costs and
               production costs of computer software to be sold, leased, or
               otherwise marketed in accordance with Statement of Financial
               Accounting Standards No. 86 "Accounting for the Costs of Computer
               Software to Be Sold, Leased, or Otherwise Marketed" ("Statement
               No. 86"). Under Statement No. 86 all costs incurred to establish
               the technological feasibility of a computer software product to
               be sold, leased, or otherwise marketed are considered research
               and development expenses that are expensed as incurred. Costs of
               producing product masters which include coding and testing
               performed subsequent to establishing technological feasibility
               but before the product is available for general release to
               customers are capitalized and amortized on a straight-line basis
               over three years. Kiosk computer software costs at June 30, 1999
               represents an allocation of the purchase price differential
               related to the acquisition of Kiosk (see Notes 4 and 11(C)).

               (ii) Software Obtained For Internal Use

               The Company accounts for software obtained for internal use in
               accordance with the Accounting Standards Executive Committee
               Statement of Position No. 98-1 "Accounting For the Costs of
               Computer Software Developed or Obtained for Internal Use" ("SOP
               98-1"). SOP 98-1 generally requires the capitalization of all
               internal or external direct costs incurred in developing or
               obtaining internal use software. The Company generally amortizes
               software developed or obtained for internal use over an estimated
               life of three years. MyLine computer software costs at June 30,
               1999 represent the external purchase price paid on April 30,
               1999. (See Notes 4 and 11(D))

            (H) Goodwill

            Goodwill arising from the acquisition of Kiosk is being amortized on
            a straight-line basis over five years. Goodwill arising from the
            acquisition of digiCities was being amortized on a straight-line
            basis over five years before the impairment during the year ended
            June 30, 2000 (See Note 5).

            (I) Income Taxes

            The Company accounts for income taxes under the Financial Accounting
            Standards Board Statement of Financial Accounting Standards No. 109.
            "Accounting for Income Taxes" ("Statement No. 109"). Under Statement
            No. 109, deferred tax assets and liabilities are recognized for the
            future tax consequences attributable to differences between the
            financial statement carrying amounts of existing assets and
            liabilities and their respective tax basis. Deferred tax assets and
            liabilities are measured using enacted tax rates expected to apply
            to taxable income in the years in which those temporary differences
            are expected to be recovered or settled. Under Statement 109, the
            effect on deferred tax assets and


                                      F-11
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            liabilities of a change in tax rates is recognized in income in
            the period that includes the enactment date.

            (J) Stock Options
            In accordance  with  Statement of Financial  Accounting  Standards
            No. 123 ("SFAS  123") the Company has elected to account for Stock
            Options  under  Accounting  Principles  Board Opinion No. 25 ("APB
            Opinion No. 25") and related interpretations.

            (K) Revenue Recognition and Deferred Revenue

            The Company recognizes revenues from advertising sales as earned.

            The Company's digiCities division charges an initial set up fee that
            is recognized when the site is created and loaded onto the Internet.
            The Company also charges a monthly hosting fee for each website.
            Revenues are recognized as earned over the hosting period.

            The Company sells its Kiosk Operating Suite as a stand-alone product
            or under development contracts with customers whereby the Company
            develops customized software applications or turnkey systems, which
            include software, hardware, and custom cabinets. The contracts
            generally contain multiple elements with specified milestones and
            delivery dates and stipulated fees for each element. The time to
            completion and delivery of the development portion of the contracts
            generally does not exceed three to six months.

            The Company recognizes revenue under its Kiosk development contracts
            in accordance with the Accounting Standards Executive Committee
            Statement of Position 97-2 "Software Revenue Recognition" ("SOP
            97-2"). Under SOP 97-2 the Company recognizes revenue from the sale
            of stand alone products upon delivery and recognizes revenue for
            each element under development contracts at the time of delivery of
            that functioning element.

            The Company  recognizes  revenue from license  agreements over the
            term of the agreement.

            (L) Advertising Expense

            In accordance with Accounting Standards Executive Committee
            Statement of Position 93-7, ("SOP 93-7") costs incurred for
            producing and communicating


                                      F-12
<PAGE>

            advertising of the Company, are recorded as operating expenses as
            incurred.

            (M) Cost of Sales

            The Company purchases hardware for specific customer requirements
            under development contracts for turnkey kiosk systems. Hardware
            purchases are recorded as cost of sales. The Company did not
            maintain inventory at June 30, 2000.
            The Company purchases advertising space for resale to customers on
            various web sites and accounts and produces advertisements for
            customers. These costs are included in the cost of sales.

            The Company used in-house and outside telemarketers to acquire new
            website customers. These amounts are charged to operating expenses
            as incurred.

