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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED: JANUARY 31, 1999
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OR
[ ]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(D)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 0-18349
                                  -------------

                               THE MNI GROUP INC.
            ---------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    NEW JERSEY                           22-2380325
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         (STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)            IDENTIFICATION NO.)

               10 WEST FOREST AVENUE, ENGLEWOOD, NEW JERSEY 07631
        -----------------------------------------------------------------
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 569-1188

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

TITLE OF EACH CLASS                    NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------                    -----------------------------------------

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

                                  COMMON STOCK
--------------------------------------------------------------------------------
                                (TITLE OF CLASS)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K/A. N/A

The number of shares outstanding of the Registrant's common stock is 4,085,709
(as of 11/30/99) The aggregate market value of the voting stock held by
nonaffiliates of the Registrant is $3,574,995.37 (as of 11/30/99).

              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes / / No / /

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


                       DOCUMENTS INCORPORATED BY REFERENCE
<PAGE>
                                     PART I

Item 1.  BUSINESS


GENERAL DEVELOPMENT OF BUSINESS-INTRODUCTION

The MNI Group ("The Company") has primarily been engaged in the development and
distribution of nutritional and health products for humans and pets. During the
past fiscal year, while conducting its existing business, the Company elected to
focus its efforts, on the development of a proprietary brand of specially
formulated phyto-estrogen and micronutrient nutritional supplements targeting
the various life cycles experienced by women and based on current nutritional
knowledge. The Company also began development of a woman's internet site
"Women's Health Network.com" which is intended to provide comprehensive health
care information for women on a broad range of conditions.

The Company's strategy is to help women make informed choices about their health
through providing information to help women evaluate their health choices. As
part of this overall strategy, the Company intends to sell its proprietary line
of nutritional supplements as well as other complementary products and services.
The Company believes its strategy is consistent with certain trends that are
emerging with respect to women's health.

INDUSTRY TRENDS AND STRATEGY

The Company believes that the markets for nutritional products for women are
expanding. By responding to these trends, the Company believes that it can
become a premier marketer of health and nutritional products for women and can
establish its Internet site as a widely recognized source of health information
and products.

o        The expanding roles of OB/GYNs and the Nurse Practitioners and
         Physician Assistants focused on women's health create a market
         opportunity for the Company, which the Company intends to leverage
         through a marketing program targeting these professionals;

o        The Company believes that there is a significant and growing population
         of women who are dissatisfied with their health care. The establishment
         of the Company's web site with detailed health information developed in
         conjunction with its Medical Advisory Board, is intended to provide
         women and their clinicians with enhanced awareness about the conditions
         affecting women and the treatment options available;

o        The Company believes that women are seeking an on-line forum where they
         can find credible information and purchase products that address their
         individual needs. The Company has designed its Internet site to
         include, among other components, this type of forum with from time to
         time hosted chat rooms (monitored by members of its Medical Advisory
         Board).

The Company has had a very limited operating history in the women's health care
arena on which to base an evaluation of its business and prospects.

                          The MNI Group - Form 10K - 1

<PAGE>

INDUSTRY OVERVIEW/NUTRITIONAL SUPPLEMENTS

The nutritional supplements industry is highly fragmented and intensely
competitive. It includes companies that manufacture and distribute products that
are generally intended to enhance the body's performance and well-being.
Nutritional supplements include vitamins, minerals, dietary supplements, herbs,
botanicals and compounds derived therefrom. Opportunities in the nutritional
supplements industry were enhanced by the enactment of the Dietary Supplement
Health and Education Act of 1994 ("DSHEA"). Under DSHEA, vendors of dietary
supplements are now able to educate consumers regarding the effects of certain
component ingredients. With certain limited exceptions, the sale of nutritional
supplements are not subject to FDA approval prior to sale. See "Government
Regulation" below.

Sales in the vitamin/supplement market in which the Company's products compete
totaled approximately 13.86 billion in 1998 (Nutrition Business Journal, Volume
IV. No.6, Industry Overview 1999) and is experiencing a double digit annual
growth rate, (N/Sight, The Hartman Group; Winter 1998-9.). The Company believes
the growth in the nutritional supplement market is driven by several factors,
including (i) the general public's heightened awareness and understanding of the
connection between diet and health, (ii) the aging population, particularly the
baby-boomer generation, which is more likely to consume nutritional supplements,
(iii) product introduction in response to new scientific research and (iv) the
nationwide trend toward preventive medicine.


WOMEN'S MARKET

The Company, in developing its new products, elected to focus on the women's
market because women are the primary household shoppers and are predominately
the primary health care decision-makers for their family.

Management believes that women are highly interested and informed about health
care issues, but are not as satisfied as men with the information or the level
of communication they receive from their health care provider. Additionally,
several studies have found that, in comparison to men, women generally receive
less thorough evaluations for complaints, less explanation in response to
questions and fewer interventions from their health care provider. In the face
of these conditions, many women have sought out alternative remedies.

It is estimated that 40 percent of women increasingly believe they need
supplements to ensure proper health. Part of this belief stems from
dissatisfaction with the cost and quality of treatment experienced within the
mainstream medical community as described above. In addition, increased
knowledge and exposure to the benefits of natural remedies has also helped drive
women's interest in the dietary supplement industry.

                          The MNI Group - Form 10K - 2
<PAGE>

While many of the women's products currently on the market are skewed toward an
older generation, manufacturers now recognize that as younger women become more
interested in maintaining their current good health status, the market may shift
toward total health nutrition products as well as intervention. The Company
believes that its branded line of products is broad enough to appeal to all
groups of women. Management is aware that this is a highly competitive market
and, as described below, believes it must target specific market niches in order
to successfully market its products.

MARKETING AND DISTRIBUTION STRATEGY

In order to take advantage of the burgeoning interest in women's health issues
and alternative treatment, the Company has developed a two-pronged marketing
strategy as well as its Internet strategy. The Company recognizes that the
success of its strategy will be dependent upon the quality of its products; its
ability to establish brand name recognition for its products; its ability to
continue to develop new products; and the ability of its management and the
people associated with the Company to implement and execute its strategy. There
is no certainty that the Company will be successful in implementing its
strategy. In addition, the market for nutritional supplements is extremely
competitive. There are a significant number of companies with substantially
greater resources and with established brands presently being marketed.

PROFESSIONAL MARKET - NURSE-PRACTITIONERS AND PHYSICIANS

As the amount of money spent on alternative health care continues to increase
health care professionals have recognized the importance of non-traditional
approaches to health care. Although ten years ago it would have been extremely
unusual to find physicians dispensing products, with the advent of managed care,
physicians have become acutely aware of opportunities to enhance their revenues
from their practices.

The principal professional groups to be initially targeted are Nurse
Practitioners and OB/GYN's.


NURSE PRACTITIONERS

NP's are registered nurses with advanced clinical and academic training at the
master levels. There are approximately 50,000 nurse practitioners, in the
country, 12,500 of whom own and operate their practice or clinic or run the
primary care segment of the physician's practice (THE NURSE PRACTITIONER. Market
Dynamics stats) Others work in managed care, hospitals and group practices. The
Nurse Practitioner has become a valuable resource for primary health care.
Through state certification, NPs may work autonomously from physicians and
provide comprehensive primary health care physical exams, diagnosis, and
appropriate pharmaceutical treatment. They account for more than 175 million
patient visits yearly, write over 200 million prescriptions for all drug
classes, and maintain their own liability coverage. The NPs incorporate
education, early detection and prevention of disease, reduction of risk
behaviors, and a philosophic approach to health in the treatment of their
patients. A recent survey finds that approximately 93% of Nurse Practitioners
use a form of alternative medicine in their practice. Their patient base
includes many of the health care consumers who are disenfranchised with
traditional medical care and seek a holistic approach. Government and
independent studies have shown that Nurse Practitioners provide a greater range
and quality of care than all other healthcare providers, appealing to those
consumers who tend to seek more personalized treatment with a focus on
prevention.

The Company believes that with the number of patient visits and the NP's
recognition of alternative health care as integral to a comprehensive program of
medical treatment, the NPs offer a very large potential market for the Company's
line of products.

The Company intends to target this market through trade shows, and by creating
alliances with institutions/hospitals that are either engaged in using NPs as
primary care providers or have on-site facilities specifically engaged in
dealing with woman's health issues. In this market, the Company intends to sell
its products under the brand name FEM CHOICE (R). The Company's strategy is to
build brand name recognition and become recognized for delivering the broadest
line of quality products for women. There are two organizations that serve as

                          The MNI Group - Form 10K - 3
<PAGE>

trade associations for NP's (American Nurse Practitioners and Nurse
Practitioners for Woman's Health). Each of these associations has a trade
monthly magazine with an aggregate of approximately 60,000 monthly subscribers.
The Company intends to promote its products through these publications with
particular emphasis on creating brand name recognition as well as promoting its
Internet site. The Company also has hired an NP whose primary job will be to
market the Company's line of products to the NPs. Initially the NP will focus on
NPs with practices in the NY/NJ metropolitan area. In addition, the Company will
participate in industry trade shows.


PHYSICIANS (OB/GYNS)

The Company believes that many women now use OB/GYNs as their primary care
physician and that as the OB/GYNs role expands its focus on women's overall
health, they will begin to recommend nutritional supplements to their patients,
In view of the fact that approximately 54% of approximately 57 million U.S.
(women between the ages of 35 and 69) are regularly visiting an OB/GYN the
Company believes targeting the OB/GYN offers significant potential. As of August
1998, there were approximately 29,000 Board certified OB/GYNs in the United
States. Initially the Company will market to the OB/GYNs through trade shows and
trade journals.


NETWORK MARKETING

Network Marketing covers any type of selling that uses independent
representatives working on commission and further permits the independent
representative to recruit other independent distributors and to draw a
commission from the sales of those recruits. In 1998, Network Marketing sales
attributable to personal care and wellness products were $4.38 billion
(Nutrition Business Journal (Volume IV, No. 6, Industry Overview 1999).

The Company has distribution relationships with several network marketing
groups, including Natural Health Options (NHO"). This group is focused on
growing its network marketing force in the African American market. NHO was
formed in late 1998 and to date has been selling the Company's preexisting line
of nutritional products described below. The Company anticipates that NHO will
begin to offer the FEM CHOICE products within the first quarter of 2000. There
is no assurance that NHO will be successful in developing its network marketing
program.

The Company is also working with other network marketing companies that are
similarly focused on developing certain market niches. There is no assurance
that this distribution strategy will be successful.

INTERNET STRATEGY

Management believes that the increasing focus on the alternative health market
for women provides a significant opportunity for the development of an Internet
strategy.

                          The MNI Group - Form 10K - 4
<PAGE>

MARKET OPPORTUNITY

The Company's proposed Internet site, womenshealthnetwork.com is intended to
enable consumers (principally women) to better manage their personal health with
comprehensive, relevant and timely content. The Company intends to establish its
network as a recognized and comprehensive source of healthcare information for
women and services on the Internet. The business model is to generate revenues
from a variety of sources. (i) e-commerce transactions, such as sales of
nutritional supplements (principally the Company's FemChoice branded line of
products) (ii) sharing of revenues with other companies that have formed
alliances with the Company to offer their products and services on the
womenshealthnetwork.com site.

Other sources of revenue may come from the sale of the Company's products (under
private label) to other Internet health sites. The Company will label all of its
products in both English and Spanish, and all information about the products
will be available in both languages. In addition, the Company believes that if
it achieves sufficient traffic, other opportunities include the offering of CME
(Continuing Medical Education) courses for professionals and using its database
(assuming visitors when registering at site elect to "opt in") for targeted
marketing programs.

