<PAGE>   1

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

     PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended:       March 31, 2000    Commission File No: 000-28638

                        INTERUNION FINANCIAL CORPORATION
        (Exact name of small business issuer as specified in its charter)

Delaware                                                              87-0520294
--------                                                              ----------
(State or other jurisdiction                   (IRS Employer Identification No.)
of incorporation or organisation)

   249 Royal Palm Way, Suite 301 H, Palm Beach, Fl                         33480
   -----------------------------------------------                         -----
          (Address of principal executive offices)                    (Zip Code)

                                  (561) 820 - 0084              (561) 655 - 0146
                                  ----------------              ----------------
                       (Issuer's telephone number)   Issuer's telecopier number)

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock $0.001
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 such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]

Check if there is no disclosure of delinquent 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 the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB. [x]

The Financial Statements required by Rule 3.09 of Regulation S-X of the
Registrant significant investee, InterUnion Asset Management, are incorporated
in full by reference herein.

State issuer's revenues for its most recent fiscal year: $ 1,440,371

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock, as of a specified date within the past 60
days. $712,579 as at June 22, 2000

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of share outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: $0.001 Par Value Common Shares -
4,243,123 as of June 22, 1999.

Transitional Small Business Disclosure Format (Check One)  Yes [ ]    No [x]




<PAGE>   2






                        INTERUNION FINANCIAL CORPORATION
                                   FORM 10-KSB
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>



<S>                                                                                           <C>
PART I.........................................................................................3
    Item 1 DESCRIPTION OF BUSINESS.............................................................3
    Item 2 DESCRIPTION OF PROPERTY.............................................................7
    Item 3 LEGAL PROCEEDINGS...................................................................7
    Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................7
PART II........................................................................................8
    Item 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............................8
    Item 6 MANAGEMENT'S DISCUSSION AND ANALYSIS...............................................10
    Item 7 FINANCIAL STATEMENTS...............................................................16
    Item 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE...........................................................16
PART III......................................................................................17
    Item 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
    COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.........................................17
    Item 10 EXECUTIVE COMPENSATION............................................................19
    Item 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....................20
    Item 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................................22
    Item 13 EXHIBITS AND REPORTS ON FORM 8-K..................................................23


</TABLE>
                                       2
<PAGE>   3


PART I

Item 1 DESCRIPTION OF BUSINESS

(A)  BUSINESS DEVELOPMENT

INTERUNION FINANCIAL CORPORATION (the 'Company"), is a Delaware corporation. The
Company carries the activities of a merchant bank and an investment bank.
Merchant banking activities focus on restructuring and/or consolidating as
principal, in order to capitalize smaller or privately/family held companies and
attract institutional interest. Investment banking activities focus on advisory
services and raising of capital, as agent, for small and medium size
corporations, public or private which are either looking for institutional
financing or strategic alliances in sectors in which InterUnion Financial
Corporation has recognized research and corporate finance strength.

The Company's policy is not to get involved in the corporations it advises or
provides financing to when acting as agent, and to limit the extent of its
involvement in the corporations in which it acts as principal.

On January 25, 1999, the Company, through a roll over of its interests,
reorganized its investment management companies: BIM, GTS and LFB, into IUAM.
The purpose of the reorganization was to allow IUAM to implement its business
plan and continue its acquisition program, on a tax effective basis, as a
consolidator of Canadian investment management companies and get access to an
institutional strategic alliance. That restructuring has allowed the Company to
include its IUAM ownership in its merchant banking activities.

On January 25, 1999, IUAM issued 310,010 convertible preferred shares to Working
Venture Canadian Fund ("WVCF") for gross proceeds of C$5,000,000. (C$ is the
symbol used for the Canadian currency, unless preceded by C, all dollar amounts
are US dollars). Each convertible preferred share is convertible into one common
share of IUAM and gives the holder one vote per share. WVCF is a Canadian
institutional investor with more than $500 million in funds under
administration. WVCF's only fund is a labor sponsored fund with approximately
400 shareholders. Investors in these funds receive an immediate tax credit of up
to 40% of the amount invested.

On March 9,1999, WVCF converted their Convertible Preferred Shares in IUAM
Common Shares and acquired an additional 568,160 Common Shares for C$5,000,000.
At that point, the ownership structure of IUAM became WVCF 56% and IUFC 44%.
Concurrent with that last financing, IUAM incorporated a new entity, AIL
INVESTMENT SERVICES LIMITED ("AILIS"). The objective of AILIS being to create a
family of mutual funds in order to expand WVCF's product line. The funds raised
by expanding the products sold by WVCF's sales force would be managed by the
various investment managers within the IUAM group.

On November 22, 1999, at the Company's Shareholders' meeting it was approved to
amend the Certificate of Incorporation of the Company by allowing the Board of
Directors of the Company to use the total amount of common voting stock, each
share of stock having one vote, at $0.001 par value and shall be set by
resolution as adopted by the Board of Directors, which such number of authorized
shares may be changed from time to time, within the said 10,000,000 share
limitation, as adopted by resolution(s) adopted by the Board of Directors.

During December 1999, the Company at the recommendation of the Board of
Directors simplified its corporate structure by reducing the number of
subsidiaries through reallocation of their business to other operating entities
or the merging of their activities. To achieve simplification of the corporate
structure the following subsidiaries were dissolved:

      Credifinance Realty Corp., Toronto, Ontario, Canada
      Credifinance Securities Inc., Florida, USA
      Marbury Trading Corporation, Panama
      Bearhill Limited, British Virgin Islands


                                       3

<PAGE>   4
In December 1999, the company formed a new, wholly owned, subsidiary named
InterUnion Merchant Group Inc. (IUMG), a British Virgin Islands based company.
InterUnion Merchant Group took over the assets and liabilities of Marbury
Trading Corporation and Bearhill Limited upon their liquidation. The Company
also changed name of I & B Inc. Delaware, USA, a wholly owned subsidiary to
Credifinance Capital Corp., Delaware, USA.

(B)  BUSINESS OF ISSUER

GENERAL

The Company was formed as a "business bank" which would acquire, when possible,
a majority interest in financial services companies in order to expand its
investment banking and merchant banking activities.

The Company provides bridge financing and development capital as part of its
investment banking activities. Financing can be provided to companies outside
the financial service sector and can be extended for a period of up to five
years, depending on the complexity of the undertaking.

InterUnion is both a holding and an operating company as it engages in
activities which can be separate from the activities of its named subsidiaries:
InterUnion derives independent revenues from its own investment banking and
merchant banking activities.

PRODUCTS AND/OR SERVICES OF ACTIVE SUBSIDIARIES

In addition to the operations of InterUnion Financial Corporation as the parent,
the Company owns operating subsidiaries. These subsidiaries are: Credifinance
Capital, Inc., Credifinance Securities Limited and InterUnion Merchant Group
Inc. In addition to these subsidiaries, the Company has a 44% interest in
InterUnion Asset Management Limited. IUAM is a holding company with interests in
Canadian investment management companies.

(1)  INVESTMENT BANKING

Credifinance Capital, Inc. ("CFCI") is an investment corporation located in
Toronto, Canada. The business of this company is to advice and/or act as agent
in the trading of international securities essentially for its European and
offshore clients on both the primary and secondary markets. CFCI owns
Credifinance Securities Limited.

Credifinance Securities Limited ("CFSL") started operations in September 1991 as
an institutional boutique active in trading for the accounts of its Canadian
clients, in the fixed income and equity markets. CFSL acts exclusively as agent
and its specialized research is the basis for its underwriting and corporate
finance activities that focus on small and medium size companies in select
sectors.

CFSL is a member of the Canadian Investment Dealers Association, the Toronto
Stock Exchange and the Montreal Exchange. CFSL is also a member of the
International Securities Market Association.

(2)  MERCHANT BANKING

InterUnion Merchant Group ("IUMG"), is a B.V.I. corporation with administrative
offices in Geneva Switzerland. The assets of Marbury Trading Corporation ("MTC")
and Bearhill Limited ("BHL") were rolled over into IUMG following IUMG's
incorporation in December 1999.

The business of IUMG is two-fold:

 a)  To take debt and equity positions in companies for which InterUnion acts
     directly or through its investment banking subsidiary for the purpose of
     restructuring, merger or acquisition. Such


                                       4

<PAGE>   5
     investments can be carried from a few months up to five years depending on
     the complexity of the transaction. Although IUMG's, and therefore the
     Company's interest in the reorganized companies can be substantial at
     times, the objectives is either to dispose of its interest over time or
     reduce it to a minority position upon completing its mandate. For the year
     ended March 31, 2000, IUMG had an investment in Receptagen Ltd, a Canadian
     based company. The Company's interest in Receptagen was written down to
     market resulting in an unrealized loss of $1,251,334 in the year ended
     March 31, 2000.

 b)  IUMG owns the proprietary rights to certain computer software known as ITM
     Software, which is a computer software program used to generate buy and
     sell signals with respect to any stock market monitored. The forecasting
     technique used by the ITM market timing model involves general market
     indicators, interest rates and monetary analysis, market perception
     indicators, and various statistical data to detect trends. Until March 31,
     1999, the Company was amortising the ITM Software at a rate of $192,444 per
     annum. However, due to an uncertain future of the software and its
     inability to produce an identifiable cash flow in the near future, the
     Company decided to depreciate the ITM Software fully, resulting in an
     additional depreciation cost of $817,889. The Company will update and
     maintain the software and sell it when a suitable offer to purchase is
     received.

(3)  INVESTMENT MANAGEMENT

The Company's primary interest in the investment management business is through
its 44% ownership of IUAM based in Toronto, Canada. IUAM's investment management
activities are carried out through Guardian Timing Services, Inc, Black
Investment Management Limited, Leon Frazer, Black & Associates Limited, The Glen
Ardith-Frazer Corporation and A.I.L. Investment Services Limited and P.J.
Doherty & Associates Ltd. Working Venture Canadian Fund owns the remaining 56%.
The above companies, in total, manage about $1.5 billion in assets.

Guardian Timing Services, Inc. ("GTS") is an independent investment and fund
management firm located in Toronto, Canada. GTS manages the Canadian Protected
Fund, the Protected American Fund and the First America Fund, in addition to
being the co-manager of the India Excel Fund. It still uses the proprietary ITM
market timing model owned by IUMG, a subsidiary of the Company.

Black Investment Management Limited ("BIM") is an independent investment counsel
based in Toronto, Canada, that provides professional management of financial
assets for pension funds, corporations, foundations, mutual funds and group
investment plans. Mr. Paul Black and Mr. Robert W. Crosbie established BIM in
1973. IUAM has a 53.20% interest in BIM.

Leon Frazer, Black & Associates Limited ("LFB") was established in 1939 and is
the second oldest independent counselling and investment management firm in
Toronto, Canada. IUAM has a 60.18% direct interest in LFB as well as an
additional 9.88% indirect interest through BIM.

The Glen Ardith-Frazer Corporation ("GAF") is an independent investment counsel
located in Toronto, Canada that provides discretionary management to both
institutional and private clients. On February 29, 2000 GAF merged with LFB.

A.I.L. Investment Services Limited ("AILIS") was recently incorporated in
Ontario. The objective of AILIS is to create a full family of mutual funds that
is to be managed by affiliated companies within the IUAM Group.

P.J. Doherty & Associates Ltd. ("PJD") is an Ottawa, Canada based investment
management firm. In November 1999, IUAM acquired a 75% interest into PJD.

The Company has reached its objective to consolidate and capitalize through an
association with an institutional investor, its Canadian investment management
activities through a pure play vehicle, which could facilitate and accelerate
its acquisition program. Going forward, the Company will be considering its
interest in the Canadian investment management industry as part of its
investment banking activity.


                                       5
<PAGE>   6
COMPETITION

Competition is a part of every business. InterUnion faces competition directly
and through its subsidiaries from larger, better-capitalized financial service
companies as well as smaller, also better capitalized niche companies. These
companies can be commercial/investment/merchant banks, thrift institutions,
venture capital firms, etc. In addition, the Company is a minority investor in
IUAM, albeit with extensive minority shareholders rights granted under a
Shareholders Agreement. The performance of the assets under administration by
IUAM and its subsidiaries is a factor that could adversely affect the results of
the Company, as poor performance or loss of key portfolio managers may cause
clients to move their assets to other investment management companies.

GROWTH STRATEGY

Since inception, InterUnion's strategy has been to be a "business bank" i.e. to
be able to take advantage of investing/advisory opportunities. These
opportunities can include the temporary involvement of the Company in pure
financial service transactions. InterUnion's business will retain the purchase
and selling of companies or part of companies which will use InterUnion's
investment banking services as well as its ability to pay cash and/or issue its
own security in order to complete corporate transactions. InterUnion's strategy
is also to reduce its shareholders' risk by ensuring that its book value is
spread among various interests and does not depend on only one sector of
activity or only one operating company. InterUnion has been successful in
managing its investors' risk as today there is a sufficient number of
professionals with adequate credentials and experience in the various operations
who at the same time are shareholders of InterUnion. In time, as InterUnion gets
a larger and more diversified shareholder base, that strategy should help
InterUnion to grow and enable it to obtain outside financing.

The investment management activity of the Company through IUAM should continue
to expand as: (i) IUAM has now been converted into a pure Canadian consolidator
and (ii) IUAM has the necessary resources to acquire firms either with cash or
stock, in a tax efficient manner.

GOVERNMENT REGULATION

The operating activities of the Company are not subject to governmental
regulatory agencies, except for:

Credifinance Securities Limited is a member of the Investment Dealers
Association of Canada, The Toronto Stock Exchange, The Montreal Exchange and the
International Securities Market Association. As such, it is subject to the
compliance, rules and regulations of these self-regulatory organisations.

Black Investment Management Limited, The Glen Ardith-Frazer Corporation,
Guardian Timing Services Inc., Leon Frazer Black & Associates Limited and P.J.
Doherty & Associates Ltd. are regulated by the Ontario Securities Commission.

EMPLOYEES

InterUnion has 14 full time employees within its majority owned subsidiaries.


                                       6
<PAGE>   7

Item 2  DESCRIPTION OF PROPERTY

The Company does not own real estate.

The Company has leasehold interests in real estate as shown below, and all
premises are in good condition.
<TABLE>
<CAPTION>

                                           Gross Area                         Annual Rent
 Lessee & Location of Premises             (Sq. Ft.)          Term            Per Sq. Ft.
 ----------------------------------        ----------   -----------------   ----------------
<S>                                         <C>         <C>                   <C>
   InterUnion Financial Corporation            300       Mar. 00-Feb. 01         $17.00
                          Suite 301
                 249 Royal Palm Way
                Palm Beach, Florida

    Credifinance Securities Limited          3,310       Feb. 97-Jan. 02        C$22.00
                         Suite 3303
              130 Adelaide Street W
                   Toronto, Ontario

    Credifinance Securities Limited            927       Jul. 97-Jan. 02        C$15.00
                         Suite 3304
              130 Adelaide Street W
                   Toronto, Ontario
</TABLE>


Item 3  LEGAL PROCEEDINGS

Credifinance Securities Limited, an ultimate wholly owned subsidiary of the
Company, filed a claim against a client in 1997 for which it had raised a
C$15,000,000 convertible debenture, on the Superior Court of Montreal (Quebec).
The claim was not contested but was faced with cross demands from two employees
of Credifinance Securities Limited for commissions, termination allowance and
damages. In compliance with a court order, the total amount of the commission,
C$373,920 was placed in an escrow with Montreal Trust. On May 29, 2000, the
Superior Court of Montreal (Quebec) rendered a judgement ordering Credifinance
Securities Limited to pay C$579,617 plus accrued interest to the cross
claimants. The above amount has been fully provided for in the financial
statement of the company for the fiscal year ending as of March 31, 2000.

Upon advice from its counsel who has advised that the May 29, 2000 judgement has
a strong chance of reversal, Credifinance Securities filed an appeal in the
Supreme Court of Quebec, Canada, on June 29, 2000.


Item 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year covered by this report, there was
no matter brought to a vote of security holders, through the solicitation of
proxies or otherwise.




                                       7

<PAGE>   8

PART II

Item 5  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a)  MARKET INFORMATION

The issuer's common equity is traded on the NASD OTC Bulletin Board under the
symbol: IUFC.

The high and low sale prices for each quarter within the last two fiscal years
are as follows.
<TABLE>
<CAPTION>

 Period               Open                 High                  Low                  Close
 ------               ----                 ----                  ---                  -----
<S>                  <C>                  <C>                  <C>                   <C>
 FY99 Qtr 1          $ 3.50               $ 4.75                $ 3.47               $ 3.75
 FY99 Qtr 2            4.12                 5.75                  4.00                 4.80
 FY99 Qtr 3            4.75                 4.85                  2.62                 4.06
 FY99 Qtr 4            4.06                 5.12                  4.00                 4.25
 FY00 Qtr 1            1.88                 1.88                  1.50                 1.50
 FY00 Qtr 2            0.84                 0.84                  0.75                 0.75
 FY00 Qtr 3            0.63                 0.63                  0.44                 0.44
 FY00 Qtr 4            0.50                 0.94                  0.47                 0.94
</TABLE>

(b)  HOLDERS

The approximate number of holders of record of each class of stock is as
follows:

<TABLE>
<CAPTION>

         Class of Stock                                     Number of Holders
         --------------                                     -----------------
<S>                                                         <C>
         Common Share                                       373
         Class A Preferred                                  1
         Class B Preferred                                  none issued
         Class C Preferred                                  none issued
</TABLE>

(c)  DIVIDENDS

The Company has never declared or paid dividends on its common stock or its
preferred stock. There are no restrictions, other than state law that may be
applicable; those limit the ability to pay out all earnings as dividends. The
Board of Directors does not anticipate paying any dividends in the foreseeable
future; it intends to retain the earnings which could be distributed, if any,
for the operations, expansion and development of its business.

