<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10 - KSB

(Mark One)

/X/  Annual report under section 13 or 15 (d) of the Securities Exchange Act of
     1934.

For the fiscal year ended December 31, 1999

                                       OR

/ /  Transition report under section 13 or 15 (d) of the Securities Exchange Act
     of 1934.

For the transition period from _______________ to _______________

Commission file number  0-25159
                        -------

                           PLENUM COMMUNICATIONS, INC.
                 (Name of Small Business Issuer in its charter)

            Minnesota                               91-1524747
 (State or other jurisdiction of         (IRS Employer Identification No.)
   incorporation or organization)

 2201 Lind Avenue SW, Suite 200, Renton, WA                  98040
 (Address of principal executive offices)                  (Zip code)

                                (425) 902 - 4140
                           (Issuers telephone number)

        Securities registered pursuant to Section 12 (b) of the Act: None

          Securities registered pursuant to Section 12 (g) of the Act:
                          Common Stock, $.001 par value

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

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

     Issuer's revenues for its most recent fiscal year $4,241,277

     On April 4, 2000, approximately 32,842,753 shares of the Company's common
stock were outstanding.

     The aggregate market value of the voting stock held by non-affiliates of
the Company as of April 4, 2000 was approximately $17,139,896 based on the
closing price for shares of the Company's common stock as reported by the OTC
Bulletin Board for that date. Shares of common stock held by officers, directors
and affiliates thereof and holders of 10% or more of the outstanding common
stock have been excluded because these people may be deemed as affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.

                      DOCUMENTS INCORPORATED BY REFERENCE:

     No documents are incorporated by reference.

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


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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BACKGROUND INFORMATION

     The Company was founded in Minnesota in 1972 as Combined Enterprises, Inc.,
changed its name to Assign, Inc. in 1987, and was reorganized into its current
structure in February 1989, by means of a change of control acquisition. In
March 1989 the name of the Company was changed to Mortgage Brokers Network,
Inc., and to Plenum Communications, Inc. in October 1991. Plenum Communications
also does business as LION Inc. The Company's common stock trades on the OTC
Bulletin Board under the symbol "LINC".

     The Company's wholly-owned subsidiary, Lioninc.com, formerly known as
Infosytems, Inc., did business as Mortgage Information Systems, Inc. ("MISI")
from 1991 to 1995 and as Lenders Interactive Online Network ("LION") from 1995
to 1999. Infosystems, Inc. changed its name to LION, Inc. in 1998 and again to
Lioninc.com, Inc. in 1999.

     Lioninc.com, and its predecessor, MISI, has been a provider of online
business-to-business (B2B) products and services for the mortgage industry since
1991. Its products and services bring together borrowers, real estate companies,
mortgage brokers, mortgage lenders, financial institutions and the secondary
market in order to facilitate the origination of home loans. Lioninc.com is an
industry leading provider of internet based products and services for mortgage
brokers and lenders. These products include: a network of consumer mortgage
sites, broker web sites, broker to consumer marketing, an extensive on-line
database of mortgage rate and fees, an online loan placement service, lender web
sites, lender to broker marketing, and automated loan underwriting systems.

INDUSTRY INFORMATION

     CONSUMER. Consumers looking to purchase homes or refinance the mortgage on
their existing homes can obtain a loan through a retail lender or through a
mortgage broker.

     MORTGAGE BROKER. Mortgage brokers originate loan applications and place the
loan with one of many wholesale lenders and assists in the processing,
fulfillment, and closing of the loan. According to an industry report prepared
by Wholesale Access, mortgage brokers originate over 70% of all residential
mortgages.

     RETAIL MORTGAGE BANKER. Mortgage bankers perform the same functions as a
mortgage broker and also arrange a line of credit that enable them to approve,
close, and then sell loans to a company that will service the mortgage loan.

     WHOLESALE LENDER. Wholesale lenders operate through independent mortgage
brokers to obtain loans and then either sell or keep the loan for servicing.

     HYBRIDS. There are many hybrid companies that have both wholesale and
retail operations. These companies serve the public through branch offices and
"wholesale rates" to mortgage brokers.

     GSEs. The government sponsored enterprises, including Fannie Mae and
Freddie Mac, are major purchasers of loans. These GSEs set the rules and
guidelines for purchasing "conforming loans" that meet their criteria.


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CUSTOMER BASE

     Mortgage brokers, wholesale lenders and industry affiliates constitute
Lioninc.com's principal income base, and therefore, the Company's primary
sources of revenue. While borrowers are not currently part of Lioninc.com's
revenue base, they directly impact the Company's core customer base. Each of
Lioninc.com's customer segments are discussed below in more detail.

     MORTGAGE BROKERS. Recent studies by Wholesale Access indicate that there
are approximately 23,000 mortgage brokerage firms in the country. On average,
there are 4-5 loan officers per firm. Assuming 23,000 firms and an average of
4-5 loan officers per firm, there appears to be a total market of approximately
90,000 mortgage originators.

     Large Mortgage Broker firms who have 50-100 loan officers in one location
tend to be spread out geographically with no more than 10-25 loan officers in a
single office. In contrast, the majority of mortgage brokers operate much like
sole practitioners with less than 10 employees.

     There has been a growing trend toward consolidation in the industry through
franchises and, more commonly, "net branch" arrangements. Under these
arrangements the central office provides compliance, administration, a brand
name, and professional marketing materials which allows the small brokerage
operation to focus on servicing their clients. These firms are actively seeking
ways to use technology to increase efficiencies, and we believe Lioninc.com
provides an Internet solution.

     Wholesale lenders do not incur these staffing costs, since they rely on
brokers to interface with the consumer. Hence, they quote a "wholesale" rate,
which tends to be about 1-1.5 points less than the retail rate. This allows the
mortgage broker to "mark up" the loan by that amount as its fee and still
compete with the retail lenders. For instance, the retail rate might be 8% with
two points, but the wholesale rate might be 8% with one point. The mortgage
broker shows his client 8% with two points, paying one point to the lender and
keeping one point as his fee.

     Brokers vary on how much to mark up the loan. Some use a flat amount for
most loans, such as 1%. Others may consider such factors as loan size, price
sensitivity of the client, difficulty of placing the loan, and/or the extent to
which price competitiveness is or is not part of their strategy.

     Brokers typically deal with a number of lenders. Most brokers report that
they concentrate their business with just a few lenders, typically about five.
However, they may be "approved" to do business with 30 or more, and may receive
daily rate information from 50 or more.

     When the broker provides a quote for a particular client, he historically
would be required to check the faxes of primary lenders to determine the current
rates for the kind of program the client has requested or the broker is
suggesting. For loans with issues making clients marginal candidates, brokers
often have to consult the remaining fax information or call lenders who provide
a solution for the particular situation. Because each lender's rate sheet is
formatted differently from the others, finding programs on rate sheets with
which the loan officer is unfamiliar is time consuming. Since it is inefficient
to keep up with program and pricing changes from every lender with daily faxes,
brokers can only monitor 3-5 lenders on a regular basis.

     Rates are important to the broker for two reasons. First, to varying
degrees, their customer may be price sensitive. The broker needs to be
competitive relative to the retail lenders and other brokers. Second, the rate
can affect the amount of fee the broker earns. In some cases, if the broker
knows a customer is satisfied by a particular interest rate, the broker's fee
can be increased if a wholesale rate can be found that is lower than the one
which originally served as the basis for the quote. Alternatively, if a broker
cannot find a low enough rate, the broker's fee may have to be cut either to
compete with another loan the customer has been offered, or to bring the loan
down to a rate that will allow the customer to qualify.


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     Since brokers are very "price sensitive," they aggressively shop with price
being the deciding factor in selecting a lender. Occasionally, if they find an
attractive rate from a lender with whom they are not currently approved, they
will try to become approved in order to place a particular loan. However,
seeking a new lender relationship in the midst of a loan placement is risky,
because the loan may be delayed or may not close at all as a result of the time
required to obtain approval and the possibility of not being approved.

     Historically, the process of checking rates, fees and choosing a lender has
been a manual and inefficient one. Lioninc.com's service is designed to make
this process dramatically more efficient, and to give the broker the best
opportunity to compete. Some rate information is now available elsewhere on the
Internet, but the Company believes the LION web site is currently a principal
place where all of the key indicators relevant to mortgage brokers appear
together in one, easily readable format.

     The mortgage broker must maintain a competitive advantage over other
mortgage brokers, mortgage bankers, and large retailers. The internet and other
advanced technologies allow efficiencies that decrease the costs of loan
production. The mortgage broker can currently develop a web site, promote this
web site, take applications, import into software and Automated Underwriting
engines, and communicate with potential and current customers. Lioninc.com
simplifies internet origination through one seamless path from the consumer web
site to an Automated Underwriting decision.

     WHOLESALE LENDERS. Lioninc.com's participating lenders are primarily
"wholesale" lenders who operate through independent mortgage brokers. The
mortgage brokers work directly with the consumer to complete the application and
submit the application to the lender for approval. If the loan is approved, the
lender then funds the mortgage at closing. Some of the wholesale lenders also
have a separate "retail" operation that works directly with the customer. In
some cases, that retail operation can operate as a broker and place loans with
other wholesale lenders.

     In any given market, typically 50 to 75 percent of the wholesale lenders
and probably a larger percentage of the loan volume are approved by either
national or large regional lenders.

     Loans are further segmented into "conforming" and "non-conforming" (also
known as "sub prime"). Strictly defined, a "conforming loan" is one that meets
the requirements set by Fannie Mae and Freddie Mac as loans these GSEs will
purchase from lenders. Conforming loans must meet GSE criteria for loan size,
credit standing of the borrower, borrower income relative to the loan payment,
loan amount to value of property, type of property and with respect to specific
documentation required to prove they meet these requirements.

     Some lenders deal primarily in conforming loans, but also will offer
programs for loans that meet most of these requirements except for one or two.
For instance, many will offer programs for "jumbo" loans, those that exceed the
maximum loan size for conforming loans (currently $252,700 for single family
residences), and many will accept less rigorous documentation. The lenders
cannot sell these loans to the GSEs . They can either keep these loans in their
own portfolios or sell them to entities other than the GSEs.

     "Non-conforming loans" do not meet the requirements for purchase by the
GSEs. Lenders work with borrowers who have had some level of credit problems in
the past (known as "A minus, B, C or D" rated credit), whose ratio of loan
payment to income is higher than allowed under conforming rules, or who may be
purchasing a property type that is not permitted under conforming rules (i.e. a
log home or certain condominiums). These non-conforming loans are considered to
be higher risk and command higher fees or rates.


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     Each lender usually offers many "programs." A program is a loan with a
particular set of terms. For example, typically there will be some 30-year fixed
rate programs, some 15-year fixed rate programs and some adjustable rate
mortgage ("ARM") programs. The rates and terms for each of these may vary by
size of loan, kind of property, credit rating, loan amount compared to property
value and other factors. The many combinations of these variables result in
lenders typically having 13-18 different programs and some having up to 50
programs. Furthermore, each program has a "matrix" or array of rates available
depending upon the points the borrower pays. For instance, a 30 year fixed rate
program might be priced at 7% if the borrower pays one point up front, but at
6-3/4% if he pays two points up front. The pricing matrix also may have standard
amounts by which the stated fees or rates increase or decrease based on certain
factors. For instance, for condominium loans, 1/4 point might be added to the
fee; or for loans over $125,000, 1/8 might be subtracted.

     INDUSTRY AFFILIATES. Another market consists of companies who sell services
or advertising to lenders, brokers or consumers seeking mortgage loans. These
companies are potential advertisers on the Lioninc.com web sites. Examples
include title insurance companies, credit reporting agencies, escrow service
companies, flood insurance companies, mortgage insurance companies, appraisers,
origination software companies, mortgage associations, training companies and
other general vendors to small businesses (i.e. cell phone companies, business
insurance agencies, pager companies, copier companies and general computer
hardware and software companies).

     BORROWERS. Borrowers are currently using the internet to search for
information to assist them in finding a mortgage company. The Morgan Stanley
Dean Witter's 1999 Mortgage Report estimates that around 60% of all mortgage
shoppers did online research and 1% applied for a loan. The primary reason for
an online information search is to find the lowest interest rate. Secondary
reasons include calculations, information, and convenience. The borrower should
become more comfortable with technology and more often move past the information
seeking stage. The report estimates that up to 10% of all mortgage shoppers will
apply online by the Year 2005.

SERVICES AND PRODUCTS

     Lioninc.com offers a number of products and services related to mortgage
brokers, wholesale lenders and industry affiliates. They are as follows:

MORTGAGE BROKER PRODUCTS.

     Lioninc.com offers mortgage brokers various online products and services.
LionPro ("www.lioninc.com") is a subscription service and is the Company's
largest source of revenue. LionChoice ("www.lionchoice.com") provides fee-based
Internet solutions for mortgage brokers.

     LIONPRO SUBSCRIPTION. Brokers have two choices when purchasing LionPro
services. They may choose an individual subscription for just one user; or a
corporate account suitable for multiple users. The corporate account is
discounted in proportion to the number of users. To date, most Lioninc.com
customers are individual subscribers. The subscription includes the following
products:

     LION LOAN SEARCH. LION Loan Search(TM) simplifies, automates and compiles
ratesheet information for brokers in minutes. Instead of wading through a pile
of ratesheets and manually adding or subtracting adjustments, brokers simply
fill out a short form on the Lioninc.com web site. Brokers enter up to 50 loan
variables and LION Loan Search(TM) identifies programs in the Lioninc.com
database, one of the largest in the mortgage industry, which fit their search
criteria. The software generates a program list, ordered by rate, lender and
other key characteristics--using a daily updated database. This feature is the
foundation of the Lioninc.com service, the key time saver for the broker, and
the reason most brokers subscribe.


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     LION LOAN~LINK. Sub-prime loans do not fit as readily into a search format
as "A" credit loans because lenders' views differ for A-, B, C or D credit
ratings. Instead of a loan search, Lioninc.com offers "Loan~Link(TM)" for
sub-prime loan brokers. With LION Loan~Link(TM), brokers fill out a form
containing basic borrower and transaction criteria. Loan~Link(TM) e-mails or
faxes the completed form to the lenders selected by the broker. The interested
lenders respond to the broker.

     LION NEWS NOW. Updated twice daily, LION News Now(TM) offers a concise,
comprehensive review of the Financial Market's rate activity, events and
upcoming economic indicator reports with mortgage market commentary. LION News
Now(TM) offers a daily morning and market close summary by condensing
information from a variety of periodicals and online service reports. Some
members purchase the Lioninc.com services solely to access this feature.

     MARKET SNAPSHOT. The Financial Market Snapshot is currently the only place
where you can find all of the key financial market indicators that are most
relevant to the mortgage industry concisely presented in one clear chart.

     RATESHEETS ON DEMAND AND DOCUMENTS ON DEMAND. Brokers can pull up lender
ratesheets and other documents, view them on the screen, download them to their
PC to print, or have them sent directly to their fax machine.

LIONCHOICE PRODUCTS

     WEB SITE SERVICES. Lioninc.com, through its LionChoice products and
services, develops, hosts and markets web sites for mortgage brokers and retail
originators.

     There are two types of web site packages, custom design packages and
template design packages. The custom design package involves designing a web
site with a `look and feel' that is unique to the company. The package includes
the internet design of company logo, navigational button sets, customer contact
forms, and customized content such as special product offerings, directories,
individual pages, and unique marketing messages. The custom design packages
require a setup fee and a monthly maintenance fee for updates, search engine
placement, and internet strategy coaching.