            (N) Per Share Data

            Net loss per common share for the year ended June 30, 2000 and 1999
            is required to be computed based on the weighted average common
            stock and dilutive common stock equivalents outstanding during the
            year as defined by Statement of Financial Accounting Standards, No.
            128; "Earnings Per Share". For 1999, under Generally Accepted
            Accounting Principles, the shares outstanding for the period from
            July 1, 1998 through the recapitalization date of November 23, 1998
            (See Note 11(B)), are deemed to be that amount issued to the
            stockholders of AmeriCom on the recapitalization date. For the
            period from the recapitalization date through June 30, 1999, the
            shares used in the weighted average computation are the actual
            shares outstanding for that period

            (O) Long-Lived Assets

            During 1995, Statement of Financial Accounting Standards No. 121,
            "Accounting for the Impairment of Long-lived Assets and for
            Long-lived Assets to be Disposed Of" ("SFAS 121"), was issued. SFAS
            121 requires the Company to review long-lived assets and certain
            identifiable assets related to those assets for impairment whenever
            circumstances and situations change such that there is an indication
            that the carrying amounts may not be recoverable. If the
            non-discounted future cash flows of the enterprise are less than
            their carrying amounts, their carrying amounts are reduced to fair
            value and an impairment loss is recognized. The Company recognized
            an impairment loss on the goodwill acquired in the digiCities merger
            (See Note 5).

            (P) Concentrations Of Credit Risk From Cash Deposits In Excess of
            Insured Limits


                                      F-13
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            The Company maintains its cash balances at one financial institution
            in California. The balances are insured by the Federal Deposit
            Insurance Corporation up to $100,000. At June 30, 2000, the
            Company's uninsured cash balances were approximately $143,900.

NOTE 2      ACCOUNTS RECEIVABLE AND FACTOR AGREEMENT

            The Company's digiCities division previously billed its customers
            primarily through aggregators. An aggregator represents several
            hundred local telephone exchange carriers ("LECs"). The LECs bill
            the hosting fees in the customer's monthly phone bill and remit the
            proceeds to the aggregator. The aggregator holds back a percentage
            of the amounts collected as a reserve against future charge backs.
            The amounts reserved are recorded as long term receivables since the
            aggregator holds these amounts up to eighteen months. The Company
            has been advanced approximately $663,100 from a factor on these
            accounts receivable and such amount is shown as a factor payable at
            June 30, 2000.. The Company has approximately $321,912 in long term
            accounts receivable outstanding from this aggregator at June 30,
            2000.

            Receivables as of June 30, 2000:

                                                 Accounts          Long Term
                                                Receivable        Receivables
                                              ---------------   ----------------

            Receivable                        $       661,706   $        321,912
            Allowance for doubtful
            accounts                                  412,306               --
                                              ---------------   ----------------
                                              $       249,400   $        321,912
                                              ===============   ================


            For the year ending June 30, 2000, the Company recorded a provision
            for doubtful accounts of $1,576,644 in its statement of operations.
            At June 30, 2000, the provision for doubtful accounts includes
            $1,191,596 attributable to the digiCities accounts receivable at the
            date of acquisition (See Note 11(E)).

            At June 30, 2000 approximately 21% and 34% of gross accounts
            receivable were due from two customers, respectively. The amounts
            from these two customers are fully reserved at June 30, 2000.

NOTE 3      PROPERTY AND EQUIPMENT


                                      F-14
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            Property and equipment at June 30, 2000 consisted of the following:

            Office equipment                          $       66,144
            Office furniture                                  48,426
            Computer equipment                               568,950
            Computer software                                 139,964
            Trade Show Booth                                   5,303
            Demonstration unites                                 985
            Capital lease                                      6,307
            Automobile                                        23,349
                                                      ----------------
                                                             859,428
            Less accumulated depreciation                   (231,833)
                                                      ----------------
                                                      $      627,595
                                                      ================

            Depreciation expense for the year ended June 30, 2000 and 1999 was
            $162,517 and $54,624, respectively.

NOTE 4      COMPUTER SOFTWARE COSTS

            The Company accounts for Kiosk computer software costs in accordance
            with Statement No. 86. Computer software costs are reported at the
            lower of non-amortized costs or net realizable value. Commencing
            upon initial product release, these costs are amortized based on the
            straight-line method over the estimated life, generally three years.
            Although technology is subject to change, the Company believes that
            based on its projections the computer software costs are stated at
            net realizable value and fully recoverable.

            Kiosk computer software costs at June 30, 2000 represent the
            non-amortized portion of the allocation of the Kiosk acquisition
            purchase price differential pursuant to Accounting Principles Board
            Opinion No. 16. (See Note 1(G)) and 11(C)).

            Kiosk computer software costs at June 30, 2000 was as follows:


            Computer software costs                $    1,673,575
            Less accumulated amortization                 790,299
                                                   --------------
                                                   $      883,276
                                                   ==============

            Amortization expense on Kiosk Software, based on an estimated useful
            life of three years, for the year ended June 30, 2000 was $557,858.


                                      F-15
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            MyLine computer software costs at June 30, 2000 represent the
            non-amortized cost of the software acquired on April 30, 1999 (see
            Notes 1(G) and 11(D)) as follows:

            MyLine computer software costs         $    1,538,000
            Less accumulated amortization                 598,108
                                                   --------------
                                                   $      939,892
                                                   ==============

            Amortization expense on My-Line software, based on an estimated
            useful life of three years, for the year ended June 30, 2000 was
            $512,664.