(d)  RECENT SALES OF UNREGISTERED SECURITIES

     (i)   SALES PURSUANT TO REGULATION D

     The Company has not made any sales within the past three (3) years in
     reliance upon an exemption from the registration requirements of the
     Securities Act of 1933, as amended, as contained within Regulation D,
     promulgated by the Securities and Exchange Commission.


                                       8

<PAGE>   9


     (ii)  SALES PURSUANT TO REGULATION S

     The following sales of Common Stock were made by the Company within the
     past three (3) years in reliance upon an exemption from the registration
     requirements of the Securities Act of 1933, as amended,as contained within
     Regulation S promulgated by the Securities and Exchange Commission:

<TABLE>
<CAPTION>

         Title of Class      Number of      Price per
           (1)(2)(3)(4)         Shares          Share         Consideration        Commission                   Date
         --------------      ---------      ---------         -------------        ----------        ---------------
<S>                           <C>               <C>            <C>                <C>                <C>
             Common (6)        229,453           5.00           1,147,265              Nil                April 1997
             Common (7)         60,000           3.00             180,000              Nil                 June 1997
             Common (8)         15,000           6.00              90,000              Nil               August 1997
             Common (9)        213,194           4.00             852,776              Nil             February 1998
             Common(10)        216,640           3.64             788,569              Nil                April 1998
             Common(11)         17,002           4.00              68,008              Nil                  May 1998
                 Common         35,000           4.00             140,000            7,000                 June 1998
             Common(11)        262,142           4.00           1,048,568              Nil                 July 1998
             Common(11)         10,000           4.00              40,000              Nil             December 1998
             Common(11)        180,000           3.50             630,000           63,000             February 1999
             Common(12)         25,000           3.50              87,500              Nil                March 1999
             Common(11)          1,140           4.00               4,560              Nil                March 1999
             Common (5)        114,500           0.50              57,250              Nil             November 1999
             Common (5)      2,014,198           0.40             805,679              Nil             November 1999
</TABLE>


NOTES TO SALES PURSUANT TO REGULATION S
[FN]

(1)  All sales were made directly by the Company as issuer.
(2)  The class of persons to whom the Company sold the above-referenced
     securities were individuals or entities whom the Company had reason to
     believe were either accredited investors within the meaning of Regulation
     Section 230.501 or were investors having such knowledge and experience in
     financial and business matters that the purchaser could properly evaluate
     the risks and merits of the investment.
(3)  All sales as shown above were made to non-U.S. persons.
(4)  The company specifically relied upon compliance with Regulation S as
     promulgated by the Securities and Exchanges Commission. The Company was in
     compliance with Category 3 of Rule 903 of Regulation S which provides an
     issuer safe harbour. Under this Category the Company complied with the two
     general conditions of Rule 903(a) and (b) and to transactional and offering
     restrictions by the execution of an investor Subscription Agreement, and
     the placing of the appropriate restrictive legend on the stock
     certificate(s).
(5)  These shares were issued on the conversion of a debenture or in settlement
     of a note payable.
(6)  These shares were issued with regards to the Receptagen restructuring. The
     consideration was determined by the price of the common stock at the time
     of the transaction. These shares were given to a non-related party.
(7)  These shares were issued upon the exercise of employee stock options,
     previously granted to Mr. Selwyn J. Kletz.
(8)  These shares were issued upon the exercise of warrants.
(9)  These shares were issued in the acquisition of IUAM. The consideration
     received was 91.55% of all of the issued and outstanding shares of IUAM.
     The valuation of IUAM was determined by an arms lengths transaction. These
     shares were given to a non-related party.
(10) These shares were issued in the acquisition of BIM. The consideration
     received was 45% of all of the issued and outstanding shares of BIM. The
     valuation of BIM was determined by an arms lengths transaction. These
     shares were given to a non-related party.
(11) These shares were issued in settlement of an equal amount due to the
     purchaser of the common stock.
(12) These shares issued for services received from the Chairman of the Company,
     Mr. Robert Crosbie.
</FN>


                                       9

<PAGE>   10



Item 6  MANAGEMENT'S DISCUSSION AND ANALYSIS

(a)  OVERVIEW

InterUnion Financial Corporation ("IUFC" or "InterUnion") was incorporated on
February 7, 1994. InterUnion's strategy is to acquire, when possible, a majority
interest in financial services businesses. InterUnion and its subsidiaries,
(collectively the "Company"), also provides bridge financing or takes equity
positions as part of its merchant banking activities. The Company acquires
companies or interest in companies for cash but preferably for common shares of
the Company with additional incentives for vending shareholders via common share
purchase warrants and stock options for management.

In 1999, the Company restructured its interest in its Canadian based investment
management activities in order to facilitate the growth strategy in that sector.
InterUnion Asset Management, ("IUAM"), which changed its name from Cluster Asset
Management in April 1998 and already held The Glen-Ardith Corporation, became
the holding company for the Company's interest in the following investment
management companies: Guardian Timing Services Inc. ("GTS"); Leon Frazer, Black
& Associates Limited ("LFB"); AIL Investment Services ("AILIS") and Black
Investment Management Limited ("BIM"). The purpose of the restructuring of IUAM
was to pursue acquisitions on a tax effective basis as well as secure an
institutional strategic alliance. IUAM issued 878,170 Common Shares (56%) to
Working Venture Canadian Fund ("Working Venture") for gross proceeds of C$10
million. On November 19, 1999, IUAM acquired a 75% interest into P.J.Doherty &
Associates Ltd. ("PJD"), an Ottawa, Canada, based money manager.

The following table is a summary of IUAM's interest in the above mentioned
investment management companies:

<TABLE>
<CAPTION>
                         Direct      Indirect      Total    Control
                         ------      --------     -------   --------
<S>                      <C>           <C>         <C>        <C>
BIM                      53.20%        0.00%       53.20%     53.20%
GTS                     100.00%        0.00%      100.00%    100.00%
LFB                      60.18%        9.88%       70.06%     70.06%
AILIS                   100.00%        0.00%      100.00%    100.00%
PJD                      75.00%        0.00%       75.00%     75.00%

</TABLE>

Although IUFC's interest in IUAM is 44%, through the Unanimous Shareholders
Agreement entered into with Working Venture, the Company has three of the seven
seats on the board of Directors as well as certain specific rights. The Company
accounts for IUAM on the equity method.

Also in 1999, the Company simplified its corporate organisation chart:
Credifinance Realty Capital Corp. (Ontario), Credifinance Securities Inc.
(Florida); Marbury Trading Corp. (BVI) and Bearhill Ltd. (BVI) were dissolved. A
new company, InterUnion Merchant Group Inc. ("IUMG") (BVI), took over the assets
and liabilities of the dissolved companies as of January 1st, 2000. As of that
date as well, the name of I&B Inc. (Delaware) was changed to Credifinance
Capital Corp. (Delaware).

Revenues

Revenues are primarily comprised of success fees and work fees. The success fees
are earned essentially through mandates relating to the raising of funds. The
Company also receives work fees for investment banking activities such as
fairness opinions, valuations, sponsorships etc. The Company has been able to
better focus on its investment banking activities, which have resulted in
increased activity.

Cost of Revenues

The principal elements comprising costs of revenues are commissions and
salaries. In general, non administrative personnel are remunerated solely on
performance. Commissions paid out are the most important expense and generally
vary with the revenues of the Company. Across all of the Company's

                                       10

<PAGE>   11
subsidiaries, the contribution margin (contribution margin is defined as
revenues less variable expenses) was 63.2% in fiscal 2000 versus 69.1% in fiscal
1999, excluding IUAM.

Interest Income

The Company invests its cash in Government issued Treasury bills that give rise
to interest income. Additional interest income comes from the spread between the
interest that the Company receives over and above what is paid to its clients on
their deposits by its clearing agent. This amount is not expected to be
significant with respect to revenues on a yearly or quarterly basis.

Interest Expenses

A substantial amount of the debt due to an affiliate has been converted into
Common Stock in the third quarter ending December 31, 1999 reducing such expense
thereafter.

Gain/Loss on Issuance of Security

The Company had no gain or loss on issuance of security during FY 2000.

Discontinued Operations

In 1999, the Company dissolved the following subsidiaries: Credifinance Realty
Corp. (Ontario) and Credifinance Securities Inc. (Florida) which had no
activity. During the same year, the Company, through a newly created subsidiary,
InterUnion Merchant Group Inc.("IUMG""), (BVI), took over the assets and
liabilities of subsidiaries which were dissolved: Marbury Trading Corp. (BVI)
and Bearhill Ltd. (BVI).

Losses, Write Downs and Write Offs

In the fiscal year ended March 31, 1999, the Company capitalized certain
expenses expensed by IUAM: C$500,000 paid to some of LFB's directors for
Management contract and C$210,000 in legal fees incurred by AILISI. The
Company's position was based on the C$10,000,000 "strategic investment" made by
Working Venture ("AILISI transaction") into IUAM which prompted the Company to
accept a lower price giving up control of IUAM, as it was believed that the
Management contract and the legal fees paid by IUAM had long term economic value
based on the Business Plan presented at the time. During the current fiscal
year, it was announced that the marketing of the mutual fund would not be
pursued and that IUAM was no longer a "strategic investment" for Working
Ventures. In consequence, the Company has decided to write off $463,749.18
(C$710,000) representing the whole cost of the AILISI transaction.

At the beginning of FY2000, the book value of the ITM software was $1,154,666
and the annual amortisation was $192,444. In accordance with GAAP, SFAS No. 121,
the value of the software was written off, resulting in an amortisation expense
of $1,154,666.

In accordance with GAAP, the Company has decided to write down to Market Value
its investment in Receptagen Ltd. ("RCG"), resulting in an Unrealized Loss of
$1,251,334. Subsequent to RCG default on the Forbearance Agreement entered with
the Company, InterUnion had recognized a gain of $668,986 during the third
quarter of FY2000. It was recommended to the Company by its auditors not to
recognise that gain until the proceeds under the Note Receivable from News
Researches Corp. were realised through repayment of that Note or sale of the
underlying security.

Unrecorded Write Ups

An ultimate wholly owned subsidiary of the Company, Credifinance Securities
Limited ("CFSL"), is a member seat holder of the Toronto Stock Exchange ("TSE").
In April 2000, the members of the Toronto Stock Exchange voted in favor of the
Exchange becoming a corporation: The Toronto Stock Exchange


                                       11
<PAGE>   12
Inc. ("TSE Inc."). Each member of the TSE has become a shareholder and received
20 shares represent one seat on the Exchange. Subsequent to the decision, KPMG
LLP, an independent accounting firm, has prepared a valuation of the TSE Inc.
Based on that report, each share of TSE Inc. has been valued at C$120,000 and
each seat, represented by 20 shares, at C$2,400,000. All the shareholders of TSE
Inc. have agreed not to sell control of their holding in TSE Inc. without prior
approval of the Exchange and that no seat can be purchased or sold unless
represented by 20 shares of TSE Inc.

Exposure to International Operations

Although all of the Company's revenues are generated in North America, a large
percentage of its operating subsidiaries are located in Canada, therefore the
Canadian Dollar involves a certain degree of foreign exchange risk. InterUnion
does not purchase derivative products and considers North America as its
domestic market.

Seasonal

Neither the Company nor its subsidiaries operate in any business which could be
affected by changes in season.

(b)  RESULTS OF OPERATIONS

Fiscal 1999 was:
      - The first year the Company raised external financing for a subsidiary.

Fiscal 2000 was:
      - The first year the Company decided to adopt the most conservative
        approach to its investment and amortisation costs.



Financial highlights are as follows:
<TABLE>
<CAPTION>
                                                  2000              1999             1998
                                               ----------       ----------        ----------
<S>                                            <C>              <C>               <C>
Revenues                                        1,440,371        1,463,884         3,115,407
Loss excluding discontinued operations         (3,599,444)        (390,182)         (819,461)
Discontinued operation                                  0                0           804,174
Net Loss                                       (3,599,444)        (390,182)          (15,287)

Assets                                          9,722,529       29,448,186        48,743,732
Shareholders' Equity                            5,240,538        7,919,650         6,692,432
Working Capital                                 1,303,131        1,773,590          (163,274)
Common Shares Outstanding                       4,243,123        2,114,425         1,654,001
Book Value per Common Share                         1.24              3.67              4.05
</TABLE>

Fiscal Year 2000 Compared to Fiscal Year 1999

(1) Overview

Revenues were basically unchanged over fiscal 1999. The total expenses for the
year ended March 31, 2000, excluding equity pick-up of IUAM but including one
time charge for assets write-down of $2,216,555, was $4,018,315 as compared to
$1,847,248 in 1999, representing an increase of $ 2,171,067 or 117.53 %. The
Company's loss from operations increased to $2,577,944 as compared to $383,364
in 1999, representing an increase of $ 2,194,580. The above increase in the loss
from operations was due to the following one-time charges totalling $2,216,555:
write down in investments
                                       12
<PAGE>   13
($1,251,334 for Receptagen Ltd.) And one time amortization ($965,221 for the
Bearhill Ltd. market timing model).

Additional losses from unconsolidated affiliates, $1,021,500, were due to the
Company's 44% equity interest into IUAM

The Company does not expect to record future losses through amortization or
write-downs although it expects continued losses from its interest in IUAM.

Earnings per share for fiscal 2000 was a loss of $1.208 versus a loss of $0.21 a
year earlier. The average number of common shares outstanding for the year
ending March 31, 2000 is 2,980,763 versus 1,855,386 a year earlier.

(2)  Revenues

Revenues remained almost unchanged at $1,440,371 over fiscal 1999 at $1,463,884.
If the Company had maintained the recognized gain generated from the sale of the
security it held from Receptagen Ltd under the Forbearance Agreement, the
revenue would have been increased by $668,986 to $2,108,357. The gain on that
sale, upon recommendation from the Company's auditors, will be recognized on the
earlier the proceeds under the note receivable of $1,740,000 from News
Researches are realised, or the underlying shares are sold for cash or a
combination of cash and a note receivable.

(3)  Cost of Revenues

Cost of revenues (Selling, General and Administrative expenditures) for the year
decreased by $83,067 or 5.52% to $1,421,892 versus $1,504,959 the previous year.
The Company continues to control its costs effectively and intends to continue
to reduce non-selling costs.

(4)  Net loss

Net loss for the period was $3,599,444 versus $390,364 the previous year. Losses
from operations (revenues less expenses) was $2,577,944 versus $383,364 the year
before. The increased operating loss is due to the Company's 44% equity interest
in IUAM as well as one time write downs and amortization and depreciation
charges. The Company does not expect to record such charges in the future
although it can still expect some losses from its equity interest in IUAM.

Basic loss per share was $1.208 versus $0.21 the previous year. Basis weighted
average common shares outstanding in Fiscal 2000 was 2,980,763 versus 1,855,386
in Fiscal 1999.


Fiscal Year 1999 Compared to Fiscal Year 1998

(1)  Overview

Although revenues decreased by $1,651,523 (or 53%) over fiscal year 1998, most
other items on the income statement improved. Costs of revenues as a percentage
of sales decreased to 57.2% from 65.0% a year earlier, due to the reduction in
revenues and the various payout structure within the Company. Fixed overhead and
non cash expenses decreased by $932,079 or 53.5%, the management looked to match
costs to a declining revenue base. The Company's loss from operations was
improved to $390,182 from $819,461, or 52%, as a net result of both variable
costs and overhead being reduced at a faster rate than that of revenues.



                                       13
<PAGE>   14

In realigning the Company's investment management firms and the subsequent
issuance of stock by IUAM, the Company was able to record a gain of $486,099.
This gain was greater than the operating loss of $436,917 the Company had to
record from this investment. The Company does not expect to record future gains
of this type, but does expect continued losses from its interest in IUAM.
However, should IUAM apply itself significant cost savings can be made, as it
has not started to maximize the use of its capital and benefit from the
synergies a consolidator should have. The Company would like to state that such
potential cost saving is beyond its direct control, as it no longer controls
IUAM.

Additional, losses from unconsolidated affiliates were due to the Company's
interest in Receptagen Ltd. This amount is not expected to continue.

Earnings per share for fiscal 1999 was a loss of $0.21 versus a loss of $0.01 a
year earlier. The basic average number of common shares outstanding for the year
ending March 31, 1999 is 1,855,386 versus 1,232,100 a year earlier.

(2)  Revenues

Revenues decreased by $1,651,523 (or 53%) over fiscal year 1998 (from $3,115,407
to $1,463,884). CFSL's decrease in revenues can account for $1,544,230 or 93.4%
of the overall reduction. The cause of this reduction is two fold: (i) difficult
market conditions for raising capital for small companies; and (ii) the time and
effort spent, without compensation, to realign its investment management
interests into IUAM and raise the financing necessary for that affiliate; and
(iii) the de-consolidation of the Company's interest in its investment
management affiliates.

(3)  Cost of Revenues

Costs of revenues (Selling, General and Administrative expenditures) for the
year decreased by $2,169,589 or 59.0% to $1,504,959 from $3,674,548. This
decrease is due to the fact that the Company's main expense is commission earned
as a function of revenues and the de-consolidation of the Company's interest in
its investment management affiliates.

(4)  Net Loss

Net loss for the period was $390,182 versus $15,287, a year earlier. Losses from
operations (revenues less expenses) was $383,364 versus $819,461 the year
before. The reduced operating loss is due to a faster reduction in compensation
expense and overhead costs versus the reduction in revenues. This year the
Company recorded a gain of $486,099 on the issuance of security by a subsidiary,
IUAM. The Company does not expect to record such gains in the future. The
Company also recorded a loss from operations from its equity investment in the
amount of $492,917 versus $8,310 a year earlier. The difference of $484,607 is
due to the fact that most of this loss, $263,600 is amortization for which this
is the first year, and is expected to continue. Of the balance, $173,017 is due
to the Company's share of IUAM's operating losses. It is the Company's hope that
IUAM's management team will strive to reduce its operating losses. In addition,
last year the Company recorded an accounting gain of $804,174 in fiscal 1998 on
the sale of Reeve, Mackay, for which the Company recorded a loss in fiscal 1997
of $390,829 as discontinued operations.