OVERALL INTERNET BUSINESS STRATEGY

The Company's internet business strategy incorporates the following key
elements:

o        Establish the Womens Health Network.com brand so that consumers
         associate trustworthiness and credibility with our company (The Company
         also has obtained the domain name for Womens Health.com in SPANISH
         "SaludDeMujer");

o        Provide consumers with high quality peer reviewed healthcare
         information to attract users to Womens Health Network.com and promote
         their loyalty to the website;

o        Syndicate content through affiliates to promote traffic growth;

o        Develop an on-line healthcare community to allow users with similar
         health-related experiences to exchange information and gather news and
         knowledge in a secure, anonymous environment;

o        Provide consumers with unique features such as one that educates
         consumers on the interaction among various drugs and other substances;

o        Provide an attractive website designed to attract women;

o        Facilitate e-commerce transactions offered by merchants, manufacturers
         and service providers to a highly targeted community of
         health-conscious consumers, including dual labeling in Spanish to
         appeal to the Hispanic market which is a rapidly growing market in the
         U.S. for nutritional supplements;

o        User-friendly site, Internet sites are frequently designed with
         sophisticated Users and state of the art equipment in mind. Womens
         Health Network.com will be designed for the lowest common denominator
         both in machines and in expertise;

                          The MNI Group - Form 10K - 5
<PAGE>

o        The site will virtually navigate itself - utilizing point and click
         algorithms. The site will guide even the novice Web surfer to his or
         her destination, user will be able to navigate site without being
         constantly required to navigate through advertising and product
         offerings;

o        The site will provide personal tracking - If desired, a visitor to the
         site can enter his name and e-mail address. From that point forward,
         the site will recognize that visitor by name when they return; this
         feature goes a long way towards creating a user-friendly site.
         Eventually the registered visitor will be updated automatically with
         information pertinent to his or her concern;

o        Personal tracking will build us a targeted e-mail database;

o        The key aspect of the Company's projected site will be to provide the
         latest information on various alternative treatments for woman's health
         issues as opposed to the more common approach of providing more limited
         information with a focus on selling products; and

o        The site will provide access to members of the Company's Medical
         Advisory Board (as described below) during monitored chat room
         sessions. The site will also list information on upcoming educational
         events and lectures across the country.

MARKETING STRATEGY

The Company's site is intended to become a directory for women seeking health
information (a "hub" site). Hub sites have a characteristic that allows them to
be promoted inexpensively on the Internet. They are viewed as conduits for
information and not advertiser driven. The Company initially will not carry any
advertising on its site.

The Company's strategy will utilize a variety of on-line and off-line marketing
initiatives focused on building brand name awareness, drawing traffic to the
site maximizing the amount of traffic to the site and minimizing the cost of
acquiring visitors.

To increase brand visibility, the Company will initially concentrate on
promoting its website through an offline strategy of promoting its products and
website through targeted magazines for professionals such as OB/GYNs, and Nurse
Practitioners and through newsletter programs to targeted groups.

The Company also is seeking various alliances to link its site with companies
offering either complimentary products or services.

PRODUCTS

The Company has developed a total of 30 products (described below) to be offered
under its branded FEM CHOICE(R) label.


1.       MENOPAUSE (Capsule) A support and replenishing formula designed to help
         alleviate symptoms of hot flashes, irritability and mood swings.

                          The MNI Group - Form 10K - 6
<PAGE>

2.       PMS (Capsule) A synergistically balanced formula providing a natural
         approach to provide support for the relief of PMS and menstrual
         discomforts such as mood and water.

3.       OSTEO CARE (Capsule) This extensively researched nutrient has shown in
         clinical studies its ability to support bone health and increase bone
         mineral density.

4.       JOINT MAINTENANCE (Caplet) A unique blend of ingredients that work
         together to provide the building blocks needed to maintain healthy
         joint cartilage and decrease the pain associated with joint disease.

5.       CHOLESTEROL CONTROL FORMULA (CAPSULE) Contains all the ingredients that
         work together in your body to help maintain a healthy cholesterol level
         and keep your heart strong and healthy.

6.       WILD MEXICAN YAM EXTRACT (CAPSULE) Contains DHEA that converts to
         estrogen in healthy women.

7.       CANDIDA CARE (CAPSULE) This revolutionary formula contains the most
         researched, cutting-edge ingredients to provide nutritional support for
         yeast control

8.       GENINSTEIN 1000 MG (TABLET) Standardized soy Isoflavonoid extract. A
         nutrient dense "Phytohormone" (Plant Estrogens) that is associated with
         lower breast cancer rates.

9.       CRANBERRY CONCENTRATE (SOFTGEL) The natural and concentrated benefits
         of cranberries without the unnecessary sugars and colors found in
         juices. A definite need in acidifying urine and preventing bacteria
         from adhering to the bladder walls, a common female problem.

10.      NUTRITION PLUS (TABLET) A phytonutrient powerhouse! An advanced formula
         designed to help meet the nutritional dietary supplement needs of
         women.

11.      USRDA Calcium 1000 (WAFER) A uniquely engineered breakthrough in
         Calcium absorption and assimilation.

12.      SUPER FOLIC ACID (CAPSULE) 800 mcg of Folacin, a heart healthy
         supplement for women and a positive aid in reducing the risk of
         developing colon cancer in women by as much as 75%.

13.      INNER BEAUTY FOR HAIR, NAILS AND SKIN (TABLET) Nourishes, strengthens,
         and supplies the nutrients needed for healthy lustrous hair, glowing
         skin, and shiny nails.

14.      SUPER PRIMROSE OIL (CAPSULE) Three (3) times the G.L.A. content of
         regular Evening Primrose Oil: 1300 mg/135 mg G.L.A.

15.      PRO-GREENS (POWDER) An advanced Probiotic whole food, multi-nutrient,
         concentrated powder.

16.      THE HEALTHY NUT (SNACK) SALTED, UNSALTED AND HONEY ROASTED FLAVORS
         (three flavors). A natural snack high in protein and phytonutrients.

17.      KAVA KAVA (CAPSULE) Eases tension, relaxes muscles and helps contribute
         to a good night's sleep.

18.      FEM-GEST CREAM (CREAM) The natural cream for women; provides relief
         from vaginal dryness.

19.      PHYTO-TONIC (LIQUID) A true health formula dietary supplement.

20.      NATURAL PLANT ESTROGENS (TABLETS) The natural way to help women who
         have an estrogen imbalance.

21.      SUPER EPA (SOFTGEL)Omega 3 fatty acids consisting of Eicosapentaenoic
         Acid (EPA) and Docosahexaenoic Acid (DHA) provide benefits for the
         heart and circulatory system.

22.      OLIVE LEAF EXTRACT (CAPSULE) is similar in molecular configuration to
         well-established antioxidants such as the bioflavonoids, grape seed
         compounds, pycnogenol, soy isoflavones and green tea catechins.

23.      COLON ENHANCER (CAPSULE) contains natural, gentle fibers that help keep
         the entire gastrointestinal system functioning smoothly, while
         promoting the growth of helpful bacteria in the intestines.

24.      BLACK CURRANT SEED OIL (SOFTGEL) A comprehensive source of Omega 3 and
         Omega 6 (Essential Fatty acids). Important in the production of
         prostaglandins.

25.      CELLU-SHRINK (CAPSULE) is made from plant extracts and other dietary
         supplements. Works below the surface, where cellulite occurs.

26.      ESSENTIAL OILS (SOFTGEL) Provides Omega 3, 6 and 9 Essential Fatty
         Acids.

                          The MNI Group - Form 10K - 7
<PAGE>

27.      FEVERFEW (CAPSULE) Feverfew is derived from the Latin term for "chase
         away fevers." Provides anti-inflammatory properties.

28.      COLLAGEN PLUS (LIQUID) nutritionally supports body structure and
         provides energy. Enhances lean body mass.

29.      DONG QUAI (CAPSULE) Often called the "female ginseng", Dong Quai is an
         all-purpose herb used for a wide range of female complaints. This herb
         has been popular for centuries for its ability to invigorate and
         revitalize the body.

30.      USRDA CALCIUM 600 (WAFER) A delicious chewable wafer flavored with
         malted milk. Provides the calcium necessary to prevent bone loss in
         women.

OTHER PRODUCTS

The Company is seeking to create alliances with other companies for the purpose
of broadening the number of products that can be purchased at its website. The
products/services to be offered will be consistent with the Company's strategy
of providing women with quality information. For example, the Company is
presently negotiating with one company to offer a medical intervention weight
reduction program and with another company to offer a proprietary line of
cosmetic products for pregnant women. In both cases the Company, assuming it
reaches an agreement, would share (on an agreed basis) a percentage of the
revenues from sales of these products on its site.

There is no assurance that the Company will be able to successfully negotiate
agreements with other providers of products/services or that if successful
revenues from such agreements will be generated.

                             MEDICAL ADVISORY BOARD

As part of the Company's strategy to create brand awareness of its site, and
develop a reputation for quality healthcare information, it has formed a Medical
Advisory Board consisting of:

WENDY KLEIN, MD, FACP,  MEDICAL CHAIR
         Program Director of  the Dept. of Internal Medicine
                   Women's Health Residency Track.
         AssociateProfessor of Internal Medicine & OB/GYN Virginia Commonwealth
                  University, Richmond VA.

MARY DEKKER NETTLEMAN, MD
         Associate Dean for Primary Care
                  Virginia Commonwealth University, School of Medicine, Richmond
         Professor and Division Chair of General Internal Medicine
                  Virginia Commonwealth University, School of Medicine, Richmond

ELLEN SHAW DE PAREDES, MD
         Professor of Radiology, Chief of Breast Imaging Section
                  Medical College of Virginia, Richmond
         President, Virginia chapter of the American College of
                  Radiology-current
         Author of:  ATLAS OF FILM - SCREEN MAMMOGRAPHY
                  Urban and Schwarzenberg Publishing Co., Baltimore, Maryland.
                         1988, 364 pages
                  ATLAS OF FILM - SCREEN MAMMOGRAPHY, 2nd Edition
                  Williams and Wilkins, Baltimore. 1992, 650 pages

                          The MNI Group - Form 10K - 8
<PAGE>

GEORGE L. BLACKBURN, MD, PH.D.
         Associate Professor of Surgery
                  Harvard University, School of Medicine
         Director, Nutritional Support Services
                  New England Deaconess Hospital
         Director, Nutrition, Metabolism Lab
                  Cancer Research Institute
                  New England Deaconess Hospital

PETER D. VASH, MD, M.P.H.
         Assistant Clinical Professor of Medicine,  UCLA Medical Center
         Board Certified Internist
         Specialist in eating Disorders and Endocrinology

ROBERT STENSON, MD
         One of 750 Gynecological Oncologists worldwide
         American College of Obstetricians and Gynecologists,
                  Diplomate (F.A.C.O.G.)
         Director of Gynecological Oncology at Holy Name Hospital, Teaneck, NJ

RALPH E. MARCUS, MD
         Chief of Rheumatology and Medical Director, Osteoporosis Program
                  Hackensack University Medical Center, Hackensack, NJ
         Chief of Rheumatology and Medical Director, Osteoporosis Program
                  Women's Outpatient Center, Holy Name Hospital, Teaneck, NJ

FRANK E. VOGEL, PH.D., MD
         Chief, Interventional Radiology, Holy Name Hospital, Teaneck, NJ
         Assistant Professor of Radiology
                  New York University Medical Center, New York, NY


ALEXIS WILSON, R. N.-C., B.S.N., M.S.N., W.H.N.P.
         Director, Women's Outpatient Center, Holy Name Hospital, Teaneck, NJ

ISAAC GREENBERG, PH.D.

