<PAGE>

                  U.S. Securities and Exchange Commission
                           Washington, D.C.  20549

                                Form 10-QSB/A
                              Amendment No. 3

[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the quarterly period ended November 30, 1999

[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934 for the transition period from  . . . . to . . . .

                       Commission file number 0-26578

                                  LMKI, INC.
      Exact name of small business issuer as specified in its charter)

                  Nevada                          33-0662114
        (State or other jurisdiction of        (I.R.S. Employer
        incorporation or organization)         Identification No.)


             3355 Michelson Drive, Suite 300, Irvine, CA    92612
             (Address of principal executive offices)     (Zip Code)

                                 (949) 794-3000
            (Registrant's telephone number, including area code)

Check whether the issuer (1) filed all the reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past twelve 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
    ---    ---

As of November 30, 1999 the number of preferred stock outstanding is 2,500 and
common stock outstanding is 36,115,666.

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

<PAGE>

                         PART I - FINANCIAL INFORMATION

LMKI, INC. (formerly Landmark International Inc.)
Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                          NOV. 30              AUG. 31
                                                          -------              -------
                                                           1999                 1999
                                                           ----                 ----
ASSETS                                                  (Unaudited)
<S>                                                  <C>                  <C>
Cash                                                 $       2,053,932    $         125,692
Accounts receivable                                            946,856              837,850
                                                     ------------------   ------------------
    Total current assets                                     3,000,787              963,542

Equipment                                                    1,027,417              302,549
Accumulated depreciation                                       (63,916)             (40,482)
                                                     ------------------   ------------------
    Net equipment                                              963,501              262,067

Goodwill, less accumulated amortization
    of $151,103 in 1999 and 1998                             1,590,356            1,678,709
Deposits                                                       116,200               35,725
                                                     ------------------   ------------------
    Total other assets                                       1,706,556            1,714,434
                                                     ------------------   ------------------
      Total assets                                   $       5,670,844    $       2,940,043
                                                     ==================   ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                                     $       1,164,424    $         999,319
Accrued payroll and related liabilities                        113,954              133,749
Other accrued liabilities                                       37,187                7,133
Accrued dividends payable                                        2,466                    -
Accrued interest to stockholder                                 25,608                3,112
Capitalized lease obligations due
    within one year                                              9,817               37,290
                                                     ------------------   ------------------
    Total current liabilities                                1,353,456            1,180,603

Capitalized lease obligations, long term                        34,359               55,275
Loans from stockholder                                       1,089,920              797,680
                                                     ------------------   ------------------
      Total liabilities                                      2,477,735            2,033,558
                                                     ------------------   ------------------

Stockholders' equity
    Preferred stock, Series A 6% convertible                 2,500,000                    -
      10,000,000 authorized,
      2,500 issued and outstanding;
      liquidation preference of $2,500,000
    Common stock, $.001; shares authorized                      36,116               36,116
      50,000,000, shares issued and outstanding
      total 36,115,666
    Paid in capital                                          3,172,225            1,834,125
    Accumulated deficit                                     (2,515,232)          (  963,756)
                                                     ------------------   ------------------
    Total stockholders' equity                               3,193,109              906,485
                                                     ------------------   ------------------
      Total stockholders' equity
      and liabilities                                $       5,670,844    $       2,940,043
                                                     ==================   ==================
</TABLE>

See accompanying notes.

                                       2
<PAGE>

LMKI, INC. (formerly Landmark International, Inc.)
Consolidated Statements of Operations (Unaudited)

<TABLE>
<CAPTION>
                                                          Three Months ended Nov. 30,
                                                    ----------------------------------------
                                                           1999                   1998
                                                           ----                   ----
<S>                                                 <C>                   <C>
Net sales                                           $       1,505,053     $          40,881

Cost of sales                                                 403,843                 3,173
                                                    ------------------    ------------------

     Gross Profit                                           1,101,210                37,708

Selling expense                                               373,522                72,589

General and administrative expenses                           690,215                25,463
                                                    ------------------    ------------------

Loss from operations                                           37,473               (60,344)

Interest (income) expense, net                                 26,483                 2,018
                                                    ------------------    ------------------

Loss before provision for income taxes                         10,990               (62,362)

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

Net loss                                                       10,990               (62,362)

Less:
     Dividends accrued on preferred stock                       2,466                     -

     Preferred stock beneficial feature                     1,560,000                     -
                                                    ------------------    ------------------

Net loss allocable to common stockholders           $      (1,551,476)    $         (62,362)
                                                    ==================    ==================

Basic and diluted net loss per common share         $           (0.05)    $           (0.00)
                                                    ==================    ==================

Weighted average shares outstanding                        36,115,666            19,986,666
                                                    ==================    ==================

</TABLE>
See accompanying notes.