Basic losses per share before discontinued operations were $0.21 versus $0.66 a
year earlier. Basic weighted average common shares outstanding this year was
1,855,386 versus 1,232,100.

                                       14
<PAGE>   15


(c)  LIQUIDITY AND CAPITAL RESOURCES

In order to meet its growth plans and fund any operating cash requirements, the
Company's policy is to issue additional capital stock, when possible. To date
the Company has done this either through the issuance of Confidential Private
Placement Offerings under Regulation "D" or Regulation "S". The following are
details of these private placements during the previous three fiscal years:

<TABLE>
<CAPTION>

Date                           # of Shares             Amount          Type
-----                          -----------           ----------        ----
<S>                            <C>                   <C>              <C>
April 1997                        229,453             1,147,265        Regulation "S"
June 1997                          60,000               180,000        Regulation "S"
August 1997                        15,000                90,000        Regulation "S"
February 1998                     213,194               852,776        Regulation "S"
April 1998                        216,640               788,569        Regulation "S"
May 1998                           17,002                68,008        Regulation "S"
June 1998                          35,000               140,000        Regulation "S"
July 1998                         262,142             1,048,568        Regulation "S"
December 1998                      10,000                40,000        Regulation "S"
February 1999                     180,000               630,000        Regulation "S"
March 1999                         25,000                87,500        Regulation "S"
March 1999                          1,140                 4,560        Regulation "S"
November 1999                     114,500                57,250        Regulation "S"
November 1999                   2,014,198               805,679        Regulation "S"

</TABLE>


In addition to the above, IUAM raised C$10 million directly, thereby reducing
the Company's interest to 44%. These funds were used to eliminate a bank loan of
approximately C$1 million and fund the AILISI transaction, C$500,000. The
balance of the funds will be used for acquisitions and operations.

Shareholders received one Right for every four (4) common share. Each Right gave
the holder the right to acquire a common share of the Company at $2.80 per
share, subject to a minimum of $1,500,000 raised. The Company's controlling
shareholder, RIF Capital, had agreed to subscribe on a pro-rata basis. Due to
the minimum subscription level not being met, the right offering was not closed.

NASDAQ advised the Company that its application for listing on the Small Cap
market was declined, as the minimum bid price per share was not greater than
$4.00.

The Company listed its Class A Preferred Shares on the over-the-counter Bulletin
Board on August 16, 1999

New Accounting Pronouncements

Financial Derivatives and Hedging Activities: In June 1998, Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" was released. For fiscal years beginning after June 15,
1999, the statement requires the accounting and disclosure of gains and losses
on certain financial instruments. Management does not believe that this
pronouncement will have any significant effect on the Company.

Start-up Costs: In April 1998, Statement of Position (SOP) 98-5 Accounting for
Costs of Start-up Activities was issued. For fiscal years beginning after
December 15, 1999, SOP requires that pre-opening costs be expensed as incurred.
Management has not yet determined the impact that this pronouncement will have
on the Company.

In December, 1999, the Securities Exchange Commission issued Staff Account
Bulletin No. 101 - "Revenue Recognition in Financial Statements" (SAB 101). The
Company is currently evaluating the effects of the SAB on its method of
recognizing revenue. Any account method changes necessary will be made during
the next fiscal year.


                                       15
<PAGE>   16


Concluding Remarks

There are no other known trends, events or uncertainties that may have, or are
reasonably likely to have, a material impact on the Company's short-term or
long-term liquidity.

In addition, there is no significant income or losses that have risen from the
Company's continuing operations that has not been analysed or discussed above.
Nor has there been any material change in any line item that is presented on the
financial statements that has also not been discussed above.

This Form 10-KSB contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. For this purpose any
statements contained in this Form 10-KSB that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, words such as "may", "will", "expect", "believe", "anticipate",
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors, many of which are not within the Company's control. These
factors include but are limited to economic conditions generally and in the
industries in which the Company's customers & investee participate in;
competition within these industries and that of the Company's, including
competition from much larger competitors; technological advances which could
render the Company's services less competitive or absolute; failure by the
Company successfully to improve its skills or anticipate current or prospective
customers' needs; price increases or other limitations by the Company for use or
its services and delays, reductions or cancellations of mandates previously
placed with the Company.

Item 7   FINANCIAL STATEMENTS

The audited consolidated financial statements for InterUnion Financial
Corporation, covering fiscal years ended March 31, 1999 and 1998 are submitted
in compliance with the requirements of Item 310 of Regulation S-B.

Item 8  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Effective January 17, 2000, the Company retained Mintz & Partners LLP as its new
certifying accountants. Mintz & Partners LLP replaced BDO Dunwoody LLP ("BDO")
as reported on InterUnion's fiscal 1999 financial statements. The 1999 opinion
contained no adverse opinion or disclaimer of opinion, and was not qualified as
to uncertainty, audit scope or accounting principles. The decision to change
accountants was recommended by the Company's Audit Committee and approved by the
Company's Board of Directors.

During the last two fiscal years and subsequent interim period to the date
hereof, there were no disagreements between InterUnion and its certifying
accountants on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to satisfaction of the certifying accountants, would have caused it
to make a reference to the subject matter of the disagreements in connection
with its reports.

None of the reportable events described in Item 304(a) (1) (ii) occurred with
respect to InterUnion within the last two fiscal years and the subsequent
interim period to the date of change. During the last two fiscal years and the
subsequent interim period to the date of change, InterUnion did not consult
Mintz & Partners LLP regarding any matter or events set forth in Item 304(a) (2)
(i) and (ii) of Regulation S-B.

                                       16
<PAGE>   17

PART III

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

(a)  IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS

<TABLE>
<CAPTION>

Name, Municipality of Residence               Age               Length of Service
-------------------------------              ----               ------------------
<S>                                           <C>               <C>
Robert W. Crosbie                             70                Chairman of the Board and
Toronto, Ontario                                                Appointed Vice-President
                                                                September 3, 1998

Georges Benarroch                             53                Member of the Board and appointed as President and
Paris, France                                                   Chief Financial Officer; March 21, 1994


T. Jack Gary, III                             58                Appointed as Secretary
West Palm Beach, Florida                                        January 30, 1995

Muriel Woodtli                                49                Appointed as Director
Geneva, Switzerland                                             November 22, 1999

Martin Kovnats                                49                Appointed as Vice President
Toronto, Ontario, Canada                                        September 28, 1999
</TABLE>

ROBERT W. CROSBIE is the Chairman of the Board of the Company, as well as a
member of the Board of InterUnion Asset Management Limited, as a nominee of the
Company. Mr. Crosbie was Chairman of the Board of Black Investment Management
Limited from 1973 until 1998.

GEORGES BENARROCH is the President, Chief Executive Officer of the Company as
well as a Director and Chairman of the Audit Committee. He is also the Chief
Executive Officer, and Chairman of the Board of Credifinance Securities Limited,
President, Chief Executive Officer, and Chairman of the Board of Credifinance
Capital Inc. -- all wholly-owned subsidiaries of the Company and Chairman of the
Board of InterUnion Asset Management Limited.

T. JACK GARY, III is the Secretary of the Company. He is Manager of the West
Palm Beach, Florida, office of Raymond James & Associates, a national brokerage
firm, having held that position since 1995 as well as a Director of the Board.
Mr. Gary will devote the time required to fulfil his duties as Secretary at
InterUnion.

MURIEL WOODTLI served as a Director of the Company. She is a legal assistant in
Geneva, Switzerland. Ms. Woodtli's duties for InterUnion will be limited to her
participation at Board Meetings and as a member of the Audit Committee.

MARTIN KOVNATS is the Vice President of the Company and is a member of the Board
of InterUnion Asset Management Limited, as a nominee of the Company. He is
appointed as an officer of the Company for a period of one year from the date of
the appointment on September 28, 1999. He is a partner in Aird & Berlis, a law
firm in Toronto.

          (1) No director of InterUnion is currently a director of any other
     reporting company, with the following exception: Georges Benarroch who
     is director of Receptagen Limited which is a publicly reporting
     company in the United States and Canada.


                                       17
<PAGE>   18

          (2) Under Section 1, ARTICLE III, of the By-Laws, the directors shall
     serve until the next annual meeting of the stockholders, as prescribed
     by the Board of Directors, at which time directors are elected by the
     stockholders.

          (3) In accordance with Item 405 no director, executive officer and
     beneficial owner of more than ten percent (10%) of any class of equity
     securities of the Company failed to file on a timely basis reports
     required by section 16(a) of the Exchange Act during the most recent
     two fiscal years to the best of the Company's knowledge.

(b)  AUDIT COMMITTEE

The Audit Committee had three meetings since approving the financial statements
for the previous year. The first meeting was to approve the change in auditors.
The second meeting was to review the Company's accounting policies while the
third meeting was to recommend to the Board of Director that the March 31, 1999
Consolidated Financial Statements be approved and presented to the shareholders.

(c)  IDENTIFY SIGNIFICANT EMPLOYEES

The Company does not expect to receive a significant contribution from employees
that are not executive officers.

(d)  FAMILY RELATIONSHIPS

Currently, there are no directors, executive officers or persons nominated or
persons chosen by the Company to become a director or executive officer of the
Company who are directly related to an individual who currently holds the
position of director or executive officer or is nominated to one of the said
positions.

(e)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

There are no material events that have occurred in the last five years that
would affect the evaluation of the ability or integrity of any director, person
nominated to become a director, executive officer, promoter or control person of
the Company.

(f)  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

For the two fiscal years ended March 31, 1998, to the best of the Company's
knowledge no director, executive officer and beneficial owner of more than ten
percent (10%) of any class of equity securities of the Company failed to file on
a timely basis reports required by section 16(a) of the Exchange Act.

                                       18

<PAGE>   19



Item 10  EXECUTIVE COMPENSATION

(A)  SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

Name and                              Fiscal        Base           Other         Long Term         All other           Total
Principal Position                     Year        Salary          Bonus        Compensation     Compensation       Compensation
------------------                    ------       ------          -----       --------------    ------------       ------------
<S>                                    <C>         <C>            <C>             <C>             <C>                 <C>
Georges Benarroch                      2000          None            None            None          $13,387(1)          $ 13,387
President & CEO                        1999          None            None            None          $30,000(1)          $ 30,000
                                       1998          None            None            None          $30,000(1)          $ 30,000

Robert W. Crosbie                      2000          None            None            None             None                   --
                                       1999       $18,230(2)      $87,500(3)         None          $83,044(2)          $188,774
                                       1998       $45,885(2)         None            None          $27,097(2)          $ 72,982


T. Jack Gary                           2000          None            None            None             None                 None
Corporate                              1999          None            None         $42,500(5)          None             $ 42,500
Secretary                              1998          None            None            None             None                 None

Martin Kovnats                         2000          None            None            None          $12,388(4)          $ 12,388
Vice-President                         1999          None            None            None             None                 None
                                       1998          None            None            None             None                 None
</TABLE>
[FN]
(1)  Represents life, disability and medical insurance and certain expenses.
(2)  Paid by Black Investment Management Limited, a subsidiary of IUAM, for
     services unrelated to those offered to InterUnion Financial Corporation.
(3)  Represents 25,000 Common Shares of the Company.
(4)  Mr. Martin Kovnats is a Vice President of IUFC. He is IUFC's nominee on the
     Board of IUAM. The amount indicated is paid directly to his firm, Aird &
     Berlis, for the time spent on IUFC business.
(5)  Represents 50,000 stock option with an expiry date of September 3, 2001 and
     an exercise price of $4.00 per share.
</FN>


(B)  ALL COMPENSATION COVERED

The Company has no formal options, warrants, SARs, long-term incentive plans,
pension or profit sharing plans, or other compensation plans, in effect
regarding any employees of the Company.

The Company feels that it does not have to include executive compensation for an
executive officer of any subsidiary because under Rule 3b-7 under the Exchange
Act (17 CFR 240.3b-7) no executive officer(s) of any subsidiary perform(s)
policy making functions for the registrant.

The Company has no agreement or understanding, express or implied, with any
officer or director, or any other person regarding employment with the Company
or compensation for services.

Section 14 of ARTICLE III of the By-Laws of InterUnion provides that directors
do not receive any stated salary for their services as directors. However, by
board resolution, a fixed fee and expenses of attendance may be allowed for each
meeting. These limitations do not affect compensation for a person serving as an
officer or otherwise for the Company and receiving compensation therefor. The
Company's Board of Directors has approved payment of $1,200 and $1,750
respectively for the services of each of its independent directors for the
fiscal year ending March 31, 1999 and 2000.

                                       19

<PAGE>   20



Item 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following persons (including any group as defined in Regulation S-B, Section
228.403) are known to InterUnion Financial Corporation, as the issuer, to be the
beneficial owner of more than five percent (5%) of any class of the said
issuer's voting securities.

<TABLE>
<CAPTION>

Title of                 Name and Address of                      Amount and Nature of        Percentage
Class                    Beneficial Owner                         Beneficial Owner            of Class
-----------              ---------------------------              ---------------------       -----------
<S>                      <C>                                              <C>                    <C>
Common                   RIF Capital Inc.(1)                               2,462,847              58.04%
                         The Financial Services Centre
                         Bishop's Court Hill, PO Box 111
                         St. Michael, Barbados, WI

Common                   William Tynkaluk &                                  259,142               6.11%
                         George Frazer
                         8 King St. East
                         Toronto, Ontario
                         Canada

Common                   Financiera Hispano-Suiza, SA                        243,750               5.74%
                         10 Rue Pierre-Fatio
                         Geneva, Switzerland  CH1204

                                                                 Total     2,965,739              69.90%

Preferred A              RIF Capital Inc.(1)                               1,500,000              100.0%
                         The Financial Services Centre
                         Bishop's Court Hill, PO Box 111
                         St. Michael, Barbados, WI

</TABLE>
[FN]


(1)  RIF Capital Inc. is wholly owned by Central Investment Trust. Safeguardian
     Limited is the sole protector of Central Investment Trust and is neither a
     beneficiary of the Trust or its subsidiaries.

</FN>

                                       20
<PAGE>   21



(b)  SECURITY OWNERSHIP OF MANAGEMENT

On June 26,2000, RIF Capital Inc., the controlling shareholder of the Company,
has advised the Company that it has agreed to sell 1,500,000 Preferred Class A
shares of InterUnion Financial Corporation stock, representing all the issued
and outstanding Preferred Class A shares, to Sovereign Depository Corporation, a
Nevada C Corporation through a private transaction expected to close in July
2000. If and when this proposed transaction closes, RIF Capital Inc., will hold
no Preferred Class A shares of the Company and will hold 2,462,847 Common Shares
of the Company representing 58.04% of the issued and outstanding Common Share of
the Company.

The following information lists, as to each class, equity securities
beneficially owned by all directors and nominees, and of the directors and
nominees of the issuer, as a group.

<TABLE>
<CAPTION>
Title of                 Name and Address of                      Amount and Nature of        Percentage
Class                    Beneficial Owner                         Beneficial Owner            of Class
-----------              ---------------------------              ---------------------       -----------
<S>                      <C>                                        <C>                         <C>
Common                   Safeguardian Limited                                2,462,847           58.04%
                         PO Box 316                                            Trustee
                         Jardine House                                (voting power of
                         1 Hesley Street                            Central Investment
                         St. Helier, Jersey, UK JE4 8UD                        Trust)

Common                   Robert W. Crosbie                                     78,508             1.80%
                         110 Yonge Street, #1701
                         Toronto, Ontario
                         Canada M5C 1T4

Common                   Martin Kovnats                                            --             0.00%
                         BCE Place, Suite 1800,
                         181 Bay Street, Toronto, Ontario
                         Canada.

Common                   Georges Benarroch                                         --             0.00%
                         68 rue Spontini
                         Paris, France 75016

Common                   T. Jack Gary, III                                         --             0.00%
                         515 North Flagler Drive, #1500
                         West Palm Beach, Florida 33401

Preferred A              Safeguardian Limited                               1,500,000            100.0%
                         PO Box 316                                           Trustee
                         Jardine House                               (voting power of
                         1 Hesley Street                           Central Investment
                         St. Helier, Jersey, UK JE4 8UD                        Trust)

Common                   Directors and Executive Officers                     78,508             1.80%
                         as a group (4 people)

Preferred A              Directors and Executive Officers                  1,500,000            100.0%
                         as a group (1 person)

</TABLE>

NOTE TO (A) AND (B): As to the beneficial owner(s) of the securities listed
above in (a) and

                                       21
<PAGE>   22
(b), no such owner has any right to acquire within sixty (60) days or otherwise,
the right to acquire shares from options, warrants, rights, conversion
privileges or similar obligations.

(c)  CHANGES IN CONTROL

On June 26, 2000, RIF Capital Inc., the controlling shareholder of the Company,
advised the Company that RIF had agreed to sell 1,500,000 Class A Preferred
shares of InterUnion Financial Corporation stock, representing all the issued
and outstanding Class A Preferred shares, to Sovereign Depository Corporation, a
Nevada "C" Corporation, through a private transaction expected to close in July,
2000. If and when the proposed transaction closes, RIF Capital Inc. will hold no
Class A Preferred shares of the Company and will hold 2,462,847 Common shares of
the Company representing 58.04% of the issued and outstanding Common shares of
the Company.

Item 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During fiscal 2000 the Company and IUAM were not involved in any related party
transaction. However, during fiscal 1999 the Company and IUAM were involved in
the following related party transactions:

     The Company paid $33,145 directly to Witpan Inc. ("Witpan") for various
     services and IUAM paid $132,582. Witpan also paid the Company $64,950, for
     investment research services. Mr. Selwyn J. Kletz controls Witpan.

     LFB paid Mr. William Tynkaluk and Mr. George Frazer C$250,000 each for
     their approval to have the management contract of the mutual fund Associate
     Investors, transferred from LFB to AILIS. LFB received the funds from
     AILIS, which borrowed them from IUAM.

     In addition, LFB paid a firm controlled by Mr. Tynkaluk C$45,000 in
     consulting fees and C$11,000 to a firm controlled by Mr. Frazer, also for
     consulting services.