            J-Engine computer software costs at June 30, 2000 represent the
            non-amortized cost of the software acquired on July 31, 1999 (See
            Note 1(G) and 11(F)) as follows:

            J-Engine software costs                           $        600,000
            Less accumulated amortization                              183,333
                                                              ------------------
                                                              $        416,667
                                                              ==================

            Amortization expense on J-Engine computer software, based on the
            estimated useful life of three years, for the year ended June 30,
            2000 was $183,333.

NOTE 5      GOODWILL

            Goodwill arising from the acquisition of Kiosk (See Note 11(C)) is
            being amortized on a straight-line basis over five years.

            Goodwill at June 30, 2000 was as follows:

            Goodwill                             $      418,394
            Less accumulated amortization               118,545
                                                 --------------
                                                 $      299,849
                                                 ==============


            Amortization expense for the year ended June 30, 2000 was $83,679.

            Goodwill arising from the acquisition of digiCities is being
            amortized on a straight-line basis over five years.

            Goodwill                             $    6,670,851
            Loss on impairment                       (5,970,848)
            Less accumulated amortization              (700,003)
                                                 --------------
                                                 $         -
                                                 ==============


                                      F-16
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            Amortization expense for the year ended June 30, 2000 was $700,003.
            During 2000, the Company underwent a strategic repositioning plan.
            As a result of the repositioning plan, the Company reevaluated the
            carrying value of goodwill from the digiCities acquisition. For
            purposes of determining the future discounted cash flows of the
            goodwill, the Company, based upon historical results, current
            projections, and internal earnings targets, determined the
            discounted future cash flows of the business to which the goodwill
            relates. Based on the measurement of goodwill, the Company
            recognized a loss on goodwill impairment of $5,970,848 during the
            year ended June 30, 2000.

NOTE 6      PAYROLL TAXES PAYABLE

            At June 30, 2000 the Company owed $469,583 in payroll taxes,
            interest and penalties for prior tax periods of fiscal year 2000.
            Such amounts were accrued in payroll taxes payable at June 30, 2000.

NOTE 7      ACCRUED SALARIES AND WAGES

            Accrued salaries and wages represent current and certain unpaid
            prior year salaries from September 1994 through June 2000:

            Accrued salaries and wages payable         $     871,930
           ---------------------------------------     =============

            A total of $75,500 included in accrued salaries as of June 30, 2000
            represents accrued wages from prior periods. A total of $643,335
            included in accrued salaries as of June 30, 2000 represents deferred
            compensation costs due to two former officers.

NOTE 8      NOTES AND LOANS PAYABLE

            The following  schedule  reflects  notes and loans payable at June
            30:
            Note payable, 7% per annum accrued interest and
               principal, due December 31, 2000, convertible into
               500,000 shares of common stock at  the option of
               the holder, unsecured                                $ 1,000,000

            Note payable to a former officer, non-interest bearing through March
               26, 1998, interest at 10% per annum from March 27, 1998, due on
               demand                                                   299,000

            Loan payable to officer, non-interest bearing, due on
               demand,                                                  135,000


                                      F-17
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

               unsecured

            Note payable, interest at 8% per annum, $200,000 due on April 30,
               2000 and $30,000 plus all accrued interest due April 30, 2001,
               unsecured                                                30,000

            Note payable, interest at 10% per annum, due on
               demand, unsecured                                        18,506

            Note payable, to director and officer, 10 % per annum,
               $3,722 monthly until August 15, 2000,
               unsecured                                                 7,353

            Loan payable, non-interest bearing, unsecured                3,285

            Note payable, interest at 18% per annum, due on
               demand, unsecured                                         3,145
                                                                     -----------
                                                                       1,496,289
            Less current portion                                       1,496,289
                                                                     -----------

                                                                     $     -
                                                                     ===========

            Interest expense for the year ended June 30, 2000 and 1999 was
            $108,662 and $97,448, respectively.

            Accrued interest of $175,757 on the notes and loans payable has been
            included in accrued expenses at June 30, 2000.

NOTE 9      RELATED PARTIES

            Certain notes and salaries are owed to related parties at June 30,
            2000 (See Notes 7 and 8). Certain related parties took part in the
            acquisition of Diversified. (See Note 11(A))

            As discussed in the supplemental disclosure to the consolidated cash
            flow statements,  and Note 12, certain  non-cash  issuance of common
            stock to related parties occurred during 1999.

NOTE 10     COMMITMENTS AND CONTINGENCIES

            (A) Operating Lease Agreement

            The Company leases various corporate office spaces, office equipment
            and furniture and automobiles under operating leases. The leases
            have remaining terms


                                      F-18
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            varying from the years 2000 through 2005.

            Future minimum lease payments for the operating leases are as
            follows at June 30, 2000:

                          Years Ending             Amount
                     -----------------------   ---------------

                              2001             $       207,350
                              2002                     209,400
                              2003                     116,890
                              2004                     102,000
                              2005                      60,500
                                               ---------------
                                               $       696,140
                                               ===============

            Rent expense for the year ended June 30, 2000 and 1999 aggregated
            $285,707 and $73,303, respectively.