                                       3
<PAGE>

LMKI, INC. (formerly Landmark International, Inc.)
Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months ended Nov. 30,
                                                         ------------------------------------------
                                                              Nov.                     Nov.
                                                              1999                     1998
                                                              ----                     ----
<S>                                                      <C>                     <C>
Cash flows from operating activities:
Net loss                                                 $          10,990       $         (62,362)

Adjustments to reconcile net loss to net
  cash provided by operating activities:
    Depreciation and amortization                                   23,434                   2,922
    Amortization of goodwill                                        88,353                       -
    Changes in operating assets and liabilities:
       Accounts receivable                                        (109,006)                 47,623
       Deposits                                                    (80,475)                 35,725
       Accounts payable                                            195,158                 (24,735)
       Accrued payroll and related liabilities                     (19,795)                  1,890
       Accrued interest to stockholder                              22,496
                                                         ------------------      ------------------
                                                                   131,156                   1,063
                                                         ------------------      ------------------
  Cash flows from investing activities:
    Purchases of capital equipment                                (724,868)                      -
                                                         ------------------      ------------------
                                                                  (724,868)                      -
                                                         ------------------      ------------------
  Cash flows from financing activities:
    Repayment of capitalized lease obligation                      (48,389)                 (4,432)
    Proceeds from preferred stock, net of
     offering costs                                              2,278,100                       -
    Proceeds from notes payable to stockholder                     292,240                       -
                                                         ------------------      ------------------
                                                                 2,521,951                  (4,432)
                                                         ------------------      ------------------

Net increase in cash                                             1,928,239                  (3,369)
Cash at beginning of periods                                       125,692                   3,772
                                                         ------------------      ------------------
Cash at end of periods                                   $       2,053,931       $             403
                                                         ==================      ==================

Supplemental cash flow disclosures:
  Cash paid for interest                                 $          26,483       $           2,018
                                                         ==================      ==================
  Cash paid for taxes                                    $               -       $               -
                                                         ==================      ==================
</TABLE>

The company has entered into certain non-cash transactions which have been
reflected in the notes hereto.

See accompanying notes.

                                       4
<PAGE>

LMKI, Inc.
(formerly Landmark International, Inc.)
Notes to Consolidated Financial Statements
For the three-months ending November 30, 1999 and 1998

1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS:  LMKI, Inc. (formerly Landmark  International,  Inc.) (The
"Company" or "LMKI") is a Nevada Corporation  engaged in providing high-speed
Internet access, data, voice and video services to individuals and businesses.

BASIS OF PRESENTATION: The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with the instructions to
Form 10-QSB and therefore do not include all information and notes necessary for
a fair presentation of financial position, results of operations, and cash flows
in conformity with generally accepted accounting principles. The unaudited
condensed consolidated financial statements include the accounts of LMKI, Inc.
and its wholly owned subsidiary Mobilenetics Corporation ("Mobilenetics") and
Landmark Communications, Inc. The operating results for interim periods are
unaudited and are not necessarily an indication of the results to be expected
for the full fiscal year. In the opinion of management, the results of
operations as reported for the interim periods reflect all adjustments which are
necessary for a fair presentation of operating results. All intercompany
accounts and transactions have been eliminated.

EQUIPMENT: Equipment is carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the depreciable assets,
which range from three to seven years.

Equipment under capitalized lease obligations are carried at estimated fair
market value determined at the inception of the lease. Amortization is computed
using the straight-line method over the original term of the lease or the
estimated useful lives of the assets, whichever is shorter.

GOODWILL: Goodwill represents the excess purchase price over the estimated fair
value of the net assets of Mobilenetics. Goodwill is being amortized using the
straight-line method over five years.

IMPAIRMENT OF LONG-LIVED ASSETS: The Company assess the recoverability of
long-lived assets by determining whether the depreciation and amortization of
the assets' balance over its remaining life can be recovered through projected
undiscounted future cash flows. The amount of impairment, if any, is measured
based on fair value and charged to operations in the period in which the
impairment is determined by management. Management has determined that there is
no impairment of long-lived assets as of November 30, 1999 and August 31, 1999.