     The custom design packages support an internet brand and provides
Mortgage101.com technology. The template design package only features the
Mortgage101.com technology with a choice of template designs. The template
designs require a minimal setup fee and monthly maintenance fee for the
Mortgage101.com technology license.

     The Mortgage101.com technology includes the ability to post interest rates
for both conforming and "sub-prime" loan programs, an online library of mortgage
articles, interactive mortgage calculators, a pre-qualification tool, and an
online secure application.

     The Mortgage101.com technology can also be added to any existing web site.
The technology implementation instructions are given to the web developer of the
mortgage company. The technology is linked to the Mortgage101.com site where the
technology contains the `look and feel' of the existing site. Integration can be
accomplished by a web developer in less than one hour.

     The pre-qualification tool and the online secure application drive
potential customer leads and online originations to the mortgage broker or
retail originator. The online secure application is formatted for import into
all major Loan Origination Software, such as Calyx Point and Byte Qualifier. The
online secure application format also interfaces with LION Automated
Underwriting solutions, the 1003 Manager and the Fannie Mae\LION DO Center. This
format supports an online origination path to the mortgage broker or retail
originator from consumer application to Automated Underwriting making a mortgage
loan decision available via the internet.


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     LionChoice also offers an Enterprise Solution for companies who request
custom applications, features, tools, and extensive design work. The Enterprise
Solution is priced "case-by-case" based on the degree of work. A
Multi-Originator package offers companies the ability to deliver an internet
strategy for each of its originators powered by Mortgage101.com technology. Each
originator can control rate and fee pricing and directly receive potential
customer leads and online originations.

     INTERNET MARKETING. Lioninc.com also provides brokers with marketing
opportunities through the Company's network of consumer mortgage sites. The
network includes America Mortgage Online("www.amo-mortgage.com"),
Mortgage101.com and segmented market sites such as BCMortgage.com,
VAMortgageOnline.com, and FHAMortgageOnline.com.

     The consumer network of sites attract approximately 600,000 visitors per
month. Consumers are looking for help in understanding the mortgage process and
searching for interest rates. The Mortgage101.com content is a library of 160
articles and tools designed to provide the answers to mortgage questions. The
AMO Interest Rate Survey features live daily rates from over 400 companies on
over 30 loan programs. The content and rates funnel potential customer leads and
online originations through online forms, a prequalification tool, and a secure
application.

     This internet marketing service enables borrowers and mortgage companies to
use the Internet to develop business-to-consumer relationships. While consumers
are not charged to use this information, the network of America Mortgage Online
web sites provides a lead generator for brokers and retail lenders who pay a
monthly fee to participate in front of AMO-Mortgage.com and Mortgage101.com's
large audiences. The monthly fee allows the mortgage company to participate in
the Interest Rate Survey, list their company in directories, and promote their
marketing message via banner advertising.

LENDER PRODUCTS AND SERVICES

     MARKETING PACKAGES. The Company believes a strong LION Loan Search(TM)
product must contain the majority of lenders in the market. All lenders are
encouraged to post up to ten (10) loan programs in LION Loan Search(TM) at no
cost. Some lenders maximize their exposure in LION Loan Search(TM) by placing
additional programs for a fee.

     The Lender Marketing Package also includes participation in the LION
Loan~Link(TM) service, posting the lender's ratesheet into the Ratesheets on
Demand product, and provides login and password access to the Lioninc.com
system.

     A button leading to the lender's homepage appears next to the lender's name
in the program details section of LION Loan Search(TM), and in the lender list
in LION Loan~Link(TM). Rotating banners on various Lioninc.com pages also give
additional links to lender homepages.

     LENDER HOMEPAGES. Lioninc.com has created web sites for a number of lender
wholesalers in the country. A Lioninc.com generated homepage will typically
include a mission statement of the lender, rolodex of contacts, ratesheets, a
LION Loan Search(TM) that contains only its own programs, documents and forms
needed to submit loans, and a section of current announcements or program
promotional material.

     AUTOMATED UNDERWRITING (AU). Fannie Mae Desktop Originator and Desktop
Underwriter are one of the mortgage industry's leading automated origination and
underwriting systems. Desktop Originator, when used in conjunction with Desktop
Underwriter, delivers fast, objective loan recommendations and provides lenders
with access to many cost and time-saving benefits including streamlined
processing, documentation, and property valuation. Desktop Originator and
Desktop Underwriter also offer lenders access to products that can expand their
markets and help them reach out to more potential homebuyers.


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     In mid-1999, Lioninc.com launched LION-AU through Fannie Mae's Desktop
Originator. For the first time, brokers who are sponsored by Fannie Mae-approved
lenders can use the Internet to send electronic home loan applications directly
into Fannie Mae for automated underwriting through
"www.lioninc.com/desktoporiginator". As a result, Lioninc.com's subscribing
mortgage brokers can quickly deliver an underwriting decision to the customers.

     LOANCAT. Lioninc.com is currently developing software applications to
support online wholesale origination and fulfillment services. As an application
service provider (ASP) in the business-to-business (B2B) space, Lioninc.com will
customize and host a wholesale lender's web site, as well as provide the
software applications needed to automate a lender's loan pipeline. LoanCat will
allow lenders to provide brokers with web-based tools that facilitate an
efficient and fast loan process. The product will feature origination
applications such as product and pricing search engines, real-time rate locking
capabilities, electronic 1003 manager, loan status monitoring and a broadcast
E-mail center. All of these features will be secured by Lioninc.com's
access-control module. This access feature provides a complete and secure
E-commerce solution.

BANNER ADVERTISING

     Lioinc.com has a variety of banner locations available as advertising
spots. These can be linked to a homepage or other marketing material. Fees are
based upon the frequency of the page views and the page location. Purchasers of
LION advertising have included major lenders, industry affiliates and Fannie
Mae.

SALES AND MARKETING

     Of Lioninc.com's principal subscriber base, consisting of mortgage brokers,
wholesale lenders and industry affiliates, brokers currently constitute the
largest source of revenue. As the broker subscriber base grows, it is expected
that the lenders and affiliates seeking access to that broker base will follow.
Consequently, most of the marketing effort is devoted to the broker group. The
Company seeks to focus its marketing efforts or increase its visibility to this
group in a number of ways:

     SALES FORCE. Lioninc.com maintains a professional sales force compensated
on a commission basis after an initial three-month internship. The sales force
make telephone solicitations, handle inbound phone inquiries and contact brokers
who register for the Company's service.

     TRADE SHOWS. The large state mortgage broker associations conduct annual
trade shows which include a schedule of speakers and/or workshops, as well as
exhibition hall where lenders and industry affiliates promote their products
from booths. At many of these shows, Lioninc.com has participated as a speaker
and exhibitor.

     TRADE JOURNALS ADVERTISING AND ARTICLES. There are three primary mortgage
publications, ORIGINATION News, MORTGAGE ORIGINATOR and THE MORTGAGE PRESS. The
first two are national publications with approximately 19,000 and 25,000
subscribers, respectively. THE MORTGAGE PRESS publishes a state association
periodical for 25 states, and distributes the issues at no cost very broadly to
an estimated audience of over 200,000.


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     The Company advertises regularly in these publications. In addition, senior
managers of the Company have contributed articles on Internet usage by brokers
and lenders to trade magazines such as SECONDARY MARKETING EXECUTIVE, MORTGAGE
PRESS and MORTGAGE MATTERS. For additional information on advertising, see Note
A (10) to the Consolidated Financial Statements.

     PRESS RELEASES AND OTHER PRESS COVERAGE. The Company issues press releases
on product introductions and changes, upon entering new states with a database,
and upon achieving certain milestones, such as receiving 600,000 hits per month
on its web sites. These appear without cost in various trade magazines.
Lioninc.com also has been the subject of published reviews of mortgage
technology products, quoted in trade journals and been the subject of articles
written about the Company.

     SPEAKING ENGAGEMENTS. Representatives of the Company from time to time
speak at other industry functions not connected to broker trade shows. As the
Company has become increasingly known for its Internet expertise, the
significance of these engagements has grown. For example, in March 1999, the
Company's National Sales Manager was asked by the World Search Group to speak at
and participate in a panel discussion on mortgage aggregators on the Internet.

     BROADCAST FAX ADVERTISING. Mortgage brokers are particularly accustomed to
receiving solicitations by fax in the form of daily rate sheet distributions by
lenders. The Company has developed a series of broadcast fax advertisements for
the mortgage broker industry.

     DATA FEED TO ORIGINATION SOFTWARE COMPANIES. In certain cases, Lioninc.com
enables its loan program data information to feed directly to the Lioninc.com
member via the member's processing software. Any third party agreements with the
processing software vendor provide Lioninc.com with a mechanism to market to the
vendor's customer.

     The four largest processing software vendors combined represent
approximately 37,000 mortgage originators. As a result, the Lioninc.com service
is displayed to those entities currently using the third party software,
provided they also subscribe to Lioninc.com's services.

     ORGANIZATION SOFTWARE VENDOR INTERFACE INTO LION LOAN SEARCH(TM).
Lioninc.com is participating in an agreement with Calyx Software which allows a
Calyx user to open a borrower file and perform a loan search. The interface
extracts the needed information from the borrower file, launches the user's
browser and accesses the LION Loan Search(TM) results page. This provides
another entry point for the mortgage broker into the Lioninc.com site. Similar
agreements are being pursued with other mortgage software vendors.

     STATE ASSOCIATION MARKETING AGREEMENTS. Lioninc.com has entered into
agreements with the state mortgage broker associations, some of which include:
Colorado, Arizona, and Kansas. The agreements vary, but generally the Company
receives membership lists of broker contacts, speaking engagements and some form
of official recognition or endorsement in return either for paying to the
association a percentage of LION revenues received from state members, or for
offering members a discount on their Lioninc.com subscriptions, and in some
cases for maintaining an association web site.

     LISTING WITH SEARCH ENGINES. As is common with Internet sites, Lioninc.com
has arranged to be listed in all of the major "search engines." The Lioninc.com
URL appears as a search result if the user enters key words such as "mortgage"
or "wholesale mortgage rates." A significant number of brokers, who subscribe to
the Company's services, report finding the site while "surfing the Net."

     NON-MEMBER SECTION AND ONLINE REGISTRATION. Most of the features of the
Lioninc.com site are password protected, however a new broker visiting the web
site without yet having a password is able to visit selected non-member sites.
The visitor is guided through various features, illustrated with "screen
captures" of LION Loan Search(TM) and Loan~Link(TM), with explanations of the
Lioninc.com's service, testimonials of current subscribers, and a form that
allows the broker to register online.


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     In addition to marketing to the broker industry, Lioninc.com markets its
business-to-consumer initiatives in a number of ways to increase the exposure of
the network of consumer sites.

     CONSUMER INTERNET ADVERTISING. In purchasing a home, the first internet web
site that consumers typically visit is a real estate listing or related site. In
refinancing, the consumer typically finds internet sites by searching a web
portal. To attract these consumers to the Lioninc.com network of sites, the
Company purchases banner advertising and content placement on real estate sites
and consumer portals.

     REALTOR MARKETING. Lioninc.com provides a free content package for real
estate and related sites. The free content delivers a Mortgage Center with
Mortgage101.com technology with live rates, interactive calculators, an
extensive library, and online applications with the "look and feel" of the real
estate site. Over 3,200 real estate and related sites participate in the content
program.

     The larger state and national REALTOR associations conduct annual trade
shows which include a schedule of speakers, workshops, and an exhibition hall
where industry affiliates promote their products from booths. Lioninc.com
promotes the Mortgage101.com content program at these trade shows.

     LISTING WITH SEARCH ENGINES. As is common with Internet sites, Lioninc.com
has arranged to be listed in all major "search engines." The URLs of the network
of consumer sites appear if the user enters key words such as "mortgage" or
"mortgage interest rates." Constant analysis of server traffic shows that a
significant number of consumers find these sites while "surfing the Net."

ACQUISITIONS

     On May 17, 1999, the Company exchanged 352,942 shares of its common stock
valued at approximately $600,000 for substantially all of the assets of IMark,
LLC ("IMark), including its mortgage industry Internet sites, and assumed
certain liabilities and obligations. The transaction was accounted for under the
purchase method of accounting. Net assets purchased from IMark totaled $64,782.
The excess purchase price over the fair value of assets purchased from IMark
totaled $566,801 and was allocated to goodwill. The Company incurred $31,582 in
acquisition costs which were comprised primarily of legal and other professional
fees in the second quarter of 1999.

RESEARCH AND DEVELOPMENT

     The Company develops its own proprietary software for providing its
products and services to its customers. These efforts are funded mostly through
the exercise of warrants to purchase the Company's stock. Research and
development expense was approximately $301,000 and $94,000 for 1999 and 1998,
respectively.

COMPETITION

     The market for Internet-based services and products is intensely
competitive and rapidly evolving. There are limited barriers to initial entry,
and the Company expects competition to persist and intensify in the future.

     Most recently, a small number of companies have developed a searchable
database of wholesale loan programs. To the Company's knowledge, none of these
have met with significant commercial success. One company offers a "bidding
room" service, by which lenders can bid on loans packaged by mortgage brokers.
It is unclear whether this service will become popular or whether it will be a
competitive service to Lioninc.com. With limited exception, the primary
competition continues to be the traditional faxed ratesheet.


                                       10
<PAGE>

     The Company believes participation from a significant majority of lenders
is necessary to make a quality product. This creates a difficult barrier to
entry for new competitors. Management anticipates that new competitors will face
significant ramp-up times in making a competitive product successful.
Nevertheless, competitors may include companies with longer operating histories,
greater market presence and name recognition, larger customer bases and greater
financial, technical and marketing resources than the Company.

     The Company will remain in a good competitive position as long it continues
to maintain the quality of its product and its relationships with lenders,
brokers and state associations. The Company's ability to compete successfully
will depend, in large part, on its ability to continually enhance and improve
its existing products and services, to adapt its products and services to the
needs of its customers and potential customers, to successfully develop and
market new products, and to continually improve its operating efficiencies.

     The company is aware of competition in the broker home page development
market. The market is comprised of a few strong competitors, such as Myers and
Ellie Mae. In addition, several industry affiliates, such as the Loan
Origination Software Providers, have entered the market. The market also
consists of small, local web companies who provide services for a wide range of
industries.

     These small, local web companies do not have the technology necessary to
provide mortgage brokers current technology specific to the mortgage industry.
The Company provides them the licensed technology allowing the developer to
facilitate the local relationship. The industry affiliates who have entered the
market view their broker home page development as an ancillary product. These
affiliates are able to deliver technology pertaining to their business model but
have not achieved substantial market share.

     Lioninc.com currently hosts over 400 custom designed sites and 400 template
sites. This places the Company as the #3 provider of internet sites for mortgage
brokers and retail originators. Lioninc.com has the ability to deliver
competitive technology and aggressive advertising campaigns. In addition, the
broker home page product benefits from the market share in our products.

     The consumer mortgage arena is intensely competitive. Well-capitalized
companies spend millions of dollars marketing to the consumer to achieve brand
awareness. Consumers search the Internet looking for information and will
commonly shop two to three companies before making a decision. Also, consumers
prefer to "shop globally and buy locally". The Company's network of consumer
sites delivers value to the consumer on both issues. As an unbiased source of
rate and fee information provided by local brokers, the Company's network of
consumer sites has become a leading mortgage portal destination when measured by
reported consumer traffic. The traffic generated by the network of sites
supports the Company's mortgage broker and retail originator advertising base
with minimal marketing investment. The Company must continue to deliver value to
the mortgage consumer to maintain its market position and advertising revenue.

