SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB
(Mark One)
[ ]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934 for fiscal year ended _______________.

[X]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 For the transition period from
     January 1, 1999 to June 30, 1999

Commission file number  0-23769

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

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

             1303 Grand Avenue, Arroyo Grande, California         93420
              (Address of principal executive offices)          (zip code)

                     Issuer's Telephone Number: 805/542-6700


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. [ ]

Revenue for the year ended June 30, 1999, was $143,591.

As of August 31, 1999,  the  aggregate  market value of the voting stock held by
non-affiliates  was $32,490,540  based on the average bid and ask price of $2.00
per share.

As of August 31,  1999,  the number of shares of Common  Stock  outstanding  was
36,660,672.

Documents incorporated by reference: None

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


<PAGE>2



                                     PART I

                         ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

         AmeriCom  USA,  Inc. ("AmeriCom" or the "Company") is  an  emerging
technology  company  focused on  developing  innovative  systems  to  facilitate
advertising  and commerce  over the world wide web  (hereinafter  referred to as
"Web"  or  "Internet").  The  core  product  of  the  Company  is a  proprietary
technology  known and marketed  under the name  AdCast  and  TrueManagementTM.
AdCast and  TrueManagementTM  constitute unique  advertising and merchandising
solutions which provide enhanced services to companies that advertise or conduct
business via the Internet.

         The AdCast system is the primary product offered by the Company.  The
AdCast system is an advertising  delivery  system which delivers  non-scrollable
advertisement  frames  ("e-Billboards")  which can contain  animated ads lasting
from 15 to 90 seconds in length with audio,  video and pop-up frame  capability.
AdCast  e-Billboards  are placed on Web sites which have entered into agreements
to carry advertising  ("AdCast  Affiliates"),  as well as hot links to other Web
sites.  (For the  Company's  own  descriptive  purposes Web site owners who have
agreed  to the  placement  of an  e-Billboard  ad  are  referred  to as  "AdCast
Affiliates" and their respective Web sites as "AdCast Affiliate Sites". They are
not affiliates as that term is used by the  Securities  and Exchange  Commission
and they do not directly or indirectly  control,  nor are controlled by, nor are
under common control with, the Company.)

        The AdCast  advertisement space appears on an AdCast Affiliate Site each
time a viewer visits that Web site. The ad appears as an outlined frame in which
an advertisement is run. Because the AdCast e-Billboard frame does not disappear
when the visitor  moves down the page or between  pages in that  particular  Web
site, complete viewing of the advertisement is likely.

        The  TrueManagementTM   system  provides  management  tools,  analytical
reports,  and operating  control data  pertaining to advertising on the Internet
for users of the AdCast system.

        The  Company  compensates  AdCast  Affiliates  for  placing  the  AdCast
e-Billboards on their Web sites, and the Company sells the e-Billboard  space to
advertisers  and  sponsors.  The  AdCast  Affiliates  receive a fee based on the
number of  visitors to their Web site and/or  advertising  credits  which can be
used to promote their Web site on other AdCast Affiliate Sites.

        The pricing structure for the AdCast  advertising rates is based on spot
minute  increments,   similar  to  spot  pricing  for  television.   Similar  to
television,  e-Billboard  ads can vary in  length.  However,  unlike  television
AdCast  e-Billboard  ads play only when the viewer or Web  surfer  stays at that
particular AdCast Affiliate Web Site.

COMPANY BACKGROUND

        The  Company  was  incorporated  in  Delaware  in 1994  under  the  name
AmeriCom USA, Inc. to market MyLine, a telecommunication system developed by RMC
Diversified Associates  International,  Ltd. ("RCM Intl."), a California company
under contract to Americom Ltd., a Turks and Caicos  corporation.  RCM Intl. was
owned by Robert Cezar, Chief Executive Officer,  President and a director of the
Company.  In April,  1996,  the Company sold the MyLine technology to Enhanced
Service  Providers  LLC ("ESP"),  a  Massachusetts  corporation.  As part of the
transaction

<PAGE>3

the Company was required to release its  international  marketing  rights to the
MyLine technology to Americom Ltd. As consideration for the Company's release of
the MyLine technology,  the Company received $540,000 in cash and 161,000 shares
of ESP  common  stock.  The ESP common  stock was valued at $0 in the  Company's
financial  statements.  (The MyLine technology has subsequently been re-acquired
by the Company. See "Company Acquisitions".) Following the sale of the marketing
rights to the MyLine technology, the Company was inactive until July, 1998, when
it acquired,  as a wholly-owned  subsidiary,  RCM Intl., which had developed the
AdCast and  TrueManagementTM  technologies.  Since the acquisition of RCM Intl.,
the Company has  concentrated  on  enhancement of these  technologies  and their
development into a comprehensive Internet commerce and advertising system.

CORPORATE RESTRUCTURING

         On December 4, 1998,  the Company  merged with  Chatsworth  Acquisition
Corporation ("Chatsworth"),  a Delaware corporation, under an Agreement and Plan
of Merger (the "Chatsworth  Merger").  The Chatsworth  Merger took the form of a
share  exchange in which all of the shares of the  Company  were  exchanged  for
common stock  representing  91.8% of all shares  outstanding 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 intention of the  Chatsworth  Merger was to give the Company access
to the benefits of being a public corporation, including the ability to have its
shares listed on the National Association of Securities Dealers Over-The-Counter
Bulletin  Board system (@NASD  OTC-BB@).  Subsequent to the  Chatsworth  Merger,
application was made to the National  Association of Securities  Dealers for the
Company's stock to be tradable on the NASD OTC-BB.

         The National Association of Securities Dealers ("NASD") did not approve
the Company's  application within the time period envisaged prior to the merger.
On the advice of counsel,  representations  were made to NASD  Regulation,  Inc.
(which   scrutinizes   trading   applications  for  the  NASD)  to  satisfy  its
reservations  regarding the trading of the  Company's  stock on the NASD OTC-BB.
Also on the advice of counsel,  additional shares of common stock were issued to
certain   officers  and  directors  of  the  Company  pursuant  to  an  Employee
Compensation  Bonus  Agreement and  registered  on Form S-8, in accordance  with
Regulation S of the Securities Act of 1933.

         Ultimately, in April 1999, the Company's application for listing on the
NASD  OTC-BB  was  unsuccessful,   primarily  due  to  concerns  related  to  an
insufficient  number of shares of common stock of  Chatsworth  which were freely
tradable prior to the merger with the Company.

         As a consequence of the Company's  inability to secure a listing on the
NASD OTC-BB,  the Company was unable to meet  commitments  to certain  investors
that the Company's stock would be traded on the NASD OTC-BB by January 31, 1999.
The Company entered into negotiations with 13 such investors and has obtained an
extension  of time until  September  30,  1999 in which to secure a NASD  OTC-BB
listing.

COMPANY ACQUISITIONS

         Kiosk  Software,  Inc.  Acquisition.  On January 24, 1999,  the Company
entered into an Agreement and Plan of Reorganization with Kiosk Software,  Inc.,
a California  corporation,  whereby Kiosk  Software,  Inc.  merged with and into
Kiosk Acquisition Inc., a newly formed  corporation  wholly owned by the Company
(the "Kiosk  Agreement").  The Kiosk Agreement  became  effective on February 8,
1999,  at which time the name of Kiosk  Acquisition  Inc.  was  changed to Kiosk

<PAGE>4


Software,  Inc. and Kiosk Software, Inc. became a wholly owned subsidiary of the
Company. Shares of the Company's common stock were issued to the shareholders of
Kiosk  Software,  Inc.  based on the following  formula:  (i) an exchange  ratio
computed by dividing  1,000,000 by the quantity of outstanding  Kiosk  Software,
Inc.  outstanding shares just prior to the merger, and (ii) the number of shares
to be issued to Kiosk Software,  Inc. shareholders to be equal to the product of
the number of shares owned by such  shareholder  times the exchange  ratio.  The
number of Kiosk  Software,  Inc.  shares  outstanding  prior to the  merger  was
1,000,000 and the exchange ratio was  one-for-one.  The Company issued 1,000,000
shares of common stock pursuant to the merger. The Kiosk Agreement also provided
that  outstanding  options to purchase shares of common stock of Kiosk Software,
Inc. would be exchanged for options to purchase shares of the Company,  with the
price and number of option shares subject to the exchange ratio. Pursuant to the
Company's  Qualified  Stock  Option  Plan,  options for the  purchase of 248,834
shares of the  Company's  common  stock at a purchase  price of $0.35 per share,
132,245  shares at a purchase  price of $1.15 per share,  and 65,539 shares at a
purchase  price of $1.04 were  granted to former  Kiosk  Software,  Inc.  option
holders.

         The  Company  advanced  Kiosk  Software,  Inc. an  aggregate  amount of
$629,950  to  pay  its  outstanding  liabilities.  Lori  Fisher,  the  principal
shareholder of Kiosk  Software,  Inc.,  was appointed a director,  president and
chief operating officer of the Company's subsidiary, Kiosk Software, Inc.

         MyLine  Technology  Acquisition.  Effective March 11, 1999, the Company
entered  into an  Agreement  of Purchase  and Sale and  Exclusive  Licensing  of
Technology  with  Americom  Ltd.,  a  Turks  and  Caicos  corporation   ("MyLine
Agreement").  Under the MyLine  Agreement,  the Company agreed to re-acquire the
MyLine and the  InstAccount  technologies  from  AmeriCom  Ltd. for an aggregate
consideration  of (i)  $538,000 in cash over a two year term,  (ii)  issuance of
500,000  shares of common  stock of the Company and (iii)  re-conveyance  to the
Turks and Caicos  corporation  of all  shares  held by the  Company in ESP.  The
MyLine Agreement was subsequently  amended to provide for payment of $503,000 in
cash and 517,500 shares.  The re-acquisition was completed on April 30, 1999. As
a result of the MyLine  Agreement,  the Company  acquired  all right,  title and
interest to the MyLine and InstaAccount technologies. See "Company Technologies"
below.

         Jim and Jon Tech  Acquisition.  On February 26th, 1999, the Company and
its  subsidiary  company  RMC  Diversified Associates, Ltd ("RMC") entered into
an  Agreement  and Plan of  Reorganization  with Jim and Jon Tech,  a California
corporation, to acquire certain technology ("J&J Agreement").  The J&J Agreement
provides  for the  Company  to  acquire  Jim and John Tech and its net assets,
including the J-Engine Tool (See "Company  Technologies"),  for consideration to
each of the two  shareholders,  Jon Iverson  and Jim  Heintz,  of (i) a total of
200,000 shares of common stock of the Company to be divided pro rata between the
two shareholders in accordance with their original  shareholdings in Jim and Jon
Tech, (ii) options for each of the two  shareholders to purchase  300,000 shares
of the  common  stock of the  Company at an  exercise  price of $2.00 per share,
(iii)  $100,000  for  each  of  the  two   shareholders  in  cash,   payable  in
installments,  and (iv) Jon Iverson  would serve as  president  of RMC.  and Jim
Heintz  would serve as chief  technological  officer of RMC. The  agreement  has
subsequently  been amended to provide for a revised timetable for payment of the
cash  element  of the  consideration  and the  transaction  has not yet  closed.
Although RMC continues as a separate corporate entity,  the J-Engine  Technology
is utilized by AmeriCom's DAI Division.

         Business Services Agreement.  On September 8, 1998, the Company entered
into a twelve month  agreement,  subject to renewal,  with Asia Pacific  Finance
Group Ltd., a British Virgin Islands corporation ("APFG") for services generally

<PAGE>5

related to  financial  and  management  advisory  services for  identifying  and
evaluating a U.S.  stock  market  listing  through a reverse  merger with a U.S.
publicly  held  company,  and for  assisting  the Company in  connection  with a
private placement offering.  Under the terms of the agreement, the Company shall
pay to APFG:  (i) 5%  management  success  fees for the  services of the private
placement upon the execution of each subscription agreement,  and (ii) 4% of the
Company's  common stock  payable for the services  related to U.S.  stock market
listing  transactions,  payable upon  execution of a reverse  merger with a U.S.
publicly held company.

         The 5% fee as noted in (i) above, was subsequently  amended to 10%. The
Company has been paying the 10% fees to the APFG as new subscription  agreements
are  received.  Upon  closing  of the  Chatsworth  Merger,  the APFG was  issued
1,200,000  shares of the  Company's  common stock  equivalent to 4% of the total
outstanding common stock of the Company at that time.

RECENT DEVELOPMENTS SUBSEQUENT TO YEAR END

         Telespace,  Ltd.  Merger.  On July 1, 1999 the Company  entered  into a
Merger Agreement and Plan of Reorganization with Telespace Ltd. ("Telespace"), a
Delaware corporation (the ATelespace Merger@).  The Telespace Merger was adopted
by the unanimous  resolution of the Board of Directors of Telespace and approved
by the  written  consent of a majority of the  shareholders  of  Telespace.  The
Telespace  Merger  was  adopted  by the  unanimous  resolution  of the  Board of
Directors of the Company on June 29, 1999.

         The  Telespace  Merger  provided  that the  Company  would  merge  into
Telespace and the shareholders of the Company would exchange their shares of the
Company for 99.3% of the shares of Telespace and the name of Telespace  would be
changed to Americom USA, Inc. Further, the holders of options to purchase shares
of the Company  would  receive  options to purchase the same number of Telespace
shares. If fully exercised, option holders would be 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 the Company would be tradable on the
NASD OTC-BB.

         The Telespace  Merger was  conditioned  upon the  occurrence of several
events. One of the conditions prior to the merger was that the Company receive a
limited  offering  merger  permit from the State of  California,  Department  of
Corporations  ("DOC") and a Fairness  Hearing and order from the DOC which would
make available the Section 3(a)(10)  exemption under the Securities Act of 1933,
as amended.  On July 23, 1999,  an  application  for a limited  offering  merger
permit and request for a Fairness Hearing before the DOC was submitted. However,
due to various  concerns  raised by the DOC  relating  to  Telespace  Ltd.,  the
Telespace  Merger was terminated by mutual consent and the DOC  application  was
voluntarily withdrawn by Telespace.