REVENUE RECOGNITION: Fees for high-speed Internet access, data, voice and video
services are recognized as services are provided.

STOCK BASED COMPENSATION: The Company accounts for stock based compensation
under Statement of Financial Accounting Standard No. 123 ("SFAS 123"). SFAS 123
defines a fair value based method of accounting for stock based compensation.
However, SFAS 123 allows an entity to continue to measure compensation cost
related to stock and stock options issued to employees using the intrinsic
method of accounting prescribed by Accounting Principles Board Opinion No. 25

                                       5
<PAGE>

("APB 25"), "Accounting for Stock issued to Employees". Entities electing to
remain with the accounting method of APB 25 must make pro forma disclosures of
net income and earnings per share, as if the fair value method of accounting
defined in SFAS 123 had been applied. The Company has elected to account for its
stock based compensation to employees under APB 25 (see Note 6).

ADVERTISING: The Company expenses the cost of advertising as incurred as selling
expenses. Advertising expenses was approximately $23,000 for three- months ended
November 30, 1999 ($404 for 1998).

INCOME TAXES: Income taxes are provided on the liability method whereby deferred
tax assets and liabilities are recognized for the expected tax consequences of
temporary differences between the tax bases and reported amounts of assets and
liabilities. Deferred tax assets and liabilities are computed using enacted tax
rates expected to apply to taxable income in the years in which temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities from a change in tax rates is recognized in income in the
period that includes the enactment date. The Company provided a valuation
allowance for certain deferred tax assets. It is more likely than not that the
Company will not realize tax assets through future operations.

NET LOSS PER COMMON SHARE: Net loss available to common stockholders per share
is computed by dividing net loss by the weighted average number of common shares
outstanding during the period. Net loss has been increased for the effect of
accrued dividends to preferred stockholders and the effect of the preferred
stockholder beneficial conversion feature (Note 8). Stock options and warrants
outstanding are not considered common stock equivalents, as the affect on net
loss per share would be anti-dilutive.

CONCENTRATION RISK: The Company grants credit to customers in the State of
California. The Company's ability to collect receivables is affected by economic
fluctuations in the geographic areas served by the Company.

RISKS AND UNCERTAINTIES: The process of preparing financial statements in
conformity with generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets, liabilities,
revenues and expenses. Management of the Company has made certain estimates and
assumptions regarding the collectibility of accounts receivable. Such estimates
and assumptions primarily relate to unsettled transactions and events as of the
date of the financial statements. Accordingly, upon settlement, actual results
may materially differ from estimated amounts.

SEGMENT REPORTING: The Company adopted SFAS No. 131 ("SFAS"), "Disclosures about
Segments of an Enterprise and Related Information," during fiscal 1999. SFAS 131
establishes standards for the way that public companies report information about
operating segments and related disclosures about products and services,
geographic areas and major customers in annual consolidated financial
statements. The Company views its operations and manages its business as
principally one segment.


2.    BUSINESS COMBINATION:
Effective June 1, 1999, LMKI, Inc. acquired Mobilenetics Corporation
("Mobilenetics"), in a business combination accounted for as a purchase.
Mobilenetics is a provider of communications consulting and systems integration

                                       6
<PAGE>

services that primarily involve Internet and network solutions. It services a
diverse base of customers that are located primarily in California. Prior to the
business combination, the majority stockholder of Mobilenetics was a stockholder
of the Company and Mobilenetics provided communication equipment to the Company
under a capitalized lease agreement. The Company issued 10,000,000 shares of its
common stock in exchange for all of the outstanding shares of Mobilenetics. The
shares issued for Mobilenetics were valued at $1,400,000 ($0.140 per share),
which represented the closing bid price of the Company's common stock on the
date the transaction was entered into. Management of the Company estimated the
value of the Company's shares exchanged after considering the historical trend
of the trading prices for its' common stock and the limited volume of shares
being traded.

The acquisition of Mobilenetics can be summarized as follows:

Fair value Mobilenetics:
Assets acquired                                          $    141,810
Liabilities assumed                                          (508,872)
                                                         -------------
Fair value of net assets acquired                            (367,062)
Fair value of consideration tendered                        1,400,000
                                                         -------------
Goodwill assigned to acquisition                         $  1,767,062
                                                         =============

The results of operations of Mobilenetics are included in the accompanying
consolidated financial statements as of June 1, 1999.