              Instructor, Dept. of Psychiatry (Psychologist)

                  Harvard Medical School

              Department of Psychiatry

                  Beth Israel Deaconess Medical Center, Boston, MA

LINDA ARPINO, M.A., C.D.N., R.D.
         Community Nutritionist and Professor
                  New York State Dietetic Board of Directors


GARY D. WASSERMAN, MD
         Attending Urologist, Englewood Hospital and Medical Center,
               Englewood, NJ
         Attending Urologist, Holy Name Hospital, Teaneck, NJ

ANDREW M. SPECTOR, DMD, FAGD, FICOI
         Clinical Associate Professor, Surgical and Prosthetic
               Implantology Program
                  New York University, New York, NY

FAYE E. WILLIAMS, ESQ., PH.D.
         President & CEO of Natural Health Options, Inc., Washington, DC
         Former Counsel to the US Congress

                          The MNI Group - Form 10K - 9
<PAGE>

CYNTHIA STAMPER GRAFF
         President and CEO of Lindora, Inc., Costa Mesa, CA
         Founder of the Lean for Life Foundation, a non profit organization that
         promotes obesity research, educational programs, and funds weight
         control services to selected low income, morbidly obese, men, women and
         teenagers who meet the criteria.

The Company selected the members of the Advisory Board to take advantage of the
professional's extensive experience in dealing with various women's health
issues. Each of the members of the Medical Advisory Board have executed a letter
agreement with the Company pursuant to which they agree to serve on the Medical
Advisory board. As an inducement to each of the members of the Board, they
received option grants totaling between 10,000 and 50,000 options.


MANUFACTURING

The Company does not have a manufacturing facility, but relies on third parties
to manufacture its products. The third party manufacturers are responsible for
receipt and storage of raw material production and packaging and labeling of
finished goods. At present, the Company is dependent upon four manufacturers for
the production of all of its products. To the extent the manufacturers should
discontinue their relationship with the Company, the Company's sales could be
adversely impacted.


COMPETITION

The market for nutritional supplements and Internet Sites concentrating on
health issues is highly competitive with few barriers to entry.

The Company will be competing with many health sites and nutritional supplement
manufacturers as well as specialty health retailers, drug stores, supermarkets,
and mass merchandisers. Many of the Company's potential competitors have
significantly greater marketing and financial resources. The Company's Internet
site, womenshealthnetwork.com, will compete with other Internet sites focused on
women's health as well as sites focused on health care issues in general. While
the Company believes the health information market is large enough to support
many companies, the Company's ability to succeed will be dependent upon
providing compelling Internet content to attract users and develop brand name
recognition. The principal factors in attracting users will be dependent upon
the quality and depth of the information on the site and the ability to attract
users through various marketing approaches.

INTELLECTUAL PROPERTY

The Company regards the protection of copyrights, trademarks and other
proprietary rights that it may own or license as material to its future success
and competitive position. The Company intends to rely on a combination of laws
and contractual restrictions such as confidentiality agreements to establish and
protect its proprietary rights. Laws and contractual restrictions, however, may
not be sufficient to prevent misappropriation of proprietary rights or deter
others from independently developing products that are substantially equivalent
or superior.


PATENTS. The Company owns four issued patents for its collagen Hydrolysate
product. These are for (1) METHOD OF PROVIDING HIGH-PROTEIN NUTRITION BY THE
ORAL ADMINISTRATION OF A PREDIGESTED PROTEIN COMPOSITION, (2) METHOD OF
COMPOSITION FOR PREVENTING NUTRITIONAL DEFICIENCY, (3) METHOD OF TREATING
NUTRITIONAL DEFICIENCY DURING CARDIAC CACHEXIA, DIABETES, HYPOGLYCEMIA,
GASTROENTEROLOGY, LIPID, CELL GLYCOGEN AND KERATIN RELATED SKIN CONDITIONS AND

                          The MNI Group - Form 10K - 10
<PAGE>

ALCOHOLISM, and (4) METHOD OF TREATING OBESITY BY THE ORAL ADMINISTRATION OF A
PREDIGESTED PROTEIN COMPOSITION. Some of the products that the Company offers
incorporate patented technology owned by others, but most of the Company's
products are not protected by patents.

COPYRIGHTS. The Company has applied for copyright registration for the Womens
Health Network.com logo and the FemChoice brand.

TRADEMARKS AND DOMAIN NAMES. The Company owns the FemChoice and Womens Health
Network.com, womenshealthnetwork.com, womanshealthnetwork.com, femchoice.com,
whnnetwork.com, menshealthnetwork.com, kidshealthnetwork.com and
saluddemujer.com. domain names. The Company has registered the .cc for these
names.

Under current domain registration practices, no one else can obtain an identical
domain name, but can obtain a similar name or the identical name with a
different suffix such as "net" or "org", The relationship between regulations
governing domain names and the laws protecting trademarks and similar
proprietary rights is evolving. Internet regulatory bodies regulate domain names
and the present regulations may be subject to change.

In addition, the regulation of domain names in the United States and in foreign
countries is subject to change. There are plans to establish additional
top-level domain names, appoint additional domain name registrars or modify the
requirements for holding domain names. As a result, the Company may not acquire
or be able to maintain its domain names in all of the countries in which it
intends to conduct business, and the Company could be unable to prevent third
parties from acquiring domain names that infringe or otherwise decrease the
value of its domain names or trademarks.

While the Company intends to take the actions that it believes are necessary to
protect its proprietary rights, it may not be successful in doing so. In
addition, the Company may be dependent on the owners of the proprietary rights
it licenses to protect those rights. Moreover, the Company and its licensors may
face challenges to the validity and enforceability of proprietary rights and may
not prevail in any litigation regarding those rights.

The Company is also subject to the risk of adverse claims and litigation
alleging infringement of the proprietary rights of others. While the Company is
not currently involved in any such claims, there can be no assurance against
future infringement claims by third parties. The resolution of any such
infringement claims may result in protracted and costly litigation, regardless
of the merits of such claims. Moreover, any such resolution may require the
Company to obtain a license to use those proprietary rights or possibly to cease
using those rights altogether. Any of these events could have a material adverse
effect on the Company's business, financial condition and results of operations.


TECHNOLOGY

The Company will rely upon third parties for its hardware and software. It is
the Company's intention to employ existing software to manage its proposed
e-commerce business.

                          The MNI Group - Form 10K - 11
<PAGE>

GOVERNMENT REGULATION

The formulation, manufacture and labeling of the Company's products are subject
to regulation by one or more federal agencies, including, principally, the Food
and Drug Administration ("FDA"). These activities are also regulated by various
agencies of the states and localities in which the Company's products are sold.

Principally through the efforts of the dietary supplement industry, on October
25, 1994, the Dietary Supplement Health and Education Act of 1994 was signed
into law. The law amends the Federal Food, Drug, and Cosmetic Act and, in the
judgment of the Company, is favorable to the dietary supplement industry. First
and foremost, the legislation creates a new statutory class of "dietary
supplements". This new class includes vitamins, minerals, herbs, amino acids and
other dietary substances for human use to supplement the diet. A dietary
supplement which contains a new dietary ingredient, one not on the market as of
October 15, 1994, will require evidence of a history of use or other evidence of
safety establishing that it will reasonably be expected to be safe, such
evidence to be provided by the manufacturer or distributor to the FDA before it
may be marketed. The legislation also recognizes the need for the dissemination
of information about the link between nutrition and health and provides that
publications, which are not false and misleading and present a balanced view of
available scientific information on a dietary supplement, may be used in
connection with the sale of dietary supplements to consumers. Among other
changes, the new law prevents the further regulation of dietary ingredients as
"food additives" and allows the use of statements of nutritional support on
product labels and in other labeling.

On September 23, 1997, the FDA issued final new regulations to implement the
1994 legislation. Among other things, these new regulations establish a
procedure for dietary supplement companies to notify the FDA about the intended
marketing of a new dietary ingredient or about the use in labeling of statements
of nutritional support. The regulations also establish a new format for
nutrition labeling on dietary supplements. The new format became mandatory on
March 23, 1999, and the Company revised all of its dietary supplements labels to
be in compliance by that date.

The FDA and other federal authorities are reviewing alternative approaches to
assure the safety of vitamins, minerals, herbals and other products sold as
dietary supplements. Increased regulatory oversight could subject us and other
manufacturers and distributors of dietary supplements to increased production
and compliance costs and possibly require capital expenditures. Future
regulation affecting dietary supplements could result in a recall or
discontinuance of certain products.


EMPLOYEES

The Company presently has 4 employees. To support future anticipated growth, the
Company expects to hire additional employees, especially in the area of sales
and marketing.


RECENT DEVELOPMENT

In November, the Company completed a private placement for principal amount $
1,521,250 of 10% Convertible Debenture ("Debenture") due October 1, 2000. Under
the terms of the Debentures, the principal dollar amount is convertible by the
holders at $.075 per share and said Debentures must be converted upon the
Company amending its Certificate of Incorporation to increase the authorized
number of shares to not less than 35,000,000. The funds received by the Company

                          The MNI Group - Form 10K - 12
<PAGE>

will be adequate to conduct operations over the next 12 months, however, in
order to fully implement the Company's strategy, the Company intends to seek
further capital in the first quarter of 2000. There can be no assurance the
Company will be successful.


PREVIOUS BUSINESS OPERATIONS

As previously noted during the fiscal year ending January 31, 1999 and
continuing through the first three quarters of 1999 (ending October 31, 1999)
the Company has generated limited revenues through the sale of existing
products, including pet products, home remedy products and nutritional
supplements.


Commencing in the first quarter of 2000, the Company intends to focus on the
sale of its new line of branded products FEM CHOICE(TM) although it will
continue to sell its other products if ordered. The Company will not expend any
funds to market its preexisting products.


FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

                           Inapplicable.


Item 2.  PROPERTIES

The principal executive offices of the Company are located at 10 West Forest
Avenue, Englewood, New Jersey 07631, where it occupies approximately 7,500
square feet at an annual rental of $60,000 under a lease expiring in December
1999. The Company has renewed the lease for a period of five years commencing
January 1, 2000. The annual rent for the initial three years is $65,625 and for
the fourth and fifth year of the lease is $67,500.

Approximately 2,500 square feet of this facility house the Company's
administrative offices with the balance utilized for shipping and warehousing.
The Company presently subleases a portion of its space to non-affiliated
persons. The Company also has arrangements with co-packers pursuant to which
such suppliers manufacture, package and ship the Company's products to major
customers. The Company believes its present facility is adequate for its present
and reasonably foreseeable future operational needs.



Item 3.  LEGAL PROCEEDINGS

                  None.


                          The MNI Group - Form 10K - 13
<PAGE>

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

There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended January 31, 1999.


                          The MNI Group - Form 10K - 14
<PAGE>

PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

         (a)  The Company's Common Stock is currently traded over NASDQ's
              Electronic Bulletin Board. Information as to the range of high and
              low bid quotations for the Company's Common Stock, for the periods
              indicated, as furnished by national Quotation Bureau incorporated,
              is set forth below:

                                                     BID
                                    -----------------------------------------
THREE MONTHS ENDED                  HIGH                                LOW

April 30, 1997                      .50                                 .1875
July 31, 1997                       .75                                 .3125
October 31, 1997                    .5625                               .375
January 31, 1998                    .3125                               .3125
April 30, 1998                      .40                                 .20
July 31, 1998                       .19                                 .125
October 31, 1998                    .09                                 .062
January 31, 1999                    .062                                .062

The above bid quotations represent prices between dealers and do not include
actual retail mark-ups, mark-downs or commissions and may not represent actual
transactions.

         (b)  As of November 30, 1999, there were approximately 50 record
              holders of the Company's Common Stock.

         (c)  The Company has not declared any cash dividends on its Common
              Stock and it has no intention to pay cash dividends in the
              foreseeable future.

                          The MNI Group - Form 10K - 15
<PAGE>

Item 6.   SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected historical consolidated financial data for
the company and its wholly owned subsidiaries. This data is qualified in its
entirety by the more detailed consolidated financial statements of the company
included elsewhere herein. The following selected consolidated financial data
were derived from audited consolidated financial statements of the company and
should be read in conjunction with the statements included elsewhere herein.