     Lender homepage competitors include a broad universe of web site makers and
technology companies. However, to the best of the Company's knowledge,
Lioninc.com is one of few companies providing lender web sites with advanced
technology.

     There can be no assurance that the Company will be able to compete
successfully, that competitors will not develop technologies or products that
render the Company's products obsolete or less marketable, or that the Company
will be able to successfully enhance its products, develop new products or lower
costs, when and as needed. Increased competition, price or other circumstances,
could result in erosion of the Company's market share, and may require price
reductions and increased spending on marketing and product development.
Increasing competition for the Company's services could have a material adverse
effect on the Company's business, operating results and financial condition.


                                       11
<PAGE>

GOVERNMENT REGULATION

     The Company is not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to or commerce
on the Internet. However, due to the increasing popularity of the Internet, it
is possible that a number of laws and regulations may be adopted with respect to
the Internet, covering issues such as user privacy, pricing and characteristics
and quality of products and services. There can be no assurance that the
enactment of laws affecting telecommunications will not decrease the growth of
the Internet, which in turn could decrease the demand for the Company's products
and services, increase the cost of doing business, or otherwise have an adverse
effect on the Company's business, operating results or financial condition.
Moreover, the applicability to the Internet of existing laws governing issues
such as property ownership, libel and personal privacy is uncertain. The Company
cannot predict the impact, if any, that future regulation or regulatory changes
might have on its business.

PROPRIETARY RIGHTS

     The Company relies on a combination of copyright and trademark laws, trade
secrets, software security measures, license agreements and nondisclosure
agreements to protect its proprietary technology and software products. The
Company has a variety of registered Internet domain names. The Company currently
has no federally registered trademarks or service marks, nor is it the owner or
assignee of any domestic or foreign patents. There are no trademark or service
mark applications or patent applications pending. The Company cannot be certain
that others will not develop substantially equivalent or superseding proprietary
technology, or that equivalent products will not be marketed in competition with
the Company's products, thereby substantially reducing the value of the
Company's proprietary rights. Furthermore, there can be no assurance that any
confidentiality agreements between the Company and its employees or any license
agreements with its customers will provide meaningful protection for the
Company's proprietary information in the event of any unauthorized use or
disclosure of such proprietary information.

     Although the Company believes that its trademarks and proprietary
technology do not and will not infringe patents or violate proprietary rights of
others, it is possible that its trademark and proprietary rights may not be
valid or that infringement of existing or future patents, trademarks or
proprietary rights of others may occur. In the event the Company's products
infringe proprietary rights of others, the Company may be required to modify the
design of its products, change the name of its products or obtain a license.
There can be no assurance that the Company will be able to do so in a timely
manner, upon acceptable terms and conditions, or at all. The failure to do any
of the foregoing could have a material effect upon the Company. In addition,
there can be no assurance that the Company will have the financial or other
resources necessary to enforce or defend a patent infringement or proprietary
rights violation action. Moreover, if the Company's products infringe patents,
trademarks or proprietary rights of others, the Company could, under certain
circumstances, become liable for damages, which could have a material adverse
effect on the Company.

EMPLOYEES

     At December 31, 1999, the Company had 133 full-time associates, which
included 36 commissioned marketing associates. The Company's future success will
depend, in part, on its ability to continue to attract, retain and motivate
highly qualified technical and management personnel, particularly highly skilled
technical engineers involved in new product development, for whom competition is
intense. From time to time, the Company may employ independent consultants or
contractors to support its research and development, marketing, customer service
and administrative organizations. The Company's employees are not represented by
any collective bargaining unit, and the Company has never experienced a work
stoppage. The Company believes its relations with its employees are good.


                                       12
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY

     The Company's executive offices are located in Renton, Washington, where
the Company currently leases approximately 12,892 square feet, which increases
to 20,093 square feet in the eleventh month of the lease. The lease began
September 13, 1999 and expires on September 30, 2004. The Company has the right
to use this space for its computer information services and related business
uses. For its sales and marketing efforts, the Company leases approximately
5,500 square feet of space in Spokane, Washington, which expires December 31,
2001 and approximately 3,862 square feet in Denver, Colorado, which expires
October 31, 2000.

     The Company's former executive offices located in Mercer Island,
Washington, have been subleased. The Company leases approximately 3,500 square
feet and the lease expires on June 30, 2001. Monthly rent on the space is $6,923
which is offset by monthly subtenant rent of $5,840.

     All leases are operating leases. The Company believes that its current
facilities are adequate and suitable for their current use, and that additional
facilities will be available, when needed, upon commercially reasonable terms.
The Company also believes that all of its leased space and all property
maintained within are adequately insured.

ITEM 3. LEGAL PROCEEDINGS

     To the best of the Company's knowledge, there are no legal actions pending,
threatened or contemplated against the Company.

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 December 31, 1999.

                                     PART II

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

MARKET INFORMATION

     The Company's common stock trades on the OTC Bulletin Board under the
symbol "LINC." The range of high and low bid prices for the Company's common
stock for each quarter during the two most recent fiscal years is as follows:

<TABLE>
<CAPTION>
     Fiscal Year Ended December 31,          1999               1998
                                        ---------------   ----------------
                                         High    Low       High      Low
                                        ------   ------   ------    ------
<S>                                     <C>      <C>      <C>       <C>
     First Quarter                      $2.125   $0.812   $0.656    $0.220
     Second Quarter                      2.187    1.500    2.719     0.500
     Third Quarter                       1.718    0.781    1.938     0.625
     Fourth Quarter                      1.000    0.531    1.062     0.688
</TABLE>


                                       13
<PAGE>

     This table reflects the range of high and low bid prices for the Company's
common stock during the indicated periods, as published by the OTC Bulletin
Board. The quotations merely reflect the prices at which transactions were
proposed, and do not necessarily represent actual transactions. Prices do not
include retail markup, markdown or commissions.

     There were approximately 1,100 holders of record of the Company's common
stock as of April 4, 2000.

DIVIDEND POLICY

     The Company has not paid dividends on its common stock since its inception.
Dividends on common stock are within the discretion of the Board of Directors
and are payable from profits or capital legally available for that purpose. It
is the current policy of the Company to retain any future earnings to finance
the operations and growth of its business. Accordingly, the Company does not
anticipate paying any dividends on common stock in the foreseeable future.

SHARES ELIGIBLE FOR FUTURE SALE

     In general, Rule 144 under the 1933 Act provides that securities may be
sold if there is current public information available regarding the Company and
the securities have been held at least one year. Rule 144 also includes
restrictions on the amount of securities sold, the manner of sale and requires
notice to be filed with the SEC. Under Rule 144 a minimum of one year must
elapse between the later of the date of the acquisition of the securities from
the issuer or from an affiliate of the issuer, and any resale under the Rule. If
a one-year period has elapsed since the date the securities were acquired, the
amount of restricted securities that may be sold for the account of any person
within any three-month period, including a person who is an affiliate of the
Company, may not exceed the greater of 1% of the then outstanding shares of
common stock of the Company or the average weekly trading volume in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of sale is filed with the SEC. If a two-year period has elapsed
since the date the securities were acquired from the issuer or from an affiliate
of the issuer, a seller who is not an affiliate of the Company at any time
during the three months preceding a sale is entitled to sell the shares without
regard to volume limitations, manner of sale provisions or notice requirements.

     SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET. As of
December 31, 1999 a substantial majority of the 31,415,622 outstanding shares of
common stock held by existing shareholders were issued and sold by the Company
in private transactions in reliance on exemptions from the registration
provisions of the Securities Act and are restricted securities within the
meaning of Rule 144 under the Securities Act. Of the outstanding shares,
including shares held by affiliates, 24,671,355 were issued on or before
December 31, 1998, and may be currently eligible for resale in the open market,
if any, in compliance with Rule 144. The sale in the public market of these
shares of restricted common stock under Rule 144 may depress prevailing market
prices of the common stock.

     EFFECT OF OUTSTANDING OPTIONS AND WARRANTS. As of December 31, 1999, there
were outstanding stock options to purchase an aggregate of 5,182,500 shares of
common stock at exercise prices ranging from $.01 to $3.00 per share, and
warrants to purchase 4,247,741 shares of common stock at exercise prices ranging
from $.25 to $1.75. The options are subject to a restriction whereby option
holders have agreed to not sell or otherwise transfer or dispose of shares of
the Company's common stock issued upon exercise of options in an amount which
shall exceed 250,000 shares during any three-month period. See "Principal
Stockholders" and "Description of Capital Stock." The exercise of these
outstanding options and warrants will dilute the percentage ownership of the
Company's stockholders, and any sales in the public market of shares of common
stock underlying such securities may adversely affect prevailing market prices
for the common stock. Furthermore, the terms upon which the Company will be able
to obtain additional equity capital may be adversely affected since the holders
of these outstanding securities can be expected to exercise their respective
rights therein at a time when the Company would, in all likelihood, be able to
obtain any needed capital on terms more favorable to the Company than those
provided in such securities.


                                       14
<PAGE>

     NO ASSURANCE OF ESTABLISHED PUBLIC TRADING MARKET. Although the common
stock of the Company trades on the OTC Bulletin Board, there can be no assurance
that a regular trading market for the securities will be sustained. The OTC
Bulletin Board is an unorganized, inter-dealer, over-the-counter market which
provides significantly less liquidity than The NASDAQ Stock Market. Quotes for
stocks included on the OTC Bulletin Board are not listed in the financial
sections of newspapers as are those for The NASDAQ Stock Market. Therefore,
prices for securities traded solely on the OTC Bulletin Board may be difficult
to obtain and holders of common stock may be unable to resell their securities
at or near their original offering price or at any price. In the event the
Company's securities are not included on the OTC Bulletin Board and do not
qualify for NASDAQ, quotes for the securities may be included in the "pink
sheets" for the over-the-counter market.

     "PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY
OF SECURITIES. The Securities and Exchange Commission (the "SEC") has adopted
regulations which generally define "penny stock" to be any equity security that
is not traded on a national securities exchange or NASDAQ and that has a market
price of less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. As long as the Company's securities are
trading at less than $5.00 per security on the OTC Bulletin Board, the Company's
securities are subject to rules that impose additional sales practice
requirements on broker-dealers who sell these securities to persons other than
established customers and accredited investors (generally, investors with a net
worth in excess of $1,000,000 or an individual annual income exceeding $200,000,
or, together with the investor's spouse, a joint income of $300,000). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require, among other things, the delivery, prior to the transaction, of a
risk disclosure document mandated by the Commission relating to the penny stock
market and the risks associated therewith. The broker-dealer must also disclose
the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
penny stock rules may restrict the ability of broker-dealers to sell the
Company's securities and may affect the ability of shareholders of the Company
to sell their securities in the secondary market.

RECENT SALES OF UNREGISTERED SECURITIES

     During the year ended December 31, 1999, the Company has issued and sold
the following securities:

     1.   At various dates throughout the year, the Company sold an aggregate of
          1,957,611 shares of common stock to 45 persons at purchase prices
          ranging from $.25 to $.50 per share to existing shareholders of the
          Company in connection with the exercise of outstanding warrants, for
          an aggregate purchase price of $943,401. The investors were accredited
          or sophisticated purchasers. The Company issued the shares in reliance
          upon the exemption from registration under Section 4(2) of the
          Securities Act. The recipients of securities represented their
          intentions to acquire the securities for investment only, and not with
          a view to sell, or for sale in connection with any resale or
          distribution. Appropriate legends were affixed to the share
          certificates issued in the transactions. The offering was made without
          the use of any general solicitation or advertising. All recipients had
          access to all material information concerning the Company.


                                       15
<PAGE>

     2.   At various dates throughout the year, the Company sold an aggregate of
          4,317,500 shares of common stock to 18 persons at purchase prices
          ranging from $.01 to $1.00 per share in connection with the exercise
          of outstanding options. Cash consideration was received from 10
          persons in the total amount of $65,950 for 865,000 shares at exercise
          prices ranging from $.01 to $.50 per share. Promissory notes were
          received from 9 persons in the total amount of $1,081,251 for
          3,452,500 shares at an exercise price ranging from $.25 to $1.00 per
          share. The promissory notes accrue interest at 10% per annum with
          maturity dates ranging from March 1, 2000 to April 1, 2001. The
          issuances of common stock to eighteen of the employees upon exercise
          of the stock options were deemed to be exempt from registration under
          the Securities Act in reliance on Rule 701, and were issued pursuant
          to a written compensation benefit plan in consummation of offers made
          prior to the Company becoming subject to the reporting requirements of
          the Exchange Act. The remaining issuance was deemed exempt from
          registration under the Securities Act in reliance on Section 4(2) of
          the Securities Act as a transaction by an issuer not involving any
          public offering. The investor was an accredited purchaser and an
          executive officer of the Company.

     3.   On September 9, 1999, the Company granted warrants to 2 participants
          as guarantors on Lioninc.com's $650,000 line of credit. The warrants
          granted totaled 280,000 common shares at an exercise price of $1.06
          and an expiration date of September 9, 2001. The granting of stock
          warrants did not require registration under the Securities Act, or an
          exemption therefrom, since the grants did not involve a "sale" as the
          term is used in Section 2(3) of the Securities Act.

     4.   From May to December 1999, the Company granted warrants for financial
          advisory services. The warrants were granted to 5 participants for a
          total of 100,000 common shares at exercise prices ranging from $.625
          to $1.75 and expiration dates ranging from December 2001 to May 2002.
          The granting of stock warrants did not require registration under the
          Securities Act, or an exemption therefrom, since the grants did not
          involve a "sale" as the term is used in Section 2(3) of the Securities
          Act.

     5.   On May 17, 1999, the Company exchanged 352,942 shares of its common
          stock valued at approximately $600,000 for substantially all of the
          assets of IMark, LLC ("IMark), including its mortgage industry
          Internet sites, and assumed certain liabilities and obligations. The
          Company issued the shares in reliance upon the exemption from
          registration under Section 4(2) of the Securities Act. The recipients
          of securities represented their intentions to acquire the securities
          for investment only, and not with a view to sell, or for sale in
          connection with any resale or distribution. Appropriate legends were
          affixed to the share certificates issued in the transactions. The
          offering was made without the use of any general solicitation or
          advertising. All recipients had access to all material information
          concerning the Company.

     6.   Pursuant to the Company's 1998 Stock Option Plan, the Company granted
          stock options to 93 employees at various dates from January to
          December 1999. These stock options were comprised of 2,602,500 shares
          of common stock, expire 5 years from the date of grant, vest in
          quarterly increments over a 4 year period and have exercise prices,
          based on the market price at the date of grant, ranging from $.66 to
          $2.42 per share. The Company also granted stock options to two
          contractors for services received. These options were comprised of
          60,000 shares of common stock, expire over a range of one and one-half
          to 4 years from the date of grant, vest upon the completion of the
          related services provided and have exercise prices ranging from $.75
          to $.92 per share. The granting of stock options did not require
          registration under the Securities Act, or an exemption therefrom,
          since the grants did not involve a "sale" as the term is used in
          Section 2(3) of the Securities Act.


                                       16
<PAGE>

     7.   During the period from July to August 1999, convertible debentures for
          2 persons were converted to 116,214 shares of common stock at prices
          ranging from $1.39 to $1.73 per share. The Company issued the shares
          in reliance upon the exemption from registration under Section 4(2) of
          the Securities Act in reliance on Rule 506 promulgated thereunder. The
          recipients of securities represented their intentions to acquire the
          securities for investment only, and not with a view to sell, or for
          sale in connection with any resale or distribution. Appropriate
          legends were affixed to the certificates issued in the transactions.
          The offering was made without the use of any general solicitation or
          advertising. All recipients had access to all material information
          concerning the Company.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

     The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Financial
Statements and the related Notes included elsewhere in this document.