         DigiCities,  Inc.  Merger.  On July 1,  1999,  the  Company  executed a
Memorandum of Understanding with DigiCities,  Inc. ("DigiCities"),  a California
corporation,  in which the Company  will acquire all of  DigiCities'  issued and
outstanding  Common  Stock in exchange  for  3,500,000  shares of the  Company's
Common Stock ("Memorandum").  In addition,  the Company will allocate options to
purchase 1,500,000 shares of its Common Stock to DigiCities employees,  pursuant
to the Company's employee stock option plan. The Memorandum also calls for Scott
Carni to remain as President and a director of DigiCities,  and for Chad Lems to
remain  as a  Vice  President  and  director  of  DigiCities.  Pursuant  to  the
Memorandum,  the proposed  acquisition  of DigiCities is to be completed one day
prior to the effective date of the proposed  Telespace  Merger,  but in any case
not later than September 30, 1999.

<PAGE>6


         On August 2, 1999, a formal  Agreement and Plan of  Reorganization  was
executed between the Company and DigiCities ("DigiCities  Agreement").  However,
in light of the termination of the Telespace  Merger, on September 27, 1999, the
Company and  DigiCities  entered  into a new Merger  Agreement  to provide for a
merger between the Company and DigiCities in which (i) the Company's Certificate
of  Incorporation  will be  amended to change the  authorized  capital  stock to
120,000,000,  of which 99,000,000  shares shall be Class A Common Stock,  $.0001
par value, 1,000,000 shares shall be Class B Common Stock, $.0001 par value, and
20,000,000  shares shall be preferred stock,  $.0001 par value;  (ii) all of the
outstanding  common stock of DigiCities will be converted into 3,500,014  shares
of the Company's Class A Common Stock;  and (iii) the Company will issue options
representing  1,500,000 shares of the Company Class A Common Stock to DigiCities
employees   ("DigiCities  Merger").  As  a  result  of  the  DigiCities  Merger,
DigiCities will disappear and the Company will be the Surviving Entity.

         Based  upon  the  DigiCities  Merger,  the  Company  will  file  a  new
application  for a merger  permit and  Fairness  Hearing  with the DOC.  The new
application  will also provide for the Company to exchange all of its  currently
outstanding  common  stock with Class A Common  Stock having the same rights and
status as the current outstanding Common Stock.

         DigiCities  specializes  in the marketing and  development of Web sites
for small to medium sized businesses.  DigiCities  commenced business in January
1999 building Web sites for business  customers using a standardized  layout and
format,  and  maintains  those  sites on its own Web  servers,  located in Santa
Monica,  California.  Following  the  acquisition  of DigiCities by the Company,
owners of Web sites maintained by DigiCities would be offered advertising income
by becoming an AdCast  Affiliate,  and the  opportunity to draw traffic to their
Web site by participation in the e-Billboard Exchange program.

         DigiCities   commenced   selling  its  Web  site  product  by  outbound
telemarketing in January 1999, using both its own  telemarketing  facilities and
telemarketing  rooms managed by outside  contractors.  Charges include a fee for
initial site set-up, and a monthly maintenance fee. Fees are primarily collected
via a Billing  Service  Contract  with an  aggregator  company.  The  aggregator
represents several hundred telephone local exchange carriers  (?LECs@).  By this
mechanism,  the business  customer  buying a web site agrees to have their local
telephone service account charged with DigiCities'  fees.  DigiCities passes the
new customer's billing information to the aggregator, who in turn distributes it
to the relevant LEC. Customers pay the DigiCities charges along with their other
monthly telephone  charges,  and the net proceeds are ultimately passed back via
the aggregator to DigiCities.

         In August 1999  DigiCities  launched an  alternative  business Web site
product  called  Flash 4 Websites  which is sold by direct  marketing  networks.
Revenues from this product are charged to customers' credit cards,  resulting in
significantly faster cash flow to DigiCities.

         DigiCities  presently maintains  approximately 15,000 Web sites, has 10
full time employees,  and generated revenues of approximately $1.2 million.

         Appointment of AdCast Division President.  In August 1999 Mr. Tom
Hopfensperger   joined  the  Company  as  President  of  AdCast  Division.   Mr.
Hopfensperger  was  previously  Director  of New  Media  for  KGO/KSFO,  the San
Francisco  affiliates of Disney's GO network,  and has an extensive  advertising
media sales background.

<PAGE>7

         Marketing Agreement for Russia with Nicola Savoretti.  On September 22,
1999  the  Company  entered  into a  memorandum  of  understanding  with  Nicola
Savoretti,  pursuant  to which the Company  appointed  Mr.  Savoretti  exclusive
licensee to market AmeriCom's  products in Russia. The memorandum provides 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.  Mr.
Savoretti  was also granted an option to purchase  20,000  common  shares of the
Company at a price of $2.00 per share, exercisable within one year.

THE COMPANY'S OPERATIONS

        The Company began online  operations on February 1, 1999 showing  unpaid
advertisements  while it  tested  the  AdCast  system.  This  phase is  commonly
referred  to as the  "beta"  phase of  development.  In July 1999,  the  Company
commenced the sale of paid advertising.  The Company is currently  displaying in
excess of 4 million ads per day. Of these,  25% are ads  displayed on the AdCast
Affiliate sites and promote products of the Company's sponsorship advertiser and
advertisers with whom the Company has entered into commission based contracts or
"paid-per-click" programs. The balance are unpaid ads which cross-promote AdCast
Affiliate sites pursuant to AdCast's e-E-Billboard Exchange program.

        The Company  anticipates  that it will continue to receive  revenue from
(i) its  sponsorship ad program (see  "Marketing")  which provides  display of a
sponsor's logo on AdCast  Affiliate Sites (ii) sale of advertising  space on the
e-Billboard ads displayed on AdCast  Affiliate Sites and (iii)  commissions from
sales of  merchandise  from ads  displayed.  The  Company  has one member in its
sponsorship  program and has received nominal revenues from commissions on sales
of merchandise.  The Company has received firm orders for e-Billboard commercial
advertising subsequent to the year end.

        The Company's has previously  entered into AdCast  Affiliate  agreements
with Web sites focused on relatively  narrow  audiences.  The Company intends to
broaden the type of Web sites on which it places AdCast e-Billboards.

        The  Company  currently  has  three  wholly  owned  subsidiaries:  Kiosk
Software,  Inc., Adcast, Inc. and AdCast Canada, Ltd; another subsidiary company
RMC Diversified  Associates,  Inc. was wound up in August 1999 subsequent to the
fiscal year end.  The Company  intends to operate its various  lines of business
through four operating divisions: AdCast, MyLine, Direct Access Internet ("DAI")
and AdCast Studios.

         MyLine  Division This Division  develops  innovative  telecommunication
products.  Its core product is the MyLine  technology  which was  re-acquired in
March 1999 (see "Background and Current Transactions"). MyLine is a value added,
remote programmable  personal  communications system which has to date been sold
via telephone local exchange carriers in the United States.  The Company intends
to  re-engineer  MyLine to exploit  the cost  savings  and  service  innovations
offered by a technology known as Internet Protocol  Telephony.  MyLine will form
the basis for a unified messaging system which will integrate with the Company's
other  businesses.  Unified  messaging  will permit  messages sent via different
media including fax, email and voice mail to be accessed and read or listened to
by any of the other media, at any time and from any location.

         Direct Access Internet  Division.  The Direct Access Internet  division
("DAI Division")  manages all engineering and operational  tasks associated with

<PAGE>8

the delivery of AdCast advertising,  the e-E-Billboard  Exchange program and the
TrueManagement  system. In addition,  the DAI Division is tasked with developing
additional   products  for  the  Company  and  coordinating  all   intra-company
engineering projects.

         AdCast  Division.  AdCast is responsible for marketing and sales of the
AdCast and TrueManagementTM technologies.

         AdCast  Studios  Division  AdCast Studios  provides  graphic design and
creative services to advertisers and web site owners including those advertising
via AdCast.

         Kiosk Software, Inc.  Kiosk Software, Inc. is engaged in the
development  and  delivery  of  products  and  services  for the  deployment  of
interactive kiosk software applications.  Kiosk Software, Inc. provides complete
kiosk  development  services from design  through  delivery.  It  specializes in
multi-media  software  development  in  addition to full kiosk  integration  and
support including graphics for effective user interface,  custom cabinet design,
multimedia  software  development  and  development of custom  applications  for
education,  retail and tourist environments.  Its primary products are the Kiosk
Operating Suite (K/OS),  a proprietary  kiosk  application  development tool and
TerraVista, a product for Internet access control. Kiosk Software, Inc. uses its
proprietary  software  to  manage  and  update  remote  systems  from a  central
location.

         Co-location  Agreement.  On April 7, 1999 the Company  entered  into an
Internet Services and Co-Location Agreement with AboveNet  Communications,  Inc.
to locate the Company's  server  equipment at the  facilities of AboveNet in San
Jose, California.  The agreement also provides for basic maintenance and network
provisioning to be provided to the servers.

COMPANY TECHNOLOGIES

         AdCast Technology. The AdCast system delivers to AdCast Affiliate Sites
non-scrollable  e-Billboards in which animated ads of 15 to 90 seconds in length
are placed.  The AdCast  system also  provides  various  audience  measurements.
Measurements  provided  include  number  of  click-throughs,  number of times an
advertisement  is  viewed  and  duration  of stay on a Web  site.  This  data is
provided to both  advertisers  and the AdCast  Affiliates  enabling them to make
adjustments  to their  advertisements  or Web sites,  respectively,  to increase
effectiveness.

         TrueManagementTM.  TrueManagementTM.  provides  a series of  management
tools that enable AdCast Affiliates to maintain  interaction  between the AdCast
system and their AdCast Affiliate  Sites. In addition,  the AdCast Affiliate can
use the  TrueManagementTM  system to manage  their own  promotional  advertising
campaigns  via  the  AdCast  delivery  system,   analyze  specific   e-Billboard
advertisement  performance,  and obtain real-time reports  summarizing visits to
their site, by hour, day, or month.

         For the advertiser,  TrueManagementTM  permits advertising  managers to
monitor the results of their advertisements and to easily make adjustments to ad
campaigns as needed.  The Company believes that what  differentiates  the AdCast
system from other Internet  advertising delivery systems is its ability to allow
advertisers  to eliminate  waste in  advertising  dollars by setting the precise
number of  advertisements  and  click-throughs  per  visitor,  on a per day, per
month,  and/or  per  campaign  basis.  AdCast  combines  all of the  traditional
features  of  existing  Internet ad delivery  systems  with  accountability,  by
providing both the AdCast  Affiliates and advertisers with detailed  information
concerning the performance of advertising campaigns.


<PAGE>9

        The benefits of the AdCast system include:

          *    Non-scrolling e-Billboard ads which can be set for durations from
               15 to 90 seconds featuring audio,  video, pop-up animation frames
               and hot links.

          *    Non-scrolling  e-Billboard ads appearing at the bottom of the Web
               site  page  during  a Web  site  visitor's  entire  stay  with  a
               clickable   link   to  that   company's   Web   site   or   other
               post-processing facilities.

          *    Specified number of times that ads are shown to each visitor, per
               day, per month or for the entire ad campaign.

          *    Ability to provide hot-links to on-line ordering, coupon printing
               and special offers.

         The   TrueManagementTM   system   contains  tools  that  enable  AdCast
Affiliates and  advertisers  to control,  review,  and manage  certain  standard
features. Some of the benefits of the TrueManagementTM system include:

          *    Reliable audience measurement as well as collection of historical
               data for analysis and review.

          *    Easy  on-line  access  to the  information  generated  by  AdCast
               advertisers and Web site hosts.

          *    Ability of advertisers to easily change their ads.

          *    Real-time  information  including  total number of new  visitors,
               daily visitors,  cumulative  repeat visitors and cumulative total
               visitors.


         MyLine. MyLine is a programmable personal telecommunication system. The
associated  InstAccount  product  is a real time  communication  accounting  and
management tool. The Company will  re-engineer the Myline  technology to exploit
the cost savings offered by Internet Protocol  Telephony and thus create a price
and service  competitive  product.  MyLine  will be  marketed  by the  Company's
subsidiary, Telespace, Inc., a Delaware corporation, to re-resellers both in the
United States and selected foreign markets.

         Kiosk Software Technology.  Kiosk Operating Suite ("K/OSTM"). 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.

         TerraVistaTM.  TerraVistaTM  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.  TerraVistaTM 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.  TerraVistaTM  constrains the hardware to

<PAGE>10

prevent  the user from  circumventing  the system.  TerraVistaTM  is a fail-safe
solution,  ideal  for  use in  academic  environments,  libraries,  correctional
facilities, corporate visitor centers and other public areas.

         DAI Technology.  Pursuant to the reorganization  agreement with Jim and
Jon Tech, the Company,  through its subsidiary  RMC,  acquired the J-Engine Tool
for use with the Company's Direct Access Internet ("DAI") Services. The J Engine
Tool is a portable,  scalable,  modular  approach to building  and  managing Web
sites. 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
down to the look of the program interface layouts themselves.  The J-Engine Tool
also  allows the Web site  manager to control  access to the  management  system
developed for their Web site 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  Web site.  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.

e-Billboard Exchange Program   Under the E-Billboard  Exchange program,  in
addition to being paid for each visitor to their Web site, AdCast Affiliates are
given 3 free ads on other  Affiliate  Web  sites  for each ad shown on their own
web. These free ads can be used by the affiliate to encourage  visitors to visit
the affiliate's own web site.
MARKETING

         General.  The Company is  marketing  the AdCast  system to domestic and
foreign  businesses  involved in publishing and commerce over the Internet.  The
Company  intends to target  manufacturers  and suppliers of products,  goods and
services  that  utilize  the  Internet  for  dissemination  and  sales  of their
products.