STATEMENTS OF OPERATIONS DATA:
<TABLE>
<CAPTION>

                                                                                  YEAR ENDED JANUARY 31,
                                                       ------------ -----------  ----------  ---------- -----------
                                                           1999        1998         1997        1996       1995
                                                       ------------ -----------  ----------  ---------- -----------
<S>                                                       <C>       <C>          <C>         <C>        <C>
Revenues:
Sales, net                                                $939,700  $  932,900   $1,032,900  $1,320,500 $  938,300
Cost of sales and operating expenses                       982,000   1,091,400    1,028,700   1,294,200  1,210,300
Operating income (loss)                                    (42,300)  ( 158,500)       4,200      26,300   (272,000)
Other income (expense)                                     (40,100)    (22,600)     (20,400)    (21,000)    39,500
(loss) from continuing operating before income tax         (82,400)   (181,100)     (16,200)      5,300   (232,500)
Provision for income taxes                                      --          --           --          --         --
Income (loss) from continuing operations item              (82,400)   (181,100)     (16,200)      5,300   (232,500)
Income (loss) from discontinued operations                   15,700    (25,500)          --          --         --
Net income (loss)                                          (66,700)   (206,600)     (16,200)      5,300   (232,500)
Net (loss) per share:
        Income (loss) from discontinued operations              --          --           --          --         --
        Income (loss) per share                                 --          --           --          --         --
        (Loss) from continuing operations                 ($ 0 .02)   ($  0.05)    ($    --)    ($   --)  ($ 0 .06)
        Income (loss) per share                           ($  0.01)   ($  0.05)    ($    --)    ($   --)  ($ 0 .06)
</TABLE>

BALANCE SHEET DATA:

                                          YEAR ENDED JANUARY 31,
                       ---------  ---------  ---------    ---------  ---------
                          1999      1998        1997        1996       1995
                       ---------  ---------  ---------    ---------  ---------
Working capital        $(585,300) $(564,100) $(295,500)   $(254,000) $(296,100)
Total assets             148,200    667,000    230,600      258,000    187,600
Long-term debt            75,000     75,000    113,700      146,400    107,100
Stockholders' equity    (796,200)  (429,500)  (550,400)    (544,200)  (549,500)

                          The MNI Group - Form 10K - 16
<PAGE>

Item 7: Management's Discussion And Analysis Of Financial Condition And Results
        Of Operations

                                JANUARY 31, 1999

RESULTS OF OPERATIONS

     1999 - 1998

The results of operations for the year ended January 31, 1999 and 1998 do not
include the operations of K.O.S. Industries, Inc. ("KOS"), which was acquired as
a wholly owned subsidiary on August 1, 1997. This transaction was reversed on
December 31, 1998 by mutual agreement of both parties.

The Company had an operating loss from continuing operations of $82,400 and a
net loss of $66,700 for the year ended January 31, 1999, as compared to an
operating loss of $181,100 and a net loss of $206,600 for the prior year. The
decrease in loss was primarily due to a decrease in general and administrative
expenses of $82,300.

Sales for the year ended January 31, 1999 increased by $6,800 or less than 1%
from $932,900 to 939,700. Cost of sales decreased by $28,200 or by 5% from
$555,900 to $527,700. This resulted in an increased gross profit margin from 40%
to 44%. Selling, general and administrative expenses decreased 15% from $535,500
to $453,200. This decrease was primarily due to a reduction in professional fees
and other costs associated with the KOS acquisition and incurred in the year
ended January 31, 1998.

The Company's loss from continuing operations decreased from $181,100 to $82,400
or approximately 55%. The loss from discontinued operations was $25,500 for the
year ended January 31, 1998 as compared to a gain of $15,700 for the current
year. The Company's net loss decreased to $66,700, or $.01 per share the year
ended January 31, 1999 as compared to a loss of $206,600 or $.05 per share in
the prior year.

     1998 - 1997

The results of operations for the year ended January 31, 1998 do not include
those of KOS for the reasons previously outlined.

The Company had a loss from continuing operations of $181,100 for the fiscal
year ended January 31, 1998 as compared to a loss of $16,200 for the year ended
January 31, 1997 and a net loss of $206,600 for the year ended January 31, 1998
as compared to a loss of $16,200 for the prior year. This loss was primarily due
to a decrease in sales and increased costs incurred in connection with the KOS
merger.

Sales for the year ended January 31, 1998 were $932,900 as compared to sales of
$1,032,900 in the prior year, a decrease of 10%. Costs of sales decreased
$44,800 from $600,700 in fiscal year ended 1997 to $555,900 in fiscal year end
1998. Correspondingly, the gross profit decreased to $377,000 or 40% of sales in
fiscal 1998 from a gross profit of $432,200 or 42% in fiscal year ended 1997.
The decrease in gross profit percentage is primarily due to decreased sales and
increased manufacturing costs.

Selling, general and administrative costs increased to $535,500 in fiscal 1998
from $428,000 in fiscal year ended 1997. This represented an increase of 25% in

                          The MNI Group - Form 10K - 17
<PAGE>

these costs. The increase was due to costs associated in conjunction with the
acquisition of KOS, and other increased costs, such as increase in rent expense
due to the loss of a subtenant.

The Company had a net loss of $206,600 or $.05 per share as compared to a net
loss of $16,200 or $.- per share for the year ended January 31, 1997.

     1997 - 1996

The Company had an operating income of $4,200 and a net loss of $16,200 for the
twelve months ended January 31, 1997. Sales decreased $287,600 from $1,320,500
to $1,032,900 which was primarily due to a reduction in sales to its major
customer. By increasing its profit margin and reducing its selling, general and
administrative expenses, the Company was able to show a small operating profit.

Sales for the twelve months ended January 31, 1997 decreased 21.7% to $1,032,900
from $1,320,500 for the comparable period in 1996. Cost of sales decreased 26.5%
to $600,700 or 58.2% of sales from $817,300 or 61.9% of sales for the comparable
1996 period. Gross profit margins increased to 41.8% from 38.1% due mainly to
increased sales through a major home shopping channel. Selling, general and
administrative expenses decreased 9.3% to $428,000 from $472,000 because of a
continued effort by the Company to control costs. The Company recognized
operating income of $4,200 and a net loss of $16,200 or $- per share, as
compared to its incurrence of an operating income of $26,300 and a net income of
$5,300 or $- per share for the twelve months ended January 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

At January 31, 1999 the Company had cash of $5,000 as contrasted with cash of
$36,900 at January 31, 1998.

In January 1998 the Company obtained an unsecured line of credit from its bank
in the amount of $50,000. The Company's chief operating officer has loaned the
Company $196,300.

Subsequent to the balance sheet date, the Company sold $1,521,250 of a
convertible debenture (convertible at $0.075 per share) (the "Debentures") to
certain accredited investors. The Company, as more fully described under
"Business," is utilizing the proceeds to develop an internet site dedicated to
women's health and a line of nutritional supplements for women.

In addition, the Company has made an assessment of its Y2K computer needs. The
Company's accounting records are either manually processed or maintained on
software that is already Y2K compliant. No additional costs are expected to be
incurred in order to address this issue.

The Company is seeking joint ventures with developers of other type of products.
This will generate additional revenue for the Company without substantially
increasing its overhead. The Company is continually seeking to expand both its
product line and customer base.

There is no assurance that the Company will be able to obtain sufficient cash to
fund its operations. Management believes that the Company requires additional
financing to conduct its operations on a profitable basis and to develop and
market additional products and programs.

THIS FORM 10-K AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY THE
COMPANY OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THOSE STATEMENTS INCLUDE STATEMENTS
REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY AND MEMBERS
OF ITS MANAGEMENT, AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE
BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING

                          The MNI Group - Form 10K - 18
<PAGE>

STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY
KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE
STATEMENT FOR FORWARD-LOOKING STATEMENTS SET FORTH BELOW. THE COMPANY UNDERTAKES
NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED
ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE
OPERATING RESULTS OVER TIME.


                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
                        SAFE HARBOR COMPLIANCE STATEMENT
                         FOR FORWARD-LOOKING STATEMENTS

In passing the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"), Congress encouraged public companies to make "forward-looking statements"
by creating a safe harbor to protect companies from securities law liability in
connection with forward-looking statements. The Company intends to qualify both
its written and oral forward-looking statements for protection under the Reform
Act and any other similar safe harbor provisions.

"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, prospective investors are urged not to place undue
reliance on written or oral forward-looking statements of the Company. The
Company undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements to reflect future developments. In
addition, the Company undertakes no obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over time.

The Company provides the following risk factor disclosure in connection with its
continuing effort to qualify its written and oral forward-looking statements for
the safe harbor protection of the Reform Act and any other similar safe harbor
provisions. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include the following:

         THE COMPANY HAS RECENTLY INSTITUTED ITS NEW BUSINESS STRATEGY. ITS
BUSINESS MUST EXPAND FOR IT TO ATTAIN PROFITABILITY.

The Company has only recently commenced the implementation of its new business
strategy. The Company may not successfully complete the transition to successful
operations or profitability pursuant to its new strategy. The Company may
encounter problems, delays and expenses in implementing its new business
strategy. These may include, but not be limited to, unanticipated problems and
additional costs related to marketing, competition and product acquisitions and
development. These problems may be beyond the Company's control, and in any
event, could adversely affect the Company's results of operations. See "Selected
Consolidated Financial Information" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

                          The MNI Group - Form 10K - 19
<PAGE>

         THE COMPANY HAS A BROAD BUSINESS MODEL THAT WILL REQUIRE THE
DEVELOPMENT OF MANY DIFFERENT AREAS. IF THE COMPANY FAILS TO IMPLEMENT ANY OF
THE KEY ELEMENTS OF ITS BUSINESS PLAN, ITS BUSINESS MAY NOT SUCCEED.

The Company has embarked on an ambitious plan to provide products, educational
programs and support systems to women to help them make better decisions
regarding their health care. There is a limited market awareness of the Company
and the products and services it offers. To be successful, the Company must
continue to develop, coordinate and balance various elements of its business.
Among other things, the Company must:

         -        generate market demand for the products it offers, prepare and
                  disseminate information about women's health care and
                  establish the FEM CHOICE brand,

         -        convince OB/GYNs and the nurse practitioners and physician
                  assistants focused on women's health to recommend the products
                  the Company offers,

         -        maintain and obtain rights to market and distribute products
                  and integrate them into its business, and

         -        augment sales and marketing and manage different distribution
                  channels for the products it offers.

If the Company fails to implement any of these key elements of its business
plan, its business may not succeed.

         IF WOMEN DO NOT USE AND THEIR CLINICIANS DO NOT RECOMMEND THE PRODUCTS
THE COMPANY OFFERS, THE COMPANY MAY EXPERIENCE SIGNIFICANT LOSSES.

The products the Company offers may not achieve market acceptance. The market
acceptance of these products will depend on, among other factors, their
advantages over existing competing products, and their perceived efficacy and
safety.

The Company's business model assumes that its marketing programs and the growth
in its target market will result in increased demand for the products it offers.
If its marketing programs do not succeed in generating a substantial increase in
demand for its products, the Company will be unable to realize its operating
objectives. In addition, the Company's business model seeks to build on the
expanding roles of OB/GYNs and the nurse practitioners and physician assistants
focused on women's health, and its marketing efforts are concentrated on this
group. If the clinicians the Company targets do not recommend the products the
Company offers or if women do not regularly use these products, the Company may
experience significant losses and its business will be adversely affected.
Moreover, if the Company fails to develop the market-wide brand identity for FEM
CHOICE that it is seeking, its business will be adversely affected.

         THE COMPANY'S QUARTERLY FINANCIAL RESULTS ARE LIKELY TO FLUCTUATE
SIGNIFICANTLY AND MAY FAIL TO MEET OR EXCEED THE EXPECTATIONS OF SECURITIES
ANALYSTS OR INVESTORS, WHICH COULD CAUSE THE PRICE OF THE COMPANY'S STOCK TO
DECLINE SIGNIFICANTLY.