     Except for the historical information contained herein, the matters
discussed in this Form 10 - KSB include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Act of 1934. All statements that look forward in time or include
anything other than statements of historical fact are forward-looking
statements. Such statements are based upon the beliefs of, and information
currently available to, the Company's management, and involve risks and
uncertainties that may affect the Company's actual results of operations.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Those risks and uncertainties include but
are not limited to: (i) uncertainties of achieving profitability; (ii) market
demand for quality, accurate and timely information on a consistent basis; (iii)
the competitive market for Internet-based services in which the Company
operates, and uncertainties as to continued end-user acceptance of the Company's
services and products; (iv) dependence on the Internet and current software
standards; (v) dependence on mortgage brokers and the mortgage brokerage
industry; (vi) possible under-capitalization and the need for future financing;
(vii) dependence on hardware and other equipment and services used for system
database security; (viii) the impact of mergers and acquisitions; (ix) the
impact of the Year 2000 related issues; and (x) risks associated with the
introduction of new products and services.

     The Company disclaims any obligation to update any forward-looking
statements whether as a result of new information, future events or otherwise.

RESULTS OF OPERATIONS

     Mortgage brokers, wholesale lenders and industry affiliates constitute
Lioninc.com's principal income base, and therefore, the Company's primary
sources of revenue. While borrowers are not currently part of Lioninc.com's
revenue base, they directly impact the Company's core customer base.

     Certain reclassifications have been made to the 1998 consolidated financial
statements to conform to the 1999 presentation.


                                       17
<PAGE>

REVENUES

     Revenues increased to $4,241,277 from $1,856,336 for the years ended
December 31, 1999 and 1998, respectively. This represents an increase of
$2,384,941 or 128%. Total revenues of $4,241,277 for 1999 were comprised of
mortgage broker fees of $3,162,973 or 74%, lender fees of $785,758 or 19%, ad
banner revenues of $192,040 or 5%, and broadcast fax fees of $100,506 or 2%.
Total revenues of $1,856,336 for 1998 were comprised of mortgage broker fees of
$1,231,503 or 66%, lender fees of $392,260 or 21%, ad banner revenues of
$136,669 or 7%, and broadcast fax fees of $95,904 or 5%.

     Three areas of the Company's business have continued to contribute to a
majority of the increase over the previous year. First, the on-going development
of the Company's growing base of subscribing mortgage brokers and participating
lenders by region throughout the United States has contributed to a majority of
the growth in its core LION-Pro products, representing $1,101,685 of the
$2,384,941 increase. Second, as a result of the acquisition of the IMark assets
and its mortgage industry Internet sites on May 17, 1999, LION-Choice products
contributed $829,785 of new revenues. Finally, the Company's lender services
area contributed $393,498 of new revenues.

DIRECT COSTS

     Direct costs are comprised primarily of web site development and salaries
related to the daily updates to rates, fees and other loan program information
in the mortgage lender database. Direct costs increased to $589,499 from
$325,092 for 1999 and 1998, respectively. This represents an increase of
$264,407 or 81%. Direct costs as a percentage of revenues improved to 14% from
18% for 1999 and 1998, respectively. The increase is primarily due to the
addition of web masters to accommodate the increased business in web site
development and to the addition of database personnel to handle the increased
volume of rate, fee and other program information that is updated on a daily
basis.

SELLING AND MARKETING

     Marketing and selling expenses are comprised of marketing and advertising
costs, trade show costs, sales salaries and related support costs. Marketing and
selling expenses increased to $2,071,970 from $791,681 for 1999 and 1998,
respectively. This represents an increase of $1,280,289 or 162%. These expenses
as a percentage of revenues were 49% and 43% for 1999 and 1998, respectively.
The increase in costs was due primarily to (1) increased use of resources for
advertising, direct mail and trade show programs and (2) an increase in the
tele-marketing sales effort.

GENERAL AND ADMINISTRATIVE

     General and administrative expenses are comprised of management and
administrative salaries and related costs, outside consulting services,
telecommunications expenses, occupancy costs, and other administrative related
expenses. General and administrative expenses increased to $2,734,526 from
$1,598,973 for 1999 and 1998, respectively. This represents an increase of
$1,135,553 or 71%. General and administrative expenses as a percentage of
revenues improved to 64% from 86% for 1999 and 1998, respectively. The increase
in costs was due primarily to (1) establishment of an executive management team
for the operating company, Lioninc.com (2) management consulting services for
strategic planning, accounting and legal expenses supporting increased external
reporting requirements with the SEC and investors, and (3) investment in
systems, processes and occupancy costs in order to provide the Company's value
added products and services in the future.

COMPENSATION FROM STOCK OPTIONS ISSUED UNDER FAIR MARKET VALUE

     During 1999, certain officers and employees exercised stock options in
consideration for nonrecourse promissory notes. Under APB Opinion No. 25, the
issuance of stock options under such notes is in essence a new granting of
options. By issuing nonrecourse notes, the Company extended the original terms
of the fixed award, creating a new measurement date. As such, additional
compensation cost is recognized to the extent that the intrinsic value of the
new award exceeds the original intrinsic value of the original award. For the
year ended December 31, 1999, the Company recorded compensation expense of
$2,190,989 for the difference between the original intrinsic value and the
intrinsic value of the new award.


                                       18
<PAGE>

RESEARCH AND DEVELOPMENT

     Research and development expenses are comprised primarily of engineering
salaries and related costs. Research and development expenses increased to
$300,738 from $94,248 for 1999 and 1998, respectively. This represents an
increase of $206,490 or 219%. The increase is primarily due to the Company's
increased efforts to develop its business-to-business (B2B) strategy through
automated underwriting with Fannie Mae and its LoanCat project for supporting
online wholesale origination and fulfillment services. The Company expects to
spend more time and resources on its B2B strategy in 2000.

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expenses increased to $241,351 from $81,013
for 1999 and 1998, respectively. This represents an increase of $160,338 or
198%. Depreciation and amortization expenses were 6% and 4% of revenues for 1999
and 1998, respectively. The increase of $160,338 was due primarily to the (1)
purchase of telecommunications equipment and computer hardware and (2)
capitalization of internally developed software needed to expand and improve the
Company's telecommunications and computer systems infrastructure. The Company
expects these capital expenditure requirements to continue to grow in the future
in order to provide its value added products and services in both a timely and
efficient manner. In addition, goodwill from the May 17, 1999 IMark acquisition
of assets totaling $566,801, contributed approximately $66,000 of amortization
expense for 1999.

INTEREST EXPENSE

     Interest expense is comprised primarily of (1) interest on convertible
debentures and amortization of loan fees and interest related to the Lioninc.com
line of credit for 1999 and (2) interest on convertible debentures, related
party debt and notes payable for 1998. All applicable debt accrued interest at
rates ranging from 10% to 12%.

     Interest expense of $173,267 for 1999 is primarily attributed to two
convertible debentures for $96,356 and loan fees and interest on the Company's
line of credit for $74,398. Interest expense of $203,604 for 1998 is primarily
due to convertible debentures for $160,879 and notes payable for $42,033.

INTEREST INCOME

     Interest income increased to $48,857 from $10,557 for 1999 and 1998,
respectively. The increase is primarily due to interest earned on promissory
notes related to the exercise of stock options throughout 1999.

LIQUIDITY AND CAPITAL RESOURCES

     Since its inception, the Company has financed its operations and capital
expenditure requirements through private placements, exercise of stock warrants,
issuance of convertible debentures and borrowings from related parties and
others. At December 31, 1999, the Company had approximately $368,649 in cash and
cash equivalents.


                                       19
<PAGE>

     During 1999, the Company used net cash of $995,417 in its operating
activities, compared to the use of $748,885 for operations in 1998. The increase
in cash used in operations was primarily attributable to increased expenses in
(1) research and development in internal software for automated underwriting and
wholesale origination and fulfillment services, (2) advertising, direct mail and
trade show programs, and (3) additional occupancy and related costs for future
growth.

     During 1999, the Company used net cash of $833,914 for its investing
activities as compared to $143,894 in 1998. The increase consisted primarily of
$371,503 in capitalized software development costs and $489,277 for the
acquisition of property and equipment for its expanded Seattle, Spokane and
Denver operations.

     During 1999, the Company received net cash of $1,631,213 from its financing
activities as compared to $1,354,942 in 1998. Sources of funds for 1999 were
$943,401 from the exercise of warrants, $587,550 from borrowings against a line
of credit, $65,950 from the exercise of stock options and $34,312 received from
related parties.

     During fourth quarter 1999, the Company's success rate at converting
warrants deteriorated. Only $270,906 out of $840,460 of warrants that were
expiring during the fourth quarter were exercised, for a conversion rate of only
32%. It became apparent to the Company that an adequate number of warrants were
not going to be exercised during fourth quarter 1999 and first quarter 2000 to
maintain the Company's current level of spending. As a result, the Company has
aggressively implemented a new plan that will generate profitability and
positive cash flow from operations either by the end of the first quarter of
2000 or no later than the second quarter.

     In addition, the Company currently is authorized to issue up to 5,000,000
shares of preferred stock. Plans are in process to raise $1.5 to $3.0 million
through a private placement of preferred stock convertible into shares of common
stock. The Company anticipates proceeds from this financing to be received
during April and May of 2000.

     Management believes these plans provide for continuance of operations
through January 1, 2001. However, there can be no assurance that the Company
will be able to obtain sufficient additional financing or be successful in its
future operations.

YEAR 2000 COMPLIANCE

     The Company completed a thorough and extensive review during 1999 of all
computer information systems and related software applications and found them to
be year 2000 ("Y2K") compliant. The monitoring for Y2K compliance is an on-going
process for any new systems development performed or contemplated by the
Company. The Company has purchased software for internal use from outside
suppliers who have certified that they are Y2K compliant. To date, the Company's
cost to ascertain and to maintain Y2K compliance has been minimal. There have
been no Y2K problems during the first quarter of 2000, therefore, no increased
cost exposure is anticipated at this time.

     However, significant uncertainty exists concerning the potential costs and
effects associated with Y2K compliance outside of the Company's control. Since
the Company is reliant on the Internet as the source to provide its suite of
products and services, the real concern is whether the Internet itself will
fail. This would have a material adverse affect on the Company's business,
results of operations and financial condition. The Company has not yet developed
a contingency plan to operate in the event that any critical systems are not Y2K
compliant, or if failure of vendor, supplier or third party systems have a
material effect on the Company.


                                       20
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

     The following consolidated financial statements of Plenum Communications,
Inc. are included in Item 7:

     Report of Independent Certified Public Accountants
     Consolidated Balance Sheets
     Consolidated Statements of Operations
     Consolidated Statement of Stockholders' Equity
     Consolidated Statements of Cash Flows
     Notes to Consolidated Financial Statements











                                       21
<PAGE>

                Report of Independent Certified Public Accountant


Board of Directors and Stockholders
Plenum Communications, Inc.

We have audited the accompanying consolidated balance sheets of Plenum
Communications, Inc. and Subsidiary as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended. 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 auditing standards generally accepted
in the United States. 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 consolidated 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 consolidated financial position of Plenum
Communications, Inc. and Subsidiary as of December 31, 1999 and 1998, and the
consolidated results of their operations and their consolidated cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States.

/s/  Grant Thornton LLP
Seattle, Washington
February 18, 2000




                                       22
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                           CONSOLIDATED BALANCE SHEETS

                                  December 31,

<TABLE>
<CAPTION>
                                     ASSETS

                                                                                1999            1998
                                                                            ------------    ------------
<S>                                                                         <C>             <C>
CURRENT ASSETS
    Cash and cash equivalents                                               $    368,649    $    566,767
    Accounts receivable, less allowance for doubtful accounts of $148,179
       and $23,350 in 1999 and 1998, respectively                                380,547         121,302
    Prepaid expenses and other                                                   236,584          12,705
                                                                            ------------    ------------
         Total current assets                                                    985,780         700,774

PROPERTY AND EQUIPMENT, net                                                      981,530         212,179

OTHER ASSETS
    Goodwill - net                                                               500,674              --
    Other assets                                                                  37,177           6,351
                                                                            ------------    ------------
                                                                            $  2,505,161    $    919,304
                                                                            ============    ============

                                   LIABILITIES

CURRENT LIABILITIES
    Line of credit                                                          $    587,550    $         --
    Accounts payable                                                             434,922          45,016
    Accrued liabilities                                                          415,152         183,626
    Deferred revenue                                                             289,930          97,828
    Related party payables                                                        60,500          26,188
    Convertible debentures                                                            --          85,032
                                                                            ------------    ------------
         Total current liabilities                                             1,788,054         437,690

COMMITMENTS                                                                           --              --

STOCKHOLDERS' EQUITY
    Preferred stock, par value $.001 per share;
       authorized 5,000,000 shares; none outstanding                                  --              --
    Common stock - authorized, 50,000,000 shares of $.001 par value               31,416          24,671
    Additional contributed capital                                            11,187,120       5,879,970
    Notes receivable from stockholders                                        (1,289,063)       (207,812)
    Accumulated deficit                                                       (9,212,366)     (5,215,215)
                                                                            ------------    ------------
                                                                                 717,107         481,614
                                                                            ------------    ------------
                                                                            $  2,505,161    $    919,304
                                                                            ============    ============
</TABLE>

The accompanying notes are an integral part of these statements.


                                       23
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             Year ended December 31,

<TABLE>
<CAPTION>
                                                                         1999          1998
                                                                     -----------    -----------
<S>                                                                  <C>            <C>
Revenues                                                             $ 4,241,277    $ 1,856,336

Expenses
    Direct costs                                                         589,499        325,092
    Selling and marketing                                              2,071,970        791,681
    General and administrative                                         2,734,526      1,598,973
    Compensation from stock options issued under fair market value     2,190,989             --
    Research and development                                             300,738         94,248
    Depreciation and amortization                                        241,351         81,013
                                                                     -----------    -----------
                                                                       8,129,073      2,891,007
                                                                     -----------    -----------
         Operating loss                                               (3,887,796)    (1,034,671)

Other income (expense)
    Interest expense                                                    (173,267)      (203,604)
    Interest income                                                       48,857         10,557
    Other income                                                          15,055             --
                                                                     -----------    -----------
         NET LOSS                                                    $(3,997,151)   $(1,227,718)
                                                                     ===========    ===========

Loss per common share - basic and diluted                            $      (.15)   $      (.06)
                                                                     ===========    ===========
</TABLE>


The accompanying notes are an integral part of these statements.