         The Company  offers a  sponsorship  program in which a  participant  is
allocated several AdCast Affiliate Sites on which its logo is placed.  These Web
sites are selected, based on compatibility of interests, from the Company's pool
of Web sites.  The sponsor  compensates  the Company either through  commissions
based on the amount of sales  generated  from viewers  clicking on the sponsor's
logo on an AdCast Affiliate Site, or through  advertising  referral  guarantees.
The Company believes that its sponsorship program is unique and anticipates that
it will  appeal  to  larger  organizations  that  already  have  name  and  logo
recognition.

<PAGE>11


         Agreement  with  Internet  Store.  On  September  3, 1998,  the Company
entered into a non-binding  memorandum of  understanding  ("MOU") with Copelands
Sports Fitness  Superstore,  a large chain  storefront and Internet  retailer of
sporting goods (the "Store").  The MOU stipulates that the Company shall receive
30% of the  Store's  net margin on sales,  as defined in the MOU,  generated  by
consumers who have "clicked"  through to the Store's Web site from the Company's
Internet  e-Billboards.  In addition, the Company leases e-Billboard space, paid
on a per visitor basis,  on the Store's Web site. The Company has also agreed to
allow the Store to be the preferred  sponsor on all of its customer's sports and
school  related Web sites and all of its  customer's Web sites where the Store's
vendors advertise.

         Consulting  Agreement.  On January 8, 1999, the Company  entered into a
consulting agreement with R.A.A.M.  International,  Inc., a Canadian corporation
(the "Consultant"),  whereby the Consultant will head American Web site customer
acquisition efforts.  Under the agreement,  the initial term was from January 1,
1999 through April 30, 1999, and the amount budgeted for the  Consultant's  fees
and expenses  during this initial term was  approximately  $100,000,  subject to
ongoing  audit and review by the  Company  of the  Consultant's  performance  in
obtaining the stipulated Web sites.  The Company agreed to pay an advance fee of
$30,000 to the  Consultant  on a bi-weekly  basis from  January 1, 1999  through
April 30, 1999.  This Agreement was terminated by the Company in July 1999 after
payment of $84,000.

RESEARCH AND DEVELOPMENT

         The Company has begun development of additional  products.  There is no
assurance  that such  products  will ever  become  viable  products  or that the
Company  will be able to market  such  products.  In fiscal  year ended June 30,
1999, the company  estimates that it spent $168,510 on research and  development
activities.

         In August, 1998, the Company entered into a joint-development agreement
with  Systeam  SpA,  an  Italian  company  engaged  in  information  technology,
consulting,  software  development and software support.  Under the terms of the
agreement, Systeam SpA has contracted to provide ongoing development and support
of the Company's AdCast, Manufacturers' Outlet, TrueManagementTM,  MyChannel and
MyLine  technologies.  In consideration  the Company has agreed to pay an annual
royalty equal to 8% of the worldwide  revenues of the Company for a period of 10
years, renewable for successive 10 year terms provided that Systeam continues to
develop,  implement,  support and upgrade the Technology  and Licensed  Software
during such  periods.  Subsequent  to fiscal year end,  the Company  amended its
agreement with Systeam to guarantee a minimum  royalty  payment in the amount of
$500,000  payable  between  August 31,  1999 and January  2000.  Systeam SpA has
established a permanent presence at the DAI Division of the Company to assist in
the technical changes necessary to accommodate the Company's growth.

         Systeam SpA is currently implementing the  telecommunications  protocol
known as "IP" within MyLine. Once completed, this enhancement will enable MyLine
calls to be made over the Internet.  MyLine will  ultimately be developed into a
unified   messaging  system  which  will  integrate  with  the  Company's  other
businesses.  Unified  messaging  will permit  messages  sent by different  media
including  fax,  email and voice mail to be accessed  and read or listened to by
any of the other media, at any time and from any location.

         Systeam SpA is also  developing a Web site known as the  Manufacturer's
Outlet. The Manufacturer's Outlet is an Internet Web site designed for the small

<PAGE>12

and medium sized business. This e-commerce site enables business to take on-line
orders for their products from retailers and/or  individual  consumers.  Call-to
action  ads,   distributed   by  the  AdCast   system,   drive  traffic  to  the
Manufacturers' Outlet site.

         MyChannel is a permission  marketing  business model by which consumers
or businesses are incentivized  with cash or other benefits to participate in an
Internet advertising network. By obtaining detailed demographic and physographic
information  about a large  population of web users,  MyChannel  will be able to
precisely target advertising and merchandising material to narrowly defined, and
thus extremely valuable, target audiences. The basic technology and the business
plan for MyChannel  already  exists but  development  work to bring it to market
continues.

PROPRIETARY RIGHTS

         The  Company  has filed two  applications  for  patents  of the  AdCast
technology with the United States Patent and Trademark Office  (applications No.
09/291,785  dated  April 14,  1999 and  09/335,384  dated  June 17,  1999) and a
copyright  application for the AdCast service with the United States Register of
Copyrights.  Work  is  in  process  for  the  filing  of  an  additional  patent
application  to protect  certain  other  features of the  Company's  proprietary
technology.  The Company does not currently have patent or trademark  protection
for any of its proprietary technology.

         There  can  be  no  assurance   that  the  Company's   pending   patent
applications  will  result in the issue of the  patents,  that if  patents  were
issued,  it would 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 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 pending
patent applications or that it was the first to file patent applications on such
inventions. There can also be no assurance that any application of 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, 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  assurances  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.

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 advertisment.  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

<PAGE>13

conventional, non-internet advertising media such as television and radio.

EMPLOYEES

         As of June 30, 1999, the Company and its subsidiaries had a total of 52
employees.  This number  includes 27  technicians/engineers,  5 marketing and 20
administrative personnel.

ITEM 2.  DESCRIPTION OF PROPERTY

             The  Company  and  its   subsidiaries   maintain  offices  in  five
locations.  The  executive  offices  are  located at 1303 Grand  Avenue,  Arroyo
Grande,  California  93420 pursuant to one-year leases totaling $3,187 per month
for approximately 4,000 square feet. The offices of the AdCast and DAI Divisions
are located at 124 South Halcyon Road,  Arroyo Grande,  California 93420 under a
monthly  lease of $2,600 per month for  approximately  3,500  square  feet.  The
AdCast sales and  marketing  office is located at 1901 S. Bascom  Avenue,  Suite
880,  Compton,  California  under a 3 year lease at $4,221 per month.  The Kiosk
Software,  Inc.  offices are located at 3534-A Empleo  Street,  San Luis Obispo,
California 93401 pursuant to a monthly lease of $1,600 for  approximately  2,400
square feet.  DigiCities,  Inc.  rent a total of 3,659 square feet at 5855 Green
Valley Circle, #206, Culver City, CA for $4,600 per month.

ITEM 3.      LEGAL PROCEEDINGS

         There is no litigation pending or threatened by or against the Company.

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

         No matter was  submitted  to a vote of  security  holders,  through the
solicitation of proxies or otherwise, during the period covered by this report.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         On December 23, 1998,  following  the  Chatsworth  merger,  the Company
applied to NASD Regulation,  Inc. for quotation of the Company's common stock on
the NASD OTC  Bulletin  Board.  On January 30,  1999,  the Company  received the
trading symbol AMUS from NASD Regulation,  Inc. However, trading was not cleared
by NASD Regulation, Inc. at that time. Consequently,  the Company's common stock
is not currently listed for trading on any stock exchange.

         As of August 31, 1999 the Company had approximately 280 shareholders.

Recent Sale of Unregistered Securities

         2,350,000  Common Stock. 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 (before costs) to investors located outside the United States through
Asia Pacific Finance Group Ltd., a British Virgin Islands Corporation,  pursuant
to  Regulation S of the  Securities  Act of 1933,  as amended  (the  "Securities
Act"). The subscription agreements for these sales included representations that
the Company's  stock would be traded on the OTC-BB by January 31, 1999, and that

<PAGE>14

the Company would use its best efforts to assist the subscribers in having their
stock   registered  under  the  Securities  Act.  Certain  of  the  subscription
agreements also permitted 10% partial payment of the subscription price with the
balance payable once the Company's stock was traded on the OTC-BB.

         As of June 30, 1999 subscriptions for 300,000 shares had been cancelled
pursuant to the contingency clause of the subscription  agreements which allowed
for cancellation of the subscription,  at the investor's  option, if the Company
did not achieve a NASD  over-the-counter  bulletin  board listing by January 31,
1999.  As a  result  of  these  cancellations,  the  net  amount  raised  by the
Regulation S offering, after costs, was reduced to $2,948,064.

         Subsequent to June 30, 1999,  subscriptions for a further 72,000 shares
at an aggregate subscription price of $129,600 (after costs) were also canceled.
Consequently,  the final outcome of this Regulation S offering was subscriptions
for 1,978,000 shares which realized $2,818,464.

         A further  1,350,000  shares were sold to non-United  States  residents
prior to the formal Regulation S offering,  at a total price of $485,000.  These
shares were offered and sold  exclusively  to  purchasers  residing  outside the
United States.

         $5,000,000  Convertible  Subordinated  Promissory Note. On February 12,
1999,  the  Board of  Directors  of the  Company  authorized  issuance  of up to
$5,000,000  of  Convertible  Subordinated  Promissory  Notes for the  purpose of
raising  funds for working  capital.  These notes are payable in full within two
years  after  issue,  bear  annual  interest of 6%, have the right to convert to
shares of the  Company's  common stock at a  conversion  price of $2.00 for each
share of common stock ($.0001 par value). To date, $1,323,500 has been raised by
way of sales of these  promissory  notes in private  transactions to individuals
who qualify as  accredited  investors  as defined in Rule 501 of  Regulation  D.
Notes totaling $1,187,422,  including accrued interest,  had been converted into
593,711 shares of common stock as of June 30, 1999. As of September 23, 1999 all
the notes issued have been converted to common stock. The sale and conversion of
these Notes was made pursuant to an exemption  provided by Section 4(2) and 4(6)
of the Securities Act.

         During the fiscal  year the Company  sold a total of 213,680  shares of
common  stock to other  accredited  investors  for  aggregate  consideration  of
$88,417,  an average  price of $0.41 per share.  The shares were sold in private
placements  to  accredited  investors  (as that term is  defined  in Rule 501 of
Regulation  D).  The sale of these  shares  was made  pursuant  to an  exemption
provided by Section  4(2) and 4(6) of the  Securities  Act. In  addition,  stock
options  were  exercised  resulting  in 43,545  shares  being issued for a total
exercise price of $49,392.

ITEM 6.          MANAGEMENT'S DISCUSSION AND ANALYSIS

PLAN OF OPERATIONS:

         The  Company's  anticipates  revenues  being  generated  in the  second
quarter of the fiscal year ending June 30,  2000,  with  breakeven on an accrual
basis being achieved only in the last quarter of the fiscal year. However, it is
unlikely that cash-flow  breakeven will be achieved  within the fiscal year 2000
due to the aggressive growth objectives of the Company. Accordingly, the Company
will  require  substantial  injections  of  capital  in  order  to  finance  its
operations,  meet capital expenditure requirements and retire existing debt over
the next three months.

         The Company  believes that it will need  approximately $5 million to $7
million to supplement  working capital.  This amount will fund the operations of
the  Company  over the next 12  months.  The  Company  anticipates  that it will
receive its working capital  through the issuance of debt or equity  securities,

<PAGE>15

but the Company may consider other financing  vehicles such as partnerships  and
joint ventures.

         As of June 30, 1999, the Company had no substantial revenues,  and does
not anticipate any substantial revenues until the second quarter of fiscal 2000.
Historically,  the Company has raised funds through equity financing to fund its
operations and provide working capital.  It is anticipated that the Company will
finance its operations and those operations of its  subsidiaries  through equity
and debt financing.  Subsequent to the fiscal year end, the Company entered into
a Subscription  Agreement with an accredited  investor providing for the sale of
1,250,000  shares of the Company's  common stock for a total  purchase  price of
$2,500,000. The Agreement provides for the sales price to be held in escrow, and
the release of the funds and the completion of the sale are conditioned upon the
Company's  stock being  listed for trading on the NASD OTC Bulletin  Board.  The
Company is currently seeking commitments for an additional $5 million.

The Company plans to expand the number of employees from  approximately 75 as of
September 23, 1999, including DigiCities personnel,  to approximately 200 at the
end of fiscal year 2000. Increases will occur in the number of employees engaged
in engineering and operations  functions in particular.  In order to attract and
retain  qualified  employees,   the  Company  may  need  to  offer  increasingly
attractive compensation arrangements to employees.

The plan of operations also anticipates  purchasing capital plant, equipment and
software at a cost of  approximately $2 million in fiscal year 2000. The Company
expects that a significant  proportion  of the cost of this capital  expenditure
will be financed by leases or bank lines of credit.  To the extent that  capital
expenditures  cannot  be  financed  by leases or lines of  credit,  liquid  cash
injections will be required by the Company, as discussed above.

During fiscal 2000,  expenditures  on research and  development for new products
and systems will  increase.  Particular  emphasis will be given to the Company's
MyLine and MyChannel technologies.

         Due to the merger between the Company and Chatsworth,  an Annual Report
on Form 10-KSB was required for the six month period of July 1, 1998 to December
31, 1998. This was due to the fact that Chatsworth (as the surviving entity) had
a December 31 fiscal year end.  Subsequent to this merger,  the Company  changed
its  reporting  fiscal  year to June 30 to  coincide  with  AmeriCom's  historic
accounting periods.  As a result, the Management  Discussion and Analysis can be
presented with comparable 12 month periods ending on June 30.

RESULTS OF OPERATIONS:

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

         In the 1999 fiscal year ended June 30,  1999,  the Company had revenues
of $143,591 from business operations.  During the comparable period in 1998, the
Company had no revenue from business operations. The Company had anticipated the
generation of  significant  revenues  commencing in the second quarter of fiscal
1999.  However,  these sales were not realized in fiscal 1999 as expected due to
the Company's  decision to re-engineer  its AdCast delivery system to ensure its
ability to accommodate a large volume of advertising  transactions.  The Company
began beta  testing of AdCast on  February  1, 1999.  The  Company is  currently
displaying  in excess of 4 million ads per day. Of these,  25% are ads displayed
on the AdCast Affiliate sites and promote products of the Company's  sponsorship
advertiser  and  advertisers  with whom the Company has entered into  commission
based contracts or "paid-per-click" programs. The balance consists of unpaid ads
which  cross-promote  AdCast Affiliate sites pursuant to AdCast's  e-E-Billboard
Exchange program.