The Company's quarterly operating results may fluctuate significantly based on
factors such as:

         -        changes in the acceptance or availability of the products it
                  offers,

         -        the timing of new product offerings, acquisitions or other
                  significant events by the Company or its competitors,


                          The MNI Group - Form 10K - 20
<PAGE>

         -        regulatory approvals and legislative changes affecting the
                  products it offers or those of its competitors,

         -        the timing of expenditures for the expansion of its
                  operations, and

         -        general economic and market conditions and conditions specific
                  to the health care industry.

Due to the Company's short operating history pursuant to its new business
strategy and the difficulty of predicting demand for the products it offers, the
Company is unable to accurately forecast its revenues. Accordingly, the
Company's operating results in one or more future quarters may fail to meet the
expectations of securities analysts or investors, which could have a material
adverse effect on the Company's stock price.

         THE HEALTH CARE INDUSTRY AND THE MARKETS FOR THE PRODUCTS THE COMPANY
OFFERS ARE VERY COMPETITIVE. THE COMPANY MAY NOT BE ABLE TO COMPETE EFFECTIVELY,
ESPECIALLY AGAINST ESTABLISHED INDUSTRY COMPETITORS WITH SIGNIFICANTLY GREATER
FINANCIAL RESOURCES.

The health care industry is highly competitive. Many of the Company's
competitors are large well-known health care companies that have considerably
greater financial, sales, marketing and technical resources than the Company.
Additionally, these competitors have research and development capabilities that
may allow them to develop new or improved products that may compete with product
lines the Company markets and distributes. In addition, competitors may elect to
devote substantial resources to marketing their products to women and may choose
to develop educational and information programs like those developed by the
Company to support their marketing efforts. The Company's business, financial
condition and results of operations could be materially and adversely affected
by any one or more of such developments.

Competition for the self-care products the Company offers is significant. These
products compete against a number of well-known brands of similar products. The
Company's Internet site, competes with other Internet sites focused on women's
health as well as sites focused on health in general. The Company's failure to
adequately respond to the competitive challenges faced by the products it offers
could have a material adverse effect on its business, financial condition and
results of operations.

         IF THE COMPANY DOES NOT SUCCESSFULLY MANAGE ANY GROWTH IT EXPERIENCES,
IT MAY EXPERIENCE INCREASED EXPENSES WITHOUT CORRESPONDING REVENUE INCREASES.

The Company's business plan will, if implemented, result in rapid expansion of
its operations. This expansion may place a significant strain on management,
financial and other resources. It also will require the Company to increase
expenditures before it generates corresponding revenues. The Company's ability
to manage future growth, should it occur, will depend upon its ability to
identify, attract, motivate, train and retain highly skilled managerial,
financial, business development, sales and marketing and other personnel.
Competition for these employees is intense. Moreover, the addition of products
or businesses will require the Company's management to integrate and manage new
operations and an increasing number of employees. The Company may not be able to
implement successfully and maintain its operational and financial systems or
otherwise adapt to growth. Any failure to manage growth, if attained, would have
a material adverse effect on the Company's business.

         THE COMPANY IS DEPENDENT ON A LIMITED NUMBER OF SOURCES OF SUPPLY FOR
MANY OF THE PRODUCTS IT OFFERS. IF ONE OF IT SUPPLIERS FAILS TO SUPPLY ADEQUATE
AMOUNTS OF A PRODUCT THE COMPANY OFFERS, THE COMPANY'S SALES MAY SUFFER AND IT
COULD BE REQUIRED TO ABANDON A PRODUCT LINE.

                          The MNI Group - Form 10K - 21
<PAGE>

The Company is dependent on a limited number of sources of supply for many of
the products it offers. With respect to these products, the Company cannot
guarantee that these third parties will be able to provide adequate supplies of
products in a timely fashion. The Company also face the risk that one of its
suppliers could become insolvent, declare bankruptcy, lose its production
facilities in a disaster, be unable to comply with applicable government
regulations or lose the governmental permits necessary to manufacture the
products it supplies to the Company. If the Company is unable to renew or extend
an agreement with a third-party supplier, if an existing agreement is terminated
or if a third-party supplier otherwise cannot meet the Company's need for a
product, the Company may not be able to obtain an alternative source of supply
in a timely manner or at all. In these circumstances, the Company may be unable
to continue to market products as planned and could be required to abandon or
divest itself of a product line on terms which would materially adversely affect
it.

         THE COMPANY MAY BE EXPOSED TO PRODUCT AND PROFESSIONAL LIABILITY CLAIMS
NOT COVERED BY INSURANCE THAT WOULD HARM ITS business.

The Company may be exposed to product or professional liability claims. Although
the Company believes that it currently carries and intends to maintain
appropriate product and professional liability insurance, the Company cannot
guarantee that this insurance will be sufficient to cover all possible
liabilities. A successful suit against the Company could have an adverse effect
on its business and financial condition if the amounts involved are material.

         THE COMPANY IS UNCERTAIN OF ITS ABILITY TO OBTAIN ADDITIONAL FINANCING
FOR ITS FUTURE CAPITAL NEEDS. IF THE COMPANY IS UNABLE TO OBTAIN ADDITIONAL
FINANCING, IT MAY NOT BE ABLE TO CONTINUE TO OPERATE ITS BUSINESS.

The Company may require significant amounts of additional capital to achieve its
goals. The Company believes that the net proceeds from the Company's recent
private offering of convertible debentures will be sufficient to meet its
working capital and capital expenditure requirements through the end of calendar
year 2000. The Company's future capital requirements will depend on many factors
including:

         -        the costs of its sales and marketing activities and its
                  education programs for clinicians and women,

         -        competing product and market developments,

         -        the costs of acquiring or developing new products,

         -        the costs of expanding its operations, and

         -        its ability to generate positive cash flow from its sales.

Additional funding may not be available on acceptable terms, if at all. If
adequate funds are not available, the Company may be required to curtail
significantly or defer one or more of its marketing or educational programs or
to limit or postpone obtaining new products through license, acquisition or
other agreements. If the Company raises additional funds through the issuance of
equity securities, the percentage ownership of its then-current stockholders may
be reduced and such equity securities may have rights, preferences or privileges
senior to those of the holders of its common stock. If the Company raises
additional funds through the issuance of additional debt securities, these new
securities would have certain rights, preferences and privileges senior to those
of the holders of its common stock, and the terms of these debt securities could
impose restrictions on its operations. For a further discussion of expenditures
and other factors that could affect the Company's need for future capital, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

                          The MNI Group - Form 10K - 22
<PAGE>

         THE COMPANY'S INABILITY TO OBTAIN NEW PROPRIETARY RIGHTS OR TO PROTECT
AND RETAIN ITS EXISTING RIGHTS COULD IMPAIR ITS COMPETITIVE POSITION AND
ADVERSELY AFFECT ITS SALES.

The Company believes that the trademarks, copyrights and other proprietary
rights that it owns or licenses, or that it will own or license in the future,
will continue to be important to its success and competitive position. If the
Company fails to maintain its existing rights or cannot acquire additional
rights in the future, its competitive position may be harmed. While some
products we offer incorporate patented technology, most of the products we sell
are not protected by patents.

The Company has applied for registration of a number of key trademarks and
intends to introduce new trademarks, service marks and brand names. The Company
intends to take the actions that it believes are necessary to protect its
proprietary rights, but it may not be successful in doing so on commercially
reasonable terms, if at all. In addition, parties that license their proprietary
rights to the Company may face challenges to their patents and other proprietary
rights and may not prevail in any litigation regarding those rights. Moreover,
the Company's trademarks and the products it offers may conflict with or
infringe upon the proprietary rights of third parties. If any such conflicts or
infringements should arise, the Company would have to defend itself against such
challenges. The Company also may have to obtain a license to use those
proprietary rights or possibly cease using those rights altogether. Any of these
events could harm the Company's business.

         THE COMPANY'S BUSINESS MAY BE INTERRUPTED BY YEAR 2000 PROBLEMS IF ITS
VENDORS, CUSTOMERS OR PAYORS ARE UNABLE TO CONVERT THEIR SYSTEMS OR IF ANY OF
ITS INTERNAL SYSTEMS ARE NOT COMPLIANT.

The Year 2000 issue results from computer programs having been written using two
digits rather than four to define the applicable year. Computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. If any of the
Company's internal systems are affected by a Year 2000 problem, the Company may
experience a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business activities. In
addition, the Company cannot predict the extent to which the Year 2000 issue
will affect its vendors, customers or payors and other parties that provide the
Company with significant products and services, or the extent to which the
Company would be vulnerable if these parties fail to resolve any Year 2000
issues on a timely basis. Any failure on the part of these parties to achieve
Year 2000 compliance on a timely basis could materially adversely affect the
Company. For example, a system failure on the part of the Company's key
suppliers or customers could result in the Company failing to receive adequate
supplies of products or the Company being unable to process sales.

In addition, disruptions in the economy generally resulting from Year 2000
issues could also materially adversely affect the Company. The Company could be
subject to litigation due to computer systems or product failure, including as a
result of equipment shutdown or failure to properly date business records. The
Company cannot reasonably estimate at this time the amount of potential
liability and lost revenue that could result from Year 2000 issues.

         THE PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK MAY BE VOLATILE, AND
THE PRICE OF THE COMMON STOCK MAY FLUCTUATE FOR REASONS UNRELATED TO THE
COMPANY'S OPERATING PERFORMANCE. A SIGNIFICANT DECLINE IN THE PRICE OF THE
COMMON STOCK COULD LEAD TO A CLASS ACTION LAWSUIT AGAINST THE COMPANY.

There has been a very limited public market for the Company's common stock, and
the Company does not know whether investor interest in the Company will lead to
the development of a more active trading market. The market prices and trading
volumes for securities of emerging companies, such as the Company, historically
have been highly volatile and have experienced significant fluctuations both
related and unrelated to the operating performance of those

                          The MNI Group - Form 10K - 23
<PAGE>

companies. The price of the Company's common stock may fluctuate widely,
depending on many factors, including factors that may cause the Company's
quarterly operating results to fluctuate as well as market expectations and
other factors beyond the Company's control. In the past, following periods of
volatility in the market price of a company's securities, class action
litigation has often been instituted against that company by some of its
stockholders. This type of litigation, if instituted against the Company, could
result in substantial costs and a diversion of management's attention and
resources, which could materially and adversely affect the Company's results of
operations and financial condition.

         INTERNET CAPACITY CONSTRAINTS MAY IMPAIR THE ABILITY OF CONSUMERS TO
ACCESS THE COMPANY'S INTERNET SITE.

The Company's success will depend, in large part, upon a robust communications
industry and infrastructure for providing Internet access and carrying Internet
traffic. The Internet may not prove to be a viable commercial medium because of:
inadequate development of the necessary infrastructure such as a reliable
network backbone, failure to timely develop complementary products such as high
speed modems, delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet activity, or increased
government regulation.

If the Internet continues to experience significant growth in the number of
users and the level of use, then the Internet infrastructure may not be able to
continue to support the demands placed on it.

         THE COMPANY'S BUSINESS IS DEPENDENT ON THE CONTINUOUS, RELIABLE AND
SECURE OPERATION OF ITS INTERNET WEBSITE AND THE RELATED TOOLS AND FUNCTIONS IT
PROVIDES.

The Company relies on the Internet and, accordingly, depends upon the
continuous, reliable and secure operation of Internet servers and related
hardware and software. Recently, several large Internet commerce companies have
suffered highly publicized system failures which resulted in adverse reactions
to their stock prices, significant negative publicity and, in certain instances,
litigation. To the extent that the Company's service is interrupted, its users
will be inconvenienced, its commercial customers will suffer from a loss in
advertising or transaction delivery and its reputation may be diminished. Some
of these outcomes could directly result in a reduction in the Company's stock
price, significant negative publicity and litigation. The computer and
communications hardware utilized by the Company are protected through physical
and software safeguards. However, they are still vulnerable to fire, storm,
flood, power loss, telecommunications failures, physical or software break-ins
and similar events. The Company's business interruption insurance may be
inadequate to protect it in the event of a catastrophe. The Company also depends
upon third parties to provide potential users with web browsers and Internet and
on-line services necessary for access to the Company's Internet site. The
Company's site users may occasionally experience difficulties with Internet and
other on-line services due to system failures, including failures unrelated to
the systems utilized by the Company. Any sustained disruption in Internet access
provided by third parties could adversely impact the Company's business.