3.       CAPITALIZED LEASE OBLIGATIONS:
The Company leases equipment under non-cancelable lease agreements. Equipment
under lease agreements aggregated at August 31, 1999 total $107,540 less
accumulated amortization at August 31, 1999 of $18,042.

Aggregate future minimum lease payments and the present value of minimum lease
payments are as follows:

Years ending August 31:
-----------------------
   2000                                                  $     59,873
   2001                                                        40,097
   2002                                                        18,064
                                                         -------------
Total minimum lease payments                                  118,034
Less amount representing interest (at annual
 interest rates ranging from 14.1% TO 28.9%)                   25,469
                                                         -------------
Present value of minimum lease payments                        92,565
Less amounts due within one year                               37,290
                                                         -------------
Long-term capitalized lease obligations                  $     55,275
                                                         =============


4.    NOTES PAYABLE TO STOCKHOLDER
For the three-months ended November 30, 1999, the principal stockholder and
Chairman of the Company advanced an aggregate of $292,240 for working capital
purposes. The notes payable to stockholder totaled $1,089,920 at November 30,
1999. The notes payable bear interest at 10% per annum. The notes are repayable
upon demand in cash. The Company intends to request the chairman to exchange his
notes for common stock of the Company. The chairman has agreed not to demand
repayment before November 30, 2000.

                                       7
<PAGE>

5.    INCOME TAXES
The Company has incurred losses for both financial and tax reporting purposes
for all periods presented. As a result, the Company's provision for taxes
consists solely of minimum state taxes.

Net deferred income taxes are as follows as of August 31:

                                              1999         1998
                                              ----         ----

  Deferred tax assets:
  Net operating losses                   $    317,500    $     50,900
  Amortization of goodwill                     22,300               -
  Less allowance for deferred tax assets     (339,800)        (50,900)
                                         -------------   -------------
  Net deferred income taxes              $          -    $          -
                                         =============   =============

The Company has approximately $750,000 in Federal net operating losses as of
August 31, 1999, which, if not utilized, expire through 2018. The Company has
$375,000 as of August 31, 1999 in State of California net operating losses,
which if not utilized, expire through 2004.

The utilization of the net operating loss carry-forwards could be limited due to
restrictions imposed under federal and state laws upon a change in ownership.
The amount of the limitation, if any, has not been determined at this time. A
valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. As a result of
the Company's continued losses and uncertainties surrounding the realization of
the net operating loss carry-forwards, management has determined that the
realization of the deferred tax assets is not more likely than not. Accordingly,
a valuation allowance equal to the net deferred tax asset amount has been
recorded as of the periods presented.


6.    STOCK OPTIONS AND WARRANTS
On December 28, 1997, the Company granted an option to its chairman to acquire
4,000,000 shares of common stock at an exercise price of $.01 per share. The
closing price of the Company's common stock was $.062 at the date of grant. The
exercise price represented an 84% discount from such closing price. Management
determined that the exercise price approximated the fair value of the Company's
common stock at the date of grant. Management of the Company estimated the value
of the Company's shares at the date of grant based on the historical trend of
the trading prices for its' common stock and the limited volume of shares being
traded. Such option vested immediately and expires five years from the date of
grant.

On December 28, 1998, the Company granted an option to its chairman to acquire
3,000,000 shares of common stock at an exercise price of $.031 per share. The
closing price of the Company's common stock was $.031 at the date of grant. The
exercise price represented no discount from such closing price. Such option
vested immediately and expires five years from the date of grant.

On December 28, 1998, the Company granted an option to its chief financial
officer to acquire 500,000 shares of common stock at an exercise price of $.031
per share. The closing price of the Company's common stock was $.031 at the date
of grant. The exercise price represented no discount from such closing price.
Such option vested immediately and expires five years from the date of grant. On
December 28, 1998, the Company granted an option to its legal counsel to acquire
500,000 shares of common stock at an exercise price of $.031 per share. The
closing price of the Company's common stock was $.031 at the date of grant.
Management determined the fair value of the option granted utilizing the
Black-Scholes option-pricing model. Management of the Company assigned a value
of $.02 per option. As such, the Company recorded services expense totaling
$10,000 during the year ended August 31, 1999. Such option vested immediately
and expires five years from the date of grant.