            (B) Employment Agreements

            The Company entered into an employment agreement with the former
            principal shareholder of Kiosk Software, Inc. on January 24, 1999.
            The agreement calls for the shareholder to become the President,
            Chief Operating Officer, and Director of KAI at an annual salary of
            $100,000.

            The Company entered into an employment agreement with an individual.
            The agreement calls for the individual to become CFO at an annual
            salary of $130,000. The agreement also calls for a moving allowance,
            monthly transportation allowance, 230,000 employee stock options at
            an exercise price of $5.00 vesting over two years, and all other
            employee benefits.


            The Company entered into an employment agreement with an individual
            to become president and COO of AmeriCom USA, Inc. at an annual
            salary of $140,000, with an increase in annual salary to $196,000
            upon a successful offering or the first quarter the Company becomes
            profitable. The agreement grants 1,400,000 employee stock options at
            an exercise price of $2.00 vesting over three years, and all other
            employee benefits. The agreement also calls for six months severance
            pay upon termination.

NOTE 11     BUSINESS COMBINATIONS AND RECAPITALIZATION

            (A) Acquisition of Diversified


                                      F-19
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            On July 15, 1998 the Board of Directors of Diversified and AmeriCom
            elected to execute a stock swap, whereby six stockholders, three of
            whom were related parties at that date representing 100% of the
            outstanding stock of Diversified, exchanged their common stock for
            common stock of AmeriCom at a ratio of 500 for 1. Diversified then
            issued 10,000 shares of its common stock to AmeriCom resulting in
            Diversified becoming a wholly owned subsidiary of AmeriCom. Since
            both entities were under common control, the exchange was accounted
            for at historical cost in a manner similar to that in a pooling of
            interests.

            (B) Merger and Recapitalization

            On November 23, 1998 AmeriCom USA, Inc. entered into an Agreement
            and Plan of Merger (the "Agreement") with Chatsworth Acquisition
            Corporation, a public shell ("Chatsworth") whereby all of the
            stockholders of AmeriCom USA, Inc. exchanged all of their common
            stock in AmeriCom USA, Inc. for 27,550,000 shares or 91.83% of the
            common stock of Chatsworth. The merger was effective on December 4,
            1998 and Chatsworth changed its name to AmeriCom USA, Inc. Under
            Generally Accepted Accounting Principles, a company whose
            stockholders receive over fifty percent of the stock of the
            surviving entity in a business combination is considered the
            acquirer for accounting purposes. Accordingly, the transaction is
            accounted for as an acquisition of Chatsworth by AmeriCom USA, Inc.
            and a recapitalization of AmeriCom USA, Inc. The financial
            statements subsequent to the acquisition include the following: (1)
            the balance sheet consists of the net assets of Chatsworth at
            historical costs and the net assets of the Company at historical
            costs; (2) the statement of operations consists of the operations of
            the Company for the period presented and the operations of
            Chatsworth from the acquisition date. As a result of the merger,
            2,100,000 shares of common stock of the surviving entity were issued
            to certain consultants. The consultants' shares were recorded as
            compensation expense in 1999, the period the services were provided,
            at a fair market value of $3,150,000 or $1.50 per share. (See Note
            10(C)). In addition, 350,000 shares were issued to the prior
            shareholders of Chatsworth, resulting in a total of 30,000,000
            common shares issued and outstanding just subsequent to consummation
            of the merger.

            (C) Acquisition of Software Company

            On January 24, 1999, the effective date, the Company entered into an
            Agreement and Plan of Reorganization (the "Agreement") by and among
            the Company, Kiosk Acquisition, Inc. ("KAI"), Kiosk Software, Inc.
            ("Kiosk") and the principal shareholder of Kiosk (the "Kiosk
            Shareholder"). KAI is a wholly owned subsidiary of the Company
            formed specifically for the purpose of acquiring Kiosk.


                                      F-20
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            Under the terms of the Agreement, which closed on February 8, 1999,
            KAI acquired one hundred percent of the issued and outstanding
            common stock of Kiosk through the issuance of 1,000,000 shares of
            the Company's common stock to the stockholders of Kiosk. All
            unexercised options of Kiosk at the effective date were also
            converted to options of the Company at a similar ratio as the common
            stock exchange discussed above. The Agreement contained a purchase
            price contingency provision that expired on August 8, 1999 without
            any additional shares being issued. At the completion of the merger,
            all shares of Kiosk were retired and the corporate existence of
            Kiosk was terminated. KAI then changed its name to Kiosk Software,
            Inc. Pursuant to the Agreement, the principal shareholder of Kiosk
            is employed by KAI subsequent to the merger as its President and
            Chief Operating Officer at an annual salary of $100,000 and as a
            director of KAI (See Note 10(B)).