                          The MNI Group - Form 10K - 24
<PAGE>

Item 8:   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors of The MNI Group, Inc.



We have audited the accompanying consolidated balance sheets of The MNI Group,
Inc. as of January 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' deficit, and cash flows for the years ended January
31, 1999, 1998, and 1997. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The MNI Group, Inc. as of
January 31, 1999 and 1998, and the results of its operations and cash flows for
the years ended January 31, 1999, 1998, and 1997 in conformity with generally
accepted accounting principles.

The accompanying consolidated financial statements have been prepared on the
assumption that The MNI Group, Inc. will continue as a going concern. The
company's ongoing losses, limited cash, subsequent conversion of lines of credit
and term notes payable to demand notes payable, loans from a corporate-officer,
and the loss of major customers raises substantial doubt about its ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments relating to the recoverability or reclassification of
any asset or liability that might result from the outcome of this uncertainty.




/s/ Lipner,Gordon & Co. LLP

Great Neck, NY

May 6, 1999

                         The MNI Group - Form 10K - 25
<PAGE>
                               THE MNI GROUP, INC.

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                            JANUARY 31,
                                                                     --------------------------
                                                                        1999           1998
                                                                     -----------    -----------
<S>                                                                  <C>            <C>
Current assets:
   Cash                                                              $     5,000    $    36,900
   Accounts receivable (net of allowance for doubtful
       accounts of $0 - 1999 and $5,500 - 1998)                           86,800        131,400
   Inventories                                                            40,300        126,100
   Other current assets                                                    1,100          7,800
                                                                     -----------    -----------

         Total current assets                                            133,200        302,200
                                                                     -----------    -----------

Furniture, fixtures and leasehold improvements:
   Furniture and fixtures                                                120,000        116,000
   Less: accumulated depreciation                                       (120,000)      (114,500)
                                                                     -----------    -----------
                                                                              --          1,500
                                                                     -----------    -----------

Goodwill (net of amortization of $4,300 - 1998)                               --        347,600
                                                                     -----------    -----------

Other assets:
   Security deposits                                                      15,000         15,700
                                                                     -----------    -----------

                                                                     $   148,200    $   667,000
                                                                     ===========    ===========

                             LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable                                                  $   160,500    $   266,200
   Accrued expenses and other liabilities                                276,800        292,300
   Notes payable - short term portion                                     84,900         85,700
   Loan payable - officer                                                196,300        222,100
                                                                     -----------    -----------

        Total current liabilities                                        718,500        866,300
                                                                     -----------    -----------

Notes payable (net of short-term portion)                                 75,000         75,000
Excess of market value of net assets acquired over
    purchase price (net of amortization of $4,300 each year)             150,900        155,200
                                                                     -----------    -----------
                                                                         225,900        230,200
                                                                     -----------    -----------

Stockholders' deficit:
   Common stock, no par value; 10,000,000 shares
        authorized; 4,085,709 shares issued and outstanding
        at January 31, 1999 and 4,685,709 at January 31, 1998          7,276,400      7,576,400
   Accumulated deficit                                                (8,072,600)    (8,005,900)
                                                                     -----------    -----------
                                                                        (796,200)      (429,500)
                                                                     -----------    -----------

                                                                     $   148,200    $   667,000
                                                                     ===========    ===========
</TABLE>
The accompanying notes are an integral part hereof.

                          The MNI Group - Form 10K - 26
<PAGE>
                               THE MNI GROUP, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                 YEARS ENDED JANUARY 31,
                                                        -----------------------------------------
                                                           1999           1998           1997
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>
Sales                                                   $   939,700    $   932,900    $ 1,032,900
                                                        -----------    -----------    -----------

Cost of sales and operating expenses:
   Cost of merchandise sales                                527,700        555,900        600,700
   Selling, general and administrative expenses             453,200        535,500        428,000
   Advertising expense                                        1,100             --             --
                                                        -----------    -----------    -----------

        Total cost of sales and operating expenses          982,000      1,091,400      1,028,700
                                                        -----------    -----------    -----------

Operating income (loss)                                     (42,300)      (158,500)        (4,200)
                                                        -----------    -----------    -----------

Other income (expense):
  Interest expense                                          (40,100)       (22,600)       (20,400)
                                                        -----------    -----------    -----------
       Total other income (expense)                         (40,100)       (22,600)       (20,400)
                                                        -----------    -----------    -----------

(Loss) from operations before discontinued operations
                                                            (82,400)      (181,100)       (16,200)
                                                        -----------    -----------    -----------

Discontinued operations:
  Income (loss) from discontinued operations                     --        (25,500)            --
  Gain on discontinued operations                            15,700             --             --
                                                        -----------    -----------    -----------
Net gain (loss) on discontinued operations                   15,700        (25,500)            --
                                                        -----------    -----------    -----------

(Loss) before provision for income taxes                    (66,700)      (206,600)       (16,200)

Provision for income taxes                                       --             --             --
                                                        -----------    -----------    -----------

Net (loss)                                              ($   66,700)   ($  206,600)   ($   16,200)
                                                        ===========    ===========    ===========

Basic earnings (loss) per share                         ($     0.01)   ($     0.05)   $        --
                                                        -----------    -----------    -----------

Weighted average number of shares outstanding             4,635,709      3,913,175      3,810,709
                                                        ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part hereof.

                          The MNI Group - Form 10K - 27
<PAGE>
                               THE MNI GROUP, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  YEARS ENDED JANUARY 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                          COMMON STOCK           ACCUMULATED
                                                     SHARES         AMOUNT         DEFICIT
                                                   -----------    -----------    -----------
<S>                                                  <C>          <C>            <C>
Balance, February 1, 1996                            3,710,709    $ 7,238,900    ($7,783,100)

Net (loss)                                                  --             --        (16,200)

Issuance of shares for services                        100,000         10,000             --
                                                   -----------    -----------    -----------

Balance, January 31, 1997                            3,810,709      7,248,900     (7,799,300)

Issuance of shares for acquisition of subsidiary       600,000        300,000             --

Exercise of warrants                                   275,000         27,500             --

Net (loss)                                                  --             --       (206,600)
                                                   -----------    -----------    -----------

Balance, January 31, 1998                            4,685,709      7,576,400     (8,005,900)

Redemption of shares resulting from discontinued
   operations                                         (600,000)      (300,000)            --

Net (loss)                                                  --             --        (66,700)
                                                   -----------    -----------    -----------
Balance, January 31, 1999                            4,085,709    $ 7,276,400    ($8,072,600)
                                                   ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part hereof.

                          The MNI Group - Form 10K - 28
<PAGE>

                               THE MNI GROUP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                    YEARS ENDED JANUARY 31,
                                                           -----------------------------------------
                                                               1999            1998        1997
                                                           ------------    ------------ ------------
<S>                                                        <C>             <C>          <C>
Cash flows from operating activities:
   Net (loss)                                              ($    66,700)   ($   206,600)($    16,200)
   Adjustments to reconcile net (loss)
   to net cash provided (used) by operating Activities:
        Depreciation and amortization                             1,200           1,400       (2,600)
        Net gain on discontinued operations                     (15,700)             --           --
        Changes in working capital items:
           (increase) decrease in accounts
              receivable                                         44,600          (5,500)         300
           (increase) decrease in inventories                    85,800         (64,700)      22,700
           (increase) decrease in other assets                    6,700           4,100        4,500
           (increase) decrease in security deposits                 700            (200)          --
           Increase (decrease) in accounts payable
             And other liabilities                             (121,200)        157,600      (35,800)
                                                           ------------    ------------ ------------
Net cash (used) by operating activities                         (64,600)       (113,900)     (27,100)
                                                           ------------    ------------ ------------

Cash flows from investing activities:
    Purchase of equipment                                        (4,000)             --           --
    Goodwill adjustment                                          63,300         (52,000)          --
                                                           ------------    ------------ ------------
Net cash provided (used) by investing activities                 59,300         (52,000)          --
                                                           ------------    ------------ ------------

Cash flows from financing activities:
   (Decrease) increase in loan payable - stockholders            48,700          76,500      (52,100)
   (Decrease) increase in short-term debt                       (75,300)        124,500       71,100
   Shares issued for warrants                                        --          27,500       10,000
   Reduction in long-term debt                                       --         (38,700)          --
                                                           ------------    ------------ ------------
Net cash provided (used) by financing activities                (26,600)        189,800       29,000
                                                           ------------    ------------ ------------

Increase (decrease) in cash                                     (31,900)         23,900        1,900

Cash, beginning of year                                          36,900          13,000       11,100
                                                           ------------    ------------ ------------

Cash, end of year                                          $      5,000    $     36,900 $     13,000
                                                           ============    ============ ============

Supplemental information:
    Cash expended for:
        Interest expense                                   $     32,400    $     22,600 $     20,400
        Federal income taxes                                         --              --           --
     Non-cash transactions:
       Value of shares issued for subsidiary acquisition             --    $    300,000           --
       Value of shares reacquired from reversal of
          prior acquisition                                $    300,000              --           --
       Elimination of goodwill resulting from reversal
          of prior acquisition                             $    300,000              --           --
</TABLE>


The accompanying notes are an integral part hereof.

                          The MNI Group - Form 10K - 29
<PAGE>

                               THE MNI GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS:

The MNI Group, Inc. (MNI), a New Jersey corporation organized in 1981, and its
subsidiaries, are engaged in the development, marketing and distribution of a
variety of health-related products and programs. The company and its
subsidiaries distribute nutritional support products and programs for weight
control, a line of nutritionally-oriented pet products, and over-the-counter
household remedies.

In May 1993, the company organized NutraPet Labs, Inc. (NutraPet) for the
purpose of developing and marketing pet products. The company subsequently
issued 313,000 shares of NutraPet for $313,000 in a private placement (see
details discussed in Note 6).

In July 1997, the company consummated a merger with K.O.S. Industries, Inc.
(KOS) whereby all of KOS' outstanding common stock was exchanged for 600,000
shares of the company's common-stock. The transaction was treated as a purchase.
KOS distributes and markets a line of pet-related products. In addition, one of
KOS' key employees was granted stock options to acquire 750,000 additional
shares of the company, and a KOS consultant was granted options to acquire
150,000 shares of the company's stock. (See Note 6 for further details.)

In December 1998, the company reversed the KOS transaction above, as a result of
KOS's inability to meet marketing expectations.

2. SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the company and its wholly-owned and majority-owned subsidiaries
after elimination of intercompany accounts and transactions for ongoing
activities and does not include any of the activities of KOS.

INVENTORIES - Inventories, which consist primarily of purchased finished goods,
are stated at the lower of cost or market using the "first-in, first-out" (FIFO)
cost method.

FURNITURE, FIXTURES AND LEASEHOLD IMPROVEMENTS - Furniture, fixtures and
leasehold improvements are stated at cost and depreciated over their estimated
useful lives using the straight-line method for financial reporting purposes and
accelerated methods for income tax purposes. Expenditures for repairs and
maintenance which do not extend the useful life of the property are expensed as
incurred. The estimated useful lives of the assets are as follows:

Furniture and fixtures                      5-10 years

Computers                                      5 years
Leasehold improvement                        3-7 years

RESEARCH AND DEVELOPMENT - The company and its subsidiaries utilize independent
third parties to design and test certain products. These expenditures are
accounted for as research and development costs and are expensed as incurred.

INCOME taxes - The company has adopted FASB 109 in accounting for its income
taxes. (See Note 7.)