                                       8
<PAGE>

On November 26, 1999, the Company granted options to members of senior
management to acquire 1,200,000 shares of common stock at an exercise price of
$4.531 per share. Subsequent to the grant, three members of senior management
voluntarily canceled 600,000 shares. The closing price of the Company's common
stock was $4.531 at the date of grant. The exercise price represented no
discount from such closing price. Such options vest over one year and expire two
years from the date of grant.

On November 26, 1999, the Company issued to various employees options to
purchase 115,760 shares of common stock of the Company. The closing price of the
Company's common stock was $4.531 at the date of grant. The options where
granted at an exercise price of $4.00 per share. The difference of $0.531 per
share is being recorded by the Company as compensation expense over the vesting
period. The options vest over a one-year period and expire two years from date
of grant.

On November 26, 1999, the Company granted an option to purchase 200,000 shares
of common stock of the Company at a price of $4.531 per share to its prior
external legal counsel. Such legal counsel became a member of the Company's
Board of Directors subsequent to the date of grant. The option vests over a year
period and expires November 25, 2001. The closing price of the Company's common
stock was $4.531 at the date of grant. Management determined the fair value of
the option granted utilizing the Black-Scholes option-pricing model. Management
of the Company assigned a value of $4.40 per option, for consideration totaling
$880,000.

The following table summarizes stock option and warrant activity for the
three-months ended November 30, 1999:
                                                              1999
                                                              ----
Options and warrants outstanding, Aug. 31, 1999             8,000,000
Options and warrants granted                                2,305,604
Options and warrants expired or canceled                     (600,000)
Options and warrants exercised                                      -
                                                         -------------

Outstanding, November 30, 1999                              9,705,604
                                                         =============

Weighted average exercised price per share
 of all options and warrants                             $        .76
                                                         =============

Options and warrants exercisable at Nov. 30, 1999           8,000,000
                                                         =============

Weighted average fair value of options and
 warrants granted during the three-month period          $       4.10
                                                         =============


7.    COMMON STOCK
The Company issued 10,000,000 shares in connection with its' acquisition of
Mobilenetics (See Note 2).

                                       9
<PAGE>

In December 1996, the Board of Directors authorized the issuance of 20,000
shares of common stock to each employee of the Company at that time. The shares
were to be surrendered back to the Company in the event that any employee who
received shares terminated their employment with the Company, or was terminated
by the Company for cause. The Company issued an aggregate of 540,000 shares of
its common stock to these employees. Management of the Company valued the share
grants at $.01 per share, which represented a 99.6% discount from the closing
bid price of the Company's common stock at the date of grant. Management of the
Company estimated the value of the company's shares granted after considering
the historical trend of the trading prices for its common stock and the limited
volume of shares being traded. The Company recorded compensation expense
totaling $5,400 during the year ended August 31, 1997 as a result of these
grants.

In December 1997, the Board of Directors authorized the issuance of 4,000,000
shares of common stock to the Chairman of the Company in exchange for
compensation and the issuance of 80,000 shares of common stock in exchange for
public relation services. Management of the Company valued the share grants at
$.062 per share, which represented an 83.8% discount from the closing bid price
of the Company's common stock at the date of grant. Management of the Company
estimated the value of the company's shares granted after considering the
historical trend of the trading prices for its common stock and the limited
volume of shares being traded. The Company recorded compensation expense and
services expense totaling $40,000 and $800, respectively, during the year ended
August 31, 1998 as a result of these grants.

In May 1998, the Company issued 4,000,000 shares of common stock to two
suppliers in exchange for $200 and a communications equipment lease. Management
of the Company valued the share grants at $.075 per share, which represented an
86.7% discount from the closing bid price of the Company's common stock at the
date of grant. Management of the Company estimated the value of the company's
shares granted after considering the historical trend of the trading prices for
its common stock and the limited volume of shares being traded. The Company
recorded capitalized lease costs totaling $40,200 during the year ended August
31, 1998 as a result of these grants.

In December 1998, the Board of Directors authorized the issuance of 4,000,000
shares of common stock to the Chairman of the Company in exchange for
compensation and 500,000 shares of common stock to two individuals in exchange
for professional services. Management of the Company valued the shares granted
to its Chairman at $.015 per share, which represented a 50.0% discount from the
closing bid price of the Company's common stock at the date of issuance.
Management of the Company valued the grants to its service providers at $.031
per share, which represented no discount from the closing bid price of the
Company's common stock at the date of grant. Management of the Company estimated
the value of the company's shares granted after considering the historical trend
of the trading prices for its common stock and the limited volume of shares
being traded. The Company recorded compensation expense and service expense
totaling $62,000 and $15,500, respectively, during the year ended August 31,
1999 as a result of these grants.