                                       24
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                     Years ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                                           Notes
                                                Common stock                 Additional  receivable
                                           -------------------   Treasury   contributed     from         Accumulated
                                             Shares     Amount     stock      capital    stockholders      deficit         Total
                                           ----------  -------   --------   -----------  -------------   -----------    -----------
<S>                                        <C>         <C>       <C>        <C>           <C>            <C>            <C>
Balance at January 1, 1998                 18,154,706  $18,155   $   (350)  $ 3,204,250   $        --    $(3,987,497)   $  (765,442)
Issuance of common stock in conjunction
  with a Private Placement Offering           577,000      577         --       143,673            --             --        144,250
Issuance of common stock in conjunction
  with exercise of warrants                 2,670,980    2,671         --     1,304,069            --             --      1,306,740
Issuance of common stock in conjunction
  with exercise of stock options              402,500      402         --       243,035      (207,812)            --         35,625
Issuance of common stock for consulting
  and marketing services received              12,000       12         --         2,988            --             --          3,000
Issuance of stock options for consulting
  services received                                --       --         --        26,957            --             --         26,957
Issuance of common stock for drawings           1,600        2         --           398            --             --            400
Issuance of common stock for related
   party debt                               1,790,309    1,790         --       445,787            --             --        447,577
Issuance of common stock for notes payable    730,429      730         --       202,651            --             --        203,381
Issuance of common stock for conversion
  of debentures                               331,831      332         --       306,162            --             --        306,494
Retirement of treasury stock                       --       --        350            --            --             --            350
Net loss for the year                              --       --         --            --            --     (1,227,718)    (1,227,718)
                                           ----------  -------   --------   -----------   -----------    -----------    -----------
Balance at December 31, 1998               24,671,355   24,671         --     5,879,970      (207,812)    (5,215,215)       481,614
Issuance of common stock in conjunction
  with exercise of warrants                 1,957,611    1,958         --       941,443            --                       943,401
Issuance of common stock in conjunction
  with exercise of stock options            4,317,500    4,318         --     1,142,883    (1,081,251)            --         65,950
Issuance of warrants for services received         --       --         --        60,955            --             --         60,955
Issuance of warrants for financing costs           --       --         --       134,000            --             --        134,000
Issuance of stock options for consulting
  services received                                --       --         --        55,960            --             --         55,960
Issuance of stock options to employees
  under fair market value                          --       --         --     2,190,989            --             --      2,190,989
Issuance of common stock for conversion
  of debentures                               116,214      116         --       181,272            --             --        181,388
Issuance of common stock in conjunction
  with purchase of IMark                      352,942      353         --       599,648            --             --        600,001
Net loss for the year                              --       --         --            --            --     (3,997,151)    (3,997,151)
                                           ----------  -------   --------   -----------   -----------    -----------    -----------
Balance at December 31, 1999               31,415,622  $31,416   $     --   $11,187,120   $(1,289,063)   $(9,212,366)   $   717,107
                                           ==========  =======   ========   ===========   ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part of this statement.


                                       25
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,

<TABLE>
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents                                1999          1998
                                                                            -----------    -----------
<S>                                                                         <C>            <C>
Cash flows from operating activities
    Net loss                                                                $(3,997,151)   $(1,227,718)
    Adjustments to reconcile net loss to net cash used in operating
       activities
          Depreciation and amortization                                         241,351         81,013
          Interest earned on notes receivable                                   (33,242)        (6,351)
          Interest expense on notes payable                                          --         30,401
          Interest expense on convertible debentures                             96,356        160,633
          Warrants issued for services received                                  60,955             --
          Warrants issued for financing costs                                    44,667             --
          Common stock and stock options issued for services received            55,960         29,957
          Common stock issued for drawings                                           --            400
          Retirement of treasury stock                                               --            350
          Compensation expense on stock options issued under fair market
              value                                                           2,190,989             --
          Changes in assets and liabilities, net of effect of purchase of
              IMark, Inc.
              Accounts receivable                                              (180,608)          (374)
              Prepaid expenses and other                                        (89,517)        32,343
              Accrued liabilities                                               136,456         94,424
              Accounts payable                                                  384,236         10,618
              Deferred revenue                                                  131,308         45,419
              Other assets                                                      (37,177)            --
                                                                            -----------    -----------
                  Net cash used in operating activities                        (995,417)      (748,885)

Cash flows from investing activities
    Capitalized software development costs                                     (371,503)            --
    Cash received for purchase of assets with common stock                       26,866             --
    Purchase of property and equipment                                         (489,277)      (143,894)
                                                                            -----------    -----------
                  Net cash used in investing activities                        (833,914)      (143,894)

Cash flows from financing activities
    Payments on notes payable                                                        --         (8,500)
    Payments on  convertible debentures                                              --         (6,562)
    Proceeds from (payments on) related party payables                           34,312       (116,611)
    Proceeds from line of credit, net                                           587,550             --
    Proceeds from issuance of common stock and exercise of stock options         65,950        179,875
    Proceeds from exercise of warrants                                          943,401      1,306,740
                                                                            -----------    -----------
                  Net cash provided by financing activities                   1,631,213      1,354,942
                                                                            -----------    -----------

Net (decrease) increase in cash and cash equivalents                           (198,118)       462,163
Cash and cash equivalents at beginning of period                                566,767        104,604
                                                                            -----------    -----------
Cash and cash equivalents at end of period                                  $   368,649    $   566,767
                                                                            ===========    ===========
</TABLE>

Supplemental cash flow information and non-cash investing and financing
activities
  See note N

The accompanying notes are an integral part of these statements.

                                       26
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE A - SUMMARY OF ACCOUNTING POLICIES

Plenum Communications, Inc. (the Company), a Minnesota corporation, does
business through its wholly-owned subsidiary, Lioninc.com, formerly known as
LION, Inc., a Washington corporation. Lioninc.com provides its subscribers,
principally mortgage brokers and agents, electronic access to a database of
mortgage offerings by a multitude of lenders throughout the United States.

A summary of significant accounting polices consistently applied in the
preparation of the accompanying consolidated financial statements follows.

1.   PRINCIPLES OF CONSOLIDATION

The financial statements include the accounts of the Company and its
wholly-owned subsidiary. All significant intercompany balances and transactions
have been eliminated.

2.   CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all
highly-liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

3.   REVENUE RECOGNITION

Subscription and service fees are recognized as revenue over the respective
subscription periods or at the time the services are provided. Deferred revenue
is recorded on prepaid subscriptions for periods ranging from 3 to 12 months and
on advance billings for the subsequent months subscriptions and services
provided.

4.   PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives, principally on a straight-line basis. The estimated
lives in determining depreciation are as follows:

        Computer equipment             3 to 5 years
        Computer software              3 to 5 years
        Equipment                           5 years

Leasehold improvements are amortized over the lives of the respective leases or
the service lives of the improvements, whichever is shorter.


                                        27
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued

5.   CAPITALIZED SOFTWARE DEVELOPMENT COSTS

During 1999, the Company capitalized software development costs, intended for
internal use, totaling $420,503. These costs are included in computer software
in property and equipment and are amortized over a period of three years.

6.   GOODWILL

Goodwill represents the excess cost of acquiring the assets of IMark, LLC over
the fair value of net assets acquired at the date of acquisition, which is
amortized using a straight-line method over five years. The Company periodically
reviews goodwill to assess recoverability. Impairment is recognized in operating
results if expected future operating undiscounted cash flows of the acquired
assets is less than the carrying value of the goodwill. Accumulated amortization
totaled $66,127 at December 31, 1999.

7.   USE OF ESTIMATES

In preparing the Company's financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

8.   FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with the requirements of Statement of Financial Accounting
Standards No. 107 - "Disclosure About Fair Value of Financial Instruments", the
following methods and assumptions were used to estimate the fair value of each
class of financial instruments.

     -    LINE OF CREDIT - The carrying amount approximates fair value because
          of their short-term nature.

     -    RELATED PARTY PAYABLES AND CONVERTIBLE DEBENTURES - It was not
          practicable to estimate the fair value due to the specific nature of
          the payables and debentures.

9.   LOSS PER COMMON SHARE

Loss per share is based on the average number of shares outstanding during each
period. The weighted average number of common shares outstanding were 27,084,016
and 22,190,181 for the years ended December 31, 1999 and 1998, respectively. The
computation for loss per common share assuming dilution for the years ended
December 31, 1999 and 1998 was anti-dilutive; and therefore, is not included.


                                        28
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued

10.  ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising expense was
approximately $144,500 and $69,700 for the years ended December 31, 1999 and
1998, respectively.

11.  RESEARCH AND DEVELOPMENT COSTS

All expenditures for research and development costs are expensed in the year
incurred.

12.  RECLASSIFICATIONS

Certain reclassifications have been made to the 1998 consolidated financial
statements to conform to the 1999 presentation.


NOTE B - BUSINESS COMBINATIONS

On May 17, 1999, the Company exchanged 352,942 shares of its common stock (the
Plenum shares) valued at approximately $600,000 for substantially all of the
assets of IMark, LLC ("IMark), including its mortgage industry Internet sites,
and assumed certain liabilities and obligations. The transaction was accounted
for under the purchase method of accounting. Net tangible assets purchased from
IMark totaled $64,782. The excess purchase price over the fair value of tangible
assets purchased from IMark totaled $566,801 and was allocated to goodwill. The
Company incurred $31,582 in acquisition costs which were comprised primarily of
legal and other professional fees.

In conjunction with the purchase, it was agreed that if on the date one year
from the date of closing (May 17, 2000), the average market price of the Plenum
shares is less than $600,000, the Company, at its discretion, will make up the
difference by either a payment of cash or through the issuance of additional
shares of the Company's common stock.

The following table reflects the pro forma consolidated results of operations of
the acquisition of the IMark assets as if it had occurred at the beginning of
the first period presented.

<TABLE>
<CAPTION>

                                        Year ended December 31,
                                -----------------------------------------
                                       1999                  1998
                                -------------------    ------------------
<S>                             <C>                    <C>
Revenues                        $     4,482,943        $    2,024,687
Net loss                        $    (3,953,908)       $   (1,156,416)
Loss per common share           $         (.15)        $         (.05)

</TABLE>


                                        29
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE C - MANAGEMENT PLANS

During the fourth quarter of 1999, it became apparent to the Company that an
adequate number of warrants were not going to be exercised to maintain the
Company's current level of spending. The Company has aggressively implemented a
new plan that will generate profitability and positive cash flow from operations
either by the end of the first quarter of 2000 or no later than the second
quarter.

In addition, the Company currently is authorized to issue up to 5,000,000 shares
of preferred stock. Plans are in process to raise $1.5 to $3.0 million through a
private placement of preferred stock convertible into shares of common stock.
The Company anticipates proceeds from this financing to be received during April
and May of 2000.

Management believes these plans provide for continuance of operations through
January 1, 2001. However, there can be no assurance that the company will be
able to obtain sufficient additional financing or be successful in its future
operations.

NOTE D - PREPAID EXPENSES AND OTHER

Prepaid expenses and other consist of the following as of December 31:

<TABLE>
<CAPTION>

                                   1999       1998
                                 --------   --------
<S>                              <C>        <C>
Deferred financing costs         $115,500   $   --
Prepaid expenses                   69,490      3,341
Other receivables                  51,594      9,364
                                 --------   --------

                                 $236,584   $ 12,705
                                 ========   ========

</TABLE>

NOTE E - PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of December 31:

<TABLE>
<CAPTION>

                                                        1999         1998
                                                     ----------   ----------
<S>                                                  <C>          <C>
Computer equipment                                   $  661,266   $  360,042
Computer software                                       584,316      166,325
Equipment                                               246,316       63,741
Leasehold improvements                                   37,714       10,690
                                                     ----------   ----------
                                                      1,529,612      600,798
Less accumulated depreciation and amortization          548,082      388,619
                                                     ----------   ----------
                                                     $  981,530   $  212,179
                                                     ==========   ==========

</TABLE>


                                        30
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE F - ACCRUED LIABILITIES

Accrued liabilities consist of the following as of December 31:

<TABLE>
<CAPTION>

                                           1999       1998
                                         --------   --------
<S>                                      <C>        <C>
Salaries                                 $153,380   $ 68,129
Payroll taxes                              86,793     45,036
Vacation                                   69,100     33,223
Accrued software costs capitalized         49,000       --
Other                                      56,879     37,238
                                         --------   --------

                                         $415,152   $183,626
                                         ========   ========

</TABLE>

NOTE G - LINE OF CREDIT

The Company has a line of credit with a bank collateralized by accounts
receivable, computer software and equipment, which expires September 7, 2000.
Under the terms of the line of credit, the Company can borrow up to $650,000 at
prime plus 1.75% (10.25% at December 31, 1999). The balance due on the line of
credit at December 31, 1999 totaled $587,550. The line of credit is guaranteed
by a director and a shareholder of the Company.

The Company is required to comply with certain covenants under the line of
credit agreement. As of December 31, 1999, the Company was not in compliance
with one of those covenants. The Company obtained a waiver from the bank waiving
the covenant as of December 31, 1999. The Company remains obligated to meet all
covenants for the year 2000.

In conjunction with obtaining the line of credit, the Company issued 280,000
warrants to purchase common stock at $1.06 per share. The Company is amortizing
the fair value of the warrants totaling $134,000 over the term of the line of
credit. Deferred financing costs of approximately $115,500 related to the
warrants and other fees is recorded in prepaid expenses and other in the
consolidated financial statements.

NOTE H - CONVERTIBLE DEBENTURES

The Company had convertible debentures totaling $85,032 at December 31, 1998,
including accrued interest of $49,032. Maturity dates ranged from July through
August 1999. Interest was compounded and accrued semi-annually at a rate of 12%
and paid monthly at the option of the holder. The agreement allowed the
registered owner to convert the outstanding balance, both principal and accrued
interest, into shares of the Company's common stock. During 1998, $306,494 of
principal and accrued interest was converted into shares of the Company's common
stock. Of this amount $103,534 represented additional interest expense. In
addition, accrued interest at December 31, 1998 included $42,516 from
outstanding convertible debentures. During 1999, $181,388 of principal and
accrued interest was converted into shares of the Company's common stock. Of
this amount $136,041 represented additional interest expense resulting from
conversion at maturity.


                                        31
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE I - RELATED PARTY PAYABLES

On December 30, 1999, the Company entered into a promissory note agreement with
a related party for $60,500, including interest at 12% per annum, due on or
before March 31, 2000. During 1998, management elected to reduce outstanding
related party debt by cash payments of $142,799 and the issuance of 1,790,309
shares of the Company's common stock totaling $447,577. Interest expense
incurred under related party agreements totaled $0 and $4,906 for the years
ended December 31, 1999 and 1998, respectively.

NOTE J - INCOME TAXES

The Company accounts for income taxes on the liability method, as provided by
Statement of Financial Accounting Standards 109, "Accounting for Income Taxes".

The income tax provision reconciled to the tax computed at the statutory federal
rate was as follows for the years ended December 31:

<TABLE>
<CAPTION>

                                          1999           1998
                                      -----------    -----------
<S>                                   <C>            <C>
Tax benefit at statutory rate         $(1,359,031)   $  (417,424)
Non-deductible expenses                    33,358         13,486
Other                                     (16,607)       (21,140)
Increase in valuation allowance         1,342,280        425,078
                                      -----------    -----------

    Total                             $      --      $      --
                                      ===========    ===========

</TABLE>


                                        32
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE J - INCOME TAXES - Continued

The components of deferred taxes are as follows at December 31:

<TABLE>
<CAPTION>

                                               1999           1998
                                           -----------    -----------
<S>                                        <C>            <C>
Deferred tax asset:
    Liabilities not timely paid            $    22,474    $    10,786
    Allowance for doubtful accounts             50,381          7,939
    Stock options and warrants issued to
       consultants for services                 39,751           --
    Stock options issued to employees
       under fair value                        744,936           --
    Net operating loss carryforward          1,816,925      1,318,171
                                           -----------    -----------
                                             2,674,467      1,336,896
Deferred tax liability:
    Depreciation                                (4,301)        (9,010)

Valuation allowance                         (2,670,166)    (1,327,886)
                                           -----------    -----------

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

</TABLE>

The Company has established a valuation allowance of $2,670,166 and $1,327,886
as of December 31, 1999 and 1998, respectively, due to the uncertainty of future
realization of the deferred tax assets. The valuation allowance was increased by
$1,342,280 and $425,078 during the years ended December 31, 1999 and 1998,
respectively based upon management's estimate of the realizability of the net
deferred tax assets. At December 31, 1999, the Company had net operating loss
carryforwards for federal income tax purposes of approximately $5,333,000
available to offset future income which expire in 2004 through 2018. Utilization
of these carryforwards are dependent on future taxable income and could further
be limited due to a change of control in the Company's ownership as defined by
the Internal Revenue Code 382.