REVENUE RECOGNITION - The company recognizes revenue when its products are
shipped from the warehouse.

                          The MNI Group - Form 10K - 30
<PAGE>

                               THE MNI GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

REVENUE RECOGNITION (CONTINUED) - The consolidated statements of operations
include the results of operations for K.O.S. Industries, Inc. in the
discontinued operations section for the years ended January 31, 1998 and 1999.
The resulting gain on the reversal of the KOS transaction mentioned above Is
included in the discontinued operations section. The amounts shown in
discontinued operations are not shown net of any income tax effect (either
expense or benefit) because the company incurred a net loss, and has substantial
net operating loss carryforwards, which may never be utilized (see Note 7).

EARNINGS PER SHARE - The consolidated financial statements are presented in
accordance with SFAS No. 128, "Earnings per Share". Basic earnings per common
share are computed using the weighted average number of common shares
outstanding during the period. Diluted earnings per common share incorporate the
incremental shares issuable upon the assumed exercise of stock options and
warrants. The possible conversion of outstanding options and warrants has not
been taken into account in the earnings per share calculation as its effect
would be anti- dilutive.

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 disclosures of contingent' assets and liabilities at the
date of the financial statements and revenues and expenses during the reporting
period.
Actual results could differ from those estimates.

3. Fixed ASSETS:

The fixed assets consisted of the following:

                                                          JANUARY 31,
                                                      -------------------
                                                        1999       1998
                                                      --------   --------
Furniture, fixtures and equipment                     $ 73,300   $ 69,300
Leasehold improvements                                  17,700     17,700
Promotional video                                       29,000     29,000
                                                      --------   --------
                                                       120,000    116,000
Less: accumulated depreciation
and amortization                                       120,000    114,500
                                                      --------   --------

                                                      $     --   $  1,500
                                                      --------   --------

4.  NOTES PAYABLE:

In December 1992, LN Investment Capital Limited Partnership (LNIC) advanced
$75,000 to MNI. This loan was originally due on July 31, 1993, and, in
accordance with the terms of the loan agreement, has subsequently been extended
and converted to a demand note, with interest at 10% per annum. In addition,
LNIC originally received warrants (which expire in December 2002) to purchase
300,000 shares of the company's common stock at an exercise price of $.25 per
share. Upon LNIC's agreement to extend the note, the warrant exercise prices
were reduced and the number of warrants increased as follows:

Loan
Extension Date                        Warrants                Per Share
--------------                        --------                ---------
7/31/93                               300,000                  $ .20
1/31/94                               500,000                    .15
7/31/94                               750,000                    .10

                          The MNI Group - Form 10K - 31
<PAGE>

                               THE MNI GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. NOTES PAYABLE (CONTINUED):

In the year ended January 31, 1998, 275,000 warrants were exercised at $.10 per
share (see Note 6 for further details). The exercise of these warrants is
reflected in the capitalization of the company as of January 31, 1998. The
company has been accruing $7,500 interest annually on this debt.

MNI borrowed $50,000 from PNC Bank on January 29, 1998. The maturity date was
January 29, 1999, with an interest rate of 10.25%. During the year ended January
31, 1999, the terms of this loan were changed to a demand note. Principal and
interest payments are being made on a monthly basis.

MNI's chief operating officer has made advances to the company totalling
$196,350 as of January 31, 1999. Interest on these advances is being charged at
rates varying from 11% to 18% as of January 31, 1999.

In November 1991, Family Weight Lose Centers, Inc., (FWLC), (a former subsidiary
of MNI), filed a petition for bankruptcy proceedings pursuant to Chapter 7 of
the federal bankruptcy statutes. This petition provided for complete liquidation
of all of the corporate assets and liabilities.

Subsequent to the bankruptcy filing, MNI agreed to satisfy an outstanding
$4,000,000 obligation, which it had guaranteed as part of the FWLC acquisition,
in the form of a term note to a financial institution that is an affiliate of a
stockholder of the company by the payment of $125,000, issuance of a three year
note in the amount of $125,000, with interest at the bank's prime rate, and the
issuance of warrants to purchase 750,000 shares of the company's common stock at
a price of $.Ol per share, expiring in February 2002. In February 1995, the
company agreed to liquidate the three year note in the amount of $125,000 by the
payment of 42 monthly payments in the amount of $2,976 each plus interest at the
prime rate commencing in August 1995. The original three year note bore interest
only through that date. Interest on this debt was $2,788, $4,939, and $7,200 for
the years ended January 31, 1999, 1998 and 1997, respectively. (See note on
subsequent events.)

A summary of MNI's debt at January 31, 1999 and 1998 was as follows:

<TABLE>
<CAPTION>

                                         January 31, 1999     January 31, 1998
                                       Short-term Long-term Short-term Long-term
                                       -------------------- --------------------
<S>                                      <C>       <C>       <C>       <C>
 Due to LN Investment Capital Ltd.
   Partnership                           $    --   $75,000   $    --   $75,000

 Due to Fleet Bank                        24,000        --    35,700        --

 Due to Advanta Bank Corp.                18,000        --        --        --

 Due to PNC Bank                          42,900        --    50,000        --
                                         -------   -------   -------   -------
                                         $84,900   $75,000   $85,700   $75,000
                                         =======   =======   =======   =======
</TABLE>

5. LEASE COMMITMENTS:

MNI leases an office and warehouse facility in New Jersey under a lease which
expires in December 1999.

                          The MNI Group - Form 10K - 32
<PAGE>

                               THE MNI GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Lease COMMITMENTS (CONTINUED):

Total gross rental expense for the year ended January 31, 1999 was approximately
$77,300, $83,000 in 1998, and $77,700 in 1997. MNI sub-leased (on a month to
month basis) a portion of its facility to various entities at an annual rental
income of approximately $41,000 for the year ended January 31, 1999, $43,000 In
1998, and $56,000 in 1997.

The minimum annual rents are as follows:

Year ended January 31, 2000                                   $ 62,000

6. STOCKHOLDERS' EQUITY:

In January 1990, MNI adopted its Incentive and Nonqualified Stock Option Plan
(the "Plan"), to which options for an aggregate of 175,000 shares of common
stock may be granted to key employees and certain other persons. Incentive stock
options granted under the Plan must be at a price per share not less than 100%
(110% in the case of stockholders who own more than 10% of the outstanding
shares) of the fair market value, as defined by the Plan, of MNI's common stock
on the date of the grant. The value of incentive stock options granted to one
employee may not exceed $100,000 per year. Options cannot be exercised prior to
one year or after ten years (five years in the case of a 10% or more
stockholder) from the date of the grant. During 1993, MNI issued 50,000 options
under this plan, exercisable at $.10 per share. These were subsequently replaced
with new options in 1994.

In March 1990, MNI concluded an initial public offering of 750,000 additional
shares, at a price of $3.25 per share. In April 1990, MNI sold an additional
120,000 shares at a price of $3.25 per share under the overallotment provisions
of the offering. MNI received $2,332,702 (net of underwriter's fees and
registration costs) from this offering. As part of the offering, the underwriter
received warrants to purchase 80,000 shares of MNI's common stock. These expired
in March 1995 unexercised.

In March 1992, three officers and directors of MNI were granted options to
immediately purchase 125,000 shares each and an additional 150,000 options each
to be granted over the next 60 months at a rate of 2, 500 per month per officer
and director. The options are exercisable at $.10 per share and expire in March
2002. Upon the resignation of one of the officers, 150,000 of the aforementioned
additional-options were cancelled.

In September 1992, Michael Connelly was elected chairman of the board and chief
executive officer of MNI. His compensation was to have been $7,500 per month,
which was to be accrued until such time as funds were available to make payment.
During 1994, Mr. Connelly agreed to reduce his annual compensation to $45,000
per annum. Mr. Connelly terminated his compensation agreement with MNI as of
January 31, 1995. He assigned his rights to such compensation to Lepercq Capital
Management Inc. In addition, he was granted options and rights identical to
those issued in March 1992 to the other officers, which he assigned to LN
Investment Capital Limited Partnership (LNIC). LNIC also received an option to
purchase 125,000 shares at $.10 per share, which it exercised in October 1992.

During 1993, MNI issued warrants to purchase 125,000 shares of its common stock
in exchange for the elimination of approximately $41,000 of accounts payable.
These warrants are exercisable at $.10 per share and expired in February 1999.
These warrants were not exercised. In addition, 156,500 warrants were issued to
a financial advisor as compensation for services rendered in conjunction with
the private placement offering of NutraPet. These warrants were exercisable at
$.125 per share, and expired In March 1999, and were also not exercised.

                          The MNI Group - Form 10K - 33

<PAGE>

                               THE MNI GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED):

In May 1993, MNI transferred certain assets related to its pet products business
into the subsidiary known as NutraPet, in exchange for 500,000 shares of
NutraPet common stock. Subsequently, NutraPet raised $313,000 (before expenses)
by the sale of 313,000 common shares (at a price of $1.00 per share) in a
private placement offering. Upon completion of the sale of these shares, MNI
entered into a management agreement with NutraPet.

During 1994, an officer of MNI was issued 35,000 fully-vested options at an
exercise price of $.10 per share. In addition, 15,000 previously issued options
exercisable at a price of $2.00 were cancelled (see above), and 15,000 options
subject to a three-year vesting and exercisable at a price of $.10 per share
were issued. In addition, consultants to KNI were issued 40,000 options
exercisable at $.10 per share which expire March and September 1999.

in August 1997, in conjunction with the acquisition of KOS, two shareholders
were granted options to purchase 900, 000 shares of MNI's stock exercisable at
$. 50 per share. These options expire on December 31, 2001. These options were
recalled upon the completion of the reversal of the acquisition effective
December 31, 1998.

During the fiscal year ended January 31, 1998, one of the option holders
exercised options for 275,000 shares at $.10 per share. This has been reflected
in the capital accounts and in the consolidated statement of stockholders'
equity.

The following is a summary of the outstanding options and warrants as of January
31, 1999:

<TABLE>
<CAPTION>
                                               Exercise
Expiration Date                                  Price        Options          Warrants
----------------------------------------------------------------------------------------
<S>                                              <C>        <C>                 <C>
February 1, 1999 (expired unexercised)           $.10                           125,000
March 1, 1999 (expired unexercised)               .125                          156,500
March 1, 1999 (expired unexercised)               .10          50,000
March 8., 1999 (expired unexercised)              .10          24,000
September 1, 1999                                 .10          16,000
February 1, 2002                                  .10                           750,000
March 26, 2002                                    .10       1,400,000
December 1, 2002                                  .10                           750,000
                                                          -----------       -----------
                                                            1,490,000         1,781,500
                                                          -----------       -----------
</TABLE>

7.  INCOME TAXES:

The company has adopted the liability method of accounting for income taxes
pursuant to Statement of Financial Accounting Standards (SFAS) No. 109. No
recognition has been made of the possible benefits of available net operating
loss carryforwards due to the uncertainties that such benefits will be available
to be used to offset future years, income. MNI and its subsidiaries have net
operating lose carryforwards in excess of $5,000,000 which could be available to
reduce income otherwise subject to income tax. The possible deferred income tax
benefits of such available net operating losses are estimated to be
approximately $1,720,000 as of January 31, 1999, with a valuation allowance of
an equal amount as follows:


                                            YEAR ENDED JANUARY 31,

                                        1999            1998            1997
                                     ----------     ----------      -----------
Deferred tax asset                   $1,720,000     $1,700,000      $1,600,000
Deferred tax asset reserve           (1,720,000)   ( 1,700,000)     (1,600,000)
                                     ----------     ----------      ----------
Net deferred tax asset               $       --             --      $       --
                                     ----------     ----------      ----------

                          The MNI Group - Form 10K - 34

<PAGE>

                               THE MNI GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  Income TAXES (CONTINUED):

Net operating losses expire during various years as follows:


Years ending prior to January 31, 2006                                $4,047,800
Year  ending  January  31, 2007                                        2,932,000
Year  ending  January  31, 2008                                          486,300
Year  ending  January  31, 2009                                           31,600
Year  ending  January  31, 2010                                          310,500
Year  ending  January  31, 2011                                           16,200
Year  ending  January  31, 2012                                           16,200
Year  ending  January  31, 2018                                          232,000
                                                                      ----------
                                                                      $8,072,600
                                                                      ==========

8.  Commitments  and Contingencies:

MNI's food and pet products are produced by third parties in various plants
under applicable government regulations. MNI depends upon its vendors to comply
with such regulations. Failure by such vendors to comply with the applicable
regulations could result in fines and/or seizure of the food products. MNI is
not presently a party to any lawsuits. In addition, it has no commitments to its
vendors for the purchase of either raw materials or finished product.