     Spriter Investments Limited ("Spriter") received C$75,000 from IUAM for
     marketing services. Spriter is controlled by Mr. Bruce Taylor an executive
     of IUAM and GAF. Spriter received C$33,332 a year earlier.

     GTS paid Havensight Holdings Corp ("Havensight") C$85,488 for marketing and
     referral services. Havensight sold BHL to the Company in 1995. The Company
     has no documents to believe that Havensight is controlled by Mr.
     Jean-Pierre Fruchet, the developer of BHL's ITM software.


Item 13  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Listing of Exhibits

<TABLE>
<CAPTION>

Exhibit                                                                                                       Page
Table Number          Exhibit Name                                                                           Number
------------          ------------                                                                           ------
<S>                   <C>                                                                                     <C>
(2)(i)                Unanimous Consent in Lieu of The First Meeting of the Board of Directors of AU 'N         +
                      AG, INC. (A Delaware Corporation)

(2)(ii)               Pre-Organization Subscription and Letter of Non-Distributive Intent                       +

(2)(iii)              Plan and Agreement of Merger                                                              +
</TABLE>

                                       22
<PAGE>   23


<TABLE>

<S>                   <C>                                                                                     <C>
(2)(iv)               Certificate of Merger, dated February 15, 1994                                             +

(3)(i)                Certificate of Incorporation of AU 'N AG, INC. Dated February 15, 1994                     +

(3)(ii)               Certificate of Amendment of Certificate of Incorporation of AU 'N  AG, INC. Dated          +
                      April 11, 1994

(3)(iii)              Certificate of Amendment of Certificate of Incorporation of AU 'N  AG, INC. Dated          +
                      April 11, 1994

(3)(iv)               Bylaws of InterUnion Financial Corporation                                                 +

(4)                   Instruments Defining the Rights of Security Holders Including Indentures                   +

(21)                  Subsidiaries of InterUnion                                                                 E-1

(27)                  Financial Data Schedule                                                                    E-2
</TABLE>

[FN]
+    Incorporated by reference to the Company's Registration Statement on Form
     10-KSB filed on June 20, 1997.
</FN>
(b)  Reports on Form 8-K Subsequent to the Third Quarter


<TABLE>
<CAPTION>

Exhibit                                                                                                       Page
Table Number          Exhibit Name                                                                           Number
------------          ------------                                                                           ------
<S>                   <C>                                                                                     <C>
(10)                  Working Venture Canadian Fund's Investment in InterUnion Asset Management Limited        ++

(16)                  Letter on change in certifying accountant                                                +++

</TABLE>
[FN]
++   Incorporated by reference to the Company's Registration Statement on Form
     8-K filed on March 16, 1999.

+++  Incorporated by reference to the Company's Registration Statement on Form
     8-K filed on April 27 1999 and May 6,1999.

</FN>


                                       23

<PAGE>   24


SIGNATURES

In accordance with 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.


                                       INTERUNION FINANCIAL CORPORATION

Date: June 30, 2000                    By: /s/
                                           ---------------------------------
                                       Georges Benarroch
                                       President and Chief Executive Officer

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

<TABLE>
<CAPTION>

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

<S>                                          <C>                                          <C>
/s/                                                                                       June 30, 2000
------------------------------               --------------------------------------
Georges Benarroch                            President and Chief Executive Officer

/s/                                                                                       June 30, 2000
------------------------------               --------------------------------------
Muriel Woodtli                                 Director

</TABLE>



                                       24




<PAGE>   25
================================================================================
                                                INTERUNION FINANCIAL CORPORATION

                                               CONSOLIDATED FINANCIAL STATEMENTS



================================================================================
                                                         MARCH 31, 2000 and 1999
================================================================================


<PAGE>   26

                        INTERUNION FINANCIAL CORPORATION
                             MARCH 31, 2000 and 1999
                                    CONTENTS


<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Independent Auditor's Reports:
      March 31, 2000 - Mintz & Partners LLP                                  F-2
      March 31, 1999 - B.D.O. Dunwoody LLP                                   F-3
      Consolidated Financial Statements:
      Consolidated Balance Sheets                                            F-4
      Consolidated Statements of Operations                                  F-6
      Consolidated Statements of Shareholders' Equity                        F-7
      Consolidated Statements of Cash Flows                                  F-8
      Notes to Consolidated Financial Statements                     F-9 To F-23
</TABLE>

<PAGE>   27

================================================================================
                          INDEPENDENT AUDITORS' REPORT
================================================================================

To The Directors and Shareholders of
InterUnion Financial Corporation


We have audited the accompanying consolidated balance sheet of InterUnion
Financial Corporation as of March 31, 2000, and the consolidated statements of
operations, shareholders' equity, and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of InterUnion Financial
Corporation as of March 31, 2000, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles in the United States.





/s/_________________
Mintz & Partners LLP
Chartered Accountants

Toronto, Canada
June 2, 2000


                                                                             F-2
<PAGE>   28

================================================================================
                          INDEPENDENT AUDITORS' REPORT
================================================================================


To The Directors and Shareholders,
InterUnion Financial Corporation



We have audited the accompanying consolidated balance sheet of InterUnion
Financial Corporation as of March 31, 1999, and the related consolidated
statements of operations, shareholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of InterUnion Financial
Corporation as of March 31, 1999, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles in the United States.









/s/_______________
BDO Dunwoody LLP
Chartered Accounts
Toronto, Canada
May 27, 1999







                                                                             F-3
<PAGE>   29

                        INTERUNION FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
================================================================================

<TABLE>
<CAPTION>
AS AT MARCH 31                                                                             2000                  1999
--------------                                                                          -----------           -----------
<S>                                                                                     <C>                   <C>
                                                         A S S E T S
CURRENT ASSETS

    Cash and cash equivalents                                                           $   441,884           $   285,706
    Marketable securities                         (Note 3)                                   32,520            19,885,302
    Due from brokers and dealers                                                          3,237,515                    --
    Due from clients                                                                        180,855                93,183
    Accounts receivables                                                                    168,506               690,374
    Receivable from Affiliates                                                               27,555                    --
    Loan receivable                                                                          59,495                    --
    Refundable income taxes                                                                   6,709                 5,046
    Prepaid expenses and other current assets                                                22,938                25,772
    Notes receivable, current portion                                                     1,001,414               973,315
                                                                                         ----------           -----------
                  Total current assets                                                    5,179,391            21,958,698
                                                                                         ----------           -----------
NON-CURRENT ASSETS
    Property & equipment, net                     (Note 4)                                   42,679             1,199,953
    Notes receivable, non-current portion         (Note 5)                                  783,286               619,992
    Other long-term assets                        (Note 20 & 21)                             77,493                77,651
    Investment in unconsolidated companies        (Note 7 & 19)                           3,639,680             5,591,892
                                                                                         ----------           -----------
                  Total non-current assets                                                4,543,138             7,489,488
                                                                                         ----------           -----------
                  TOTAL ASSETS                                                           $9,722,529           $29,448,186
                                                                                         ==========           ===========
</TABLE>
================================================================================
                 See Notes to Consolidated Financial Statements              F-4
<PAGE>   30



                        INTERUNION FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS AT MARCH 31,                                                                            2000                  1999
---------------                                                                         -----------           -----------
<S>                                                                                     <C>                   <C>
                                                    L I A B I L I T I E S

CURRENT LIABILITIES
    Due to brokers and dealers                                                          $        --           $18,899,072
    Due to clients                                                                        3,247,166               979,783
    Accounts payable and accrued liabilities                                                433,157               253,476
    Due to affiliates                                                                       168,382                    --
    Notes payable, current portion                     (Note 6)                                  --               776,213
                                                                                        -----------           -----------
                  Total current liabilities                                               3,848,705            20,908,544
NOTES PAYABLE, LONG-TERM PORTION  (Note 6)                                                  633,286               619,992
                                                                                        -----------           -----------
                  Total liabilities                                                       4,481,991            21,528,536
                                                                                        -----------           -----------


                                                    SHAREHOLDERS'  EQUITY

CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL    (Note 8 & 18)
    Class A Preferred Stock, $0.10 par value
         Authorized - 1,500,000 shares
         Issued and outstanding - 1,500,000                                                 150,000               150,000
    Class B Preferred Stock, $0.10 par value
         Authorized - 1,000 shares
         Issued and outstanding - None                                                           --                    --
    Class C Preferred Stock, $0.10 par value
         Authorized - 1,000 shares
         Issued and outstanding - None                                                           --                    --
    Common Stock, $0.001 par value
         Authorized -5,000,000 in 2000 and 1999
         Issued and outstanding - 4,243,123 in 2000; 2,114,425 in 1999                        4,243                 2,114
    Additional Paid-In Capital                                                           10,612,050             9,750,249
CUMULATIVE TRANSLATION ADJUSTMENT                                                            37,439               (18,963)

ACCUMULATED DEFICIT                                                                      (5,563,194)           (1,963,750)
                                                                                        -----------           -----------
                  Total shareholders' equity                                              5,240,538             7,919,650
                                                                                        -----------           -----------
Total Liabilities and Shareholders' Equity                                              $ 9,722,529           $29,448,186
                                                                                        ===========           ===========

</TABLE>

================================================================================
                   See Notes to Consolidated Financial Statements            F-5

<PAGE>   31

                        INTERUNION FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

================================================================================

<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,                                                               2000                  1999
-----------------------------                                                           -----------           -----------
<S>                                                                                     <C>                   <C>
REVENUES
    Investment Banking                                                                  $ 1,377,368           $ 1,348,466
    Interest Income                                                                          63,003               115,418
                                                                                        -----------           -----------
                                                                                          1,440,371             1,463,884
                                                                                        -----------           -----------
EXPENSES
    Selling, General and Administrative                                                   1,421,892             1,504,959
    Amortization and Depreciation            (Note 15)                                    1,165,392               200,171
    Foreign Exchange Loss (Gain)                                                              3,521              (104,493)
    Write-down of Investment                   (Note 16)                                  1,251,334                     -
    Interest                                                                                176,176               246,611
                                                                                        -----------           -----------
                                                                                          4,018,315             1,847,248
                                                                                        -----------           -----------

LOSS BEFORE GAIN ON SALE ON ISSUANCE OF SECURITY BY SUBSIDIARY
AND EQUITY IN NET LOSSES OF UNCONSOLIDATED AFFILIATES                                    (2,577,944)             (383,364)

GAIN ON SALE ON ISSUANCE OF SECURITY BY SUBSIDIARY                                                -               486,099

EQUITY IN NET LOSSES OF UNCONSOLIDATED AFFILIATES                                        (1,021,500)             (492,917)
                                                                                        -----------           -----------
NET LOSS FOR THE YEAR                                                                   $(3,599,444)          $  (390,182)
                                                                                        ===========           ===========

LOSS PER COMMON SHARE - Basic and Diluted
    Weighted average common shares outstanding                                            2,980,763             1,855,386
    Loss per share                                                                           (1.208)               (0.210)
</TABLE>


================================================================================
              See Notes to Consolidated Financial Statements                 F-6


<PAGE>   32





                        INTERUNION FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
================================================================================


FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                          Number                           Additional           Share
                                                            of                               Paid-in           Capital
                                                          Shares              Amount         Capital           Totals
                                                         ---------          -----------   -------------     ------------
<S>                                                      <C>                <C>           <C>               <C>

Preferred Shares
    Balances,
      March 31, 2000 & 1999                              1,500,000           $150,000      $        -            $150,000
                                                         =========           ========      ==========           =========
Common Shares
    Balance, March 31, 1998                              1,654,001              1,654       8,119,397           8,121,051
    Issued during the year
      Net of issue costs                                    35,000                 35         132,965             133,000
      Investments                                           48,366                 48         193,416             193,464
      In cancellation of debt                              411,918                412       1,494,648           1,495,060
      For services                                          35,000                 35         127,465             127,500
      Cancellation                                         (69,860)               (70)       (317,642)           (317,712)
                                                         ---------           --------      ----------           ---------
    Balance, March 31, 1999                              2,114,425              2,114       9,750,249           9,752,363
    Issued during the year
      In cancellation of debt                            2,128,698              2,129         861,801             863,930
                                                         ---------           --------      ----------           ---------
    Balance, March 31, 2000                              4,243,123             $4,243   $  10,612,050     $    10,616,293
                                                         ---------           --------      ----------           ---------

</TABLE>



<TABLE>
<CAPTION>

                                                                         Cumulative
                                                                           Foreign
                                                                          Currency
Deficit and Foreign currency                                             Translation                        Comprehensive
Translation adjustment                                                   Adjustment          Deficit           Income
----------------------------                                            ------------      ------------    ------------------
<S>                                                                     <C>               <C>             <C>

    Balance, March 31, 1998                                             $     (5,051)     $ (1,573,568)       $    11,141
                                                                                                              -----------
    Foreign currency translation adjustment                                  (13,912)                -            (13,912)
    Net loss for fiscal 1999                                                       -          (390,182)          (390,182)
                                                                        ------------      ------------        -----------
    Balance, March 31, 1999                                                  (18,963)       (1,963,750)          (404,094)

    Translation adjustment                                                    56,402                -              56,402
    Net loss for fiscal 2000                                                       -        (3,599,444)        (3,599,444)
                                                                        ------------      ------------        -----------
    Balance, March 31, 2000                                             $     37,439      $ (5,563,194)       $(3,947,136)
                                                                       =============      ============        ===========
</TABLE>



================================================================================
              See Notes to Consolidated Financial Statements                 F-7








<PAGE>   33



                        INTERUNION FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================


<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,                                                               2000                 1999
-----------------------------                                                          ----------------      -------------
<S>                                                                                     <C>                  <C>




CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                              $   (3,599,444)       $   (390,182)
    Adjustments to reconcile net loss to net
     cash provided by (used in) operating activities
      Depreciation and Amortisation                                                          1,165,392             200,171
      Equity and net loss on investments                                                     1,021,500             492,917
      Gain on sale of securities by subsidiary                                                       -            (486,099)
      Non cash compensation                                                                          -              87,500
      Non cash operating expenses                                                              387,633              40,000
      Unrealised loss (gain) in marketable securities and investment                         1,255,987             (11,814)
                                                                                        --------------      --------------
                                                                                               231,068             (67,507)
                                                                                        --------------      --------------
Changes in operating assets and liabilities net of effects from the 1999
    purchase/divestiture of InterUnion Asset Management Limited
      Increase (decrease) in due to/from brokers and dealers, net                          (22,136,587)        (15,762,238)
      Decrease (increase) in due to/from client, net                                         2,179,710          (1,455,276)
      Decrease in marketable securities                                                     19,852,782          15,242,302
      Increase in accounts receivable and other assets                                         463,545             124,263
      Decrease in accounts payable and accrued liabilities                                    (428,150)           (572,359)
                                                                                        --------------      --------------
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES                                      162,368          (2,490,815)
                                                                                        --------------      --------------
CASH FLOWS FROM FINANCING ACTIVITIES
      Net proceeds on issuance of capital stock                                                      -             133,000
      Proceeds of due to related parties                                                             -             771,109
      Repayment of notes payable                                                                     -            (103,448)
                                                                                        --------------      --------------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                                                      -             800,661
                                                                                        --------------      --------------

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of property and equipment, net                                                   (6,190)             (7,438)
      Purchase of long-term investments, net                                                         -            (437,363)
      Cash divested on sale of security by subsidiary                                                -            (195,304)
      Investment in notes receivable                                                                 -            (257,766)
                                                                                        --------------      --------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES                                                     (6,190)           (897,871)
                                                                                        --------------      --------------
NET INCREASE (DECREASE) IN CASH                                                                156,178          (2,588,025)
CASH AND CASH EQUIVALENTS - Beginning of Year                                                  285,706           2,873,731
                                                                                        --------------      --------------
CASH AND CASH EQUIVALENTS - End of Year                                                 $      441,884      $      285,706
                                                                                        ==============      ==============
</TABLE>

For supplemental disclosure information for the Consolidated Statement of Cash
flows, see note 14.


================================================================================
              See Notes to Consolidated Financial Statements                 F-8

<PAGE>   34

                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================


1.   ORGANIZATION AND BASIS OF PRESENTATION

Description of Business: InterUnion Financial Corporation ("IUFC") and its
subsidiaries (collectively the "Company") are engaged in financial services with
activities in investment banking and securities brokerage business.

Principles of Consolidation: The consolidated financial statements include the
accounts of IUFC and all wholly owned and majority owned subsidiaries from their
respective dates of acquisition, after the elimination of all significant
inter-company transactions and balances. At March 2000, the consolidated
subsidiaries of IUFC are Credifinance Capital Inc., Credifinance Securities
Limited, Credifinance Capital Corporation and InterUnion Merchant Group Inc.
Investments in affiliates, representing 20% to 50% of the ownership, are
accounted for under the equity method. Under the equity method, the Company
records its proportionate share of income (loss) of the affiliate (net of the
amortization of the excess of the purchase price over the net assets acquired)
to results of operations, with this amount either added to (deducted from) the
cost of the investment. Dividends received from affiliates which are accounted
for on the equity basis are deducted from the carrying value of the investment.
Equity method affiliates are InterUnion Asset Management Limited and its
subsidiaries; Black Investment Management Limited, Guardian Timing Services
Limited, Leon Frazer, Black & Associates Limited, The Glen Ardith-Frazer
Corporation, and P.J. Doherty & Associates Co. Ltd. Investments in companies
representing less than 20% ownership are accounted for under the cost method.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents: Cash and cash equivalents include demand deposits
with banks, money market accounts, and other highly liquid short-term
investments with original maturities of 90 days or less when acquired. Balances
of cash and cash equivalents in financial institutions may at times exceed the
government-insured limits.