In March 1999, the Board of Directors authorized the issuance of 400,000 shares
of common stock to two individuals in exchange for professional services.
Management of the Company valued the share grants at $.09 per share, which

                                       10
<PAGE>

represented no discount from the closing bid price of the Company's common stock
at the date of grant. The Company recorded service expense totaling $36,000
during the year ended August 31, 1999 as a result of these grants.

Also in March 1999, the Company issued 1,000,000 shares of common stock to a
related party in exchange for communication software developed specifically for
the Company. Management of the Company valued the share grant at $.09 per share,
which represented no discount from the closing bid price of the Company's common
stock at the date of grant. The Company capitalized software costs totaling
$90,000 during the year ended August 31, 1999 as a result of this grant.

In June 1999, the Board of Directors authorized the issuance of 229,000 shares
of common stock to four employees in lieu of compensation and one individual in
exchange for professional services. Management of the Company valued the share
grants at $.531 per share, which represented no discount from the closing bid
price of the Company's common stock at the date of grant. The Company recorded
compensation and service expense totaling $68,499 and $53,100, respectively,
during the year ended August 31, 1999 as a result of these grants.


8.    PREFERRED STOCK
In November 1999, the Company closed the placement of 2,500 shares of Series A
6% Convertible Preferred Stock, $.001 par value (the "Series A Preferred
Stock"), to one purchaser (the "Purchaser") at a purchase price of $1,000 per
share, for an aggregate purchase price of $2,500,000, pursuant to a securities
purchase agreement (the "Purchase Agreement"). The Company entered into a
registration rights agreement and a warrant agreement. Concurrent with the
closing of the placement, the Company issued warrants to the Purchaser for the
purchase of 250,000 shares of the Company's common stock at an exercise price of
$4.25 per share, subject to customary anti-dilution provisions, expiring on May
5, 2002. The Company also issued warrants for the purchase of 49,844 shares of
common stock to the Placement Agent, exercisable at $4.0125 per share, expiring
on November 22, 2004. The Company also paid $222,000 in cash to the Placement
Agent for fees and costs associated with the Purchase Agreement. In conjunction
with the Purchase Agreement, the Company valued the Purchaser and Placement
Agent warrants utilizing the Black-Scholes option-pricing model. Management
arrived at a fair market value of $1,220,000 for the warrants.

The convertible feature of the Series A Preferred Stock provides for a rate of
conversion that is below market value. Such feature is normally characterized as
a "beneficial conversion feature". Pursuant to EMERGING ISSUES TASK FORCE No.
98-5 ("EITF 98-5"), the Company has valued such beneficial conversion feature
for this issuance of Series A Preferred Stock in the amount of $1,560,000. In
the calculation of basic and diluted net loss per share, such beneficial
conversion feature has increased the net loss allocable to common stockholders.


9.   INVESTMENT AGREEMENT
In September 1999, the Company entered into an irrevocable Investment Agreement
for a "private equity line" of up to $35,000,000. Under the Investment Agreement
an investment banking company has made a firm commitment to purchase the
Company's common stock and resale the securities in an offering under Regulation
D of the United States Securities and Exchange Commission.

                                       11
<PAGE>

Subject to an effective registration statement and ending 36 months from the
initial subscription date, the Company at its discretion may "Put" common stock
to the investment banking company. The purchase price per share will equal 92%
of the lowest closing bid price of the common stock during the 20 business days
following each Put, subject to a minimum price specified by the Company as
defined in the Investment Agreement. The amount of each Put sold to the
investment banking company may be up to $2,000,000, but the number of shares
sold may generally not exceed 15% of the aggregate trading volume of the
Company's common stock during the 20 business days following each Put.

The investment banking company shall receive warrants to purchase 10% of the
number of shares of the Company it purchases under each Put. The warrants are
exercisable at a price equal to 110% of the market price for each Put.