9.  MAJOR CUSTOMERS:


Two customers were responsible for approximately $523,000, $540,307 and $568,200
in sales for the fiscal years ended January 31, 1999, 1998 and 1997,
respectively, representing approximately 56%, 43% and 55% of total sales,
respectively.

10. SUBSEQUENT EVENTS:

Subsequent to the balance sheet date, the terms of the two notes payable to PNC
Bank and Fleet Bank were changed (see Note 4). In February 1999, PNC notified
the company that due to insufficient cash flows and minimal balance
requirements, the amount due was converted into a demand note payable. The Fleet
Bank loan is in default. Payment in full has been requested by the bank.

As of the report date, the options and warrants, up to and including those
expiring March 8, 1999, expired and were not exercised.

II. SEGMENTAL REPORTING:


                                 Segment Report


                           Year Ended January 31, 1999

<TABLE>
<CAPTION>

                          Medical        Holistic   Nutrapet    Adjustment &
                          Nutrition      Products   Labs        Elimination    Consolidated
                          ---------      --------   --------    -----------    ------------
<S>                       <C>          <C>          <C>          <C>            <C>
Revenues:
From unaffiliated
customers                 $ 718,200    $  87,300    $ 134,200    $ 939,700

(Loss) from
operations before
discontinued operations   ($ 25,600)   ($ 48,600)   ($ 33,100)   $  24,900      ($ 82,400)

Identifiable assets at
January 31, 1999          $ 101,600    $  12,900    $  33,700    $ 148,200
</TABLE>


                          The MNI Group - Form 10K - 35

<PAGE>

                               THE MNI GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

II. SEGMENTAL REPORTING (CONTINUED):

The adjustment and elimination is comprised of the recognition of the changes to
amortization expense of $20,600 of goodwill (NutraPet Labs) and recognition of
$4,300 of amortized income of the excess of market value over cost (NutraPet
Labs).

The company organizes its business units into three reportable segments:
nutritional support products, holistic products, and animal products.

The segments' accounting policies are the same as those described in the summary
of significant accounting policies. The company evaluates performance based on
profit or loss from operations before interest and income taxes, and excluding
nonrecurring gains and losses.

The company's reportable business segments are strategic business units that
offer different products and services. Each segment is managed as a separate
unit. Each segment markets to a distinct class of customers.


                          The MNI Group - Form 10K - 36
<PAGE>


Item 9:   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ACCOUNTING AND FINANCIAL DISCLOSURE


          None.



                          The MNI Group - Form 10K - 37
<PAGE>

PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

Set forth below are the names, ages, and the position and offices held by each
of the directors and executive officers of the Company.

Name                       Age               Position and Office
--------                   -----             ----------------------------------
Lawrence Burstein          57                Chairman (1) and Director
Arnold Gans                65                President
Myra Gans                  60                Executive Vice President/Director
Jeffrey Janco              42                Vice President/Operations

----------
(1) Michael J. Connelly resigned as the Company's Chairman in November 1999.

LAWRENCE BURSTEIN is and since March 1996 has been President, a director and the
principal shareholder of Unity Venture Capital Associates, a private investment
banking firm. He is also a director of Graphon Corp., a developer of thin-client
software, CAS Medical Systems, Inc. engaged in the manufacture and marketing of
disposable medical devices, T.H.Q., Inc., a developer of electronic game
cartridges, Quintel Communications, Inc., a direct marketing company and ID
Systems, Inc., a manufacturer of wireless tracking devices. Mr. Burstein became
Chairman of MNIG in July 1999 upon the resignation of the former Chairman.

ARNOLD GANS has been President and a director of the Company since its formation
in 1981. Prior thereto, Mr. Gans had been involved in the weight control market
for over 25 years during which time he, among other things, developed certain
appetite suppressants and anti-obesity programs. Prior to founding the Company
in 1981, Mr. Gans was President of Control Drug, Inc. a private company engaged
in the manufacture of nutritional protein supplements. Mr. Gans was granted
patents in 1977 for method-use manufacturing for certain nutritional formula
processes relating to the use of certain foods (EMF) to treat nutritional
deficiency, which he has assigned to the Company.

MYRA GANS, wife of Arnold Gans, the Company's president, has been Executive Vice
President of and a director of the Company since 1982. Prior to thereto, Mrs.
Gans served as Vice President/Sales for Control Drug, Inc.

JEFFREY JANCO has been Vice President of Operations of the Company since
December, 1988. Prior thereto, he served as Operations Manager of the Company
since 1982. His present responsibilities include purchasing, inventory control
and warehouse supervision.


Directors of the Company hold office until the next annual meeting of the
Company's shareholders and until their successors have been duly elected and
qualified. None of the Company's Directors receives compensation for his
services as such.

Officers of the Company serve at the pleasure of the Board of Directors and
until the first meeting of the Board of Directors following the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

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

                          The MNI Group - Form 10K - 38
<PAGE>
Item 11.  EXECUTIVE COMPENSATION


(a)      CASH COMPENSATION

              The following table summarizes the compensation paid in the fiscal
              years ended January 31, 1999, 1998 & 1997respectively, to the
              Company's Chief Executive Officer, being the only executive
              officer of the Company who received total annual salary in excess
              of $100,000.



                           SUMMARY COMPENSATION TABLE

NAME AND PRINCIPAL POSITION                      ANNUAL COMPENSATION
                                                 -------------------
                                                 YEAR       SALARY
                                                 ----      ---------
Arnold Gans
    President (CEO)                              1999      $140,000
                                                 1998      $140,000
                                                 1997      $140,000

No options to acquire shares of the Company's Common Stock were granted during
the fiscal year ended January 31, 1999. In October 1999, Lawrence Burstein,
Chairman of the Company was awarded a total of options to purchase 300,000
shares of the Company's common stock at a price of $0.10 per share. Such options
expire on November 1, 2004. Options to purchase 750,000 shares of the Company's
common stock which were previously issued to Lepercq Capital Management, were
transferred to Arnold and Myra Gans. Such options expire on November 1, 2004.
Options to purchase 1,550,000 shares of the Company's common stock at $0.10 per
share were issued in August through October 1999 to various consultants. Such
options expire on November 1, 2004. In September 1999, options to purchase
335,000 shares of the Company's common stock were issued to various medical
consultants. Such options expire on November 1, 2009.


                          The MNI Group - Form 10K - 39
<PAGE>

                 AGGREGATED OPTION EXERCISE IN LAST FISCAL YEAR
                        AND FISCAL YEAR END OPTION VALUES

                  NUMBER OF SECURITIES             VALUE OF UNEXERCISED
                  UNDERLYING EXERCISED             IN-THE-MONEY OPTIONS
                  OPTIONS AT YEAR END (#)          AT FISCAL YEAR END ($)(a)
                  ---------------------------      -----------------------------
NAME              EXERCISABLE    UNEXERCISABLE     EXERCISABLE     UNEXERCISABLE

Arnold Gans         650,000                          $               $
Myra Gans           650,000                          $               $

---------
(a) None of such options were in the money at fiscal year end.


EMPLOYMENT AGREEMENTS

None of the Company's executive officers is presently a party to an employment
agreement with the Company.


(b)   COMPENSATION PURSUANT TO PLANS None.

(c)   OTHER COMPENSATION None.

(d)   COMPENSATION OF DIRECTORS

        Directors receive no compensation for their services as such.

(e)   TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS

        None.

                          The MNI Group - Form 10K - 40
<PAGE>
12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the Company's
outstanding common stock beneficially owned on November 30, 1999 by (i) each
person who is known by the Company to beneficially own or exercise voting or
dispositive control over at least 5% of the Company's common stock, (ii) each of
the Company's directors and (iii) all of the Company's executive officers and
directors as a group:



NAMES AND ADDRESSES             NUMBER OF SHARES
OF BENEFICIAL OWNER             BENEFICIALLY OWNED(1)    PERCENTAGE OF CLASS(1)
-------------------             ---------------------    ----------------------

Arnold Gans                     2,399,830(2)                     .0814%
10-West Forest Avenue,
Englewood, NJ 07631

Myra Gans                       2,399,830(2)                     .0814%
10 West Forest Avenue,
Englewood, New Jersey 07631

Lawrence Burstein               2,453,833(3)                     .0833%
245 Fifth Avenue,
New York, New York 10016

All directors and executive
officers as a group
(3 persons)(2) - (3)            4,853,663(2) - (3)               .1647%


(1)  Includes all shares issuable pursuant to presently exercisable options as
     well as all such options which will become exercisable within 60 days of
     the date hereof. Also includes the 20, 283,333 shares of common stock
     issuable upon the conversion of the Debenture. Except as otherwise
     indicated, all shares are beneficially owned, and their sole investment and
     voting power is held by the persons named herein.

(2)  Includes  349,830  shares  which are owned by Arnold  and Myra  Gans;  also
     includes options to acquire an aggregate of 2,050,000 shares for Arnold and
     Myra Gans exercisable at $.10 per share through November 1, 2004.

(3)  Includes 800,000 shares of common stock issuable upon the conversion of the
     Debentures; 1,333,333 shares issuable to Unity Venture Capital Associates
     Ltd.(of which Mr. Burstein is a principal shareholder, director and
     officer), and options to acquire 300,000 shares of common stock at $0.10
     per share. Excludes 8,863 shares owned by Trinity Pension Trust, of which
     Mr. Burstein is a trustee and beneficiary.

                          The MNI Group - Form 10K - 41
<PAGE>

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.

                          The MNI Group - Form 10K - 42
<PAGE>

                                     PART IV


Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
         (a)      FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
                  (i)      FINANCIAL STATEMENTS (included in Part 11)

                           Report of Independent Public Accountants

                           Consolidated Balance Sheets - January 31, 1999 and
                           1998.

                           Consolidated Statements of Operations for the years
                           ended January 31, 1999, 1998 and 1997.

                           Consolidated Statements of Stockholders' Equity for
                           the years ended January 31, 1999, 1998 and 1997.

                           Notes to Consolidated Financial Statements for the
                           years ended January 31, 1999, 1998 and 1997.

(ii)     FINANCIAL STATEMENTS SCHEDULES

                           Not applicable

(b)      REPORTS ON FORM 8-K


              None.


         (c)   EXHIBITS

                  Exhibit
                  Number                    Description
                  ------                    -----------

                  22       Subsidiaries of the Company

                  27       Financial Data Schedule


                          The MNI Group - Form 10K - 43
<PAGE>

                                   SIGNATURES

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

Dated: December 22, 1999           THE MNI GROUP INC.



                                    By: /s/ ARNOLD GANS
                                    -----------------------------------
                                            Arnold Gans, President

         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.


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


/s/ LAWRENCE BURSTEIN            Chairman and Director
-------------------------------  (Principal Executive Officer) December 22, 1999
 Lawrence Burstein


 /s/ ARNOLD GANS                 President (Principal
-------------------------------  Operating Officer and
 Arnold Gans                     Principal Accounting
                                 and Financial Officer)        December 22, 1999


 /s/ MYRA GANS                   Vice President,
-------------------------------  Secretary, and Director       December 22, 1999
 Myra Gans


                          The MNI Group - Form 10K - 45