<PAGE>16

         In 1999,  indirect  costs  were  substantially  higher  as the  Company
strengthened  its marketing,  operational and engineering  resources in order to
launch  its AdCast and  associated  products.  Marketing  expense  increased  to
$527,935 as compared to marketing  expense of $0 during the comparable period in
1998.  Research and  development  expenses  were $168,510 in fiscal year 1999 as
compared to $3,774 in 1998.  Administrative  expenses  increased  to $977,979 in
fiscal year 1999  compared  to $39,116 in the  comparable  period in 1998.  This
increase  was due to  preparations  for the  operational  roll out of AdCast and
related Company  products,  and costs associated with the transition to a public
corporation.

Fiscal Year Ended June 30, 1998 Compared to Fiscal Year Ended June 30, 1997

         In the fiscal year ended June 30, 1998, the Company had no revenue from
business  operations.  In the fiscal year ended June 30,  1997,  the Company had
only  incidental  revenue derived from  consulting  activities  unrelated to the
continuing  business of the  Company.  During  both years the  Company  incurred
administrative costs and costs arising from the development of various technical
and business  concepts  which did not reach fruition  during either  period.  As
such, no accurate and  comprehensive  comparison  between the Company's 1998 and
1997 operating results is available.


         The following  table provides a summary of selected  financial data for
the Company's statement of operations:


<PAGE>17

<TABLE>
<S>                                <C>                    <C>                     <C>

                                                    FISCAL YEAR END,
                                          (in US$ thousands except per share data)



                                     Fiscal Year Ended       Fiscal Year Ended      Fiscal Year Ended
                                     June 30, 1999           June 30, 1998          June 30, 1997

Operative Revenue                        $143,591                        $0              $14,275

Income(loss) from operations          ($7,700,999)                ($272,569)           ($379,280)

Income (loss) per share                    ($0.26)                   ($0.01)              ($0.04)

Total Assets                           $4,458,559                   $51,586              $14,279

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

Stockholder equity (Deficicency)      ($1,155,641)              ($1,726,543)        ($1,453,974)

</TABLE>


Liquidity and Capital Resources

         The Company's  operations in future  periods will be dependent upon the
availability  of  adequate  liquid  funds for capital  expenditures  and to meet
income  deficits  associated  with  the  operational   roll-out  of  the  AdCast
advertising  service. 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.  A further  1,350,000  shares  were sold to  non-United  States
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-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 OTC-BB.  Consequently,
as of June 30, 1999, the final Regulation S offering  included  2,050,000 shares
sold for  $2,948,064.  Subsequent to the fiscal year end, an  additional  72,000
shares  (aggregating  $129,600 after costs)  previously sold in the Regualtion S
offering  were  canceled.  As a result of these,  the net  amount  raised by the
Regulation S offering, after costs, was $2,818,464.

         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 upon the Company's  stock being
listed for trading on the NASD OTC-BB.

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



<PAGE>18



         On February 12, 1999, the Board of Directors of the Company  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
for one share of common stock.  To date,  $1,323,500 has been invested by way of
purchases of these  promissory  notes by  individuals  who qualify as accredited
investors as defined by the Securities And Exchange  Commission.  Notes totaling
$1,187,422,  including accrued interest,  had been converted into 593,711 shares
of common  stock as of June 30,  1999.  As of  September  23, 1999 all the notes
issued have 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.

         The Company  considers  that existing  commitments  and  indications of
intent of equity and debenture  financing will be adequate to meet the Company's
operational  funding  requirements  for the next 12 months.  However,  we cannot
guarantee  that these sources of funding will be realized,  nor that  internally
generated  funds will be developed  sufficiently  quickly to meet the  Company's
needs when 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, 1999,  the Company  funded its  operations  primarily
through private placements of it securities.  As of June 30, 1999, June 30, 1998
and June 30, 1997, the Company's  working  capital  (deficit) was  ($2,776,554),
($1,741,377) and ($1,458,870),  respectively.  Proceeds from private  placements
were used for working capital.

IMPACT OF THE YEAR 2000 ISSUE

         Overview.  Currently  installed  computer systems and software products
are coded to accept or recognize  only two digit entries in the date code field.
These  systems and software  products  will need to accept four digit entries to
distinguish  21st century dates from 20th century  dates.  As a result  computer
systems  and/or  software used by many companies and  governmental  agencies may
need to be upgraded to comply  with such Year 2000  requirements  or risk system
failure or miscalculations causing disruptions of normal business activities.

         State  of  readiness.  Americom  USA has  substantially  completed  its
initial  assessment  of the Year 2000  readiness of its  information  technology
("IT")  systems,  including  the hardware and software that enable it to provide
and deliver its solutions,  and its non-IT systems.  AmeriCom's  assessment plan
consists  of  (i)  quality  assurance   testing  of  its  internally   developed
proprietary software incorporated in its solutions ("Solutions Software");  (ii)
contacting third-party vendors and licensors of material hardware,  software and
services  that are both  directly  and  indirectly  related to the  delivery  of
Americom USA's  solutions to its Web publisher and advertiser  customers;  (iii)
contacting  vendors of material  non-IT  systems;  (iv)  assessment of repair or
replacement requirements;  (v) repair or replacement; (vi) implementation;  (vi)
implementation  of  contingency  plans in the event of Year 2000 failures  which
include backup systems for both on and off site  locations,  24 hour watch using
various software and trained personnel, and ensuring proper emergency procedures
are in place for  handling  situations  we have no control  over such as loss of
utility services.

         Americom USA is  conducting  quality  assurance  testing to ensure Year
2000 compliance of all new internally  developed  proprietary code  incorporated
into its Solutions Software. The Company plans to perform a Year 2000 simulation
on its  Solutions  Software  during the fourth  quarter of 1999,  following  the
implementation  of revisions  to the  Solutions  Software  planned for the third

<PAGE>19

quarter of 1999.  Based on the  results of its Year 2000  simulation  test,  the
Company  intends to revise the code of its  Solutions  Software as  necessary to
improve the Year 2000 compliance of its Solutions Software.

         Americom  USA has been  informed  by many of its  vendors  of  material
hardware and software components of its IT systems that the products used by the
Company are  currently  Year 2000  compliant.  Americom USA is in the process of
requiring vendors of the other material hardware and software  components in its
IT systems to provide  written  assurances  of their Year 2000  compliance.  The
Company plans to complete this process during the second half of 1999.  Americom
USA has completed an assessment of the  materiality of its non-IT systems and is
in the  process of  seeking  written  assurances  of Year 2000  compliance  from
providers of its material non-IT  systems.  The Company is also dependent on the
continued functioning of basic services such as electrical utilities, telephony,
mail  delivery  and  transportation  in order to  conduct  its  business.  While
Americom  USA is taking  steps to ensure  that the third  parties on which it is
reliant  are Year 2000  compliant,  it cannot  predict the  probability  of such
compliance nor the costs to the Company of non-compliance by those third parties
or of securing alternate services from Year 2000 compliant parties.

Pending  completion  of its planned Year 2000  simulation  test of its Solutions
Software and its program of  requesting  Year 2000  assurances  from vendors and
licensors of material IT and non-IT systems,  Americom USA has not yet completed
its Year 2000  compliance  repair or replacement  analysis,  or its  contingency
plans.  The Company plans to complete all Year 2000 planning and analysis before
the end of the fourth quarter.

         Costs.  Americom  USA has not incurred  any  material  expenditures  in
connection with identifying or evaluating Year 2000 compliance  issues.  Most of
its expenses have related to, and are expected to include,  the operating  costs
associated with time spent by employees in the evaluation  process and Year 2000
compliance matters  generally.  The Company does not now possess the information
necessary to estimate the potential costs of revisions to its Solutions Software
should such revisions be required or the  replacement  of third-party  software,
hardware or services that are determined not to be Year 2000 compliant. Although
Americom USA does not  anticipate  that such  expenses  will be  material,  such
expenses, if higher than estimated,  could have a material adverse effect on the
Company's business, results of operations and financial condition.

         Risks.  Americom  USA  believes  that it has  established  an effective
program to resolve  material  Year 2000  issues in its sole  control in a timely
manner. As aforementioned, however, the Company has not yet completed all phases
of its program and is dependent on third  parties  whose  progress is not within
its control.  The failure by such third parties to be Year 2000 compliant  could
result  in a  systematic  failure  beyond  the  control  of  Americom  USA  from
delivering  its services to its  customers,  decrease the use of the Internet or
prevent users from accessing the Web sites of its Web publisher customers, which
could  have  material  adverse  effect on the  Company's  business,  results  of
operations and financial condition. There can also be no assurance that Americom
USA will not discover Year 2000  compliance  problems in our Solutions  Software
that will require substantial revisions which could be costly and time-consuming
to  remedy.  If the  Company  does not  complete  any of its  currently  planned
additional  remediation  prior to the Year 2000,  the Company  could  experience
significant  difficulty in producing and delivering solutions and conducting its
business  in the Year 2000 as it has in the  past,  which  could  result in lost
revenues,  increased  operating  costs,  loss of  customers  and other  business
interruptions,  any of which  could have a material  adverse  effect on Americom
USA's business,  results of operations and financial  condition.  Moreover,  the
failure to adequately  solve Year 2000 compliance  issues could result in claims
of   mismanagement,   misrepresentation   or  breach  of  contract  and  related

<PAGE>20

litigation,  which could be costly to defend.  This potential liability and lost
revenue can not be reasonably estimated at this time.

         Contingency  Plan.  As  aforementioned  Americom  USA is  engaged in an
ongoing Year 2000  assessment and has not yet developed any  contingency  plans.
The results of the  Company's  Year 2000  simulation  testing and the  responses
received  from third  party  vendors and  service  providers  will be taken into
account in determining the nature and extent of any contingency plans.

         Forward-Looking  Statements. The foregoing Year 2000 discussion and the
information  contained herein is provided as a "Year 2000 Readiness  Disclosure"
as defined in the Year 2000  Information  and Readiness  Disclosure  Act of 1998
(Public Law 105-271,  112 Stat.  2386)  enacted on October 19, 1998 and contains
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995. Such statements,  including  without  limitation,
anticipated  costs and the  dates by which  Americom  USA  expects  to  complete
certain actions,  are based on management's best current  estimates,  which were
made using assumptions about future events, including the continued availability
of certain resources,  third party  representations and other factors.  However,
there can be no guarantee or assurance  that these  estimates  will be achieved,
and actual results could differ  materially.  Specific  factors that could cause
such  material  differences  include,  but are not  limited  to, the  ability to
identify and  remediate  all  relevant  systems;  results of Year 2000  testing;
adequate resolution of Year 2000 issues by governmental agencies, businesses and
other third parties who are outsourcing service providers, suppliers and vendors
of the Company;  unanticipated  system costs; and the adequacy of and ability to
implement  contingency  plans.  The  "forward-looking  statements"  made  in the
foregoing Year 2000  discussion  speak only to the date on which such statements
were  made,   and  the  Company   undertakes   no   obligation   to  update  any
forward-looking  statement to reflect events or circumstances  after the date on
which such  statement  was made or to reflect the  occurrence  of  unanticipated
events.

FACTORS AFFECTING FUTURE OPERATING RESULTS

         The  Company's   income  will  be  heavily   dependent  upon  sales  of
advertising inventory on AdCast e-Billboards and the successful delivery of that
advertising.  The Company did not sell or deliver paid  advertising  through its
AdCast  e-Billboard  until July 1999,  after the end of the fiscal  year and the
Company  cannot  be sure  that  such  sales  will  increase  or  even  continue.
Prospective  sales of AdCast  advertising are dependent upon both the ability of
the Company to sell and deliver AdCast services and the continued development of
the overall market for Internet advertising

<PAGE>21



services and Internet related commerce.  Similarly, sales by the Company's Kiosk
Software and DigiCities subsidiaries may not increase or continue.

         Future prospects for the Company's  financial  condition and results of
operations  will be  overwhelmingly  dependent on factors which were not present
during the 1998 fiscal  year and were only  present in the second half of fiscal
1999.  In  particular,  the speed  and  success  of  development  of the  AdCast
advertising  e-Billboard  service,  which only  commenced in August  1999,  will
determine the bulk of the  Company's  revenues and costs in fiscal year 2000 and
beyond.  Additionally,  the Company's wholly owned  subsidiaries  Kiosk Software
(which is engaged in the  development  of software  for public  access  computer
terminals),  and DigiCities  (which  develops and maintains  business Web sites)
will generate significant and growing revenues and costs in fiscal year 2000 and
beyond. To date Kiosk Software has incurred  operating losses and DigiCities has
generated a profit.  All the Company's  main business  operations are relatively
new, are growing rapidly and have an insufficient track record from which future
financial results can be predicted.

The market for  Internet  advertising  has only  recently  begun to develop,  is
rapidly  evolving  and  is  characterized  by an  increasing  number  of  market
entrants,  although Internet advertising continues to be dominated by the larger
Web sites.  As is typical in the case of a new and  rapidly  evolving  industry,
demand and market acceptance for recently  introduced  products and services are
subject to a high level of uncertainty.

AmeriCom's ability to generate  advertising  revenue will depend on, among other
factors:

o        the continued development of the Internet as an advertising medium,

o        pricing of advertising on other Web sites,

o        the Company's ability to achieve and demonstrate user demographic
         characteristics  that are attractive to  advertisers,

o        the development and expansion of the AmeriCom's advertising sales
         force, and

o        the establishment and maintenance of desirable sales relationships.

         Rapid  growth  in use of and  interest  in the  Internet  in the  North
American market is a recent phenomenon and there is no assurance that acceptance
and use of the Internet  will  continue to develop or that a sufficient  base of
users will emerge to support  AmeriCom's  business.  We believe this growth will
slow,  but this will not affect the growth in  advertising on the Internet which
is in its infancy.