                                        33
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE K - COMMITMENTS

The Company conducts a portion of its operations in leased facilities classified
as operating leases. The following is a schedule by years of approximate minimum
rental payments, excluding sublease income, under such operating leases, which
expire at various dates through September 2004.

         Year ending December 31,

                   2000                     $     398,800
                   2001                           460,000
                   2002                           401,900
                   2003                           406,900
                   2004                           316,500
                                            ---------------

 Total minimum payments required            $   1,984,100
                                            ===============

The leases provide for payment of taxes and other expenses by the Company. Rent
expense for leased facilities totaled approximately $239,860 and $118,900 for
the years ended December 31, 1999 and 1998, respectively.

NOTE L - WARRANTS

The Company had the following warrants outstanding to purchase common shares as
of December 31:

<TABLE>
<CAPTION>

                                                                                        1999                 1998
                                                                                   ----------------     ----------------
<S>                                                                                <C>                  <C>
   Warrants issued in conjunction with the Private Placement whereby one warrant
      entitles the holder to purchase one share of common stock at a exercise
      price of $0.50, expiring through 1999                                                   -             3,425,876

   Warrants issued in conjunction with the Private Placement whereby one warrant
      entitles the holder to purchase one share of common stock at a exercise
      price of $0.25, expiring through 2000                                               73,000              200,591

   Warrants issued in conjunction with the Private Placement whereby one warrant
      entitles the holder to purchase one share of common stock at a exercise
      price of $0.50, expiring through 2000                                            3,794,741            3,470,741

   Warrants issued in conjunction with the Private Placement whereby one warrant
      entitles the holder to purchase one share of common stock at a exercise
      price of $0.63, expiring through 2001                                               50,000                   -


</TABLE>


                                        34
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE L - WARRANTS - Continued

<TABLE>
<CAPTION>

                                                                                        1999                 1998
                                                                                   ----------------     ----------------
<S>                                                                                <C>                  <C>
   Warrants issued in conjunction with the Private Placement whereby one warrant
      entitles the holder to purchase one share of common stock at a exercise
      price of $1.06, expiring through 2001                                              280,000                   -

   Warrants issued in conjunction with the Private Placement whereby one warrant
      entitles the holder to purchase one share of common stock at a exercise
      price of $1.75, expiring through 2002                                               50,000                   -
                                                                                   ----------------     ----------------

        Total                                                                          4,247,741            7,097,208
                                                                                   ================     ================

</TABLE>


NOTE M - STOCK OPTIONS

The Company has a stock option plan accounted for under APB Opinion No. 25 and
related Interpretations. The plan allows the Company to grant options to
employees for up to 50,000 shares of common stock per employee. Options
currently outstanding vest over a two to five-year period. Stock options are
exercisable at not less than the market value of the Company's common stock on
the date of grant. Accordingly, no compensation cost has been recognized for
stock options granted. Had compensation cost for the plan been determined based
on the fair value of the options at the grant dates consistent with the method
required by Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123), the Company's net loss would have been
increased to the pro forma amounts indicated below for the years ended December
31.

During 1999, certain officers and employees exercised stock options in
consideration for nonrecourse promissory notes. Under APB Opinion No. 25, the
issuance of stock options under such notes is in essence a new granting of
options. By issuing nonrecourse notes, the Company extended the original terms
of the fixed award, creating a new measurement date. As such, additional
compensation cost is recognized to the extent that the intrinsic value of the
new award exceeds the original intrinsic value of the original award. For the
year ended December 31, 1999, the Company recorded compensation expense of
$2,190,989 for the difference between the original intrinsic value and the
intrinsic value of the new award. In conjunction with the Company issuing the
notes, the officers and employees also exercised their option to purchase the
Company's common stock. As a result the shares are reflected as issued and
outstanding; however, the shares are held by the Company as collateral on the
notes. The Company recorded notes receivable from shareholders totaling
$1,081,251 for the exercise of these stock options. The promissory notes bear
interest at 10% per annum with accrued interest to be paid quarterly until the
notes are paid in full. Notes are due on or before April 1, 2001.

The Company has notes receivable from stockholders totaling $1,289,063 and
$207,812 at December 31, 1999 and 1998, respectively, resulting from the
exercise of stock options. The notes totaling $207,812 as of December 31, 1999
and 1998 plus accrued interest are due at maturity. Maturity dates range from
March 1, 2000 to April 1, 2001. The underlying stock certificates are held by
the Company as collateral on all notes.


                                        35
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE M - STOCK OPTIONS - continued

The fair value of option grants are estimated using the Black-Scholes option
pricing model with the following weighted average assumptions used for grants in
fiscal year 1999: expected volatility ranging from 75.70% to 83.97%; risk free
interest rate of 6.50%; expected lives ranging from 2 to 5 years; and a zero
percent dividend yield. The following weighted average assumptions were used for
grants in fiscal year 1998: expected volatility ranging from 140.59% to 156.05%;
risk free interest rate of 6.50%; expected lives ranging from 2 to 5 years; and
a zero percent dividend yield.

<TABLE>
<CAPTION>

                                    1999             1998
                                -----------      -----------
<S>                             <C>              <C>
Net loss:
    As reported                 $(3,997,151)     $(1,227,718)
    Pro forma                   $(4,090,943)     $(1,456,746)

 Net loss per common share:
    As reported                       $(.15)           $(.06)
    Pro forma                         $(.15)           $(.07)

</TABLE>

A summary of the Company's stock option plan's activity is as follows:

<TABLE>
<CAPTION>

                                                  1999                        1998
                                         ------------------------   ------------------------
                                                        Weighted                  Weighted
                                                         average                   average
                                                        exercise                  exercise
          Stock options                    Shares         price       Shares        price
--------------------------------------   ----------    ----------   ----------    ----------
<S>                                       <C>                <C>     <C>                <C>
 Outstanding at beginning of year         7,127,500    $      .44    6,195,000    $      .43
 Granted                                  2,662,500          1.37    1,820,000           .54
 Forfeited or exercised                  (4,607,500)          .32     (887,500)          .57
                                         ----------    ----------   ----------    ----------

 Outstanding at end of year               5,182,500    $     1.04    7,127,500    $      .44
                                         ==========    ==========   ==========    ==========

 Options exercisable at end of year       2,172,865    $      .69    6,181,705    $      .39
                                         ==========    ==========   ==========    ==========

Weighted-average fair value of options
  granted during the year                              $      .94                 $      .64
                                                       ==========                 ==========

</TABLE>


                                        36
<PAGE>

                   Plenum Communications, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998

NOTE M - STOCK OPTIONS - continued

The following is a summary of stock options outstanding at December 31, 1999:

<TABLE>
<CAPTION>

                                                 Options Outstanding
                          -------------------------------------------------------------------
                                               Weighted-average                Number of
                              Number              remaining                     options
    Exercise price         outstanding          contractual life              exercisable
  --------------------    ---------------    ------------------------      ------------------
  <S>                     <C>                 <C>                           <C>
  $.01 - $.25                  287,500             1.92 years                       245,625
  $.26 - $.50                  762,500             1.16 years                       721,125
  $.51 - $.75                  942,500             3.52 years                       394,303
  $.76 - $1.00               1,430,000             3.57 years                       783,688
  $1.01 - $3.00              1,760,000             4.32 years                        28,124

</TABLE>


NOTE N - SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING
         ACTIVITIES

Supplemental disclosure of cash flow information and non-cash investing and
financing activities is as follows for December 31:

<TABLE>
<CAPTION>

                                                                               1999                  1998
                                                                          ----------------      ---------------
<S>                                                                       <C>                   <C>
 Supplemental disclosure of cash flow information:
    Cash paid during the year for interest                                $      17,437         $      22,966

 Non-cash investing and financing activities
    Exercise of stock options by note receivable                          $   1,081,251         $     207,812
    Related party debt converted to common stock                          $          -          $     447,577
    Debentures converted to common stock                                  $     181,388         $     306,494
    Note payable converted to common stock                                $          -          $     203,381
    Capitalized software costs incurred through accrued liability         $      49,000         $          -
    Purchase of assets with common stock                                  $     600,001         $          -
    Issuance of warrants for financing costs deferred                     $      89,333         $          -

</TABLE>


                                        37
<PAGE>

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

     None.

                                    PART III

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

     The following table sets forth information concerning the directors and
executive officers of the Company as of March 31, 2000:

<TABLE>
<CAPTION>

           NAME                                AGE                   POSITION
           ----                                ---                   --------
     <S>                                       <C>        <C>
    John A. McMillan (1)                       68         Director, Chief Executive Officer,
                                                            Chief Financial Officer
    Allen C. Ringer                            60         Director, President
    Billy Anders, Sr.                          56         Director
    Sam Ringer                                 39         Director
    Joe Ringer                                 37         Director
    Kurt Springman  (2)  (3)                   39         Director
    Jacob L. Smith                             60         Director
    J.C. (Tuck) Marshall (1)                   53         Director

</TABLE>

(1)  Member of the Executive Committee
(2)  Member of the Audit Committee
(3)  Member of the Compensation Committee

     Following is a discussion of the business background of each director and
executive officer. Sam Ringer and Joe Ringer are full-time employees of the
Company, and are sons of Allen Ringer. The other directors and executive
officers devote only such time as may be necessary to the Company's business and
affairs.

     BILLY ANDERS, SR. joined the Company as a member of the Board of Directors
in 1995 and has served as Chairman since January 1997. Mr. Anders served as the
President of the Mars Hotel Corporation in Spokane, Washington, from 1994 to
June 1997, and was Chairman of the board of directors of Pacific Marine & Steel,
Inc. in La Jolla, California, in 1995 and 1996. Mars Hotel Corporation was
general partner of the Spokane Mars Limited Partnership ("Partnership").
Subsequent to Mr. Anders' association with the corporation, in November 1997 the
Partnership filed for bankruptcy under Chapter 11, which was converted to
Chapter 7 in November 1998. He was a member of the board of directors of Output
Technology, Spokane, Washington from 1989 through 1993, and served as its
President and CEO during 1992 and 1993. Mr. Anders was President and CEO and
served as Chairman of the board of directors of Soricon Corporation, Boulder,
Colorado, from 1986 through 1991. He also served as a business consultant and
inaugural member of the board of directors of International Pacific, Inc.,
Spokane, Washington, from 1986 to 1992. From 1983 through 1986 he was Senior
Vice-President and General Manager of Key Tronic Corporation, Spokane,
Washington. Mr. Anders spent 16 years from 1967 through 1983 with the IBM
Corporation in several cities in various key management positions.


                                        38
<PAGE>

He was Director of Field Operations in the General Systems Division of IBM in
1980. Mr. Anders graduated from Southern University, Baton Rouge, Louisiana, in
1964 where he completed the Advanced R.O.T.C. program and was commissioned as a
2nd Lieutenant in the U.S. Army.

     JOHN A. MCMILLAN has been a director of the Company since January 1999. Mr.
McMillan is a Director and member of the Executive Committee of the Board of
Directors for Nordstrom, Inc. Mr. McMillan has been associated with Nordstrom
for 40 years and has served as a member of the office of chief executive officer
since 1971. Mr. McMillan's business and civic affiliations include sitting on
the Board of Directors for Vision Youth (Chairman), Follet Company, Seattle
YMCA, Seattle Foundation, ZION Preparatory Academy Capitol Campaign (Chairman),
Crista Ministries, World Concern, Urban Enterprise Council (Chairman), Bob Walsh
Enterprises, Global Partnerships, Catholic Fund, and Seattle Pacific University.

     ALLEN RINGER has served as CEO from 1989 to October 1999 and as President
of Plenum since 1989. Mr. Ringer is also the founder and President of PlenTech
Electronics, Inc. a company listed on the Vancouver Stock Exchange; and he
serves as a director of its subsidiary, Consolidated Electronics, Inc., a
Spokane manufacturing and marketing firm serving primarily the utility and
processing industries. From 1978 to 1986 Mr. Ringer operated United Farm Agency,
a real estate brokerage firm in Colville, Washington. From 1987 to February
1990, Mr. Ringer managed the operations of Mortgage Brokers Network, Inc., an
electronic mortgage brokerage company which originated mortgage loan
applications.

     SAM RINGER has been a director of the Company since 1989. He has served as
President of Lioninc.com from 1997 to March 2000 and during the period from 1991
through 1995. From February 1999 to March 2000 he also served as Chief Executive
Officer of Lioninc.com. In March 2000, Mr. Ringer switched roles to become the
Chief Technology Officer of Lioninc.com. He was co-founder, co-architect and
author of the Lioninc.com software. He received his training as a computer
engineer and programmer in Spokane, WA at Spokane Falls Community College and
Gonzaga University. Prior to his tenure with the Company, Sam served for two
years as a mortgage broker at Mornet Mortgage, a Seattle mortgage brokerage
firm.

     JOE RINGER has served as a director of the Company since 1989. He is the
other co-founder of Lioninc.com, and served as Executive Vice President from
1995 to March 2000. During that time he was responsible for company operations,
including oversight of the data entry, web development, network management and
quality control. In addition, he was responsible for a number of marketing
functions including ad banner sales, press releases, writing the Daily Market
Commentary that appears on the Lioninc.com site, articles for submission to
trade journals, certain lender homepage sales and negotiation with potential
industry partners. In March 2000 Mr. Ringer moved to the role of Executive Vice
President of Strategic Development. Prior to co-founding Lioninc.com, he worked
for three years at Mornet Mortgage in virtually every position of the mortgage
brokerage firm, including operations, as a mortgage broker and in the management
of the business.

     KURT SPRINGMAN has been a director of the Company since 1997. Kurt is
currently the Strategic Alliance Manager for NetIQ Corporation, with
responsibility for the development and maintenance of technical and marketing
alliances with Microsoft, Citrix and other technology companies. From 1999 to
2000, Mr. Springman was the Market Manager for Attachmate, responsible for the
strategic marketing of the EXTRA! line of mainframe terminal emulation products.
From 1996 to 1999, Mr. Springman was Compaq Computer Corporation's (formerly
Digital Equipment Corporation) Senior Marketing Consultant for the Enterprise
Solution Center for Windows in Bellevue, WA. From 1991 to 1996, he was the
principal owner and CEO of Prestige Events, Inc., a firm specializing in high
tech event marketing. Customers of Prestige included major names like Microsoft,
Intel, Digital, and Paul Allen


                                        39
<PAGE>

Group. From 1985 to 1991, he served with Merrill Lynch Securities and JP Morgan
in New York as an Associate Officer where he was involved in creating and
trading jumbo mortgage pools and derivative products, and structuring real
estate and corporate financings. From 1983 to 1986, Mr. Springman was a CPA with
Peat Marwick - KMPG in Denver, Colorado. He was an elected Council member of the
City of Bellevue (term 1996-1999), and is well known in the Washington Software
Alliance. Mr. Springman received an MS degree in accounting from the University
of Denver in 1983, and an MBA in Finance from New York University in 1987. He is
a Microsoft Certified Professional, a Compaq Accredited Systems Engineer and a
Citrix Certified Administrator.