            The Kiosk acquisition was recorded under the purchase method of
            accounting and accordingly, the results of operations of Kiosk from
            the acquisition date of February 8, 1999 are included in the
            accompanying consolidated financial statements. The purchase price
            of $1,500,000, which was based upon a $1.50 fair market value of the
            Company's common stock issued, was allocated to the assets acquired
            and liabilities assumed based on fair market values at the date of
            acquisition. The fair market value of assets acquired and
            liabilities assumed is summarized as follows:

            Current assets                          $       33,215
            Property and equipment                          15,084
            Computer software                            1,673,575
            Goodwill                                       418,394
            Current liabilities                          (640,268 )
                                                    --------------
                                                    $    1,500,000
                                                    ==============

            The following unaudited pro forma financial information for the
            Company gives effect to the Kiosk acquisition as if it occurred on
            July 1, 1997. These pro forma results have been prepared for
            comparative purposes only and do not purport to be indicative of the
            results of operations which actually would have resulted had the
            acquisition occurred on the date indicated, or which may result in
            the future.

                                                       Year Ended
                                                      June 30, 1999
                                                      --------------
            Net revenue                             $      345,990
            Net loss                                    (8,176,989)
            Net  loss per share  -  basic and
            diluted                                          (0.27)
            Shares  used  in  per  calculation  -
              basic and diluted                         29,816,117


                                      F-21
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            (D) Acquisition of Technology

            Under an agreement of Purchase and Sale and Exclusive Licensing of
            Technology, (the "Agreement") dated March 11, 1999 and closed on
            April 30, 1999, the Company acquired all tangible and intangible
            assets relating to technology marketed by the seller under the names
            "MyLine" and "InstAccount" ("Products"). The MyLine product was
            originally developed by Diversified under contract to the seller.
            The products provide enhanced communication services.

            The Company paid a deposit on the Agreement date of $38,000, and on
            the closing date paid $15,000 in cash, $485,000 in promissory notes,
            issued 500,000 shares of the Company's common stock valued at $2.00
            per share and re-conveyed all Enhanced Service Provider shares of
            common stock held by the Company which was written down in a prior
            year to its net realizable value of zero, for a total purchase price
            of $1,538,000. The acquisition was recorded under the purchase
            method of accounting at its fair value of $1,538,000. (See Note 4)

            (E) Acquisition of Internet Services Company

            On August 2, 1999, the Company entered into a acquisition agreement
            and plan of reorganization to acquire digiCities. Under the terms of
            the agreement, which closed January 1, 2000, AmeriCom acquired all
            of the digiCities issued and outstanding common stock in exchange
            for 3,500,000 shares of AmeriCom's Class A common stock.
            Additionally, Americom allocated options to purchase 1,500,000
            shares of its Class A common stock to digiCities employees, pursuant
            to AmeriCom's Employee Stock Option Plan. Upon completion of the
            acquisition, digiCities ceased to exist as an independent entity.
            The digiCities acquisition was recorded under the purchase method of
            accounting and accordingly, the results of operations of digiCities
            from the acquisition date of January 1, 2000 are included in the
            accompanying consolidated financial statements. The purchase price
            of $7,000,000, which was based upon a $2.00 fair market value of the
            Company's common stock issued, was allocated to the assets acquired
            and liabilities assumed based on the fair market values at the date
            of acquisition. The fair market value of assets acquired and
            liabilities assumed is summarized as follows:

            Current assets                                    $      1,393,637
            Property and equipment                                     130,304
            Goodwill                                                 6,670,851
            Current liabilities                                     (1,194,792)
                                                              ----------------
                                                              $      7,000,000
                                                              ----------------


                                      F-22
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            During 2000, the Company underwent a strategic repositioning plan.
            As a result of the repositioning plan, management reevaluated the
            carrying value of goodwill acquired from the digiCities acquisition
            (See Note 5).

            The following unaudited pro forma financial information for the
            Company gives effect to the digiCities acquisition as if it occurred
            on July 1, 1998. These pro forma results have been prepared for
            comparative purposes only and do not purport to be indicative of the
            results of operations which actually would have resulted had the
            acquisition occurred on the date indicated, or which may result in
            the future.

                                                       Year Ended June 30,
                                                   -----------------------------
                                                       2000            1999
                                                   -------------   -------------

            Net revenue                          $   2,210,897   $   1,239,768
            Net loss                               (19,212,180)     (7,963,743)
            Net  loss per  share - basic  and
            diluted                                     (0.47)           (0.24)
            Shares used in per calculation -
              basic and diluted                     40,989,825      32,727,076

            (F) Acquisition of J-Engine Computer Software

            Under an agreement of Purchase and Sale and Exclusive Licensing of
            Technology, (the "Agreement") dated February 26, 1999 closed on July
            31, 1999, the Company acquired all intangible assets relating to
            technology known as the "J-Engine."

            The Company paid a deposit on the agreement date of $120,000 and
            issued 200,000 shares of the Company's common stock valued at $2.00
            per share. The Company issued a promissory note for $80,000 on the
            closing dtae for a total purchase price of $600,000. The acquisition
            was recorded under the purchase method of accounting at its fair
            value of $600,000 (See Note 4).

NOTE 12     STOCKHOLDERS' EQUITY

            (A) Application of Recapitalization

            Pursuant to the merger and recapitalization agreement (See Note
            11(B)) all capital stock shares and amounts and per share data in
            the accompanying consolidated financial statements for the year
            ended June 30, 1999 give effect to the recapitalization.