         Virtually all of AmeriCom's Web  advertising  revenues are derived from
short-term contracts from a limited number of advertisers. Consequently, many of
AmeriCom's  advertising  customers can cease  advertising on AmeriCom's Web site
quickly  and  without  penalty,   thereby  increasing   AmeriCom's  exposure  to
competitive pressures. There is no assurance that AmeriCom's current advertisers
will continue to purchase advertisements or that AmeriCom will be able to secure
new advertising  contracts from existing or future customers at attractive rates
or at all.  Any failure of AmeriCom to achieve  sufficient  advertising  revenue
could  have a  material  adverse  effect  on  AmeriCom's  business,  results  of
operations and financial condition.

The market for  Internet  information  delivery is  characterized  by  extensive

<PAGE>22


research and development and rapid  technological  change,  frequent new product
introductions  and  technological  innovation,  resulting in short  product life
cycles and evolving industry standards. Development by others of new or improved
products,  processes or technology may render  AmeriCom's  products and services
less  competitive  or  obsolete.  The emerging  character of these  products and
services and their rapid  evolution  will require  AmeriCom to  effectively  use
leading technologies,  continue to develop its technological expertise,  enhance
its current  services  and  continue to improve the  performance,  features  and
reliability of its network infrastructure.

AmeriCom's  future  success  depends  in large  part upon its  ability to obtain
rights to and deliver  content of sufficient  interest to users of the Internet.
AmeriCom does not create its own content. Rather, AmeriCom relies on third party
content providers,  such as Web site publishers.  AmeriCom's ability to maintain
its  existing  relationships  with  such  content  providers  and to  build  new
relationships  with additional  content  providers is critical to the success of
its business.

AmeriCom  anticipates  that  significant  expansion  of its  operations  will be
required in order to address  potential market  opportunities.  AmeriCom expects
that it will need to increase its  personnel  significantly  in the near future.
The anticipated  substantial growth is expected to place a significant strain on
its managerial,  operational and financial  resources and systems. To manage its
growth,  AmeriCom must implement,  improve and effectively use its  operational,
management, marketing and financial systems and train and manage its employees.

Despite the  implementation  of security  measures,  AmeriCom's  networks may be
vulnerable  to  unauthorized  access,  computer  viruses  and  other  disruptive
problems.   A  party  who  is  able  to  circumvent   security   measures  could
misappropriate  proprietary  information  or cause  interruptions  in AmeriCom`s
Internet operations. ISPs and OSPs have in the past experienced,  and may in the
future  experience,  interruptions  in service as a result of the  accidental or
intentional  actions of Internet users,  current and former employees or others.
AmeriCom  may be required to expend  significant  capital or other  resources to
protect against the threat of security breaches or to alleviate  problems caused
by such breaches.

AmeriCom  will  face  intense  competition  in  every  aspect  of its  business,
including  competition  for  advertisers,  providers of banner  advertising  and
vendors of  advertising  services.  The  business  of  providing  data and other
products using the Internet is currently  experiencing  explosive  growth and is
characterized  by extremely rapid  technological  development,  rapid changes in
consumer habits and preferences,  massive infusions of capital and the emergence
of a large number of new and established  companies with  aspirations to control
as much of the  distribution  process as possible.  A relatively small number of
these companies,  including America On Line and Yahoo! currently control primary
or  secondary  access of a  significant  percentage  of all  Internet  users and
therefore have a competitive advantage in marketing to those users.

AmeriCom and its  subsidiaries  must be  considered to be in the early stages of
development  similar to other  young  companies,  particularly  those in new and
rapidly  evolving  markets,  including  Internet  content,  electronic  commerce
("e-commerce")  Internet  advertising and merchandising.  To achieve and sustain
profitability, AmeriCom must, among other things:

o    Provide  diverse  content  of  interest  to  Internet  users by  attracting
     Internet web sites to participate in the AdCast program.

o    Effectively   develop  new  and  maintain   existing   relationships   with
     advertisers,   advertising   brokers,   advertising  agencies  and  content
     providers.

<PAGE>23

o    Continue to develop and upgrade its technology and network infrastructure.

o    Respond to competitive developments.

o    Successfully  introduce  enhancements to its existing products and services
     to address new technology standards and developments on the Internet.

o    Attract, retain and motivate qualified personnel.


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.


                                    PART III

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

         The Directors and Officers of the Company are as follows:

<TABLE>
                <S>                                 <C>                  <C>


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


                     Robert M. Cezar                    57                 Director, President, Chief
                                                                           Executive Officer

                     David H. Loomis                    61                 Director, Chief Financial
                                                                           Officer,  Treasurer, Vice
                                                                           President of Finance

                     Gary M. Hogue                      59                 Chief Operating Officer

                     Helen E. Cooper                    58                 Secretary, Vice President of
                                                                           Administration

                     Craig D. Machado                   53                 Director, Vice President, Sales
                                                                           and Marketing

                     Winston Lee                        44                 Vice President, International
                                                                           Corporate Development

</TABLE>

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

<PAGE>24

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

         ROBERT M. CEZAR,  57, has served as Chairman,  Chief Executive  Officer
and a director of the Company since 1994. From 1994 to 1999, Mr. Cezar 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,  a  telecommunications
company.

         DAVID H. LOOMIS, 61, has served as Chief Financial Officer,  Treasurer,
Vice President of Finance and a director of the Company since 1994. From 1963 to
1991,  Mr.  Loomis  served  in  various  positions  at  Loomix,  a  $23  million
agri-business  company  culminating as chief  financial  officer and a director.
From 1996 to 1998, Mr. Loomis served as chief  financial  officer and a director
of RMC Diversified  Associates  International  Ltd., a California  company.  Mr.
Loomis received his Bachelor of Science degree in Social Science from California
Polytechnic State University in 1961.

         GARY M. HOGUE, 59, has served as Chief Operating Officer of the Company
since 1998.  From 1994 to 1998,  Mr.  Hogue was the  Administrative  Manager for
Torch  Operating  Company,  Santa  Maria  District,  an oil  production  company
operating facilities both offshore and onshore in California. From 1969 to 1992,
Mr. Hogue served in a number of positions  with Atlantic  Richfield Co.  (ARCO),
the last of which was Personnel Director for ARCO Oil and Gas, Western District.
Mr. Hogue received his Bachelor of Science degree in Economics from Sonoma State
College  in  1972  and his  Masters  of  Business  Administration  in 1982  from
Pepperdine University, Malibu, California.

         HELEN E. COOPER, 58, has served as Secretary and Vice President of
Administration  of the Company since 1994.  From 1993 to 1994, Ms. Cooper served
as a director,  corporate  secretary and vice president of administration of RMC
Diversified  Associates  International Ltd., a California company.  From 1996 to
1998,  Ms.  Cooper  served as an  administrative  assistant at Enhanced  Service
Providers,  a telecommunications  company. Since April 1998, Ms. Cooper has been
employed by the Company.  Ms. Cooper  received her teaching  degree in 1962 from
Oxford University and the Froebel Institute, United Kingdom.

         CRAIG D. MACHADO, 53, has served as Vice President, Sales and Marketing
and as a director of the  Company  since 1998.  From 1991 to 1995,  Mr.  Machado
served as vice president,  marketing and merchandising at Calgene Fresh, Inc., a
genetically  engineered fresh tomato company. From 1995 to 1998, Mr. Machado was
the director of marketing  for APIO,  Inc.,  an  agricultural  distribution  and
processing company located in Guadalupe,  California.  Mr. Machado has served as
president of the Northern  California  Produce  Council in 1976 and 1977 and was
recognized  by the  Sacramento  Bee as the Creative  Advertiser  of the Year for
1987.  Mr.  Machado  received  his Bachelor of Science  degree in  Architectural
Engineering from California State University, Sacramento, California in 1966.

               WINSTON  LEE, 44, has served as Vice  President of  International
Corporate  Development  since  October  1998.  In 1987 Mr. Lee  founded  Gateway
Communications  Limited,  Taipei,  Taiwan,  an  international  direct  dial rate
arbitrage company which developed an automatic  aggregation system. From 1994 to
1998,  Mr. Lee was  managing  director of Strait  Venture  Inc.,  Taiwan,  which
represents several large telecommunications companies in the Far East, including

<PAGE>25


China.  Mr. Lee received his Bachelor of  Architecture  degree in 1977 from Rice
University and his Master of Business Administration from New York University in
1982.


Family Relationship

         There are no family  relationship  between any director  and  executive
officer.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's executive officers and directors, 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 Form 4 or 5 with the  Securities  and Exchange  Commission  (the
"SEC").  Such  executive  officers,  directors  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, 1999, all Section 16(a) filing  requirements  applicable
to its executive  officers,  directors and 10%  stockholders  were complied with
except as follows:  Mr.  Winston Lee filed three late reports  representing  one
stock  transaction  each in April,  May and July  1999;  and  subsequent  to the
Company's  fiscal year end, Mr. Robert Cezar filed one late Form 4 reporting two
stock transactions in August, 1999.

<PAGE>26



ITEM 10.          EXECUTIVE COMPENSATION


         The following table sets forth the total  compensation  paid or accrued
by the Company on behalf of the Chief  Executive  Officer and  President  of the
Company for last three completed  fiscal years and the only officer who received
a salary in excess of $100,000.


                           SUMMARY COMPENSATION TABLE

<TABLE>
<S>                         <C>        <C>         <C>           <C>              <C>         <C>              <C>      <C>


                                                                                 Long Term Compensation
                                                                                 -----------------------
                                   Annual Compensation                               Awards                        Payout
                                   --------------------                              -------                       -------

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

Robert M Cezar, Chief       1999       $137,500           0              0            0          935,000           0            0
Executive Officer           1998       $ 11,150           0              0            0                0           0            0
                            1997              0           0              0            0                0           0            0

David Loomis, C.F.O.        1999       $ 96,000    $ 40,000*             0            0          675,000           0     $192,165**
                            1998              0           0              0            0                0           0            0
                            1998              0           0              0            0                0           0            0

</TABLE>

*    A bonus of the Company's shares was given on 2/18/99 to 5 individuals.
**   Previously accrued salaries for 1997 and 1998.

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.

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  employee  realize  a direct  proprietary  interest  in the
Company.  The 1999 Plan requires approval by shareholders within one year of its
creation. The 1999 Plan provides for grants of up to 15,000,000 shares of Common
stock as  non-statutory  and  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  otherwise  provided by the Board, an option granted
under  the 1999  Plan is  exercisable  for a term of ten years (or for a shorter
period up to 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

<PAGE>27



terms of the options. The 1999 Plan may be amended,  suspended, or terminated by
the Board,  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 June 30, 1999,  options to acquire
10,282,581 shares of Common Stock were outstanding.

Options Granted in Last Fiscal Year

The following  table sets forth options  granted by the Company  during the last
fiscal year to the executives listed in the summary compensation table.


<TABLE>
<S>                       <C>                <C>                       <C>                  <C>
                           Option/SAR Grants in Last Fiscal Year

                                               Percentage of Total
                                               Options/SARs Granted
                        Options/SARs Granted   to Employees in
Name                                           Fiscal Year (1)        Exercise Price $/sh    Expiration Date
----------------------- ---------------------- ---------------------- ---------------------- ----------------------


Robert M Cezar               935,000                    9.1%                   2.20               2009

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

David Loomis                 675,000                    6.7%                   2.00               2009

----------------------- ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>


(1) Reflected as a percentage of the total number of options to purchase  common
shares granted  (10,282,581) during the most recently fiscal year ended June 30,
1999.



<PAGE>28



No incentive stock options were exercised by the Named Executive Officers during
the most recently fiscal year ended June 30, 1999.

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 officers and directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following  table sets forth, as of August 31, 1999 each director and officer
of the Company and each person known by the Company to be the  beneficial  owner
of five percent or more of the Company's  Common Stock and except if noted,  the
holder thereof has sole voting and  investment  power with respect to the shares
shown.
<TABLE>
<S>                                               <C>                            <C>

                                                                                   Percentage
                                                 Number of                        Beneficially
Name and Address                                  Shares                              Owned
----------------------------------             ----------------                ------------------

Robert Cezar                                      16,504,679(1)                     45.0%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420


David Loomis, Director                             2,260,684                         6.2%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420


Helen Cooper                                       993,919(3)                        2.6%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420


<PAGE>29


Gary Hogue                                         100,000(2)                        0.3%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420


Craig Machado                                      556,120                           1.5%
21 La Gaviota
Pismo Beach, California 93449



All directors and executive officers            -----------                        -----
as a group (6 persons)                          20,415,402                          55.7%

</TABLE>



(1)  Of which  4,548,370  is held in the Robert M.  Cezar  trust.
(2)  Includes 100,000 shares issuable under stock options  exercisable within 60
     days of June 30, 1999.
(3)  Of which 665,690 is held in the Helen E. Cooper trust.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On July 1, 1999, the Company signed an agreement to merge with Telespace Ltd. Mr
Winston Lee is 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
Diversified  Associates  International,  Ltd. ("RMC Intl."). At the time of this
transaction  Robert  Cezar,  David  Loomis,  Craig Machado and Helen Cooper were
officers, directors and principal shareholders of RCM Intl.

As of June 30, 1999, officers and relatives of officers had outstanding loans to
the Company of $638,145 which  represents  approximately  48% of the total notes
and loans owed by the Company. $475,000 of this amount bears interest at 10% per
annum and is due March 27, 2000. $3,145 of this amount bears interest at 14% per
annum.  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.

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

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

<TABLE>
<S>              <C>                                                                            <C>

                                                                                                 PAGE
(1)      Financial Statements


                  Report of Independent Auditors - Weinberg & Company, P.A.........................F-1

                  Consolidated Balance sheet as of June 30, 1999............................F-2 to F-3

                  Consolidated Statements of Operations for the years ended
                  June 30, 1999 and 1998...........................................................F-4

                  Consolidated Statements of Stockholders' Equity for the
                  Years ended June 30, 1999 and 1998........................................F-5 to F-6

                  Consolidated Statements of Cash Flows for the years ended
                  June 30, 1999 and 1998....................................................F-7 to F-8

                  Notes to Consolidated Financial Statements................................F-9 to F-34

         (2)      Exhibits

</TABLE>

<PAGE>30


3.1* Certificate  of  Incorporation   filed  as  an  exhibit  to  the  Company's
     registration  statement  on Form  10-SB  (filed on  February  11,  1998 and
     incorporated herein by reference.)