In consideration of the Investment Agreement, the Company granted the investment
banking company warrants to purchase 490,000 shares of its common stock. The
warrants are exercisable upon the successful completion of certain tasks, as
defined, and at a price equal to the lowest closing bid price for the 5 days
prior to the execution of the Investment Agreement of the 5 days following its
execution, whichever price is lower. The Company has not valued the warrants as
they vest upon a contingent event.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT: This discussion may contain statements that
could be deemed forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934 and the Private Securities Litigation Reform
Act, which statements are inherently subject to risks and uncertainties.
Forward-looking statements are statements that include projections, predictions,
expectations and beliefs about future events or results or otherwise are not
statements of historical fact. Such statements are often characterized by the
use of qualifying works (and their derivatives) such as "expect," "believe,"
"estimate," "plan," "project," "anticipate," or other statements concerning
opinions or judgment of the Company and its management about future events.
Factors that could influence the accuracy of such forward-looking statements
include, but are not limited to, the financial success or changing strategies of
the Company's customers, actions of government regulators, the level of market
interest rate and general economic conditions. All forward-looking statements
included herein are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those in such forward-looking statements due to the
factors cited above. As a result of these factors, there can be no assurance the
Company will not experience material fluctuations in future operating results on
a quarterly or annual basis, which would materially and adversely affect the
Company's business, financial condition and results of operations.

RESULTS OF OPERATIONS
The Company's operating results have fluctuated in the past and may in the
future fluctuate significantly, depending upon a variety of factors, including

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the timely deployment and expansion of new network architectures, the incurrence
of related capital costs, variability and length of the sales cycle associated
with the Company's product and service offerings, the receipt of new value-added
network services and consumer services subscriptions and the introduction of new
services by the Company and its competitors. Additional factors that may
contribute to variability of operating results include: the pricing and mix of
services offered by the Company; customer retention rate; market acceptance of
new and enhanced versions of the Company's services; changes in pricing policies
by the Company's competitors; the Company's ability to obtain sufficient
supplies of sole or limited-source components; user demand for network and
Internet access services; balancing of network usage over a 24-hour period; the
ability to manage potential growth and expansion; the ability to identify,
acquire and integrate successfully suitable acquisition candidates; and charges
related to acquisitions. In response to competitive pressures, the Company may
take certain pricing or marketing actions that could have a material adverse
affect on the Company's business. As a result, variations in the timing and
amounts of revenue could have a material adverse affect on the Company's
quarterly operating results. Due to the foregoing factors, the Company believes
the period-to-period comparisons of its operating results are not necessarily
meaningful and that such comparisons cannot be relied upon as indicators of
future performance. In the event that the Company's operating results in any
future period fall below the expectations of securities analysts and investors,
the trading price of the Company's common stock would likely decline.

REVENUE: Revenue totaled approximately $1,505,053 for the three-month period
ended November 30, 1999, a 3,582% increase over revenue of $40,881 for the
three-month period ended November 30, 1998. This increase reflects the growth in
revenue for exclusive selling of DSL and T-1 services resulting from marketing
arrangements with new strategic partners, the continued growth derived from
Internet access customers, and sale of equipment to support network systems.

COST OF SALES: Cost of sales increased for the three-month period ended November
30, 1999 was approximately $404,843, and increase of 12,659% from $3,173 for the
three-month period ended November 30, 1998. Cost of sales consists primarily of
access charges from local exchange carriers, backbone and Internet access costs,
and the cost of customer equipment to support network systems. The Company
expects its cost of sales to continue to increase in dollar amount, while
declining as a percentage of revenue as the Company expands its customer base.

GROSS MARGIN: The gross margin for the three-month period ended November 30,
1999 was approximately $1,101,210 compared to $37,708 for the same period ended
November 30, 1998. Gross margin percent decreased to 73% for the period ended
November 30, 1999 compared to 92% for the period ended November 30, 1998. This
decrease was attributable to the increased mix of our product services.

SALES EXPENSE: Sales expense consists primarily of personnel expenses, including
salary and commissions, and costs for customer support functions. Marketing and
sales expense was approximately $373,522 for the three-month period ended
November 30, 1999 and $72,589 for the three-month period ended November 30,
1998, which represents a 415% increase. The increase of approximately $300,000
in 1999 reflects an expansion of the direct sales organization necessary to
support increased revenue volumes. The Company expects sales expenditures to

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continue to increase in dollar amount, but to decline as a percentage of
revenue.

GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expense consists
primarily of personnel expense, rent and professional fees. General and
administrative expense was approximately $690,215 for the three-month period
ended November 30, 1999 and $25,463 for the three-month period ended November
30, 1998, which represents 26,107% increase. This higher level of expense
reflects an increase in personnel and professional fees necessary to manage the
financial, legal and administrative aspects of the business. In addition, the
three-month period ended November 30, 1999 included $88,353 of goodwill
amortization relating to the Company's June 1, 1999 acquisition of Mobilenetics.
The Company expects the general and administrative expense to increase in dollar
amount, reflecting the growth in operations, but to decline as a percentage of
revenue.