            (B) Authorized Common and Preferred Stock

            AmeriCom has authorized 120,000,000 shares of capital stock of which


                                      F-23
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            99,000,000 shares are designed as Class A Common Stock, 1,000,000
            shares are designated as Class B Common Stock and 20,000,000 shares
            of preferred stock. The shares of all three classes have a par value
            $0.0001. No preferred stock has ever been issued. The preferred
            stock may be issued from time to time in one or more series; each
            such series to have such distinctive designation or title as may be
            fixed by the Board of Directors. Preferred stockholders have
            preference over common stockholders as to cash dividends and
            liquidations.

            (C) Conversion of Promissory Notes to Common Stock

            In October 1998, six of the convertible promissory notes issued by
            the Company during 1998 and 1997 aggregating $75,000 were converted
            to common stock of the Company at a price of $1.00 per share. The
            shares aggregated 78,455 including 3,455 shares for accrued
            interest.

            On June 30, 1999, thirty-eight of the convertible promissory notes
            issued by the Company during 1999 aggregating $1,173,500 were
            converted to common stock of the Company at a price of $2.00 per
            share. The shares issued aggregating 593,711 including 6,961 shares
            issued for accrued interest.

            In July 1999, three convertible promissory notes issued by the
            Company during 1999 aggregating $265,500 were converted to common
            stock of the Company at a price of $2.00 per share. The shares
            issued aggregated 134,123 including 2,746 shares issued for accrued
            interest. In 2000, the Company converted $513,216 of notes payable
            and accrued interest into 430,312 shares of common valued at
            $860,624. The Company recognized at loss on extinguishment of debt
            of $347,408.
            (D) Stock Option Plan

            On March 26, 1999 the Board of Directors adopted a Stock Option Plan
            (the "Plan"), as amended on the same date. The Plan was developed to
            provide a means whereby key employees, directors, associates and
            consultants of the Company and its subsidiary corporations may be
            granted stock options to purchase common stock of the Company.
            The Company applies APB Opinion No. 25 and related interpretations
            in accounting for its Plan. Accordingly, no compensation cost has
            been recognized for options issued under the plan as of June 30,
            2000. Had compensation cost for the Company's stock-based
            compensation plan been determined on the fair value at the grant
            dates for awards under that plan, consistent with Statement of
            Accounting Standards No 123, "Accounting for Stock Based
            Compensation" (Statement No. 123) the Company's net loss for the
            year ended June 30, 2000 would have been increased to the pro-forma
            amounts indicated below.


                                      F-24
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            Net loss                 As reported              $    (19,677,002)
                                       Pro forma              $    (58,797,859)
            Net loss per share       As reported              $          (0.51)
                                       Pro forma              $          (1.52)

            The effect of applying Statement No. 123 is not likely to be
            representative of the effects on reported net loss for future years
            due to, among other things, the effects of vesting.

            The Plan authorizes options up to an aggregate of 15,000,000 shares
            of the Company's common stock. The Company grants incentive and
            nonqualified stock options. Incentive stock options are only granted
            to employees of the Company or any affiliate thereof while
            nonqualified stock options are granted to individuals who are not
            employees. Furthermore, stock options granted to employees might
            qualify as nonqualified stock options in case the stock option terms
            do not qualify as incentive stock options. The exercise price which
            is established by the plan administrator may not be less than 100%
            of the fair market value of the common stock at the time of the
            grant and may not be less than 110% of the fair market value of the
            common stock at the time of the grant if granted to employees owning
            more than ten percent of the total voting power or value of all
            classes of stock of the Company. The term of the Stock Option Plan
            shall be ten years from the earlier of the date of adoption by the
            Board of Directors of the Company or approval by the shareholders.
            In the case of incentive stock options, which are granted to
            employees owning more than ten percent of the total voting power or
            value of all classes of stock of the Company, the term may not
            exceed five years. Stock options are exercisable in one or more
            installments during its term, and the right to exercise may be
            cumulative as determined by the Plan Administrators. Stock options
            issued vest over a period of up to four years.

            Holders of options to purchase common stock of Kiosk, to the extent
            outstanding and unexercised immediately prior to the Merger (see
            Note 11(C)), pursuant to the Kiosk Stock Incentive Plan, receive
            options to purchase shares of common stock of the Company in
            substitution of their options to purchase Kiosk common stock.
            For financial statement disclosure purposes the fair market value of
            each stock option grant is estimated on the date of grant using the
            minimum value method in accordance with Statement No. 123 using the
            following weighted-average assumptions: expected dividend yield 0%,
            risk-free interest rate of 5.636%, and expected term of four years.

            Holders of options to purchase common stock of digiCities, to the
            extent outstanding and unexercised immediately prior to the
            acquisition (See Note 11(E)), pursuant to the digiCities Stock
            Incentive Plan, receive options to purchase shares of common stock
            of the Company in substitution of their options to purchase


                                      F-25
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            digiCities common stock. For financial statement disclosure purposes
            the fair market value of each stock option grant is estimated on the
            date of grant using the minimum value method in accordance with
            Statement No. 123 using the following weighted-average assumptions:
            expected dividend yield 0%, risk-free interest rate of 5.00%, and
            expected term of four years.