3.2* By-Laws filed as an exhibit to the Company's registration statement on Form
     10-SB filed on February11, 1998 incorporated herein by reference.

10.3* Stock Option Plan.

10.4+ Stock Exchange Agreements  dated July 15,  1998  between shareholders of
      RMC  Diversified Associates International, Ltd. And AmeriCom USA, Inc.

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

10.6** Agreement and Plan of Reorganization dated January 24, 1999 between Kiosk
       Acquisition, Inc. and AmeriCom USA, Inc.

10.7** Agreement and Plan of Reorganization  dated February 26, 1999 between
       Jim and Jan Tech and AmeriCom USA, Inc.

10.8** Agreement  of Purchase and Sale and  Exclusive  Licensing  of  Technology
       dated March 11, 1999 between AmeriCom Ltd. and AmeriCom USA, Inc.
------------------------------------------------------------------------------

     *    Previously filed with Form 10-KSB for the fiscal year ended December
          31, 1998.

     **   Previously filed with Form 8-K

     +    Filed herewith

(b)      Reports on Form 8-K:

     Form  8-K  filed  December  18,  1998  reporting  item 1, 2, 4, 6 and 9 and
     amended  February 18, 1999  reporting item 7,  financial  statements  dated
     January 29, 1999.

     Form 8-K filed February 23, 1999 reporting  acquisition of Kiosk  Software,
     Inc.

     Form 8-K filed  April  26,  1999  reporting  financial  statement  of Kiosk
     Software, Inc.

     Form 8-K filed May 17, 1999 reporting item 2, reporting  acquisition of the
     MyLine technology.

     Form 8-K filed July 12, 1999  reporting  item 2, merger of with  Telespace,
     Ltd.

     Form 8-K filed July 19, 1999 reporting item 2, merger with DigiCities Inc.



Form 8-K filed September 22, 1999 reporting cancellation of Telespace, Ltd.
merger.

<PAGE>31


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:   September 24, 1999                     AMERICOM USA, INC.


                                             /S/ ROBERT CEZAR
                                             ---------------------------------
                                             By: Robert Cezar
                                             Chief Executive Officer, Chairman
                                             of the Board of Directors and
                                             Principal Executive Officer


                                             /S/ DAVID LOOMIS
                                             ---------------------------------
                                             By: David Loomis
                                             Chief Financial Officer, Principal
                                             Financial Officer and Principal
                                             Accounting 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
----                                ------                    -----------


/S/ROBERT CEZAR
--------------------
Robert Cezar                       Director                  September 24, 1999


/S/ DAVID LOOMIS
-------------------
David Loomis                       Director                  September 24, 1999


/S/ CRAIG MACHADO
-------------------
Craig Machado                      Director                  September 24, 1999



<PAGE>32

                     AMERICOM USA, INC. AND SUBSIDIARIES

                                   CONTENTS



PAGE            1  -  INDEPENDENT AUDITORS' REPORT

PAGES   F-2 - F-3  -  CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1999

PAGE          F-4  -  CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
                      YEARS ENDED JUNE 30, 1999 AND 1998

PAGES   F-5 - F-6  -  CONSOLIDATED STATEMENT OF CHANGES IN
                      STOCKHOLDERS' DEFICIENCY FOR THE YEARS ENDED
                      JUNE 30, 1999 AND 1998

PAGES   F-7 - F-8  -  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
                      YEARS ENDED JUNE 30, 1999 AND 1998

PAGES  F-9 - F-34  -  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<PAGE>F-1
                          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,  1999  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,  1999.  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, 1999 and the results of their  operations  and
their cash flows for each of the two years in the period ended June 30, 1999, 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 20 to the
financial  statements,  the Company's  significant  operating losses and working
capital  deficiency of $2,776,554 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  20.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

                         WEINBERG & COMPANY, P.A.



Boca Raton, Florida
September 3, 1999


<PAGE>F-2



                       AMERICOM USA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1999


                                     ASSETS

CURRENT ASSETS
 Cash and cash equivalents                               $     5,497
 Accounts receivable, net                                     33,819
 Due from officer                                             46,414
 Due from employees                                            7,516
 Other assets                                                 10,338
                                                         -----------

    Total Current Assets                                     103,584

PROPERTY AND EQUIPMENT, NET                                  537,223
                                                         -----------
OTHER ASSETS
 Advances pursuant to merger- cash and common stock          520,000
 Deposits                                                     20,534
 Kiosk computer software costs, net                        1,441,134
 MyLine software cost, net                                 1,452,556
 Goodwill, net                                               383,528
                                                        ------------
         Total Other Assets                                3,817,752
                                                         -----------
TOTAL ASSETS                                             $ 4,458,559
------------                                             ===========



     See accompanying notes to consolidated financial statements.

<PAGE>F-3



                       AMERICOM USA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1999

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
 Accounts payable and accrued expenses                   $ 1,371,503
 Payroll taxes payable                                       150,917
 Accrued salaries and wages                                  228,673
 Deferred revenue                                              2,463
 Obligation under capital lease                                2,484
 Notes and loans payable - current portion                   335,951
 Notes and loans payable - related parties                   638,145
 Convertible promissory notes                                150,000
                                                         -----------

    Total Current Liabilities                              2,880,136
                                                         -----------

Notes and loans payable                                      200,000
                                                         -----------
TOTAL LIABILITIES                                          3,080,136
                                                         -----------

REFUNDABLE COMMON STOCK
 Common stock - refundable (1,889,000 shares issued
  and outstanding)                                               189
 Common stock subscribed - refundable (161,000 shares)            16
 Additional paid in capital                                2,947,859
 Less due from investors for issued common stock            (124,200)
 Less subscriptions receivable                              (289,800)
                                                         -----------
TOTAL REFUNDABLE COMMON STOCK                              2,534,064
                                                         -----------
STOCKHOLDERS' DEFICIENCY
 Preferred stock $.0001 par value, 10,000,000 shares
  authorized, none issued and outstanding                          -
 Common stock $0.0001 par value, 100,000,000 shares
  authorized, 32,519,284 issued and outstanding                3,252
 Additional paid-in capital                                8,416,156
 Accumulated deficit                                      (9,575,049)
                                                         -----------
TOTAL STOCKHOLDERS' DEFICIENCY                            (1,155,641)
                                                         -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY          $  4,458,559
----------------------------------------------           ===========


See accompanying notes to consolidated financial statements.

<PAGE>F-4


                       AMERICOM USA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

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

REVENUES                                    $   143,591    $        -

COST OF SALES                                   121,873             -
                                            -----------    ----------

GROSS PROFIT                                     21,718             -
                                            -----------    ----------

OPERATING EXPENSES
 Salaries, wages and other compensation       1,612,659       163,289
 Contract services                              717,623             -
 Amortization expense                           353,206           455
 Depreciation expense                            54,624         4,738
 Consulting expense                           3,417,418         2,000
 Legal fees                                     487,310        28,100
 Other general and administrative expenses      977,979        39,116
                                            -----------    ----------

TOTAL OPERATING EXPENSES                      7,620,819       237,698
                                            -----------    ----------

LOSS FROM OPERATIONS                         (7,599,101)     (237,698)
                                            -----------    ----------

OTHER INCOME (EXPENSE)
 Gain on debt forgiveness                         5,000         8,938
 Other income                                     1,752             -
 Interest expense                               (97,448)      (37,154)
 Vendor finance charges                          (1,505)       (2,553)
 Payroll tax penalties and interest              (8,097)       (4,102)
                                            -----------    ----------

NET OTHER EXPENSES                             (100,298)      (34,871)
                                            -----------    ----------

Income Tax expense                                1,600             -
                                            -----------    ----------

NET LOSS                                    $(7,700,999)   $ (272,569)
--------                                    ===========    ==========

Weighted average number of shares
 outstanding during period -
 basic and diluted                           29,227,076    25,296,320
                                            ===========   ===========

Net loss per common
 share and equivalents -
 basic and diluted                               ($0.26)        ($.01)
                                            ===========   ===========



See accompanying notes to consolidated financial statements.



<PAGE>F-5


                       AMERICOM USA, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                   FOR THE YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<S>                      <C>           <C>        <C>        <C>    <C>         <C>                <C>


                                                     RMC DIVERSIFIED
                                                       ASSOCIATES
                                 COMMON STOCK         INTERNATIONAL
                                    ISSUED                 INC.
                                --------------      ------------------
                                                                         ADDITIONAL
                               NUMBER                NUMBER               PAID-IN      ACCUMULATED
                             OF SHARES    AMOUNT    OF SHARES   AMOUNT    CAPITAL        DEFICIT        TOTAL
                           ------------  --------  ---------- --------- ----------   -------------   -----------
Balance, June 30, 1997      11,982,548   $  1,198  13,313,800 $  1,331  $  144,978   $ (1,601,481)   $(1,453,974)

Acquistion of Diversified
 Associates by
 AmeriCom USA, Inc.         13,313,800      1,331 (13,313,800)  (1,331)          -              -              0

Net loss 1998                        -          -           -        -           -       (272,569)      (272,569)
                            ----------   -------- ----------- --------  -----------   ------------     -----------

Balance, June 30, 1998      25,296,348      2,529           -        -     144,978     (1,874,050)    (1,726,543)

Conversion of promissory
 notes into 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


</TABLE>


See accompanying notes to consolidated financial statements.

<PAGE>F-6


                       AMERICOM USA, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                    FOR THE YEAR ENDED JUNE 30, 1999 AND 1998


<TABLE>
<S>                      <C>           <C>        <C>        <C>    <C>         <C>                <C>


                                                     RMC DIVERSIFIED
                                                       ASSOCIATES
                                 COMMON STOCK         INTERNATIONAL
                                    ISSUED                 INC.
                                --------------      ------------------
                                                                         ADDITIONAL
                               NUMBER                NUMBER               PAID-IN      ACCUMULATED
                             OF SHARES    AMOUNT    OF SHARES   AMOUNT    CAPITAL        DEFICIT        TOTAL
                           ------------  --------  ---------- --------- ----------   -------------   -----------

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
 My Line 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.

<PAGE>F-7

                       AMERICOM USA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED JUNE 30, 1999 AND 1998



                                                      1999        1998
                                                 ------------ -------------
Cash flows from operating activities:

 Net loss                                         $(7,700,999) $ (272,569)
 Adjustments to reconcile net loss
  to net cash used in operating activities:
   Depreciation                                        54,624       4,738
   Amortization                                       352,751         455
   Provision for doubtful accounts                     21,679           -
   Issuance of common stock for services            3,514,000           -
Changes in operating assets and liabilities:
 (Increase) decrease in:
   Accounts receivable                                (25,453)        638
   Employee receivable                                 (7,516)      1,779
   Other assets                                        (9,138)     (1,200)
   Deposits                                           (20,079)          -
  Increase (decrease) in:
   Accounts payable and accrued expenses              813,725      53,067
   Deferred revenue                                     2,463           -
   Payroll taxes payable                               97,303      12,116
   Accrued salaries and wages                      $ (337,069) $  140,321
                                                   ----------  ----------

     Net cash used in operating activities         (3,243,709)    (60,655)
                                                   ----------  ----------

Cash flows from investing activities:
   Due from officer                                   (39,647)          -
   Purchase of property and equipment                (562,384)     (8,014)
   Proceeds from return of deposits                         -         498
   Advances related to merger and acquisition        (173,000)          -
   Cash acquired in acquisition of Kiosk                3,171           -
                                                   ----------  -----------

     Net cash used in investing activities           (771,860)     (7,516)
                                                   ----------  ----------

Cash flows from financing activities:
   Proceeds from stock subscription                 2,534,062           -
   Proceeds from stock issuance                     1,820,401           -
   Payment of capital lease obligation                 (6,163)          -
   Payment of notes and loans payable                 (54,457)     59,239
   Proceeds from notes and loans payable              150,000      37,500



See accompanying notes to consolidated financial statements.

<PAGE>F-8


                       AMERICOM USA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED JUNE 30, 1999 AND 1998


   Payment of related party notes
    and loans payable                               (611,544)         -
   Proceeds from related party notes
    and loans payable                                160,000          -
                                                   ---------   ---------

     Net cash provided by
      financing activities                         3,992,299     96,739
                                                   ---------   --------

     Net increase (decrease) in cash                 (23,270)    28,568

Cash and cash equivalents at
 beginning of year                                    28,767        199
                                                   ---------   --------

CASH AND CASH EQUIVALENTS AT END OF YEAR           $   5,497   $ 28,767
----------------------------------------           =========   ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

CASH PAID DURING THE YEAR FOR INTEREST             $  39,388   $      -
                                                   =========   ========


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

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

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.

<PAGE>F-9


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (A) Description of Business

         AmeriCom USA, Inc. ("AmeriCom") has developed proprietary  technologies
         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 14(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 14(B))

         Kiosk Software,  Inc. ("Kiosk"), a wholly-owned subsidiary of AmeriCom,
         was  acquired by AmeriCom on February 8, 1999 (see Note  14(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".

         (B) Principles of Consolidation

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

<PAGE>F-10



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)

         (C) 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.

         (D) 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.

         (E) 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's of the assets from three to
         five years.

         (F) Computer Software Costs

         (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 5 and 14(C)).

<PAGE>F-11

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)

         (F) Computer Software Costs - (CONT'D)

         (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 5 and 14(D))

         (G) Goodwill

         Goodwill  arising  from the  acquisition  of Kiosk (see Note  14(C)) is
         being amortized on a straight-line basis over five years.

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

         (I) 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.

<PAGE>F-12


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)

         (J) Revenue Recognition

         The Company recognizes revenues from advertising sales as earned.

         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.

         (K) Advertising Expense

         In accordance with Accounting  Standards  Executive Committee Statement
         of Position  93-7,  ("SOP  93-7")  costs  incurred  for  producing  and
         communicating  advertising  of the  Company,  are recorded as operating
         expenses as incurred.