INTEREST EXPENSE: Interest expense was $26,483 for the three-months ended
November 30, 1999 and $2,018 for the three-months ended November 30, 1998. The
increase is related to new leases of equipment and interest on notes from the
principal stockholder that advanced funds for working capital.

NET INCOME: The Company incurred net income for the period ended November 30,
1999 of $10,990 compared to a net loss of $62,362 for the period ended November
30, 1998. We expect to focus in the near term on building and increasing our
revenue base, which will require us to significantly increase our expenses for
personnel, marketing, network infrastructure and the development of new
services, and may adversely impact our short term operating results. As a
result, we believe that we will incur losses in the near term and we cannot
assure you that the Company will be profitable in the future.


FINANCIAL CONDITION

To date, we have satisfied our cash requirements primarily through debt and
equity financings and capitalized lease financings. In late November of 1999,
the Company received $2,278,100 from an equity placement. The Company's
principal uses of cash are to fund working capital requirements, acquisition of
additional DSL lines and capital expenditures, and to service our capital lease
and debt financing obligations. Net cash provided by operations for the
three-month periods ended November 30, 1999 and 1998 was approximately $131,156
and $1,063, respectively. Cash provided by operating activities in the period
ending November 30, 1999 was primarily affected by the net loss from operations
and the increases of accounts receivable and accounts payable as we were
expanding our market share and improving our infrastructure

Net cash used by investing activities for the three-month period ended November
30, 1999 was $724,868 for the purchase of equipment. No cash was either used or
provided by investing activities in the three-month period ending November 30,
1998. DSL routers located at client sites represented $235,000, Cisco routers in
support of broadband sales represented $428,000 and $62,000 was for
miscellaneous equipment.

Net cash provided by financing activities for the period ending November 30,
1999 came from an increase in notes payable to officer of $317,848 and sale of
preferred stock for a net proceeds of $2,278,100. During November 1999, the
Company closed the placement of the initial tranche of 2,500 shares of Series A

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6% Convertible Preferred Stock, $.001 par value (the "Series A Preferred
Stock"), to one purchaser (the "Purchaser") for an aggregate purchase price of
$2.5 million (less $221,900 placement fees and commissions). Net cash used for
financing activities for the three-month period ending November 30, 1998 was for
repayment of capitalized leases.

The net cash increase for the three-month period ended November 30, 1999 was
$1,928,239 as compared to a net cash decrease for the three-month period ended
November 30, 1998 of $3,369. Such increase came as a result of events discussed
above.

At November 30, 1999, we had cash and cash equivalents of approximately
$2,053,931, and positive working capital of $1,647,331.

The Company expects to satisfy its working capital needs for the foreseeable
future through additional debt and equity placements, and capital leases. There
can be no assurances that the Company will be successful in securing additional
financing, and if secured, it will be sufficient to satisfy working capital
needs for the foreseeable future.


Year 2000 Compliance

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of normal business activities. We have reviewed our products
and services, as well as our internal management information systems in order to
identify and modify those products, services and systems that are not year 2000
compliant.

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                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

        None

Item 2. Changes in Securities and Use of Proceeds

        None

Item 3. Defaults Upon Senior Securities

        None

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

        None

Item 5. Other Information

        None

Item 6. Exhibits and Reports on Form 8-K

       (a) Exhibit Table:

                EX-27  Financial Data Schedule

       (b) Form 8-K:

                We filed Form 8-K for Item 5 on 10/13/99. We filed Form 8-K for
                Item 5 on 10/20/99.

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                                POWER OF ATTORNEY

The Registrant and each person whose signature appears below hereby authorizes
William J. Kettle, the agent for service named in this Report, with full power
to act alone, to file one or more amendments to this Report, which amendments
may make such changes in this Report as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually and in
each capacity stated below, any such amendments to this Report.

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                                  [SIGNATURES]

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

Date: April 11, 2000

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


LMKI, INC. (Registrant)


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

/s/ William J. Kettle              Chairman, Director and      April 11, 2000
--------------------------------   Chief Executive Officer
William J. Kettle


/s/ John W. Diehl, Jr.              Chief Financial Officer,   April 11, 2000
--------------------------------    Secretary (Principal
John W. Diehl, Jr.                  Accounting Officer)

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