Marketable Securities: The Company classifies its marketable securities into one
of three categories: trading, held to maturity, or available for sale. Trading
securities, which are bought and held primarily for the purpose of selling them
in the near term, are recorded at fair value with gains and losses included in
earnings. Held-to-maturity securities, which are securities that the Company has
the ability and the intent to hold until maturity, are recorded at amortized
cost and adjusted for amortization or accretion of premiums or discounts. All
other investments in marketable securities not classified as either trading or
held-to-maturity are classified as available-for-sale and are reported at fair
value. Unrealised gains and losses on securities classified as available for
sale are reported as a separate component of shareholders' equity until
realized. Market values of marketable securities are based on the last day of
the fiscal year. A decline in market value of any available-for-sale or
held-to-maturity security below cost that is deemed other than temporary is
charged to earnings, resulting in the establishment of a new cost basis for the
security.

Use of Estimates: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates and assumptions.

Security Transactions: Security transactions are recorded in accordance with
industry practice in the accounts on trade date. Commission income and related
expenses for transactions executed but not yet settled are accrued as of the
financial statement date.

==============================================================================
/Continued...                                                              F-9




<PAGE>   35

                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================

In accordance with Canadian industry practice, the balances due from and to
brokers, dealers and clients may include the trading balances of clients at the
end of the reporting period and may not be an indication of the investment
activity of the Company. These balances are due to the Company's ownership of
Credifinance Securities Limited, a Canadian broker/dealer. These balances may
fluctuate significantly.

     Property and Equipment: Property and equipment are stated at cost less
accumulated amortization. Amortization is computed using straight line and
accelerated methods over the estimated useful lives of the asset. The Company
evaluates its property and equipment on a yearly basis.

     Other Long Term Assets: Stock exchange seats are recorded at cost and are
included in other long-term assets. Declines in market value are only recorded
when there is an indication of permanent decline in value. The Company evaluates
its long term assets on a yearly basis. Any impairment in the value of the long
term assets is provided in the year an asset is considered impaired.

     Long-lived Assets: As prescribed by the Statement of Financial Accounting
(SFAS) No. 121, "Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed of", the Company assesses the recoverability of
its long-lived assets by determining whether the asset balance can be recovered
over the remaining depreciation or amortization period through projected
undiscounted future cash flows. Any impairment in the value of the long lived
assets is provided in the year the long lived asset is considered impaired

     Fair Value of Financial Assets: The carrying value of cash and cash
equivalents, due from (to) clients, accounts receivable, accounts payable,
accrued liabilities, notes receivable, notes payable and due to affiliates
approximates the fair value. In addition, unless described elsewhere, the
carrying value of all financial assets approximate the fair value based on terms
and interest rates currently available to the Company.

     Income Recognition: Revenues are recognized once an assignment to provide
business and advisory services is completed. Gains and losses resulting from the
issuance of shares by affiliate are recorded as income or loss in the year the
transaction occurs.

     Impact of New Accounting Pronouncement: In December 1999 the Securities
Exchange Commission issued Staff Accounting Bulletin No. 101 - "Revenue
Recognition in Financial Statements" (SAB 101). The Company is currently
evaluating the effects of the SAB on its method of recognising revenue. Any
accounting method changes necessary will be made during the next fiscal year.

     Income Taxes: The Company provides for federal and state income taxes
currently payable, as well as for those deferred because of timing differences
between reporting income and expenses for financial statements purposes versus
tax purposes. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect of a change in
tax rates is recognized as income or expense in the period that includes the
enactment date.

The Company and its U.S. subsidiaries file U.S. federal and state income tax
returns. Non-U.S. subsidiaries, which are consolidated for financial reporting,
file tax returns outside the U.S., and therefore

================================================================================
/Continued...                                                               F-10


<PAGE>   36



                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            MARCH 31, 2000 AND 1999
================================================================================

separate provisions for income taxes have been determined for these entities.
Except for return of capital and selected dividends, the Company intends to
reinvest the unremitted earnings of its non-U.S. subsidiaries and postpone their
remittance indefinitely. Accordingly, no provision for U.S. income taxes for
non-U.S. subsidiaries was required for any year presented.

Translation of Foreign Currencies: In accordance with SFAS No.52, "Foreign
Currency Translation", the financial statements of certain subsidiaries of the
Company are measured using local currency as the functional currency. Assets and
liabilities have been translated at current exchange rates and related revenue
and expenses have been translated at average monthly exchange rates. Gains and
losses resulting from the translation of subsidiaries' financial statements are
included as a separate component of shareholders' equity. Any gains or losses
resulting from foreign currency transactions are included in results of
operations.

Earnings per Share: Net income (loss) per share is reported in accordance with
SFAS No. 128, "Earnings Per Share". SFAS No. 128 requires dual presentation of
basic earnings per share ("EPS") and diluted EPS on the face of all statements
of earnings, for all entities with complex capital structures. Diluted EPS
reflects the potential dilution that could occur from common shares issuable
through the exercise or conversion of stock options, restricted stock awards,
warrants and convertible securities. In certain circumstances, the conversion of
these options, warrants and convertible securities are excluded from diluted EPS
if the effect of such inclusion is anti-dilutive. Fully diluted loss per share
is not provided, as the effect will be anti-dilutive.

Stock Based Compensation: The Company accounts for employee stock options in
accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting
for Stock Issued to Employees". Under APB No. 25, the Company applies the
intrinsic value method of accounting. SFAS No. 123, "Accounting for Stock-Based
Compensation", prescribes the recognition of compensation expense based on fair
value of options determined on the grant date. However, SFAS No. 123 allow
companies currently applying APB No. 25 to continue applying the intrinsic value
method under APB No. 25. For companies that continue in applying the intrinsic
value method, SFAS No. 123 mandates certain pro forma disclosures as if the fair
value method had been utilized.

Comprehensive Income: As of April 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income". This
statement establishes standards for reporting and display of comprehensive
income and its components. Comprehensive income is net income plus certain items
that are recorded directly to shareholders' equity bypassing net income.

Segment Information: In fiscal 1999, the Company adopted SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information". SFAS No.
131 requires that the Company disclose its operations in the business segment as
viewed by management: which is Investment Banking, which includes its merchant,
banking activities and Investment Management. Previously reported segmented
information has been restated.

Financial Derivatives and Hedging Activities: In June 1998, Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" as amended by SFAS 137 was released. For fiscal years
beginning after June 2000, the statement requires the accounting and disclosure
of gains and losses on certain financial instruments. Management does not
believe that this pronouncement will have any significant effect on the Company.

Start-up Costs: SOP 98-5 Accounting for Costs of Start-up Activities requires
that pre-operating costs be expensed as incurred. All pre-operating costs
incurred during the year or un-amortized balance from prior years are expensed
during the year.

Other: All amounts in these financial statements are in United States dollars
unless indicated with a "C" to represent Canadian dollar presentation.

================================================================================
/Continued...                                                              F-11

<PAGE>   37

                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================

3.   MARKETABLE SECURITIES



<TABLE>
<CAPTION>
                                                               Original            Carrying             Market
                                                                 Cost                Value               Value
                                                            ---------------     ---------------    ----------------
<S>                                                         <C>                 <C>                <C>
As of March 31, 2000
               Trading securities                           $        37,308     $        32,520    $         32,520
               Available for Sale                                        --                  --                  --
               Held to maturity                                          --                  --                  --
                                                            ---------------     ---------------    ----------------
               Total                                        $        37,308    $         32,520    $         32,520
                                                            ===============    ================    ================
As of March 31, 1999
               Trading securities                           $    19,932,518     $    19,885,302    $     19,885,302
               Available for Sale                                        --                  --                  --
               Held to maturity                                          --                  --                  --
                                                            ---------------     ---------------    ----------------
               Total                                        $    19,932,518    $     19,885,302    $     19,885,302
                                                            ===============    ================    ================
</TABLE>

The majority of marketable securities are pledged as security to the due to
brokers and dealers.

<TABLE>
<CAPTION>

         For the year ending March 31,                                               2000                1999
         -----------------------------                                          ---------------    --------------
<S>                                                                             <C>                <C>
Proceeds from securities classified as available for sale                       $            --    $           --
Gross realised gains (losses) from securities
classified as available for sale                                                             --                --
Gross realised gains (losses) due to change
in classification to trading from available for sale                                         --                --
Change in net unrealised gains (losses)
on available for sale securities                                                             --                --
Change in net unrealised gains (losses) on trading
securities included in revenues                                                           4,654           (11,814)

</TABLE>



4.   PROPERTY AND EQUIPMENT


<TABLE>
<CAPTION>
                                                                                            March 31
                                                                                -----------------------------------
                                                                                      2000               1999
                                                                                ---------------    ----------------
<S>                                                                             <C>                <C>
Computer hardware and software                                                  $        41,920    $         82,120
ITM Computer software                                                                 1,924,443           1,924,443
Furniture, fixtures and equipment                                                        32,163              58,409
Leasehold improvements                                                                    1,735               1,735
                                                                                ---------------    ----------------
        Total cost                                                               $    2,000,261    $      2,066,707
Less: accumulated amortization                                                        1,957,582             866,754
                                                                                ---------------    ----------------
                                                                                $        42,679    $      1,199,953
                                                                                ===============    ================

</TABLE>


Amortization expense amounted to $1,165,392 (Note 15) and $200,171,
respectively, for the years ended March 31, 2000 and 1999.


================================================================================
/Continued...                                                               F-12

<PAGE>   38



                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================

5.   NOTES RECEIVABLE

<TABLE>
<CAPTION>

                                                                                             2000              1999
                                                                                        -------------     --------------
<S>                                                                                     <C>                <C>

    Note receivable from Receptagen Ltd., an investee, with no minimum periodic
    Payment, due June 30, 1999 plus interest at the rate of
    11%, loan is collateralised by a pledge on all assets                               $           -     $     973,315
    Note receivable from Receptagen Ltd., an investee, with no minimum
    Periodic payment, no maturity and no rate of interest                                     633,286           619,992
    Note receivable from Finance Research & Development Trust
    with no minimum periodic payment, no maturity and no rate of  interest                    150,000                 -
    Note receivable from New Researches Corp.
    with no minimum periodic payment, due November 30, 2004,
    with no interest.  This note is collateralised by 1,740,000 shares
    of common stock of B-Twelve Inc. which is discounted for $69,600
    for one year @ 6% per annum.                                                            1,001,414                 -
                                                                                        -------------     -------------
                                                                                            1,784,700         1,593,307
                   Less: current portion                                                    1,001,414           973,315
                                                                                        -------------     -------------
                   Non-current portion                                                  $     783,286     $     619,992
                                                                                        =============     =============
</TABLE>



6.  NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                             2000                   1999
                                                                                      -----------------         -------------
<S>                                                                                   <C>                       <C>
    Note payable to a related party in the amount of C$75,000 plus
    interest at the rate of 9%, due July 31, 1999                                       $      -                $     52,777
    Note payable to a related party in the amount of $695,000 plus
    interest at the rate of 11%, due July 31, 1999                                             -                     723,436
    Note payable to the co developer  of Receptagen Ltd's research with
    no minimum periodic payment, no maturity and no rate of interest                     633,286                     619,992
                                                                                        --------                ------------
                                                                                         633,286                   1,396,205
              Less: current portion                                                            -                     776,213
                                                                                        --------                ------------
              Long-term portion                                                         $633,286                $    619,992
                                                                                        ========                ============
</TABLE>







================================================================================
/Continued...                                                               F-13

<PAGE>   39




                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================

7.   EQUITY INVESTMENT IN INTERUNION ASSET MANAGEMENT LIMITED


    On January 25th, 1999, the Company reorganised its investment management
    interest in order to have them all under one holding company, InterUnion
    Asset Management Limited ("IUAM"). The Company's interest at the time of the
    reorganisation were:

<TABLE>
<CAPTION>
                                                                            Directly              Indirectly
                                                                            --------              ----------
<S>                                                                         <C>                   <C>
         Black Investment Management Limited                                  45.0%                   -
         Guardian Timing Services Limited                                    100.0%                   -
         Leon, Frazer, Black & Associates Ltd.                                33.3%                  14.4%
         The Glen Ardith-Frazer Corporation                                  100.0%                   -
</TABLE>

    Thereafter, IUAM issued 310,010 convertible preferred shares for C$5,000,000
    to Working Ventures Canadian Fund ("WVCF"). Each of these shares was
    exchangeable into one common share of IUAM, thus reducing the Company's
    interest to 69%. This transaction has been recorded as of January 1, 1999.

    On March 9th, 1999, WVCF converted their convertible preferred shares into
    common shares and subscribed for an additional 569,160 common shares for
    C$5,000,000, thereby diluting the Company's interest to 44%. This
    transaction has been accounted for as of March 31, 1999.

    On April 13, 1999, IUAM acquired an additional 5,978 common shares of Black
    Investment Management Limited (BIM) for C$209,230 in cash bringing their
    interest in BIM up to 50.5%.

     The following is summarised information from IUAM's Audited Consolidated
     Financial Statements

<TABLE>
<CAPTION>

                                                                March 31, 2000            March 31, 1999
                                                                --------------            --------------
<S>                                                             <C>                       <C>
         Current assets                                            2,129,414                   5,990,243
         Non-current assets, excluding goodwill                    1,947,468                     354,832
         Goodwill                                                  8,763,090                   5,432,327
         Current liabilities                                         548,810                     765,506
         Non-current liabilities                                   2,632,847                     331,652
         Minority interests                                          208,229                     154,542
         Revenues                                                  3,628,502                   3,272,158
         Expenses                                                  4,302,810                   4,066,241
         Income from continuing operations                        (1,287,921)                   (583,594)
         Net Income                                               (1,150,653)                   (430,008)
</TABLE>


     Information as to this and other uncosolidated investments is included at
     Note 19.

================================================================================
/Continued...                                                               F-14




<PAGE>   40

                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================


8.   CAPITAL STOCK

     On September 4, 1999, the shareholders voted to increase the authorised
     number of Common Shares to 5,000,000 from 2,500,000.

     Currently, the number of shares that the Company is authorised to issue
     under each class of stock are:


1,500,000      Class A Preferred Shares, ($0.10 par value), entitled to 100
               votes for every one share issued, annual dividends, if declared
               by the directors, at a rate of $0.01 per share, non-cumulative.
               In case of liquidation or dissolution of the company, the holder
               of Class A Preferred Shares shall be entitled to be paid in full
               the par value of the shares before the holder of the common stock
               of Class B and C Preferred Stock.

1,000          Class B Preferred Shares, ($0.10 par value), non-voting, annual
               dividends, if declared by the directors, at a rate to be
               determined by the directors at the first issuance of these
               shares, non-cumulative

1,000          Class C Preferred Shares, ($0.10 par value), non-voting, annual
               dividends, if declared by the directors, at a rate to be
               determined by the directors at the first issuance of these
               shares, non-cumulative. These shares are convertible into common
               stock at terms determined by the directors when these shares are
               issued.

5,000,000      Common shares ($0.001 par value); each share has one vote


     During fiscal 2000, the Company issued 2,128,698 shares of Common Stock for
     $863,930 by cancelling the debt from its controlling shareholder, RIF
     Capital Inc. (Note 6) and for the repayment of certain notes payable by RIF
     Capital Inc.

     During fiscal 1999, the Company issued 35,000 shares of Common Stock and
     17,500 Common Stock purchase warrants for net proceeds of $133,000 and
     21,142 shares of Common Stock as per its debt assumption agreement with
     Receptagen Ltd at the market price at the time of the agreement. The
     Company issued 27,224 shares of Common Stock for investments in affiliates,
     411,918 shares of common stock for the cancellation of debt in the amount
     of $1,495,060 and 35,000 shares of Common Stock in lieu of payment for an
     aggregate amount of $127,500. In addition, the Company cancelled 69,860
     shares that it received in reduction of the note receivable amounting to
     $317,712 from the purchaser of Reeve, Mackay & Associates Ltd, which were
     acquired in the open market. Value on cancellation was based on the quoted
     price the day of cancellation.



================================================================================
/Continued...                                                               F-15


<PAGE>   41


                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================

9.   STOCK OPTIONS

          The Company currently issues stock options at the direction of the
          Board of Directors. To date, non-qualified stock options have been
          granted to selected key employees under terms and conditions
          determined by the Board of Directors at the time the options are
          issued. Presented below is a summary of stock option plan activity:


<TABLE>
<CAPTION>

                                                                        Wt. Avg.                                Wt. Avg.
                                                                        Exercise            Options             Exercise
                                                        Number            Price           Exercisable             Price
                                                     ------------      -----------      -------------         -----------
<S>                                                  <C>               <C>              <C>                   <C>
         Balance, April 1, 1998                          120,000       $      4.00           120,000          $      4.00
         Cancelled                                       (10,000)             4.00           (10,000)                4.00
         Granted                                         250,000              4.00           250,000                 4.00
                                                     -----------       -----------      ------------          -----------
         Balance, April 1, 1999                          360,000              4.00           360,000                 4.00
         Cancelled                                       (25,000)             4.00           (25,000)                4.00
                                                     -----------       -----------      ------------          -----------
         Balance, March 31, 2000                         335,000       $      4.00           335,000          $      4.00
                                                     ===========       ===========      ============          ===========

</TABLE>

         Options outstanding and exercisable at March 31, 2000 are as follows:

<TABLE>
<CAPTION>

                       Outstanding                                                             Exercisable
        ----------------------------------------------------------------------       -------------------------
                                                 Wt. Avg.          Wt. Avg.                           Wt. Avg.
                                    Expiry       Remaining         Remaining                          Exercise
        Price         Number         Date          Life         Exercise Price       Number             Price
        --------      -------      ----------    ---------      --------------       --------        ---------
        <S>           <C>          <C>           <C>            <C>                  <C>             <C>
        $4.00          85,000       Aug. 2001       <1           $   4.00              85,000        $   4.00
         4.00          50,000      Sept. 2003       <3               4.00              50,000            4.00
         4.00         200,000       May  2005       <5               4.00             200,000            4.00

</TABLE>


         SFAS No.123 requires entities that account for awards for stock-based
         compensation to employees in accordance with APB No.25 to present pro
         forma disclosures of net income and earnings per share as if
         compensation cost was measured at the date of grant based on fair value
         of the award. The fair value for these options was estimated at the
         date of grant using a Black-Scholes option-pricing model with the
         following weighted-average assumptions:

<TABLE>
<CAPTION>

                                                                                               1999
                                                                                           -----------
<S>                                                                                        <C>
                  Expected life of the option                                              5 - 7 years
                  Risk free interest rate                                                      5.0 %
                  Expected volatility                                                         20.0%
                  Expected dividend yield                                                      0.0 %
</TABLE>



         The Black-Scholes option valuation model was developed for use in
         estimating the fair value of traded options, which have no vesting
         restrictions and are fully transferable. In addition, option valuation
         models require the input of highly subjective assumptions including the
         expected stock price volatility. Because the Company's employee stock
         options have characteristics significantly different from those of
         traded options, and because changes in the subjective input assumptions
         can materially affect the fair value estimate, in management's opinion,
         the existing models do not necessarily provide a reliable single
         measure of the fair value of its employee stock options.