         (L) 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, 1999.

         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 in 1999.


<PAGE>F-13

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)

         (M) Per Share Data

         Net loss per common  share for the year ended June 30, 1999 and 1998 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  recaptialization  date of  November  23,  1998  (see Note
         14(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.  For 1998, the weighted average shares have been  retroactively
         restated  to reflect the  quantity of shares of AmeriCom  issued to the
         Company's stockholders at the date of the recapitalization. The assumed
         exercise of common share  equivalents was not utilized since the effect
         was anti-dilutive.

         (N) 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 undiscounted  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 adoption of this pronouncement did not have a significant impact on
         the Company's financial statements as of June 30, 1999 and 1998.

NOTE 2 - ACCOUNTS RECEIVABLE

         Accounts receivable were as follows at June 30, 1999:

         Accounts receivable                        $ 72,648
         Allowance for doubtful accounts             (38,829)
                                                    ---------
                                                    $ 33,819
                                                    =========

<PAGE>F-14



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999



NOTE 2 - ACCOUNTS RECEIVABLE - (CONT'D)

         For the year ending June 30, 1999, the Company recorded a provision for
         doubtful  accounts of $21,679 on its statement of  operations.  At June
         30, 1999, the allowance for doubtful accounts includes this amount plus
         the allowance attributable to the Kiosk accounts receivable at the date
         of acquisition. (see Note 14(C))

         At June 30, 1999 approximately 34% and 41% of gross accounts receivable
         was due from two  customers,  respectively.  The 41%  amount  was fully
         reserved.

NOTE 3 - PROPERTY AND EQUIPMENT

         Property and equipment at June 30, 1999 consisted of the following:

         Office equipment                           $  4,893
         Office furniture                             34,485
         Computer equipment                          476,502
         Computer software                            53,962
         Trade Show Booth                              5,303
         Demonstration units                             985
         Automobiles                                  23,349
                                                   ---------
                                                     599,479
         Less accumulated depreciation               (62,256)
                                                   ---------
                                                   $ 537,223
                                                   =========

         Depreciation  expense  for the year  ended  June 30,  1999 and 1998 was
$54,624 and $4,738, respectively.

NOTE 4 - ADVANCES PURSUANT TO MERGER

         The Company has entered into an  acquisition  agreement  where advances
         have been made by the Company to the sellers as of June 30, 1999.

         Under an agreement and Plan of Reorganization  ("Reorganization  Plan")
         entered into on February  26, 1999,  the Company has agreed to merge an
         unrelated company (the "Target") into the Company,  with the Company as
         the  surviving  corporation.  The purpose of the merger is to allow the
         Company to acquire  certain human  resources and  operational  computer
         software  held  by  the  Target.   The  two  principals  and  the  sole
         stockholders  of the  Target  shall  become  officers  of the  Company.
         Pursuant to the  Reorganization  Plan,  the Company  shall pay $200,000
         cash


<PAGE>F-15



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 4 - ADVANCES PURSUANT TO MERGER - (CONT'D)

         to the Target stockholders and shall issue 200,000 shares of its common
         stock valued at $2.00 per share to the Target  stockholders in exchange
         for all issued and outstanding  common stock of the Target.  All common
         and preferred stock of the Target shall then be cancelled. In addition,
         the Company shall issue 200,000 fully vested options to purchase common
         stock at an exercise  price of $2.00 per share and  400,000  options to
         purchase  common stock at an exercise  price of $2.00 per share,  which
         shall vest at a rate of 200,000 at the end of each  subsequent  year of
         employment  of the two  principals.  The stock  options shall be deemed
         issued under the employee stock option plan.

         In  anticipation  of closing  the  transaction,  the  Company  advanced
         $120,000 in cash and issued the 200,000  shares of its common  stock to
         Target stockholders as of June 30,1999.  Pursuant to the Agreement, all
         cash and stock advanced to the Target's  stockholders is non-refundable
         if the merger does not close,  and the $520,000 value of these advances
         will be considered  fully-earned  access and use fees for the software.
         The  $120,000  in cash and the  $400,000  value of the  200,000  shares
         issued is recorded as an asset entitled  Advances  Pursuant to Merger -
         Cash and Common Stock.  If it is  determined  the merger will not close
         the asset will be charged to operations in the period the determination
         is  made.  No  amortization   has  been  recorded  in  1999  since  the
         transaction is pending.

NOTE 5 - 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 unamortized  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,  1999  represent  the
         unamortized portion of the allocation of the Kiosk acquisition purchase
         price differential pursuant to Accounting Principles Board Opinion No.
         16. (see Note 1(F) and 14(C))


<PAGE>F-16



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 5 - COMPUTER SOFTWARE COSTS - (CONT'D)

         Kiosk computer software costs at June 30, 1999 was as follows:

         Computer software costs              $ 1,673,575
         Less accumulated amortization           (232,441)
                                              -----------
                                              $ 1,441,134
                                              ===========
         Amortization  expense on Kiosk Software,  based on an estimated  useful
         life of three years for the year ended June 30, 1999 was $232,441.

         MyLine  computer   software  costs  at  June  30,  1999  represent  the
         unamortized cost of the software  acquired on April 30, 1999 (see Notes
         1(F) and 14(D)) as follows:

         MyLine computer software costs       $1,538,000
         Less accumulated amortization            85,444
                                              ----------
                                              $1,452,556
                                              ==========

         Amortization expense on My-Line software,  based on an estimated useful
         life of three years, for the year ended June 30, 1999 was $85,444.

NOTE 6 - GOODWILL

         Goodwill  arising  from the  acquisition  of Kiosk (see Note  14(C)) is
         being amortized on a straight-line basis over five years.

         Goodwill at June 30, 1999 was as follows:

         Goodwill                             $   418,394
         Less accumulated amortization            (34,866)
                                               ----------
                                              $   383,528
                                               ==========

         Amortization expense for the year ended June 30, 1999 was $34,866.

NOTE 7 - PAYROLL TAXES PAYABLE

         At June 30, 1999 the Company owed $150,917 in payroll  taxes,  interest
         and penalties  for prior tax periods of fiscal year 1999.  Such amounts
         were accrued in payroll taxes payable at June 30, 1999.

NOTE 8 - ACCRUED SALARIES AND WAGES

         Accrued  salaries and wages represent  current and certain unpaid prior
         year salaries from September 1994 through June 1999:

<PAGE>F-17


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 8 - ACCRUED SALARIES AND WAGES - (CONT'D)

         Accrued salaries and wages payable   $   228,673

         In January 1999 $490,742 of the accrued salaries existing prior to that
         date were paid in cash with funds  received  from a private  placement.
         (see Note 15(F)) A total of $75,500  included in accrued salaries as of
         June 30, 1999 represents accrued wages from prior periods.

NOTE 9 - NOTES AND LOANS PAYABLE

         The following  schedule reflects notes and loans payable to non-related
         parties at June 30:

         Note payable, interest at 8% per annum,
        $200,000 due on April 30, 2000 and
        $200,000 plus all accrued interest due
        April 30, 2001, unsecured                           $  400,000

          Note payable,  non-interest bearing, due monthly through September 30,
       1999, unsecured,  Company to issue 7,500 shares of stock in lieu of first
       payment of $15,000 that was due on June 15, 1999 85,000

      Note payable, interest at 10% per annum,
       due on demand, unsecured                                  6,821

      Note payable, non-interest bearing,
       due on demand, unsecured                                 25,624

      Note payable interest at 10% per annum,
       due on demand, unsecured                                 18,506
                                                           -----------
                                                               535,951
                                                           -----------
      Less current portion                                     335,951
                                                           -----------
                                                           $   200,000
                                                           ===========

         The  following  schedule  reflects  notes and loans  payable to related
parties at June 30:


<PAGE>F-18


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 9 - NOTES AND LOANS PAYABLE - (CONT'D)

      Note payable to officer,  non-interest  bearing  through  March 26,  1998,
       interest at 10% per annum from March 27, 1998, due
       on March 27, 2000, unsecured                        $  475,000

      Note payable, interest at 14% per annum,
       due on demand, unsecured                                 3,145

      Note payable to employee, non-interest
       bearing, due on demand, unsecured                       20,000

      Note payable, to director and officer,
       non-interest bearing, due on demand, unsecured          25,000

      Loan payable to officer, non-interest bearing,
       unsecured                                               85,000

          Note payable, non-interest bearing
           due on demand, unsecured                            30,000
                                                           ----------
                                                           $  638,145
                                                           ==========

         Required  payments of  principal  on notes and loan payable at June 30,
         1999, including current maturities, are summarized as follows:

                                        2000        974,096
                                        2001        200,000
                                                 ----------
                                                  1,174,096
                                                 ==========

         Interest  expense for the year ended June 30, 1999 and 1998 was $97,448
and $37,154, respectively.

         Accrued  interest of  $104,460 on the notes and loans  payable has been
         included in accrued expenses at June 30, 1999.

NOTE 10 - CONVERTIBLE PROMISSORY NOTES

         During  1999 and  1998,  the  Company  issued  $1,361,000  and  $37,500
         respectively,  of convertible promissory notes to investors.  Six notes
         totaling $75,000 and related interest of $3,455 was converted to common
         stock  in  October  1998  at  $1.00  per  share.   Thirty-eight   notes
         aggregating  $1,173,500  and related  accrued  interest of $13,922 were
         converted on June 30, 1999 at a price of $2.00 per share. Two remaining

<PAGE>F-19


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 10 - NOTES AND LOANS PAYABLE - (CONT'D)

         notes of $100,000 and $50,000  issued to one investor  during 1999 bear
         interest  at 6% per annum.  The  holder can  convert  the  amounts  due
         (including  interest calculated to the conversion date) to common stock
         of the  Company  at a price of $2.00 per share at any time  during  the
         term of the note.  Interest accrued to June 30, 1999 aggregated $1,981.
         Subsequent to year end, both of the outstanding  convertible notes were
         converted. (See Notes 15(C), 15(D) and 21(A))

NOTE 11 - RELATED PARTIES

         Certain  notes and salaries are owed to related  parties at June 30,
         1999. (See Notes 8 and 9).  Certain related parties took part in the
         acquisition of Diversified. (See Note 14(A))

         As discussed in the supplemental  disclosure to the  consolidated  cash
         flow  statements,  and Note 15,  certain  non-cash  issuances of common
         stock to related parties occurred during 1999.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

         (A) Year 2000 Issue

         The Company is aware of the issues associated with the programming code
         in existing  computer systems as the millennium (year 2000) approaches.
         The "year 2000"  problem is pervasive  and complex as  virtually  every
         computer  operation will be affected in some way by the rollover of the
         two-digit  year to 00.  The  issue is  whether  computer  systems  will
         properly recognize date-sensitive  information when the year changes to
         2000.  Systems that do not properly  recognize such  information  could
         generate erroneous data or cause a system to fail.

         Although  management  believes that none of the  Company's  systems are
         affected by this problem,  the Company could be impacted by the failure
         of other  companies  to timely  correct  their  computer  systems.  The
         Company's operations are dependent on the world wide telecommunications
         networks  including computer systems,  telephone systems,  and delivery
         systems. If any of these systems become inoperational, the Company will
         be directly and significantly affected. Management has not assessed the
         potential effect on the Company's earnings.



<PAGE>F-20


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 12 - COMMITMENTS AND CONTINGENCIES - (CONT'D)

         (B) Capital Lease Agreement

         The Company leases "Kiosk  equipment" under a lease agreement dated May
         26, 1994. Prior to the acquisition of Kiosk by the Company, Kiosk wrote
         down the Kiosk equipment to its net realizable value of zero pursuit to
         SFAS 121.

         Future minimum lease payments under the capital lease are as follows at
June 30, 1999:

         Minimum lease payments              $     2,512
         Less: interest                              (28)
                                              -----------
         Obligation under capital
          lease - current                    $     2,484
                                              ===========

         The Company made its last payment  required under its lease  obligation
         in April 1999. The Company subsequently financed its purchase option on
         the capital lease for six months at 12% annually.

         (C) Operating Lease Agreement

         The Company leases various  corporate  office spaces,  office equipment
         and furniture and three automobiles under operating leases.  The leases
         have remaining terms varying from the years 2000 through 2003.

         Future minimum lease  payments for the operating  leases are as follows
at June 30, 1999:

                           Years
                           Ending                   Amount

                           2000                     119,054
                           2001                      79,017
                           2002                      61,597
                           2003                         141
                                                  ---------
                                                  $ 259,809
                                                  =========

         Rent  expense  for the year  ended  June 30,  1999 and 1998  aggregated
$73,303 and $ 2,318, respectively.



<PAGE>F-21

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 12 - COMMITMENTS AND CONTINGENCIES - (CONT'D)

         (D) 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.

         (E) Consulting Agreements

         On January 1999 the Company entered into a consulting  agreement with a
         Canadian  corporation  relating to the acquisition of American  Website
         Customers.  The Agreement was terminated in July 1999 after payments to
         the consultant of $84,000.

         The  Company  entered  into two  agreements  for  financial  consulting
         services.  The Company  issued  1,200,000 and 900,000  shares of common
         stock to Asia Pacific Finance Group, LTD. and P.T. International, LTD.,
         respectively for these services.

NOTE 13 - REFUNDABLE COMMON STOCK

         Pursuant to the common stock subscription  agreements under the Private
         Placement (see Note 15(F)), the investor may, at their option,  request
         a full refund if the Company does not become quoted on the OTC Bulletin
         Board  by  a   stipulated   date  of  January  31,  1999  for  original
         subscription agreements and September 30, 1999 for amended subscription
         agreements.   Pursuant  to  the  Securities  and  Exchange   Commission
         Codification  of  Financial   Reporting   Policies   Section  211,  the
         refundable  common  stock  is  presented  as a  separate  item  between
         liabilities and equity. As of the date of this report,  the Company has
         received   cancellations  on  stock  subscriptions  for  72,000  shares
         resulting in a total  reduction  of proceeds  after  offering  costs of
         $129,600.