     JACOB L. SMITH has been a director of the Company since June 1998. Mr.
Smith has practiced business law in Washington State for the last thirty-three
years. Mr. Smith received a B.S. degree in Chemical Engineering from the
University of Washington in 1962. He received a J.D. law degree from Willamette
University Law School in Salem Oregon in 1965.

     J.C. (TUCK) MARSHALL was elected to the Board of Directors on July 1, 1999.
Mr. Marshall is the immediate past president of the National Association of
Mortgage Brokers (NAMB) and is currently the president of J.C. Marshall
Financial Services Inc., a licensed brokerage of mortgages, real estate, and
insurance in Tinley Park, Illinois. He is also president of Margo Financial
Services LLC, a national provider of wholesale residential mortgages. His past
accomplishments include; president of the Illinois Association of mortgage
brokers, NAMB Regional broker of the Year in 1995, NAMB Volunteer of the Year in
1996/1997, and NAMB Legislative Chairman in 1998. As president of NAMB, Tuck
developed contacts at all levels of congress and state governments through his
lobbying efforts. He also developed strong working relationships with the
leadership of the national and state mortgage broker associations along with the
nation's leading mortgage industry companies. Mr. Marshall assumed the role of
President of Lioninc.com in March 2000.

COMMITTEES OF THE BOARD OF DIRECTORS

     The standing committees of the Board of Directors of the Company are the
Executive Committee, Audit Committee and the Compensation Committee. The
Executive Committee, established in February 1999, consists of 2 members. The
committee will act as an advisory group for the management team of Lioninc.com.
The Audit Committee, established in May 1998, is responsible for reviewing the
results and scope of audits and other services provided by the Company's
independent auditors, and the fees for related services performed during the
year. The Audit Committee also recommends to the Board of Directors the firm to
be appointed as independent auditors. At times, the Audit Committee may meet
with representatives of the Company's independent auditors without any officers
or employees of the Company present. The Compensation Committee, established in
October 1998, makes recommendations concerning retirement and benefit plans and
salaries and incentive compensation of executive personnel, employees of, and
consultants to, the Company. The Compensation Committee administers the
Company's 1998 Stock Option Plan.

SIGNIFICANT EMPLOYEES

     The Company employs several finance, administrative, technical, sales and
support personnel who perform various day-to-day tasks and conduct operations of
Lioninc.com. None of these employees are under a non-competition agreement, nor
covered by key-man life insurance. In addition, the Company has from time to
time utilized consultants to assist in the development of its business plan and
operations. The inability to attract, retain and motivate additional skilled
employees or consultants, or the termination of certain significant employees,
or termination of several employees as a group, could have a material adverse
affect on the Company. The following individuals are significant employees or
consultants of the Company:


                                        40
<PAGE>

     DAVID STEDMAN, 50, joined the Company in June 1999 as its Vice President of
Marketing & Sales. In January 2000 he was promoted to Chief Operating Officer.
He has over 20 years of marketing experience that includes expertise in market
analysis, systems development, strategic and market planning, identity creation,
advertising and public relations. Most recently Mr. Stedman was Vice
President/Director of Marketing for Safeco Properties, a real estate development
subsidiary of Safeco Insurance. Prior to Safeco Properties, he held a number of
positions with advertising agencies in the northwest and in Alaska. Along with
winning a variety of national and local advertising awards he has been a guest
speaker for a design class at the University of Washington and has presented to
a variety of business organizations.

     STEVE THOMSON, 47, has served as Controller since joining Lioninc.com in
March 1998. From 1995 to 1998, as a consultant he worked with a number of
software and Internet related companies including Sierra On-Line, Inc. and N2H2,
Inc. From 1988 to 1995, Mr. Thomson served as Controller and Division Manager
with Vanier, a $130 million subsidiary of American Business Products. From 1979
to 1986, he was a public accountant with Price Waterhouse. Mr. Thomson received
a B.A. degree in Business Administration from the University of Washington in
1976, and has been a CPA since 1981.

     PAUL ECKERT, 39, has served as National Sales Manager of LION since 1997,
after joining the Company in 1995 as Lender Sales Manager. Prior to joining the
Company, Mr. Eckert held sales management positions in the mortgage industry
with North American Mortgage Company, Columbia First Service, Inc. and General
Electric Mortgage Insurance Company of Bellevue, Washington. Mr. Eckert received
a B.A. degree from Winona State University in 1984.

     ED HALLDA, 33, joined LION as Director of Internet Services in February
1997 and was promoted to Manager of Engineering in December 1998. From 1984 to
1990 he served in the Navy as an Electronics Technician, gaining experience
troubleshooting complex computerized weapon control systems. From 1991 to 1997,
Mr. Hallda was a Senior Technician and Computer Specialist with Vitro, Inc. From
1992 to 1997, he designed custom software applications for the U.S. Navy as a
consultant, graphical presentations using video conferencing, and designed
database-aware Intranet systems and Internet sites.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that our directors and executive officers, and persons who own more than ten
percent of the our common stock, file with the SEC initial reports of ownership
and reports of changes in ownership of our common stock and other equity
securities. Officers, directors and greater-than-ten percent shareholders are
required by the SEC regulation to furnish us with copies of all Section 16(a)
forms they file. Specific due dates have been established by the SEC, and we are
required to disclose in this report any failure to file by those dates.

     Based upon a review of the copies of the Section 16(a) reports furnished
to us, or written representations from one or more of these persons that no
annual Form 5 reports were required to be filed by them for the 1999 fiscal
year, we believe that there has been compliance with all Section 16(a) filing
requirements applicable to our officers, directors and ten-percent beneficial
owners; except that Jack McMillan failed to file an initial report on Form 3,
and two monthly reports covering 3 transactions on Form 4, but did report the
transactions on his year-end report on Form 5, which was filed late; Allen
Ringer failed to file an initial report on Form 3 for an affiliated company,
and five monthly reports covering 6 transactions on Form 4, but did report
the initial Form 3 and transactions on his year-end report on Form 5, which
was filed late; Sam Ringer, failed to file one monthly report covering one
transaction on Form 4, but did report the transaction on his year-end report
on Form 5, which was filed late; Joe Ringer failed to file one monthly report
covering one transaction on Form 4, but did report the transaction on his
year-end

                                        41
<PAGE>

report on Form 5, which was filed late; Billy Anders, Sr. failed to file an
initial report on Form 3, and five monthly reports covering 6 transactions on
Form 4, but did report the initial Form 3 and transactions on his year-end
report of Form 5, which was filed late; Alan Dernbach failed to file two
monthly report covering 2 transactions on form 4, but did report the
transaction on his year-end report on Form 5, which was filed late; Kurt
Springman failed to include one item on a Form 3 previously filed and failed
to file one monthly report covering one transaction on Form 4, but did report
the Form 3 ommission and the transaction on his year-end report on Form 5,
which was filed late; Steve Thomson failed to file one monthly report covering
one transaction on Form 4, but did report the transaction on his year-end
report on Form 5, which was filed late.

ITEM 10.   EXECUTIVE COMPENSATION

     The following table sets forth all compensation paid or earned for services
rendered to the Company in all capacities during the years ended December 31,
1999, 1998 and 1997 to the Company's Chief Executive Officer and President. No
other executive officers received total annual salary, bonus and other
compensation in excess of $100,000 in the fiscal years disclosed below.



<TABLE>
<CAPTION>

                                 Summary Compensation Table*
                              ---------------------------------
                                    Annual Compensation               Long-Term Compensation
                              ---------------------------------   -----------------------------
                                                                                     Securities
                                                                                     Underlying
                                                                                      Options/
Name and Principal Position   Year     Salary           Other      Stock Awards       Warrants
---------------------------   ----   ----------      -----------   ------------      ----------
<S>                           <C>    <C>             <C>            <C>              <C>
John A. McMillan              1999         --        $ 16,250(1)          --         440,000(1)
  CEO and CFO

Allen Ringer                  1999   $ 59,552(3)     $132,150(2)          --            --
   President

                              1998   $ 60,000(3)           --             --            --

                              1997         --        $  3,405(4)     236,593(4)      236,593(4)

</TABLE>

----------

(*)  Columns in the Summary Compensation Table that were not relevant to the
compensation paid to the Named Executive Officers were omitted.

(1)  In September 1999, Mr. McMillan, as guarantor on Lioninc.com's line of
credit, was paid a loan fee of $16,250 and granted warrants to purchase 140,000
shares of the Company's common stock at $1.06 per share. In December 1999, Mr.
McMillan, as CEO of the Company, was granted stock options to purchase 300,000
shares of the Company's common stock at $.66 per share. As of December 31, 1999,
the aggregate value of all shares beneficially owned by Mr. McMillan was
$456,250, valued at $.625 per share, the closing price of the Company's common
stock on the OTC Bulletin Board on that date.

(2)  During first quarter 1999, Mr. Ringer exercised stock options totaling
85,000 shares of the Company's common stock which created taxable ordinary
income of $132,150. As of December 31, 1999, the aggregate value of all shares
beneficially owned by Mr. Ringer was $2,174,706, valued at $.625 per share, the
closing price of the Company's common stock on the OTC Bulletin Board on that
date.


                                        42
<PAGE>

(3)  Mr. Ringer's cash compensation was paid to him by the Company for 1998 and
first quarter of 1999 through American Management and Consulting, Inc., a
consulting firm, of which Mr. Ringer is Chief Executive Officer and President.
See Item 12 "Certain Relationships and Related Transactions."

(4)  In January 1998, Mr. Ringer purchased 144,000 shares of common stock and
144,000 warrants, exercisable at $.50 per share, in exchange for 1997
deferred compensation of $36,000. In addition, Mr. Ringer purchased 92,593
shares of common stock and 92,594 warrants, exercisable at $.50 per share, in
exchange for interest earned of $23,148 on deferred compensation and loans to
the Company. Interest earned and paid in cash during 1997 to Mr. Ringer
related to deferred compensation and loans to the Company totaled $3,405.

                                        43
<PAGE>

OPTION GRANTS LAST FISCAL YEAR.

     The following table sets forth options granted to Named Officers during
1999. No other executive officers received option grants in the last fiscal
year.

<TABLE>
<CAPTION>

                                              Number of        Percent of
                                             securities       total stock
                                             underlying     options granted     Exercise or
                                            stock options   to employees in      base price
Name and Principal Position                    granted        fiscal year          ($/Sh)       Expiration date
---------------------------                 -------------   ---------------     -----------     ---------------
<S>                                             <C>              <C>                <C>            <C>
John A. McMillan, CEO and CFO                   300,000          11.3%              $0.66          12/13/03

</TABLE>

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE.

     The following table provides information with respect to the Named
Executive Officers regarding the exercise of options or warrants during the
fiscal year ended December 31, 1999 and unexercised options or warrants held as
of December 31, 1999. No stock appreciation rights were exercised during 1999 or
were outstanding at December 31, 1999.

<TABLE>
<CAPTION>

                                                       Number of Securities              Value of Unexercised
                                                     Underlying Unexercised                  In-the-Money
                           Shares                       Options/Warrants                   Options/Warrants
                        Acquired on   Value            at Fiscal Year-End(#)             at Fiscal Year-End($)
                          Exercise   Realized    --------------------------------     ----------------------------
       Name                 (#)        ($)         Exercisable      Unexercisable     Exercisable    Unexercisable
       ----              ---------   --------    ----------------   -------------     -----------    -------------
<S>                        <C>       <C>          <C>               <C>               <C>            <C>
John A. McMillan,
CEO and CFO
    Options                   --           --            50,000           300,000              --              --
    Warrants               120,000   $ 11,160           140,000                --              --              --

Allen Ringer (1)
 President
    Options              1,000,000   $589,650                --                --              --              --
    Warrants                  --           --           740,164                --     $    92,520              --

</TABLE>

(1)  Includes 740,164 warrants owned by American Management and Consulting,
Inc., a consulting firm, of which Mr. Ringer is Chief Executive Officer and
President, and deemed the beneficial owner because of his power to vote and
dispose of those securities.

STOCK OPTION PLAN

     The Company's 1998 Stock Option Plan ("1998 Plan") is intended to serve as
an equity incentive program for management, qualified employees, non-employee
members of the Board of Directors, and independent advisors or consultants. The
1998 Plan became effective on October 30, 1998 upon adoption by the Board of
Directors, and was approved by the shareholders at the December 1998 annual
shareholders' meeting. Under the 1998 Plan, the total number of shares of common
stock reserved for issuance is 15,000,000, which may be Incentive Stock Options
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, or nonqualified stock options.


                                        44
<PAGE>

     The 1998 Plan contains two separate components: (i) a discretionary option
grant program under which eligible individuals in the Company's employ or
service (including officers and other employees, non-employee Board members and
independent advisors or consultants) may, at the discretion of the Plan
Administrator, be granted options to purchase shares of common stock; and (ii)
an automatic option grant program under which option grants will automatically
be made at periodic intervals to eligible non-employee Board members to purchase
shares of Common Stock at an exercise price equal to their fair market value on
the grant date.

     The discretionary option grant program will be administered by the Board of
Directors or a committee of two or more members of the Board. Plan
administrators have sole authority to prescribe the form, content and status of
options to be granted, select the eligible recipients, determine the timing of
option grants, determine the number of shares subject to each grant, the
exercise price, vesting schedule, and term for which any option will remain
outstanding. The Board of Directors have the authority to correct any defect,
supply any omission or reconcile any inconsistency in the Plan, determine the
terms and restrictions on all restricted option awards granted under the Plan,
and in general, to construe and interpret any provision of the 1998 Plan or of
any option granted thereunder. The administration of the automatic option grant
program will be self-executing in accordance with the provisions of the 1998
Plan.

     The exercise price for outstanding option grants under the 1998 Plan may be
paid in cash or, upon approval of the Plan administrators, in shares of common
stock valued at fair market value on the exercise date. The option may also be
exercised through a same-day cashless exercise program or a reduction in the
amount of any Company liability to the optionee. In addition, the Plan
administrator may provide financial assistance to one or more optionees in the
exercise of their outstanding options by allowing the individuals to deliver a
full-recourse, interest-bearing promissory note in payment of the exercise price
and any associated withholding taxes incurred in connection with the exercise.

     Under the automatic option grant program, immediately after each annual
meeting of shareholders, each elected non-employee director of the Company shall
automatically be granted a nonqualified stock option to purchase 15,000 shares
of common stock for each year included in the term for which such he or she was
elected, provided that individual has not previously received an option grant
from the Company in connection with his or her Board service which remains
unvested.

     Under the 1998 Plan, no stock option can be granted for a period longer
than ten years or for a period longer than five years for ISOs granted to
optionees possessing more than 10% of the total combined voting power of all
classes of stock of the Company. Following the effective date of any
registration of the Company's securities under the Exchange Act, the per share
exercise price for any option granted may not be less than the fair market value
of the Company's securities on the grant date. Unless extended by the Plan
administrators until a date not later than the expiration date of the option,
the right to exercise an option terminates thirty days after the termination of
an optionee's employment, contractual or director relationship with the Company.
If the optionee dies or is disabled, the option will remain exercisable for a
period of one year after the termination of employment or relationship with the
Company.

     At the sole discretion of the Plan administrators, options granted under
the 1998 Plan may contain resale provisions pursuant to which the purchaser of
the common stock issued upon exercise of the option may be limited to sales of
common stock in an amount which may not exceed 250,000 shares during any
three-month period.