================================================================================
/Continued...                                                               F-16




<PAGE>   42

                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================



As at March 31, 2000, the shares of IUFC were trading at $ 0.94, which is below
the exercise price of the option at $4.00 per share. As a result, the options
are out of money, have no intrinsic value, and have no impact on the earnings
per share. Had the compensation cost for the Company's stock option plan been
recognized based upon the fair value on the grant date under the methodology
prescribed by SFAS No. 123, the Company's loss from operations and loss per
share would have been impacted as indicated in the following table. The Proforma
results below reflect only the impact of the options granted. EPS is presented
following SFAS No. 128.


<TABLE>
<CAPTION>

                                                                                                        1999
                                                                                             -------------------------
                                                                                             Reported         Proforma
                                                                                             ----------      ---------
<S>                                                                                          <C>             <C>

Net loss                                                                                      (390,182)      (493,857)
Basic Loss Per Share                                                                             (0.21)         (0.27)
Diluted Loss Per Share                                                                           (0.21)         (0.27)
</TABLE>


For fiscal 2000 the Loss Per Share (basic) and loss per share (Fully diluted)
are the same due to anti-dilution effect of options.

10.  DISSOLUTIONS AND FORMATION OF A NEW COMPANY:


     In order to make the organizational structure of IUFC simple and cost
     effective the management with the consent of the Board of Directors and
     shareholders decided to dissolve the previously wholly owned subsidiaries:
     Credifinance Realty Inc., (Ontario, Canada), Credifinance Securities Inc.
     (Florida, USA), Bearhill Limited (British Virgin Island) and Marbury
     Trading Corporation (Panama) in December 1999. In January 2000, a new
     wholly owned subsidiary , InterUnion Merchant Group Inc. (British Virgin
     Island), was formed which took over the assets and liabilities of the two
     dissolved subsidiaries, Bearhill Limited and Marbury Trading Corporation.
     The above dissolution had no significant impact on the financial statements
     of the Company.


11.  INCOME TAXES


     IUFC files US Federal income tax returns for its US operations and its US
     subsidiaries. Separate income tax returns are filed, as locally required,
     for each of its foreign subsidiaries. The provision for income taxes
     consists of:


<TABLE>
<CAPTION>
         Year Ended March 31,                                                             2000             1999
         --------------------                                                       -------------    --------------
         <S>                                                                        <C>              <C>

                Domestic
                Current                                                             $           0    $            0
                Deferred                                                                        0                 0
                Foreign
                Current                                                                         0                 0
                Deferred                                                                        0                 0
                                                                                    -------------    --------------
         Total provision for income taxes                                           $           0    $            0
                                                                                    ==============   ==============
</TABLE>


The total provision for income taxes differs from that amount which would be
computed by applying the United States federal income tax rate to income (loss)
before provision for income taxes. The reasons for these differences are as
follows:

================================================================================
/Continued...                                                               F-17


<PAGE>   43




                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================


<TABLE>
<CAPTION>
Year Ended March 31,                                                   2000                           1999
                                                            -----------------------       -----------------------
                                                              Amount            %            Amount           %
                                                            ----------       ------       ----------       ------
<S>                                                         <C>              <C>          <C>              <C>
Statutory income tax rate (recovery)                        $ (29,680)       (0.87)       $ (132,700)         (34)
Foreign taxes payable                                               0            0                 0            0
Gain on issuance of security by subsidiary                          0            0           165,000           42
Use of losses carried forward                                  22,250         0.67          (165,000)         (42)
Effect of non-taxable gain on
disposition of subsidiary                                           0            0                 0            0
Non-deductible items                                            5,000          0.1            30,000            8
Other, including valuation                                          0            0                 0            0
Allowance adjustment                                            2,430          0.1           102,700           26
                                                            ---------        -----        ----------         ----
Net taxes (recovery) and effective rate                     $       0            0        $        0            0
                                                            =========        =====        ==========         ====

</TABLE>




The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between the carrying amounts
and the tax basis of assets and liabilities and net operating loss
carry-forwards. Temporary differences and carry-forwards, which give rise to,
deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                          March 31, 2000                     March 31, 1999
                                                  ------------------------------     ----------------------------
                                                    Component        Tax Effect       Component        Tax Effect
                                                  ------------     -------------     ------------     -----------
<S>                                               <C>              <C>               <C>              <C>

Net operating losses - domestic                     $   86,000     $     17,500      $   376,000         $150,000
Unrealised gains - domestic                                  0                0                0
Less valuation allowance                               (86,000)         (17,500)        (376,000)        (150,000)
                                                    ----------     ------------      -----------         --------
Net deferred asset                                  $        0     $          0      $         0                0
                                                    ==========     ============      ===========         ========
Net operating losses - foreign                      $  446,800     $    196,000      $   336,000         $134,000
Less valuation allowance                              (446,800)        (196,000)        (336,000)        (134,000)
                                                    ----------     ------------      -----------         --------
         Net deferred asset                         $        0     $          0      $         0         $      0
                                                    ==========     ============      ===========         ========
</TABLE>

At March 31, 2000, the Company had cumulative net operating loss carry-forwards
of approximately $ 86,000 and $ 446,000 in the United States and Canada,
respectively. These amounts will expire in various years through 2015. In
addition, the Company has capital loss carry-forward of approximately $624,000
for tax purposes. The related deferred tax asset of $ 624,000 has been
completely offset by a valuation allowance. This amount will expire in various
years beginning in 2001. The Company has no significant deferred tax liabilities




================================================================================
Continued...                                                                F-18



<PAGE>   44


                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================



12.  RELATED PARTY TRANSACTIONS


     Directors, officers or employees of the Company may also be officers of and
     serve on the board of directors of companies in which IUFC or its
     subsidiaries have invested.

     During the fiscal year ending March 31, 2000, the Company received US
     $125,000 from RIF Capital, its majority shareholder, as "Fee" for the
     services rendered.

     During the period ending March 31, 1999, the Company paid an entity owned
     by a director and officer of IUAM approximately $33,145 directly and
     $132,582 by IUAM. The Company received $64,950 from the same entity for
     advisory services for the period ending March 31, 1999. There was no
     related transaction between the Company and IUAM for the year ended March
     31, 2000.

     The Company paid an entity related by common ownership approximately $ nil
     and $26,500 during fiscal 2000 and 1999 respectively which has been
     included as rent expense. In turn, this related company has paid an
     unrelated entity $ nil and $26,500 as rent for these same premises.

     During the year ending March 31, 2000, the wholly owned subsidiaries of the
     Company received from Receptagen Ltd., an affiliate, in total, US$ 55,259
     as fee for certain services provided to it; and US $ 4,139 as a
     reimbursement for the expense incurred on behalf of Receptagen Ltd. As of
     March 31, 2000, the Company had US $ 5,310 receivable from Receptagen Ltd.

13.  COMMITMENTS AND CONTINGENCIES

     The Company leases office space under a number of operating leases expiring
     at various dates through to January 2002. The Company also has a number of
     commitments with regard to information suppliers that expire at various
     dates through to January 2005. The total minimum annual rentals, exclusive
     of additional operating costs, under the leases for the Company's premises
     or the next five fiscal years are approximately:

<TABLE>
                   <S>        <C>              <C>              <C>
                   2001       $  87,000         2004            $  5,000
                   2002          65,000         2005               5,000
                   2003           5,000
</TABLE>

     Payments under the above mentioned leases that have been charged to
     operations for the years ending March 31, 2000 and 1999 amount to $180,212
     and $246,597, respectively.

     From time to time the Company is exposed to claims and legal actions in the
     normal course of business, some of which are initiated by the Company. At
     March 31, 2000, management believes that any such outstanding issues will
     be resolved without significantly impairing the financial condition of the
     Company.

================================================================================
Continued...                                                                F-19

<PAGE>   45



                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================


14.  SUPPLEMENTAL CASH FLOW DISCLOSURE



     The following is additional information regarding the Consolidated
     Statement of Cash Flows:


<TABLE>
<CAPTION>
         Supplemental disclosure of cash flow information:                                      2000          1999
                                                                                             ----------    ----------
<S>                                                                                          <C>           <C>
           Cash paid during the year for interest                                            $    9,237    $  111,887
           Cash paid during the year for income taxes                                             7,178             0

         Supplemental disclosure of non-cash financing and investing:
           Stock issued for long-term investments                                                     0       108,868
           Non-cash consideration received                                                      255,000             0
           Liabilities paid by issuing common stock                                             863,930     1,622,172
           Common stock cancelled                                                                     0       317,712

</TABLE>




15.  WRITE DOWN IN PROPERTY & EQUIPMENT:


     As of April 1, 1999, the book value of ITM Software owned by InterUnion
     Merchant Group Inc., a wholly owned subsidiary of the Company, was
     $1,154,666. The Company was amortising the above software at a rate of
     $192,444 per annum. However, due to an uncertain furture of the software
     and its inability to produce an identifiable cash flow in the near future
     the Company decided to write it down to zero in the current year. This
     resulted in an amortisation expense of $ 1,154,666. The Company will update
     and maintain the software and sell it when a suitable offer to purchase is
     received.

16.  WRITE DOWN IN INVESTMENT:

     As of April 1, 1999, InterUnion Merchant Group Inc., a wholly owned
     subsidiary of the Company, had an investment of $1,231,618 in Receptagen
     Ltd., a Canadian based Company, and the Company had a direct investment of
     $ $49,805. Due to the uncertain future of Receptagen Ltd., the Company
     decided to write down value of its investment to market value of Receptagen
     Ltd. shares as of March 31, 2000. This caused a write down of investment to
     $ 30,089. Due to this the Company recorded an unrealised loss of
     $1,251,334.




================================================================================
/Continued...                                                               F-20


<PAGE>   46


                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================



17.  SEGMENT INFORMATION


     The following tables summaries the revenues, operating income (losses) from
     continuing operations and identifiable assets by geographical area.

<TABLE>
<CAPTION>
                                                                                            Adjustments
                                                             United                              &
                                             Canada          States            Other        Elimination      Consolidated
                                          ------------    ------------    -------------     ------------   ---------------
<S>                                       <C>             <C>             <C>               <C>            <C>
For the year ended and as of
  March 31, 2000
Revenue from
  unaffiliated customers                    $  781,770    $    508,501   $     150,100      $         0    $    1,440,371
Revenue from
  Inter-segments
                                            ----------    ------------   -------------      -----------    --------------
Total revenue                                  781,770         508,501         150,100                0         1,440,371
                                            ==========    ============   =============      ===========    ==============

Depreciation
& Amortization                                  10,034         145,025       1,010,333                -         1,165,392
                                            ==========    ============   =============      ===========    ==============
Operating profit                               229,267         385,271      (1,010,233)               0          (395,695)
                                            ==========    ============   =============      ===========    ==============
General corporate
  expenses                                     250,015       1,562,072          50,094                0         1,862,181
Interest expenses, net                          78,070          28,506          69,600                0           176,176
Income from continuing
  Operations before provision
   for income taxes                           (108,853)     (1,350,331)     (2,140,260)               0        (3,599,444)
                                            ==========    ============   =============      ===========    ==============
   Identifiable assets                      $4,263,066    $  8,729,326   $   1,703,934      $(4,973,797)   $    9,722,529
                                            ==========    ============   =============      ===========    ==============

For the year ended and as of March 31, 1999
Revenue from
  unaffiliated customers                    $1,011,995    $    357,468   $      94,421      $         -    $    1,463,884
Revenue from
   Inter-segments                              119,494          42,179               -         (161,673)                -
                                            ----------    ------------   -------------      -----------    --------------
Total revenue                                1,131,489         399,647          94,421         (161,673)        1,463,884
                                            ==========    ============   =============      ===========    ==============
Depreciation
& Amortisation                                   6,997             730         192,444                -           200,171
                                            ==========    ============   =============      ===========    ==============
Operating profit                               256,182         (67,410)       (197,343)               -            (8,571)
                                            ==========    ============   =============      ===========    ==============
General corporate
  expenses                                                                                                        135,000
Interest expenses, net                                                                                            246,611
                                                                                                           --------------
Income from continuing
  Operations before provision
   for income taxes                                                                                              (390,182)
                                                                                                           ==============
Identifiable assets                         $6,506,729    $    751,718   $  22,189,739      $         -    $   29,448,186
                                            ==========    ============   =============      ===========    ==============


</TABLE>

================================================================================
/Continued...                                                               F-21

<PAGE>   47

                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================

18.  SALE OF THE COMPANY'S COMMON SHARES:

In November 1999 the Company sold its Common Shares to its majority shareholder,
RIF Capital Inc. at the current market price of the common share on the date of
the transaction. 114,500 common share were sold at the rate of $0.50 per share
and 2,014,198 shares were sold at the rate of $0.40 per share. RIF Capital Inc.,
paid $ 863,931 for the above shares by cancelling its debt (principal $765,508
plus accrued interest $98, 423 on it) to the Company.

19.  INVESTMENT IN UNCONSOLIDATED COMPANIES:


It is a Company policy to account of all investments in unconsolidated companies
on a cost basis if the investment of the Company is below 20% of equity of the
investee company. If the ownership of the equity of the investee company is
between 20% to 50% then investment is accounted for on an equity basis. The
investment in the unconsolidated companies and their respective ownership are
shown below:

<TABLE>
<CAPTION>
Company                             % of Ownership                        Amount of investment
-------                             --------------                    ----------------------------
                                                                       Year 2000        Year 1999
                                                                      ----------        ----------
                                                                           $                 $
<S>                                 <C>                               <C>               <C>
Receptagen Ltd.                             22.62%                        30,089         1,281,423
B-Twelve Inc.                                8.80%                       255,000             ----
InterUnion Asset Management Inc.            44.00%                     3,354,590         4,294,719
I & B Partnership                             ----                         -----           15, 750
                                                                       ---------         ---------
                                                                       3,639,680         5,591,892
                                                                       ---------         ---------
</TABLE>

There is no difference between the Company's carrying value of the investments
and its proportionate interest in the underlying net assets.

20.     LONG TERM ASSETS:

<TABLE>
<S>                                                                     <C>             <C>
Stock Exchange Seat, TSE                                                $    77,493     $      77,651
</TABLE>





================================================================================
/Continued...                                                               F-22

<PAGE>   48

                        INTERUNION FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999
================================================================================


21.  EVENTS SUBSEQUENT OT THE BALANCE SHEET DATE:

i)   Cable Satisfaction International


     Credifinance Securities Limited, an ultimate wholly owned subsidiary of the
     Company, had filed a claim against a client in 1997 for which it had raised
     a C$ 15,000,000 convertible debenture, on the Superior Court of Montreal
     (Quebec). The claim was originally not contested. However, the Company
     faced a claim from two employees of Credifinance Securities Limited for
     commissions, termination allowance and damages. In compliance with a court
     order, the total amount of the commission, C$ 373,920 (US $ 249,663) was
     placed in an escrow with Montreal Trust. On May 29, 2000, the Superior
     Court of Montreal (Quebec) rendered a judgement ordering Credifinance
     Securities Limited to pay C$ 579,617 (US$ 387,005) plus accrued interest to
     the cross claimants. The above amount has been fully provided for and
     included in the general and administration expenses in the financial
     statement of the company for the fiscal year ending as of March 31, 2000.

     Upon advice from its counsel who has advised that the May 29, 2000
     judgement has a strong chance of reversal, Credifinance Securities has
     filed an appeal in the Supreme Court in Quebec on June 29, 2000.

ii)  The Toronto Stock Exchange

     Credifinance Securities Limited, an ultimate wholly owned subsidiary of the
     Company, is a member seat holder of the Toronto Stock Exchange. In April
     2000, the member of the Toronto Stock Exchange voted in favour of having
     the Exchange become a corporation: The Toronto Stock Exchange Inc. (TSE
     Inc.). Each member of the Toronto Stock Exchange has become a shareholder
     and 20 shares represent each seat on the Exchange. Subsequent to the
     decision, KPMG LLP, an independent accounting firm, has prepared a
     valuation for the TSE Inc. Based on that report, each share of the TSE
     Inc., has been valued at C$ 120,000 and each seat represented by 20 shares
     at C$ 2,400,000. All the shareholders of TSE Inc. have agreed not to sell
     control of their holding in the TSE Inc. without prior approval of the
     Exchange and that no seat can be purchased or sold unless represented by 20
     shares of TSE Inc.

iii) Sale of Shares by Majority Shareholder:

     On June 26, 2000, RIF Capital Inc., the controlling shareholder of the
     Company, has advised the Company that it has agreed to sell 1,500,000
     Preferred Class A shares of InterUnion Financial Corporation stock,
     representing all the issued and outstanding Preferred Class A shares, to
     Sovereign Depository Corporation, a Nevada C Corporation through a private
     transaction expected to close in July 2000. If and when this proposed
     transaction closes, RIF Capital Inc., will hold no Preferred Class A shares
     of the Company and will hold 2,462,847 Common Shares of the Company
     representing 58.04% of the issued and outstanding Common Shares of the
     Company.