            A summary of the Company's Plan as of June 30, 2000 and changes
            during the year is presented below:

                                                   Number of    Weighted-Average
                                                    Shares       Exercise Price
                                                  ------------   ---------------
            STOCK OPTIONS
              Balance at beginning of period      10,282,581     $         1.96
              Granted                              5,505,000               2.17
              Exercised                                 --                  --
              Forfeited                              884,334               2.00
                                                  ------------   --------------
              Balance at end of period            14,903,247     $         2.02
                                                  ============   ==============

            Options exercisable at end of period   3,620,666     $         1.98
                                                  ============   ==============
            Weighted average fair value of
              options granted during the period           --     $          .37
                                                  ============   ==============

      The following table summarizes information about options outstanding at
      June 30, 2000:

                           Options Outstanding              Options Exercisable
                -------------------------------------  ------------------------
                                Weighted
                                 Average    Weighted      Number
    Range of       Number      Remaining    Average      Average       Weighted
    Exercise    Outstanding at Contractual  Exercise  Exercisable at   Exercise
     Price      June 30, 2000     Life       Price     June 30, 2000    Price
  ------------  -------------  -----------  ---------  -------------  ---------

         2.00     1,296,000      8.04167       2.00        756,000       2.00
         2.00       126,666      8.37500       2.00         46,666       2.00
         2.00       776,000      8.54167       2.00        355,999       2.00
  1.04 - 2.00       757,051      8.62500       1.89        525,051       1.83
   .35 - 2.00     4,862,530      8.70833       1.92      2,036,858       1.77
         2.00       935,000      3.71000       2.00        311,666       2.00
         2.00       162,000      8.79167       2.00         53,999       2.00
         2.00       483,000      8.95833       2.00        161,000       2.00
         2.00       531,000      9.04167       2.00        475,666       2.00
         2.00     2,212,000      9.08333       2.00        710,000       2.00
         2.00        50,000      9.16667       2.00         50,000       2.00
         2.00         2,000      9.33333       2.00           -          2.00
         2.00       200,000      9.41667       2.00        200,000       2.00
  2.00 - 2.20     2,020,000      9.54167       2.10      2,000,000       2.10
         2.00        95,000      9.62500       2.00           -          2.00
  2.00 - 5.00       395,000      9.91667       3.82        185,000       3.14
  ------------  -------------  -----------  ---------  -------------  ---------
   .35 - 5.00    14,903,247         8.56    $  2.02      3,620,666    $  1.98
  ============  =============  ===========  =========  =============  =========


                                      F-26
<PAGE>
                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            Through the date of this report outstanding stock options totaled
            6,508,247 (See Note 18(B)).

NOTE 13     CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

            During fiscal 2000, 38% of the Company's total revenues was derived
            from sales to four customers.

            At June 30, 2000, 21% of accounts receivable were due from two
            customers (See Note 2). Financial instruments, which potentially
            subject the Company to concentrations of credit risk, consist of
            cash and accounts receivable. The Company's allowance for doubtful
            accounts is based upon management's estimates and historical
            experience. The Company performs ongoing credit evaluations of its
            customers and generally does not require collateral.

NOTE 14     INCOME TAXES

            Income tax expense (benefit) for the years ended June 30, 2000 and
            1999 is summarized as follows:
                                                    2000             1999
                                               ------------     ------------
            Current
              Federal                          $       -        $       -
              State                                   1,600            1,600

            Deferred                                   -                -
                                               ------------     ------------
                                               $      1,600     $      1,600
                                               ============     ============

            The Company's tax expense differs from the "expected" tax expense
            for the years ended June 30, 2000 and 1999 (computed by applying the
            Federal Corporate tax rate of 34 percent to income (loss) before
            taxes), as follows:

                                                  2000              1999
                                            -------------     --------------
          Computed "expected tax expense
            (benefit)                       $  (3,967,340)    $   (2,618,340)
          State income tax                          1,600              1,600
          Effect of net operating loss          3,967,340          2,618,340
                                            -------------     --------------
                                            $       1,600     $        1,600
                                            =============     ==============


                                      F-27
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            The tax effects of temporary differences that give rise to
            significant portions of deferred tax assets and liabilities at June
            30 are as follows:

                                                    2000              1999
                                               -------------    --------------
            Deferred tax assets:
            Net operating loss carryforward    $   7,073,360    $    3,549,073
                                               -------------    --------------
            Total gross deferred tax assets        7,073,360         3,549,073
            Less valuation allowance               7,073,360         3,549,073
                                               -------------    --------------
                                               $      -         $         -
                                               ============     ==============

            At June 30, 2000, the Company had net operating loss carryforward of
            approximately $20,804,000 for income tax purposes, available to
            offset future taxable income expiring on various dates beginning in
            2009 through 2025. The net operating loss carryforward include
            approximately $863,400 of acquired net operating loss carryforward
            subject to an annual usage limitation of $70,650.