     As of December 31, 1999, the Company had granted options to purchase an
aggregate of 12,077,500 shares of common stock, of which 5,182,500 were
outstanding at December 31, 1999. Of the options granted, 4,595,000 were issued
to directors of the Company, of which 1,445,000 were outstanding at December 31,
1999.


                                        45
<PAGE>

COMPENSATION OF DIRECTORS

     Except for grants of stock options and reimbursement of expenses, directors
of the Company do not receive compensation for services rendered as a director.
The Company does not compensate its directors for committee participation or for
performing special assignments for the Board of Directors. Directors who are not
officers or employees of the Company receive as an initial retainer options to
purchase 50,000 shares of common stock, exercisable at not less than the fair
market value of the Company's common stock on the day of grant. Thereafter,
under the Company's 1998 Stock Incentive Plan, non-employee directors will
receive automatic option grants each year to purchase 15,000 shares of common
stock upon their reelection at the annual meeting of shareholders.

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

     The following table sets forth certain information regarding the beneficial
ownership as of December 31, 1999 of the Company's common stock by (a) each
person known by the Company to be a beneficial owner of more than five percent
of the outstanding common stock of the Company, (b) each director of the
Company, and (c) all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>

                                           Shares
Name and Address(1)                     Beneficially        Percentage
Of Beneficial Owner                       Owned(2)           of Shares
-------------------                       -----              ---------
<S>                                         <C>              <C>
Allen C. Ringer                             3,479,529 (3)      10.8%
Sam Ringer                                   2,831,974(4)       8.9%
Joe Ringer                                   2,832,535(5)       8.9%
Billy Anders, Sr.                            2,134,091(6)       6.6%
John A. McMillan                               730,000(7)       2.3%
Alan S. Dernbach                               392,000(8)       1.2%
Kurt Springman                                 129,600(9)        *
Jacob L. Smith                                 80,000(10)        *
J.C. (Tuck) Marshall                            1,000(11)        *
All Officers and Directors
   As a  Group  (9 persons)                12,610,729          36.4%

</TABLE>

----------
*    Less than one percent.

(1)  Except as noted below, the business address of Mr. Ringer and all other
directors and executive officers is 2201 Lind Avenue SW, Suite 200, Renton, WA
98055.

(2)  Pursuant to applicable rules of the Securities and Exchange Commission,
"beneficial ownership" as used in this table means the sole or shared power to
vote shares (voting power) or the sole or shared power to dispose of shares
(investment power). Unless otherwise indicated the named individual has sole
voting and investment power with respect to the shares shown as beneficially
owned. In addition, a person is deemed the beneficial owner of those securities
not outstanding which are subject to options, warrants, rights or conversion
privileges if that person has the right to acquire beneficial ownership within
sixty days.


                                        46
<PAGE>

(3)  Includes 1,000,000 shares underlying stock options exercised by promissory
note. Mr. Ringer is deemed the beneficially owner of the 1,927,529 shares of the
Company's stock beneficially owned by American Management and Consulting Inc.
because of his power to vote and dispose of those shares. Excludes 632,278
shares beneficially owned by Dutchman Irrevocable Trust, of which his wife
Marilyn K. Ringer is trustee, and 10,000 shares underlying stock options owned
by his wife, as to which Mr. Ringer disclaims beneficial ownership.

(4)  Includes 1,000,000 shares underlying stock options exercised by promissory
note and 414,888 shares underlying warrants granted but not yet exercised.

(5)  Includes 1,000,000 shares underlying stock options exercised by promissory
note and 416,568 shares underlying warrants granted but not yet exercised.

(6)  Includes 1,000,000 shares underlying stock options and 70,000 shares
underlying warrants granted but not yet exercised. The address of Mr. Anders is
2010 S. Overbluff Ct., Spokane, WA 99203.

(7)  Includes 350,000 shares underlying stock options and 140,000 shares
underlying warrants granted but not yet exercised. The address of Mr. McMillan
is 500 Pine Street, Seattle, WA 98101.

(8)  Includes 15,000 shares underlying stock options not yet exercised.

(9)  Includes 15,000 shares underlying stock options not yet exercised.

(10) Includes 65,000 shares underlying stock options granted but not yet
exercised. The address of Mr. Smith is 3800 Ft. Bellingham Rd., Bellingham, WA
98225.

(11) The address of Mr. Marshall is 7601 W. 191st Street, Tinley Park, IL 60447.


ITEMS 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company has previously entered into certain transactions with various
parties, which had, at the time of the transaction, a material direct or
indirect relationship with the Company, its officers, directors, or principal
shareholders, their respective affiliates, or other persons associated with the
foregoing, as set forth below.

     American Management and Consulting Inc. ("AMC") is a consulting firm of
which Allen Ringer serves as President and CEO. The Company received management
consulting services from AMC during the first quarter of 1999, marketing and
sales consulting services from Billy Anders, Sr., Chairman of the Board, during
all of 1999, and administrative and clerical consulting services from Marilyn
Ringer, wife of the Company's president, during the first quarter of 1999. For
the year ended December 31, 1999, AMC, Billy Anders, Sr. and Mrs. Ringer were
paid cash compensation totaling $15,000, $72,000 and $4,000, respectively. For
the year ended December 31, 1998, AMC, Billy Anders, Sr. and Mrs. Ringer were
paid cash compensation totaling $60,000, $66,830 and $31,550, respectively

     From time to time, AMC and members of Allen Ringer's family, including
children Sam Ringer, Joe Ringer and Shadda Lee, have deferred salaries and made
working capital advances and loans to the Company. At December 31, 1997 the
company owed this group a combined total of $538,162. With respect to AMC, the
Company owed $149,041 which was comprised of $36,000 of deferred compensation
and $113,041 of loans and interest. In January of 1998 the $149,041 was paid off
through the issuance of 596,164 shares of the Company's common stock at $.25 per
share and warrants representing 596,164 shares exercisable at $.50 per share.
Sam Ringer was owed $161,613 which was comprised of $103,722 of deferred
compensation and interest and $57,891 of loans to the Company. In January of
1998 the Company paid off the $103,722 of deferred compensation and interest by
the issuance of 414,888 shares of the Company's common stock at $.25 per share
and warrants representing 414,888 shares exercisable at $.50 per share. The
loans of $57,891 were paid off in cash in June 1998.


                                        47
<PAGE>

Joe Ringer was owed $121,449 which was comprised of $104,142 of deferred
compensation and interest and $17,307 of loans to the Company. In January of
1998 the Company paid off the $104,142 of deferred compensation and interest by
the issuance of 416,568 shares of the Company's common stock at $.25 per share
and warrants representing 416,568 shares exercisable at $.50 per share. The
loans of $17,307 were paid off in cash in June 1998. Shadda Lee was owed
$106,059 which was comprised of $47,720 of deferred compensation and interest
and $57,891 of loans and interest to the Company. In January of 1998 the Company
paid off $90,672 of this balance through the issuance of 362,689 shares of the
Company's common stock at $.25 per share and warrants representing 362,689
shares exercisable at $.50 per share. The remaining $15,387 of debt was paid off
in cash throughout the first six months of 1998. At December 31, 1998 the
Company owed a total of $26,188 which was comprised of $13,094 each to Sam and
Joe Ringer for deferred compensation and interest. In January of 1999 this debt
was paid off in full through a cash payout. At December 31, 1999, Sam Ringer
loaned the Company $60,500 that is payable with interest on March 30, 2000.

     In June 1996 the Company engaged Howard Baskin, a management consultant, to
help the Company grow its customer and revenue base and expand nationally. In
January 1997, the Company entered into a consulting agreement with Mr. Baskin
under which he agreed to temporarily relocate to Seattle and advise the Company
on a full-time basis. From January 1997 through July 1998 he served as "Managing
Executive" of LION under the consulting agreement, advising management on
strategic and operating decisions. In consideration for his services, the
consulting agreement entered into in January 1997 originally provided for
incentive compensation under a formula that would have created a cash bonus in
the high six figures to low seven figures upon achieving certain financial
targets. In March 1998 the consulting agreement was amended to replace this
substantial potential cash obligation by an option to purchase 700,000 shares of
the Company's common stock exercisable at $.01, which are now fully vested at
December 31, 1998. Compensation expense of $412,930 related to these options was
recognized by the Company during the year ended December 31, 1997. The
consulting agreement also provides for certain other options to purchase
1,800,000 shares of the Company's common stock at prices ranging from $.75 to
$3.00 per share which are to be granted contingent upon the occurrence of
certain events. Based on certain events that did occur, options to purchase
25,000 shares at $.75 per share were granted during 1998 and again to purchase
25,000 shares at $.75 per share during 1999 and are both fully vested.
Compensation expense of $16,825 and $41,072 was recognized for the years ended
December 31, 1998 and 1999, respectively. Under the consulting agreement Mr.
Baskin received cash compensation of $79,797 and $88,312 for the years ended
December 31, 1998 and 1999, respectively.

     In consideration for his consulting services rendered to the Company,
1,000,000 options exercisable at prices ranging from $.50 to $1.00 were issued
in July 1997 to Billy Anders, Sr., a director of the Company. During September
1998, the Company sold 62,500 shares of common stock to Mr. Anders, in
connection with the exercise of outstanding options for cash consideration of
$15,625. In addition, the Company sold 62,500 shares of common stock to Mr.
Anders at a purchase price of $.50 and 125,000 shares of common stock at a
purchase price of $1.00 in connection with the exercise of outstanding options.
The aggregate purchase price of $156,250 was payable by promissory note with
principal balance, together with interest at the rate of 10% per annum, due on
or before March 1, 2000. The 187,500 shares of common stock purchased by the
promissory note were pledged to the Company as collateral until the note is paid
in full. Mr. Anders is associated as a registered representative with Craig &
Associates, Inc., an NASD member broker-dealer. During the period from January
1996 to March 1998, the Company utilized Craig & Associates to assist in the
sales of three discrete offerings of securities. Placement agent fees were paid
to Craig & Associates in connection with these sales, consisting of 7% of the of
the offering price of the units sold, plus warrants exercisable at $.25 per
share with an aggregate offering price equaling 7% of the price of the units
sold.

     At December 31, 1999, Allen Ringer, Sam Ringer and Joe Ringer beneficially
owned approximately 10.8%, 8.9% and 8.9%, respectively, for aggregate holdings
of approximately 28.6%, of


                                        48
<PAGE>

the outstanding shares of common stock of the Company (assuming exercise of
their outstanding warrants and not the options granted to Company employees and
service providers). As a group, the present executive officers and directors of
the Company beneficially owned approximately 36.1% of the outstanding shares. As
a result, these shareholders may be able to control or significantly influence
all matters requiring shareholder approval, including the election of the
Company's directors and approval of significant corporate transactions. As of
December 31, 1999, the Company had granted options to purchase an aggregate of
12,077,500 shares of common stock, of which 5,182,500 were outstanding at
December 31, 1999. Of the options granted, 4,595,000 were issued to directors of
the Company, of which 1,445,000 were outstanding at December 31, 1999.

     The Company may be subject to various conflicts of interest arising out of
the relationship of the Company, its Board of Directors, affiliates and the
common shareholders. If conflicts do arise they will not be resolved through
arms length negotiations but through the exercise of management's judgment
consistent with its fiduciary responsibility to the shareholders and the
Company's objectives and policies. The directors will minimize and resolve
conflicts by putting their fiduciary responsibility to the shareholders ahead of
personal interests. Certain directors of the Company will only devote so much of
their time to the business of the Company as in their judgment is reasonably
required and must decide how to allocate their time and services among the
Company and other entities with which they are involved.

     The Company intends that all future transactions, including loans, between
the Company and its officers, directors, principal stockholders and their
affiliates will be approved by a disinterested majority of the Board of
Directors, and will be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS:

     The following documents are filed herewith for informational purposes not
     part of this Annual Report, except as otherwise indicated:

<TABLE>

<S>      <C>
3.1      Restated Articles of Incorporation (1)
3.2      By-laws (1)
4.1      Specimen Common Stock Certificate (1)
10.1     1998 Stock Option Plan with Form of Option Agreement (1)
10.2     Consulting Agreement on H. Baskin (1)
10.3     Premises Lease Agreement (Mercer Island property) dated as of May 1, 1998 (1)
10.4     Premises Lease Agreement (Spokane property) dated as of January 1, 1999 (2)
10.5     Premises Lease Agreement (Renton Property) dated as of June 30, 1999 (lease term beginning September 13, 1999 (3)
16.1     Letter on change in certifying accountant from Thomas J. Harris CPA related to Form 10 - SB (2)
16.2     Letter on change in certifying accountant from Thomas J. Harris CPA related to this annual report (2)
21.1     LION,  Inc., a Washington corporation is the sole subsidiary of the Company (1)
27.1     Financial Data Schedule December 31, 1999

</TABLE>


(1)  Incorporated by reference to the same exhibit number to the Company's
     Registration Statement on Form 10-SB (File No. 0-25159)

(2)  Incorporated by reference to the same exhibit number to the Company's Form
     10 - KSB for the year ended December 31, 1998.


                                        49
<PAGE>

(3)  Incorporated by reference to the same exhibit number to the Company's Form
     10 - QSB for the quarter ended September 30, 1999.

(b)  REPORTS ON FORM 8-K

     No Reports on Form 8-K were filed during the quarter ended December 31,
1999.


                                        50
<PAGE>

                                   SIGNATURES

     In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Renton, Washington, on April 14, 2000.

                           PLENUM COMMUNICATIONS, INC.
                           ---------------------------
                                  (Registrant)

                              BY: /s/ Allen Ringer
                                 --------------------
                                  Allen Ringer
                                  President

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

<TABLE>
<CAPTION>

           Signature                               Title                         Date
           ---------                               -----                         ----
      <S>                                <C>                                  <C>
     /s/ John A. McMillan                Chairman of the Board, CEO           April 14, 2000
                                         and CFO
    /s/ Allen C. Ringer                  Director and President               April 14, 2000
    /s/ Billy Anders, Sr.                Director                             April 14, 2000
    /s/ Sam Ringer                       Director                             April 14, 2000
    /s/ Joe Ringer                       Director                             April 14, 2000
    /s/ Kurt Springman                   Director                             April 14, 2000
    /s/ Steve Thomson                    Controller                           April 14, 2000


</TABLE>

                                        51
<PAGE>

                                  EXHIBIT INDEX

<TABLE>

<S>      <C>
3.1      Restated Articles of Incorporation (1)
3.2      By-laws (1)
4.1      Specimen Common Stock Certificate (1)
10.1     1998 Stock Option Plan with Form of Option Agreement (1)
10.2     Consulting Agreement on H. Baskin (1)
10.3     Premises Lease Agreement (Mercer Island property) dated as of May 1, 1998 (1)
10.4     Premises Lease Agreement (Spokane property) dated as of January 1, 1999 (2)
10.5     Premises Lease Agreement (Renton Property) dated as of June 30, 1999 (lease term beginning September 13, 1999 (3)
16.1     Letter on change in certifying accountant from Thomas J. Harris CPA related to Form 10 - SB (2)
16.2     Letter on change in certifying accountant from Thomas J. Harris CPA related to this annual report (2)
21.1     LION,  Inc., a Washington corporation is the sole subsidiary of the Company (1)
27.1     Financial Data Schedule December 31, 1999

</TABLE>

(1)  Incorporated by reference to the same exhibit number to the Company's
     Registration Statement on Form 10-SB (File No. 0-25159)

(2)  Incorporated by reference to the same exhibit number to the Company's Form
     10 - KSB for the year ended December 31, 1998.

(3)  Incorporated by reference to the same exhibit number to the Company's Form
     10 - QSB for the quarter ended September 30, 1999.


                                        52