================================================================================
/Continued...                                                               F-23
<PAGE>   49


INTERUNION ASSET MANAGEMENT LIMITED
FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1999 AND MARCH 31, 2000







<TABLE>
<CAPTION>
                                                                        CONTENTS
--------------------------------------------------------------------------------
<S>                                                                           <C>
AUDITORS' REPORT                                                              2

FINANCIAL STATEMENTS

         BALANCE SHEETS                                                       3

         STATEMENTS OF OPERATIONS AND DEFICIT                                 4

         STATEMENTS OF CASH FLOWS                                             5

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                        6-16
</TABLE>



                                       1
<PAGE>   50



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

                                                                AUDITORS' REPORT

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


To the Shareholders of
InterUnion Asset Management Limited


We have audited the consolidated balance sheets of InterUnion Asset Management
Limited as at March 31, 2000 and 1999 and the consolidated statements of
operations and deficit 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 Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at March 31, 2000
and 1999 and the results of its operations and its cash flows for the years then
ended in accordance with Canadian generally accepted accounting principles.





(Signed by "BDO Dunwoody LLP")

Chartered Accountants


Toronto, Canada
May 5, 2000


                                       2
<PAGE>   51



InterUnion Asset Management Limited
Consolidated Balance Sheets
(amounts expressed in Canadian dollars unless otherwise stated)
(as at March 31)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    2000                   1999
                                                              --------------         --------------
<S>                                                           <C>                    <C>
                                     Assets
Current:
  Cash                                                        $      525,621         $    8,135,719
  Marketable securities, at market (note 4)                        1,991,800                209,542
  Accounts receivable and accrued revenue (note 10)                  472,166                610,804
  Prepaid expenses                                                    71,317                 43,768
  Income taxes recoverable                                                --                 26,320
  Future income tax asset                                             26,108                     --
                                                              --------------         --------------
                                                                   3,087,012              9,026,153
Management contracts, net (note 5)                                 2,304,762                500,000
Capital assets, net (note 6)                                         447,006                120,787
Investments, at cost (note 7)                                         71,477                204,477
Goodwill (note 8)                                                 12,703,851              7,694,665
                                                              --------------         --------------
Total assets                                                  $   18,614,108         $   17,546,082
                                                              ==============         ==============
                                  Liabilities
Current:
  Bank indebtedness                                           $       36,853         $      225,695
  Accounts payable and accrued liabilities (note 10)                 542,578              1,026,885
  Current portion of long term debt                                   69,339                 32,400
  Income taxes payable                                               146,840                     --
                                                              --------------         --------------
                                                                     795,610              1,284,980
Deferred revenue and inducements (note 9)                            121,864                176,515
Long term debt (note 11)                                             151,224                222,568
Other liabilities                                                     43,750                     --
Preference shares (note 12)                                        3,500,000                     --
                                                              --------------         --------------
                                                                   4,612,448              1,684,063
                                                              --------------         --------------
Non-controlling interest                                             301,869                494,127
                                                              --------------         --------------
                              Shareholders' Equity
Shareholders' equity:
  Share capital (note 13)                                         16,358,558             16,358,558
  Deficit                                                         (2,658,767)              (990,666)
                                                              --------------         --------------
Total shareholders' equity                                        13,699,791             15,367,892
                                                              --------------         --------------
Total liabilities and shareholders' equity                    $   18,614,108         $   17,546,082
                                                              ==============         ==============
</TABLE>


See accompanying notes to consolidated financial statements.

Approved by the Board:

Director (Signed by "Jim Hall")         Director (Signed by "Selwyn J. Kletz")
        -----------------------                 ------------------------------


                                       3
<PAGE>   52




InterUnion Asset Management Limited
Consolidated Statements of Operations and Deficit
(amounts expressed in Canadian dollars unless otherwise stated)
(for the years ended March 31)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                2000                 1999
                                                         --------------        --------------
<S>                                                      <C>                   <C>
Revenue:
  Management fees                                        $    5,316,239        $    4,788,515
  Other income (loss)                                           (56,000)              647,536
                                                         --------------        --------------
                                                              5,260,239             5,436,051
                                                         --------------        --------------

Operating expense
  Commission and incentives                                   1,023,113             1,564,258
  Salaries and benefits                                       2,784,722             2,045,186
  Marketing and advertising                                     435,022               637,613
  Office and general                                          1,460,675             1,206,176
  Professional fees                                             251,932               392,583
  Amortization of management contracts                          195,238
  Amortization of capital assets                                 87,081                31,120
                                                         --------------        --------------
                                                              6,237,783             5,876,936
                                                         --------------        --------------
  Operating loss before undernoted                             (977,544)             (440,885)
                                                         --------------        --------------

Interest expense
  Current                                                        39,328                62,021
  Long term                                                      90,371                20,568
                                                         --------------        --------------
                                                                129,699                82,589
                                                         --------------        --------------
Loss before amortization of goodwill,
non-controlling interest and income taxes                    (1,107,243)             (523,474)
                                                         --------------        --------------
Income taxes (note 14)
  Current income taxes (recovery)                               212,224                (2,081)
  Future income taxes (benefit)                                 (26,108)                   --
                                                         --------------        --------------
                                                                186,116                (2,081)
                                                         --------------        --------------
Loss before amortization of goodwill
and non-controlling interest                                 (1,293,359)             (521,393)
Amortization of goodwill                                        573,740               418,558
                                                         --------------        --------------
Loss before non-controlling interest                         (1,867,099)             (939,951)
Non-controlling interest                                        198,998               (31,396)
                                                         --------------        --------------
Net loss, for the period (note 15)                           (1,668,101)             (971,347)
Deficit, beginning of period                                   (990,666)              (19,319)
                                                         --------------        --------------
Deficit, end of period                                   $   (2,658,767)       $     (990,666)
                                                         ==============        ==============
</TABLE>


See accompanying notes to consolidated financial statements.


                                       4
<PAGE>   53



InterUnion Asset Management Limited
Consolidated Statements of Cash Flows
(amounts expressed in Canadian dollars unless otherwise stated)
(for the years ended March 31)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                           2000               1999
                                                                     -------------       -------------
<S>                                                                  <C>                 <C>
Cash flows from operating activities
  Net loss                                                           $  (1,668,101)      $    (971,347)

  Adjustments for:
     Amortization of goodwill                                              573,740             418,558
     Amortization of management contracts                                  195,238                  --
     Amortization of capital assets                                         87,081              31,120
     Deferred rent inducements                                                (318)             (7,275)
     Provision for doubtful receivable                                     218,000                  --
     Unrealized loss on investment                                         133,000                  --
     Future income tax asset                                               (26,108)                 --
     Non-controlling interest                                             (198,998)             31,396
  Changes in non-cash working capital
     Decrease (increase) in accounts receivable                             52,677            (579,592)
     Increase (decrease) in accounts payable                              (701,249)            395,238
     Decrease (increase) in income taxes recoverable                        26,320              11,544
     Increase (decrease) in income taxes payable                           132,442                  --
     Other items, net                                                       31,016             218,706
                                                                     -------------       -------------
                                                                        (1,145,260)           (451,652)
                                                                     -------------       -------------
Cash flows from investing activities
  Acquisition of capital assets, net of disposals                         (293,347)            (49,353)
  Acquisitions, net of cash acquired                                    (4,401,304)         (1,523,427)
  Acquisition of marketable securities, net                             (1,253,506)           (209,542)
                                                                     -------------       -------------
                                                                        (5,948,157)         (1,782,322)
                                                                     -------------       -------------
Cash flows from financing activities
  Increase (decrease) in bank indebtedness                                (188,842)            107,660
  Increase (decrease) of deferred revenue
     and inducements                                                      (268,434)             74,665
  Proceeds from long term borrowings                                        32,829             169,868
  Repayments of long term borrowings                                       (67,234)            (32,400)
  Dividend paid to non-controlling
     interest                                                              (25,000)            (21,105)
  Increase in preference share capital                                          --           4,920,534
  Increase in common share capital                                              --           4,920,533
                                                                     -------------       -------------
                                                                          (516,681)         10,139,755
                                                                     -------------       -------------
Net increase (decrease) in cash                                         (7,610,098)          7,905,781
Cash at beginning of period                                              8,135,719             229,938
                                                                     -------------       -------------
Cash at end of period                                                $     525,621       $   8,135,719
                                                                     =============       =============
Supplemental Cash Flows Information
     Interest paid                                                   $      88,571       $      82,589
     Income taxes paid                                                      65,921              32,176
                                                                     =============       =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>   54


InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------


1.   NATURE OF BUSINESS

     InterUnion Asset Management Limited, formerly Cluster Asset Management
     Limited, was incorporated on August 13, 1997 under the laws of Ontario. The
     principal business activities of InterUnion Asset Management Limited and
     its subsidiaries are discretionary and advisory portfolio management
     services for its clients and the acquisition of investment management
     firms.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a)   Principles of Consolidation
          These consolidated financial statements include the accounts of
          InterUnion Asset Management Limited and its subsidiaries. The
          principal operating subsidiaries are A.I.L. Investment Services Inc.,
          Black Investment Management Ltd., Glen Ardith-Frazer Corporation,
          Guardian Timing Services Inc., Leon Frazer, Black & Associates
          Limited, and P.J. Doherty & Associates Co. Ltd. Unless the context
          implies otherwise, the term "Company" collectively refers to
          InterUnion Asset Management Limited and all of its subsidiaries.

     b)   Marketable Securities
          Marketable securities are valued at market and unrealized gains and
          losses are reflected in income.

     c)   Management Contracts
          Management contracts are recorded at cost less accumulated
          amortization and are amortized on a straight-line basis over periods
          from 5 to 7 years. The Company assesses the value of its management
          contracts by considering the future economic benefit associated with
          the revenue capacity of the related contracted items.

     d)   Capital Assets
          Capital assets are recorded at cost less accumulated amortization.
          Amortization is provided on the following basis:

<TABLE>
<S>                                  <C>
          Computer equipment         30% declining balance
          Furniture and fixtures     20% declining balance
          Leasehold improvements     over the term of lease on a straight line basis
</TABLE>

     e)   Goodwill
          Goodwill being the excess of cost over assigned values of net assets
          acquired, is stated at cost less amortization. Amortization is
          provided on a straight-line basis over periods from 15 to 20 years.
          The value of goodwill is evaluated regularly by reviewing, among other
          items, the undiscounted cash flows relating to the returns of the
          related business, and by taking into account the risk associated with
          the investment. Any impairment in the value of the goodwill is written
          off against operations.

     f)   Revenue Recognition
          Revenue is recognized by the Company on an earned basis. For its
          services the Company is entitled to an annual fee payable monthly or
          quarterly, depending on its agreement with the client. Fees are
          calculated based on the fair market value of the portfolio at the end
          of each month. Fees billed in advance are recorded as deferred revenue
          and taken into income evenly over the term of the stated billing.


                                       6
<PAGE>   55

InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------


     g)   Financial Instruments
          The Company's financial instruments consist of cash, bank
          indebtedness, marketable securities, accounts receivable, investments,
          accounts payable and accrued liabilities, due to related parties,
          preference shares and long term debt. It is management's opinion that
          the Company is not exposed to significant interest risks arising from
          these financial instruments. Unless otherwise noted, the fair value of
          these financial instruments approximate their carrying values.

          The Company is exposed to credit risk on the accounts receivable from
          its customers. Management has adopted credit policies in an effort to
          minimize those risks. The Company does not have a significant exposure
          to any individual customer or counter-party.

     h)   Income Taxes
          As recommended by The Canadian Institute of Chartered Accountants,
          effective April 1, 1999, the Corporation adopted the liability method
          of accounting for income taxes. The provisions were applied
          retroactively with no significant impact to prior period financial
          statements. Under this method, future tax assets and liabilities are
          recognized for temporary differences between the financial reporting
          and tax bases of assets and liabilities as well as for the benefit of
          losses available to be carried forward to future years for tax
          purposes that are likely to be realized.

     i)   Stock-Based Compensation Plan
          The Company's stock-based compensation arrangements are described in
          Note 13. No compensation expense is recognized for these arrangements
          when stock options are issued to employees. Any consideration paid by
          employees on exercise of stock options is credited to share capital.
          If stock options are repurchased from employees, the excess of the
          consideration paid over the carrying amount of the stock option
          cancelled is charged to retained earnings.

     j)   Use of Estimates
          The preparation of financial statements in accordance with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of 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 management's best estimates as additional
          information becomes available in the future.


3.   ACQUISITIONS

     The following are acquisitions made during the periods. These acquisitions
     were accounted for by the purchase method and consolidated from the
     respective effective date of acquisition, except where noted.

     1999 Acquisitions:

     -    Effective January 21, 1999, the Company acquired 100% of Guardian
          Timing Services Inc., 45% of Black Investment Management Ltd., 33% of
          Leon Frazer, Black & Associates Limited and indirectly through Black
          Investment Management Limited an additional 14.4% of Leon Frazer,
          Black & Associates. The former parent company, InterUnion Financial
          Corporation sold the investments for shares of the Company. The sale
          was accounted for using the carrying values of the parent company at
          January 21, 1999 and reflects a continuity of interest. The Company
          has accounted for the operations of the investments with an effective
          date of April 1, 1998.

     2000 Acquisitions:

     -    The Company purchased an additional 5,978 shares in Black Investment
          Management Limited on April 13, 1999 for cash considerations of
          $209,230. The purchase increased the Company's ownership to 50.5%.


                                       7
<PAGE>   56

InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------


     -    The Company purchased an additional 3,000 shares in Black Investment
          Management Limited on July 22, 1999 for cash consideration of
          $105,000.

     -    On November 19, 1999, the Company completed the acquisition of 75% of
          P.J. Doherty & Associates Co. Ltd. for total consideration of
          $7,632,022. Goodwill of $5,340,879 resulting from this acquisition is
          being amortized over 15 years.

     The assets acquired and consideration given are as follows:

<TABLE>
<CAPTION>
                                                            2000                1999
                                                       --------------      --------------
    <S>                                                <C>                 <C>
           Cash                                        $       44,849      $       90,823
           Net assets (liabilities) acquired,
              at fair value                                   311,601            (490,992)
           Management contracts                             2,000,000                  --
                                                       --------------      --------------
                                                            2,356,450            (400,169)
                                                       --------------      --------------

     Consideration
           Cash                                             4,324,310                  --
           Class A Preference Shares                        3,500,000                  --
           Share capital - common shares                           --           5,143,491
           Direct acquisition expenses                        121,942                  --
                                                       --------------      --------------
                                                            7,946,252           5,143,491
                                                       --------------      --------------
     Goodwill                                          $    5,589,802       $   5,543,660
                                                       ==============       =============
</TABLE>

4.   MARKETABLE SECURITIES

     Marketable securities are recorded at market values and comprise the
following:

<TABLE>
<CAPTION>
                                                                                     2000             1999
                                                                              ---------------     ------------
     <S>                                                                      <C>                 <C>
     Bankers Acceptances                                                      $     1,554,482     $    150,505
     Money Market Mutual Funds                                                        393,309               --
     Other Mutual Funds                                                                44,009           59,037
                                                                              ---------------     ------------
                                                                              $     1,991,800     $    209,542
                                                                              ===============     ============
</TABLE>


     Bankers Acceptances mature at various dates through November 1, 2000.
     Annualized yields on these securities range between 5.35% and 5.64%.


5.   MANAGEMENT CONTRACTS

     Management contracts comprise the following:

<TABLE>
<CAPTION>
                                                                2000                                  1999
                                       -------------------------------------------------------     ------------
                                                             Accumulated          Net Book           Net Book
                                            Cost            Amortization           Value              Value
                                       --------------     ---------------      ---------------     ------------
     <S>                               <C>                <C>                  <C>                 <C>
     Management contract               $      500,000     $       100,000      $       400,000     $    500,000
     Non-competition agreement              2,000,000              95,238            1,904,762               --
                                       --------------     ---------------      ---------------     ------------
                                       $    2,500,000     $       195,238      $     2,304,762     $    500,000
                                       ==============     ===============      ===============     ============
</TABLE>


                                       8


<PAGE>   57

InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------


6.   CAPITAL ASSETS

     Capital assets comprise the following:

<TABLE>
<CAPTION>
                                                                2000                                  1999
                                       ------------------------------------------------------     ------------
                                                             Accumulated         Net Book           Net Book
                                            Cost            Amortization          Value               Value
                                       -------------     ---------------      ---------------     ------------
     <S>                               <C>               <C>                  <C>                 <C>
     Computer equipment                $     614,874     $       437,995      $       176,879     $     65,676
     Furniture, fixtures and other           440,291             302,506              137,785           46,961
     Leasehold improvements                  158,276              25,934              132,342            8,150
                                       -------------     ---------------      ---------------     ------------
                                       $   1,213,441     $       766,435      $       447,006     $    120,787
                                       =============     ===============      ===============     ============
</TABLE>

7.   INVESTMENTS

     Investments are carried at the lower of cost and fair value and include the
following:

<TABLE>
<CAPTION>
                                                                                  2000                1999
                                                                             ---------------      -------------
     <S>                                                                    <C>                  <C>
     27,224 common shares of InterUnion Financial Corporation,               $        17,000      $     150,000
         a shareholder of the Company, held by a subsidiary of the
         company (quoted market value - $36,997, 1999 - $163,344)
     44,477 Class A preference shares of Kanata Capital Inc., a                       44,477             44,477
         corporation controlled by minority shareholders of and held by a
         subsidiary (it is impractical to determine a fair value as the
         company is privately held and there is no ready market)
     Other investments                                                                10,000             10,000
                                                                             ---------------      -------------
                                                                             $        71,477      $     204,477
                                                                             ===============      =============
</TABLE>


8.   GOODWILL

<TABLE>
<CAPTION>
                                                                                    2000                 1999
                                                                             ---------------      ---------------
      <S>                                                                    <C>                  <C>
      Cost                                                                   $    13,762,035      $     8,179,109
      Accumulated amortization                                                     1,058,184              484,444
                                                                             ---------------      ---------------
                                                                             $    12,703,851      $     7,694,665
                                                                             ===============      ===============
</TABLE>


9.   DEFERRED REVENUE AND LEASE INDUCEMENTS

     Deferred revenue and lease inducements compromise the following:

<TABLE>
<CAPTION>
                                                                                    2000               1999
                                                                             ---------------      -------------
          <S>                                                                <C>                  <C>
          Deferred revenue                                                   $        76,493      $      74,665
          Deferred rent inducement                                                    45,371            101,850
                                                                             ---------------      -------------
                                                                             $       121,864      $     176,515
                                                                             ===============      =============
</TABLE>

     A subsidiary company's lease at its Toronto premises provides for rent-free
     periods and periods of significantly reduced rent. In order to properly
     reflect these rental inducements over the term of the lease, the total
     lease payments have been aggregated and allocated over the term of the
     lease on a straight-line basis. This treatment of rental inducements has
     given rise to deferred rent inducements which will be applied to income
     over the term of the lease.