NOTE 14 - BUSINESS COMBINATIONS AND RECAPITALIZATION

         (A) Acquisition of Diversified

         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

<PAGE>F-22



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 14 - BUSINESS COMBINATIONS AND RECAPITALIZATION - (CONT'D)

         (A) Acquisition of Diversified - (CONT'D)

         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
         stock-holders 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 12(E)).
         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


<PAGE>F-23

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 14 - BUSINESS COMBINATIONS AND RECAPITALIZATION - (CONT'D)

         (C)  Acquisition of Software Company - (CONT'D)

         a wholly owned  subsidiary of the Company formed  specifically  for the
         purpose of acquiring  Kiosk.  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 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.

         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

         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.


<PAGE>F-24


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 14 BUSINESS COMBINATIONS AND RECAPITALIZATION - (CONT'D)

         (C)  Acquisition of Software Company - (CONT'D)

                                                       YEAR ENDED
                                                        JUNE 30,
                                                    1999         1998
                                                -----------  -----------
         Net revenue                            $   345,990  $   346,269
         Net loss                                (8,176,989)    (411,319)
         Net loss per share - basic and diluted       ($.27)       ($.02)
         Shares used in per share calculation -
          basic and diluted                      29,816,117   26,296,320

         (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 5)

NOTE 15 - STOCKHOLDERS' EQUITY

         (A) Retroactive Application of Recapitalization

         Pursuant  to the  merger  and  recapitalization  (see Note  14(B))  all
         capital stock shares and amounts and per share data in the accompanying
         consolidated financial statements for the years ended June 30, 1999 and
         1998 have been retroactively restated.



<PAGE>F-25


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)

         (B) Authorized Common and Preferred Stock - (CONT'D)

         AmeriCom has authorized  100,000,000  shares of common stock, par value
         $0.0001,  and 20,000,000  shares of preferred stock, 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 1999 and 1998  aggregating  $75,000  were  converted to
         common  stock of the Company at a price of $1.00 per share.  The shares
         issued  aggregated  78,455  including  3,455 shares  issued for accrued
         interest. (see Note 10)

         (D) Conversion of Promissory Notes to Common Stock

         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  aggregated  593,711  including  6,961 shares issued for
         accrued interest. (see Note 10)

         (E) Stock Issued As Compensation

         Although  the  Company  has  not  yet   established  any  formal  stock
         compensation  plans,  during 1999  AmeriCom  issued under what would be
         considered a nonvariable compensatory stock issuance, 180,000 shares of
         common  stock to certain key officers  and  employees.  The fair market
         value of the stock was considered to be equal to the private  placement
         price of $2.00 per share  and  accordingly  $360,000  was  recorded  as
         compensation expense in 1999.

         The Company  issued  1,200,000  (see Note 18(B)) and 900,000  (see Note
         12(E)) shares of common stock to Asia Pacific  Finance Group,  LTD. and
         P.T  International,   LTD.,   respectively  for  consulting   services.
         Accordingly,  the Company recorded  $3,150,000 in consulting expense in
         1999.

<PAGE>F-26



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)

         (F) Private Placements

         In December  1998 the Company  issued a Private  Placement  Memorandum,
         pursuant to Regulation S of the Securities Act of 1933, as amended,  to
         offer 152 units each consisting of 10,000 shares of the Company's Class
         A Common  Stock at a purchase  price of  $20,000  per unit or $2.00 per
         share.  A discount  of $0.50 per share was offered to  subscribers  who
         paid  100% with  their  subscription  agreement.  In  January  1999 the
         Company amended such Private Placement Memorandum to increase the units
         offered  to 452.  As of  January  29,  1999 the  Company  has  received
         subscriptions  for 2,050,000 shares  aggregating  $3,207,500,  at which
         point the  offering  was  closed.  The  Company's  net  proceeds  after
         placement discount,  commissions, and offering expenses were $2,948,064
         including related receivables of $414,000.  Certain  subscriptions were
         refunded as of June 30, 1999 (see Note 13)

         (G) - 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, 1999. 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,  1999 would have been
         increased to the pro-forma amounts indicated below.

         Net loss             As reported        $ (7,700,999)
                              Pro forma          $(10,218,905)
         Net loss per share   As reported        $      (0.26)
                              Pro forma          $      (0.35)

         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.

<PAGE>F-27


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)

         (G) - Stock Option Plan - (CONT'D)

         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
         14(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.


<PAGE>F-28


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)

         (G) - STOCK OPTION PLAN - (CONT'D)

         A summary of the Company's Plan as of June 30, 1999 and changes during
         the year is presented below:



                                                               Weighted-
                                              Number of         Average
                                               Shares       Exercise Price
                                              ------------   -------------
         Stock Options
          Balance at beginning of period                 -     $      -
          Granted                               10,326,126          1.96
          Exercised                                (43,545)         1.13
          Forfeited                                      -             -
                                                ----------     ---------
          Balance at end of period              10,282,581     $    1.96
                                                ==========     =========

          Options exercisable at end of period   1,210,081          1.55
          Weighted average fair value of
           options granted during the period                   $     .37
                                                               =========

         The following table summarizes information about options outstanding at
June 30, 1999:

                          Options Outstanding           Options Exercisable
                          -------------------           --------------------
                                  Weighted-
                       Number      Average    Weighted      Number     Weighted
    Range of         Outstanding  Remaining    Average   Exercisable   Average
    Exercise         at June 30, Contractual  Exercise   At June 30,   Exercise
      Price            1999        Life         Price     30, 1999      Price
    --------         --------  ------------   --------   ------------  --------

    $  2.20           935,000   Years  4.71   $  2.20           -      $    -
       2.00           810,000          9.05      2.00           -           -
       2.00           140,000          9.38      2.00           -           -
       2.00         1,615,000          9.55      2.00     292,000        2.00
$      0.35 - 2.00  1,724,092          9.63      1.69     605,092        1.11
       1.04 - 2.00  4,295,489          9.71      2.00     312,989        1.96
       2.00           272,000          9.80      2.00           -           -
       2.00             3,000          9.88      2.00           -           -
       2.00           488,000          9.96      2.00           -           -
                   ----------                           ---------
 0.35 - 2.20       10,282,581          9.17      1.96   1,210,081        1.55
                   ==========                           =========

         Through  the date of this  report  outstanding  stock  options  totaled
13,791,581.

<PAGE>F-29


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999


NOTE 16 -  CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

         During fiscal 1999,  97% of the Company's  total  revenues were derived
from sales to five customers.

         At June 30,  1999,  98% of  accounts  receivable  were  due  from  four
         customers.  (See  Note 2).  Financial  instruments,  which  potentially
         subject  the  Company  to  concentrations  of credit  risk,  consist of
         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 17 - INCOME TAXES

         Income tax expense (benefit) for the years ended June 30, 1999 and 1998
is summarized as follows:

                                                   1999        1998
                                                ----------  ----------
         Current:
          Federal                              $      -      $     -
          State                                   1,600            -

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

         The Company's tax expense  differs from the  "expected" tax expense for
         the years  ended  June 30,  1999 and 1998  (computed  by  applying  the
         Federal  Corporate  tax rate of 34  percent  to  income  (loss)  before
         taxes), as follows:
                                                        1999       1998
                                                  ------------  -----------
         Computed "expected" tax expense(benefit)  $(2,618,340)  $ (92,674)
         State income tax                                1,600           -
         Change in valuation allowance               2,618,340      92,674
                                                    ----------   ---------

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



<PAGE>F-30



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 17 - INCOME TAXES - (CONT'D)

         The tax effects of temporary  differences that give rise to significant
         portions  of  deferred  tax assets and  liabilities  at June 30, are as
         follows:
                                                           1999         1998
                                                         --------     --------
                  Deferred tax assets:
                  Net operating loss carryforward      $ 3,549,073   $ 637,176

                  Total gross deferred tax assets        3,549,073     637,176

                  Less valuation allowance               3,549,073     637,176
                                                       -----------   ---------

                  Net deferred tax assets              $         -   $       -
                                                       ===========   =========

         At June 30, 1999, the Company had net operating loss  carryforwards  of
         approximately $10,438,450 for income tax purposes,  available to offset
         future  taxable  income  expiring on various  dates  beginning  in 2009
         through 2024. The net operating loss carryfowards include approximately
         $863,400 of acquired  net  operating  loss  carryfowards  subject to an
         annual usage limitation of $70,650.

         The valuation allowance at July 1, 1998 was approximately $637,176. The
         net change in the  valuation  allowance  during the year ended June 30,
         1999 was an increase of approximately  $2,911,897 including an increase
         of $293,556 attributable to acquired net operating loss carryforwards.

NOTE 18 -  OPERATING AGREEMENTS

         (A) Agreement with Internet Store

         On September 3, 1998 the Company entered into a non-binding  memorandum
         of understanding  (the  "memorandum") with a large chain storefront and
         Internet retailer of sporting goods (the "Store").

         The  memorandum  stipulates  that the Company  shall receive 30% of the
         Store's net margin on sales as defined in the  agreement,  generated by
         consumers who have  "clicked"  through to the Store's Web site from the
         Company internet billboards.  In addition, the Company leases billboard
         space,  paid on a per  visitor  basis,  on the  Store's  Web site.  The
         Company has also agreed to allow the Store to be the preferred  sponsor
         on all of its customer's sports and school related Web sites and all of
         its customer's Web sites where the Store's vendors advertise.

 <PAGE>F-31



                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 18 -  OPERATING AGREEMENTS - (CONT'D)

         (B) Business Services Agreement

         On September 8, 1998 the Company entered into a twelve month agreement,
         subject to renewal,  with a British  Virgin  Islands  Corporation  (the
         "Corporation")   for  services   generally  related  to  financial  and
         management  advisory  services for the  arrangement  of a United States
         stock market listing through a reverse acquisition with a United States
         publicly held company and for assisting the Company in connection  with
         a  private  placement  offering  (See  Note  15).  Under  terms  of the
         agreement,  the Company shall pay to the Corporation:  (i) five percent
         management  success fees for the services of the private placement upon
         the  execution of each  subsequent  agreement  (see  below),  (ii) four
         percent of the  Company's  common stock  payable for the United  States
         stock market  listing  services,  payable upon execution of the reverse
         merger with a United States publicly held company.

         Per  management  of the  Company,  the five percent fee as noted in (i)
         above was verbally amended to ten percent.  The Company has been paying
         the ten percent fees to the Corporation as new subscription  agreements
         are received.  Upon closing of the reverse  merger (See Note 14(B)) the
         Corporation was issued  1,200,000  shares of the Company's common stock
         equivalent to four percent of the then total  outstanding  common stock
         of the Company. (See Note 15(E))

         (C) 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 $40,000 and has


<PAGE>F-32

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 18 -  OPERATING AGREEMENTS - (CONT'D)

         (C) Software Development Agreement - (CONT'D)

         $85,000 of minimum royalty payments due included in accrued expenses at
         June 30, 1999.

         (D) 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,   and  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,  (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.

         (E) 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 19 - 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  and  marketing
         support. No allocation of general corporate expenses has been allocated
         between the segments. Inter-company transactions have been eliminated

<PAGE>F-33


                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999

NOTE 19 - BUSINESS SEGMENTS - (CONT'D)

         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.

         1999                               Software   Internet  Consolidated
        -------------------------------   ----------  ---------  ------------
         Revenue                          $  143,217  $     374  $  143,591

         Operating Loss                      549,683   7,151,316  7,700,999

         Assets employed at end of year    1,893,244   2,565,315  4,458,559

         Depreciation and Amortization       269,495     138,335    407,830

         Capital Expenditures                 14,765   2,085,619  2,100,384

NOTE 20 - Going Concern

         As reflected in the accompanying financial statements,  the Company has
         had continuing losses, a working capital deficiency of $2,776,554,  and
         has been  delayed in  introducing  its  proprietary  technologies.  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  significant  revenues beginning in the second
         quarter of fiscal 2000 due to the  implementation of its business plan.
         The  company  has  received  a  commitment  for  $2.5  million  from an
         accredited  investor  contingent  upon the Company  obtaining a trading
         status on the NASD OTC Bulletin  Board.  (see Note 21(D)).  The Company
         anticipates  raising additional working capital through the issuance of
         debt or equity  securities or other vehicles such as  partnerships  and
         joint ventures.  Management believes that actions presently being taken
         to obtain additional funding provide the opportunity for the Company to
         continue as a going concern.

<PAGE>F-34

                       AMERICOM USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1999


NOTE 21  - SUBSEQUENT EVENTS

(A)      Convertible Notes Payable

         At  June  30,  1999  there  were  two  convertible   promissory   notes
         outstanding  aggregating  $150,000  (See Note 10). In July 1999 both of
         the convertible  promissory notes were converted to common stock of the
         Company at a price of $2.00 per share.  The shares issued  approximated
         75,990 including 990 shares issued for accrued interest.

         (B) Cancelled merger

         On July 1, 1999 the Company entered into a Merger Agreement and Plan of
         Reorganization  ("Merger") with a trading public shell.  The merger was
         subsequently terminated by mutual consent of the parties.

         (C) Merger Agreement

         On  August  2,  1999 as  amended,  the  Company  entered  into a Merger
         Agreement and Plan of  Reorganization  to acquire an Internet  Services
         Provider.  ("Target")  Pursuant  to the Merger,  the  Company  will (i)
         increase  authorized  capital stock to 120,000,000 of which  99,000,000
         shares shall be Class A common stock, 1,000,000 shall be Class B common
         stock,  and 20,000,000  shall be preferred  stock (ii) issue  3,500,014
         shares of the Company `s Class A common  stock in  exchange  for all of
         the  issued and  outstanding  common  stock of Target  and (iii)  issue
         1,500,000  options to purchase Class A common stock.  As of the date of
         this report, the Merger has not closed.

         (D) Subscription Agreement

         On July 29, 1999 the Company entered into a subscription agreement with
         an accredited  investor  providing 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  sales  price  to be held in  escrow,  and
         conditioned  release of the funds and  completion  of the sale upon the
         Company's  stock  being  listed for  trading  on the NASD OTC  Bulletin
         Board.