            The valuation allowance at July 1, 1999 was approximately
            $3,549,073. The net change in the valuation allowance during the
            year ended June 30, 2000 was an increase of approximately
            $3,524,287.


NOTE 15     OPERATING AGREEMENTS

            (A) Software Development Agreement

            In August, 1998 the Company entered into an agreement with System
            Spa (the "Developer"), an Italian company engaged in information
            technology, consulting, software development, software support and
            related matters. Under the terms of the agreement the Developer has
            contracted to provide continued, ongoing development and support of
            the Company's AdCast, e-CommPlus, TrueManagement, and My-Channel
            technology ("Technology"). In consideration the Company has agreed
            to pay an annual royalty equal to eight percent (8%) of the
            world-wide net revenues of the Company for a period of ten (10)
            years, renewable for successive ten (10) year terms provided the
            Developer continues to develop, implement, support and upgrade the
            Technology and Licensed Software during such periods. The Company
            has agreed to guarantee a minimum royalty payment in the amount of
            $250,000 in the first calendar year and advance another $250,000
            against future royalties, subject to the completion of the
            development of Phase I of the Licensed Software which was completed
            and accepted by the company on January 3, 1999. The Company has paid
            $460,000 in 2000 and $40,000 in 1999 and has $125,000 in prepaid
            royalty fees at June 30, 2000 and $85,000 of minimum royalty
            payments due included in accrued expenses at June 30, 1999.


                                      F-28
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

            (B) Software License Agreements

            The Company enters into agreements with various customers whereby
            the customer acquires the right and license to use and market
            Kiosk's programs and materials. The agreements were established for
            terms of twelve months and eighteen months, respectively, continuing
            thereafter on a yearly basis and month to month basis, respectively.
            Under the terms of the agreements, the Company agrees, (i) to
            provide to the customer its "Value Added Reseller Starter Kit", (ii)
            to advise the customer of its software enhancements and, at the
            customer's request offer these enhancements to the customer for
            additional compensation and, (iii) to provide technical support and
            training. The customer agrees to purchase from the Company a "Value
            Added Reseller Starter Kit" and to provide (i) marketing to
            end-users, (ii) application software development, (iii) support to
            end-users, (iv) software licensing to end-users and (v) accounting
            records. The Company retains all ownership rights, title, and
            interest in and to all current and future revisions or enhancements
            of the licensed software.

            (C) Customer Software Development Agreements

            The Company sells its Kiosk Operating Suite under software
            development agreements to various customers. Under the terms of the
            agreements the Company develops customized software applications or
            turnkey systems which include software, hardware, and custom
            cabinets. The agreements generally contain multiple elements with
            specified milestones and delivery dates and stipulated fees for each
            element. The time to completion and delivery of the development
            portion of the contracts generally does not exceed three to six
            months.

NOTE 16     BUSINESS SEGMENTS

            The operations of the Company are divided into two segments,
            software sales and Internet Advertising. The software segment
            includes operating systems, hardware, and consulting operations. The
            Internet segment provides web site advertising, content development,
            hosting services, and marketing support. No allocation of general
            corporate expenses has been allocated between the segments.
            Inter-company transactions have been eliminated between the
            Company's revenues, operating, income, assets, capital expenditures
            and depreciation and amortization pertaining to the industries in
            which the Company operates are presented below:


                                      F-29
<PAGE>

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 2000

                                         Software      Internet    Consolidated
                                      ------------   ----------   -------------
            Revenue                   $    227,911   $  887,386   $  1,115,297
            Operating loss               1,389,769    18,287,23     19,677,002
            Assets employed at end
              of year                    1,213,737    3,140,692      4,354,429
            Depreciation and
              amortization                 653,315    1,546,739      2,200,054
            Capital expenditures               -        182,156        182,156

NOTE 17     Going Concern

            As reflected in the accompanying financial statements, the Company
            has had continuing losses and a working capital deficiency of
            $4,105,781. The ability of the Company to continue as a going
            concern is dependent on the Company's ability to raise additional
            capital and implement its business plan. The financial statements do
            not include any adjustments that might be necessary if the Company
            is unable to continue as a going concern.

            The Company anticipates raising additional working capital through
            the issuance of debt and equity securities and reducing operating
            overhead (See Note 18(A). Management believes that actions presently
            being taken to obtain additional funding and reduce operating costs
            provide for the Company to operate as a going concern.
NOTE 18     SUBSEQUENT EVENTS

            (A) Subsequent Borrowing

            On August 3, 2000, the Company executed a Promissory Note with a
            bank for $1,660,000. The Note bears interest at the bank's prime
            rate plus 1% and is secured by a lien on substantially all the
            Company's assets and a personal guarantee of a director of the
            Company. The Note is due November 1, 2000.

            (B) Change in Stock Options

            In September 2000, the founders and certain members of management
            agreed to cancel or materially reduce their stock option grants. A
            total of 8,395,000 stock options outstanding as of June 30, 2000
            were canceled.

                                      F-30