                                       9

<PAGE>   58
InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------

     The subsidiary company has sub-let certain of its leased premises for the
     term of the lease. Included in deferred rent inducement are expenses
     associated with the sub-lease arrangement which have been deferred and will
     be amortized over the remaining life of the sub-lease.


10.  RELATED PARTY TRANSACTIONS

     Transactions with shareholders, officers and directors of the Company,
     its subsidiaries and companies influenced by the aforementioned parties are
     considered related party transactions.

     Summary of the related party transactions affecting the accounts are as
     follows:

<TABLE>
<CAPTION>
                                                          2000            1999
                                                        --------        --------
     <S>                                                <C>            <C>
     Revenue
          Management fees .....................         $128,000       $160,000
          Other income ........................             --           12,000
     Expenses
          Commissions and incentives ..........           23,200         85,100
          Marketing and advertising ...........           31,250        675,000
          Office and general ..................          138,200         40,600
          Professional fees ...................           25,200           --
</TABLE>

          These transactions are in the normal course of operations and are
          measured at the exchange values (the amount of consideration
          established and agreed to by the related parties), which approximate
          the arm's length equivalent values.

     Other related party transactions are as follows:

          Effective February 29, 2000, the Company acquired an additional 7,610
          shares in Leon Frazer, Black & Associates Limited in exchange for 100%
          of the Company's investment in The Glen Ardith-Frazer Corporation. The
          transaction was accounted for using the Company's carrying value of
          $2,356,927 at February 29, 2000 and represents a continuity of
          interest. The acquisition increased the Company's direct ownership to
          59.2%.

          On March 7, 2000, Black Investment Management Limited transferred 192
          shares in Leon Frazer, Black & Associates to the Company as a
          financing set up fee. This transfer was not deemed to occur in the
          normal course of operations and has been measured at the carrying
          amount (net book value) of $41,170 of the shares issued as payment.

     Related party balances in the accounts are as follows:

<TABLE>

          <S>                                         <C>              <C>
          Accounts receivable .............           $ 71,463         $137,830
          Accounts payable ................             46,875           40,662
          Other liabilities ...............             43,740             --
</TABLE>

          These balances are interest-free, unsecured, payable on demand (except
          for Other liabilities which is due on November 19, 2002) and have
          arisen from the transactions referred to above.


                                       10
<PAGE>   59
InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------

11.  LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                                                           2000            1999
                                                                                         --------        --------
     <S>                                                                                 <C>             <C>

     Demand installment loan, monthly principal payments of $2,700, interest at
     prime plus 2%. Unless demanded, balance is due on August 15, 2003
                                                                                         $114,100        $146,500
     Demand bank loan, interest at prime + 1/2%, monthly principal
     payments of $1,500 commencing January 2000 ...................................        75,500         100,000

     Bank loan, interest at prime + 1 1/2%, 30 monthly principal payments of
     $1,095 commencing September 1999, secured by computer equipment ..............        25,164              --

     10% note payable to a director and non-controlling interest
     shareholder, due on demand ...................................................         5,799           8,468
                                                                                         --------        --------

                                                                                          220,563         254,968

     Less: current portion ........................................................        69,339          32,400
                                                                                         --------        --------

                                                                                         $151,224        $222,568
                                                                                         ========        ========
</TABLE>

     During a prior fiscal period, the demand installment loan was negotiated in
     order to eliminate a certain subsidiary's shareholder loans. This loan is
     secured by a general assignment of book debts and a general security
     agreement of a subsidiary. Two of the subsidiary's shareholders have a
     personal guarantee on the debt. One subsidiary shareholder has guaranteed
     up to $125,000 and the other shareholder has guaranteed an unlimited
     amount.

     The demand bank loan is guaranteed by two of a subsidiary company's
     shareholders.


12.  PREFERENCE SHARES

     3,500 Cumulative Redeemable Convertible Class A Preference Shares (with a
     value equal to $1,000 per share) were issued on November 19, 1999 as
     consideration for the acquisition of P.J. Doherty & Associates Co. Ltd.
     These Class A Preference Shares are redeemable at the option of either the
     holders (commencing November 19, 2002, subject to certain provisions for
     early redemption arising from non-payment of dividends and an Initial
     Public Offering of the Common Shares of the Company prior to November 19,
     2002) or the Company (commencing November 19, 2001) at $1,000 per share. In
     the instance that the Class A Preference Shares are redeemed by the
     Company, the holders are entitled to a cash premium of 2.5% per annum,
     calculated from the original issue date together with all dividends
     accruing thereon whether or not declared. At any time after issuance, each
     Class A Preference Share is convertible to 78.408 Common Shares at a
     conversion price of $12.7538 per Common Share (subject to certain
     provisions with respect to the issuance of additional Common Shares).
     Holders of these Class A Preference Shares are entitled to quarterly
     cumulative cash dividends of: i.) 2.50% per annum until the third
     anniversary of the original issue date; and ii.) 5.00% per annum,
     thereafter. Holders of these Class A Preference Shares are also entitled to
     an additional dividend of 2.50% per annum accruing until and payable on the
     earlier of: i.) the third anniversary of the original issue date; ii.) the
     date on which Common Shares are delivered to the holder pursuant to a
     conversion of Class A Preference Shares; and iii.) the redemption of such
     Class A Preference Shares. As these Class A Preference Shares are
     redeemable at the option of the holders, the value of these shares have
     been classified as long-term debt on the balance sheet. These Class A
     Preference Shares are collateralized by a pledge by the Company of
     4,000,000 common shares in the capital of P.J. Doherty & Associates Co.
     Ltd. valued at $4,000,000.


                                       11


<PAGE>   60
InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------

13.  SHARE CAPITAL

     The authorized share capital of the Company consists of an unlimited number
     of Common Shares and an unlimited number of Preference Shares (issuable in
     series).

     The Preference Shares are voting, convertible and rank in priority to the
     Common Shares with respect to the payment of dividends and the distribution
     of assets on liquidation, dissolution or wind-up. The remaining conditions
     attached to the Preference Shares are to be fixed by the Directors of the
     Corporation before any series of Preference Shares are issued. During the
     prior year, 310,010 convertible Preference Shares were issued and converted
     to Common shares on a 1 for 1 basis.

     During the year, the articles of the Company were amended to cancel the
     existing Preference Shares and to authorize the issuance of an unlimited
     number of Class A and Class B Preference Shares, issuable in Series (note
     12).

     Details of issued share capital are as follows:

<TABLE>
<CAPTION>
                                        --------Shares---------  -----------Amount----------
                                            Common   Preference      Common       Preference
     <S>                                 <C>         <C>         <C>             <C>

     Mar 31, 1998 ................         234,292         --    $ 1,374,000     $        --
                                         ---------   --------    -----------     -----------
     Jan 21, 1999 ................         455,699    310,010      5,143,491(2)    4,920,533(1)

     Mar 8, 1999 .................         310,010   (310,010)     4,920,533(3)   (4,920,533)

     Mar 8, 1999 .................         568,160         --      4,920,534(1)           --
                                         ---------   --------    -----------     -----------
     CLOSING SHARE CAPITAL:
     Mar 31, 1999 & 2000 .........       1,568,161         --    $16,358,558     $        --
                                         =========   ========    ===========     ===========
</TABLE>

     (1) issued for cash
     (2 )issued on acquisition of subsidiaries
     (3) Preference Share conversion

     A common stock warrant was issued to the majority shareholder of the
     Company on March 8, 1999. Under the terms of the warrant, in the event that
     the assets under management as represented on March 8, 1999 are
     subsequently determined to be less than 95% of said representation, the
     majority shareholder is entitled to receive additional common shares of the
     Company. Consequently, management has estimated that approximately 54,000
     common shares will be issued to the majority shareholder subsequent to the
     current fiscal year end.


                                       12
<PAGE>   61
InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------

      During the prior fiscal period the Board of Directors of the Company
      approved the granting of options to employees to purchase up to 136,300
      common shares of the Company which may be granted from time to time.
      Various vesting requirements are associated with each employee grant.

      Vested Options
<TABLE>
<CAPTION>
                                            ------------------Number of Options-------------
      Fiscal     Vested expiry   Exercise   Outstanding   Issued     Exercised   Outstanding
      year       date            price      March 31,     (vested)               March 31,
      granted                               1999                                 2000
      -------    -------------   --------   -----------   --------   ---------   -----------
      <S>        <C>              <C>         <C>          <C>        <C>           <C>
      1999       Jan 21, 2009     $16.13      36,300           --       --          36,300
      1999       Jan 21, 2009     $0.001      11,000       11,000       --          22,000
      2000       May 10, 2009     $13.00          --        9,167       --           9,167
</TABLE>

      Unvested Options

<TABLE>
<CAPTION>

                                            ----------------------Number of Options--------------------
      Fiscal     Vested expiry   Exercise   Outstanding   Issued     Vested    Forfeited    Outstanding
      year       date            price      March 31,                                       March 31,
      granted                               1999                                            2000
      -------    -------------   -------    -----------   -------    ------    ---------    ----------
      <S>        <C>              <C>         <C>          <C>       <C>         <C>           <C>
      1999       Jan 21, 2009     $0.001      37,000           --    11,000      15,000        11,000
      2000       May 10, 2009     $13.00          --       33,000     9,167          --        23,833
</TABLE>

     Unvested options with an exercise price of $0.001 will vest on the basis of
     specific employee performance related to the acquisition of assets under
     management. The unvested options will expire on March 31, 2001 if
     performance criteria is not met. Unvested options with an exercise price of
     $13.00 will vest evenly over a three-year term.


14.  INCOME TAXES

     The Company's effective income tax rate used in determining the provision
     for income taxes is as follows:

<TABLE>
<CAPTION>
                                                             2000         1999
                                                          --------      --------
     <S>                                                   <C>           <C>
     Combined statutory tax rate (recovery) .........      (44.6)%       (44.6)%
     Deduct:
          Non-deductible expenses ...................        5.6           2.0
          Temporary differences .....................        6.8            --
          Unrecognized losses carried forward .......       47.0          38.9
          Small business reduction rate .............         --           3.3
          Other, net ................................        2.0            --
                                                          ======        ======

          Effective income tax rate (recovery) ......       16.8%         (0.4)%
                                                          ======        ======
</TABLE>


                                       13
<PAGE>   62
InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------

     As at March 31, 2000, the consolidated group had approximately $1,512,000
     of non-capital losses (1999 - $450,000) and $13,000 of capital losses (1999
     - $0) which may be carried forward and utilized to reduce future years'
     taxable income and capital gains, respectively. Capital losses can be
     carried forward indefinitely. The right to claim the non capital losses
     expires as follows:

<TABLE>
<CAPTION>
              Expiry
      <S>                                     <C>
              2006                            $  357,000
              2007                             1,155,000
                                              ----------
                                              $1,512,000
</TABLE>

     During the period, the Company's future income tax asset increased by
     $607,000 (1999 - $194,000) and totaled $801,000 (1999 - $194,000) after
     applying the statutory tax rate to the temporary differences and
     non-capital and capital losses described above.

     Subsequently, the net change to the valuation allowance during the period,
     and the total valuation allowance as at March 31, 2000 provided by the
     Company, increased by $581,000 (1999 - $194,000) and totaled $775,000 (1999
     - $194,000) to reduce the future income tax asset, reflecting the
     uncertainty of full realization of the future income tax asset.


15.  LOSS PER SHARE

     Basic loss per share has been calculated on a weighted average basis of
     common shares outstanding during the period.

<TABLE>
<CAPTION>
                                                   2000           1999
                                                ---------      ---------
     <S>                                        <C>              <C>
     Weighted average common shares
     - basic calculation                        1,568,161        763,172
</TABLE>

     The calculations of fully diluted earnings per share is based upon the
     common shares outstanding during the period as above and not adjusted by
     the unexercised convertible Class A Preference shares and vested options in
     computing diluted loss per share because their effects were antidilutive.

<TABLE>
<CAPTION>
                                                   2000           1999
                                                ---------      ---------
     <S>                                        <C>              <C>
     Basic loss per share                       $  (1.06)      $  (1.27)
</TABLE>


16.  COMMITMENTS

     The Company has basic lease payments exclusive of operating costs for the
     premises and office equipment for the next five years as follows:

<TABLE>
     <S>                           <C>
          2001                     $  329,000
          2002                        286,000
          2003                        145,000
          2004                         94,000
          2005                         16,000
</TABLE>

     The Company has employment contracts and obligations with eight of its
     employees at the following yearly base salaries amount:

<TABLE>
     <S>                           <C>
          2001                     $1,314,000
          2002                      1,010,000
          2003                        614,000
          2004                        490,000
          2005                        326,000
</TABLE>

                                       14

<PAGE>   63
InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------

17.  UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

     The Year 2000 Issue arises because many computerized systems use two digits
     rather than four to identify a year. Date-sensitive systems may recognize
     the year 2000 as 1900 or some other date, resulting in errors when
     information using year 2000 dates is processed. In addition, similar
     problems may arise in some systems which use certain dates in 1999 to
     represent something other than a date. Although the change in date has
     occurred, it is not possible to conclude that all aspects of the Year 2000
     Issue that may affect the Company, including those related to customers,
     suppliers, or other third parties, have been fully resolved.


18.  RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED
     ACCOUNTING PRINCIPLES

     The consolidated financial statements of the Company are prepared in
     accordance with accounting principles generally accepted in Canada
     ("Canadian GAAP"). Material differences at March 31 between Canadian GAAP
     and accounting principles generally accepted in the United States ("U.S.
     GAAP") are described below:

     (a)  Statements of Operations:

          The application of U.S. GAAP would have the following effect on net
          loss for the year and loss per common share as reported:
<TABLE>
<CAPTION>
                                                        2000           1999
                                                     -----------    -----------
     <S>                                             <C>            <C>
     Net loss for the period, Canadian GAAP ......   $(1,668,000)   $  (971,000)
     Stock based compensation (i) ................      (175,000)      (210,000)
                                                      ----------     ----------
     Net loss for the period, U.S. GAAP ..........   $(1,843,000)   $(1,181,000)
                                                      ==========     ==========
     Loss per common share under U.S. GAAP .......   $     (1.18)   $     (1.55)
</TABLE>

          (i) Stock-Based Compensation Expense

              The Company does not recognize compensation expense for stock
              options granted. Under U.S. GAAP, Accounting Principles Board
              ("APB") Opinion No. 25 requires that stock based compensation cost
              be recorded using the intrinsic-value method. FASB Statement of
              Financial Accounting Standard ("SFAS") No. 123 encourages the
              Company to record compensation expense using the fair-value
              method. In reconciling Canadian GAAP with U.S. GAAP, the Company
              has chosen to measure compensation costs related to stock options
              in accordance with APB 25.

              Under APB 25 the intrinsic-value of vested options would have been
              $177,000 (1999 - $177,000). The intrinsic-value of unvested
              options is estimated to be $177,000 (1999 - $597,000) with a
              vesting period of two years (1999 - three years). Accordingly, had
              the Company recognized compensation cost related to the unvested
              options the intrinsic value would have been amortized over the
              vesting period, or in amounts of $88,500 (1999 - $199,000) in each
              vesting year. Management's best estimate is that the performance
              conditions attached to the unvested options will be met. Total
              compensation cost for the period under APB 25 would have been
              $175,000 (1999 - $210,000). Had the Company booked compensation
              expense in accordance with APB 25, basic loss per share would have
              been increased by $0.11 (1999 - $0.28).


                                       15
<PAGE>   64
InterUnion Asset Management Limited
Notes to Consolidated Financial Statements
March 31, 2000 and March 31,1999
(amounts expressed in Canadian dollars unless otherwise stated)
--------------------------------------------------------------------------------

         (ii) Common Stock Warrant

              Under U.S. GAAP, the common shares to be issued to the majority
              shareholder subsequent to the current fiscal year end would be
              reflected as issued for no consideration as at March 31, 2000. The
              inclusion of these common shares would not have a significant
              impact on loss per common share reported under U.S. GAAP.

     (b) Other Disclosures:

         (i)  Stock-Based Compensation Expense

              For unvested options issued in the current fiscal year, the
              estimated fair value of the underlying equity at date of issuance
              was $13.00. As such, compensation costs under SFAS 123 would have
              totaled $227,700 (1999 - $0) with a vesting period of three years.

              The fair value estimates were determined using the Black-Scholes
              option-pricing model. Valuation was based on a risk-free interest
              rate of 5.46%, an expected term of 10 years, an expected
              volatility of 30% and no expected dividends. Had the Company
              booked compensation expense, loss per common share would have been
              increased by $0.15 (1999 - $0).

         (ii) Comprehensive Income

              FASB SFAS No. 130 introduced the concept of Comprehensive Income.
              Under this pronouncement, U.S. GAAP requires companies to report
              Comprehensive Income as a measure of overall performance.
              Comprehensive Income includes net income and all other changes in
              equity, exclusive of shareholders' contributions or any
              distributions to shareholders. The application of FASB SFAS N0.
              130 would not have a material effect on net loss for the year and
              loss per common share as reported under U.S. GAAP.

19.  COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS

               Certain comparative figures have been restated to conform with
               the current year's presentation.


                                       16