UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                      For Fiscal Year Ended: March 31, 1999
                       Commission File Number:33-38511-FW

                         CHEQUEMATE INTERNATIONAL, INC.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

                 Utah                                       76-0279816
          --------------------------------              -------------------
         (State or other jurisdiction                    (I.R.S. Employer
          of incorporation or organization)             Identification No.)


            57 West 200 South, Suite 350; Salt Lake City, Utah 84101
            --------------------------------------------------------
                    (Address of principal executive offices)



                                 (801) 322-1111
                            --------------------------
                           (Issuer's Telephone Number)


         Check whether the Issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirement for the past 90 days. YES X    No
                                                                     ---    ---
         State issuer's revenues for its most recent fiscal year:     $682,760

         Check  if  there  is no  delinquent  filers  pursuant  to  Item  405 of
Regulation  S-B contained in this report and no disclosure  will be contained to
the best of registrant's  knowledge in definitive proxy or information statments
incorporated  by reference  in Part 111 of this Form 10-KSB or any  amendment to
this Form 10-KSB:

         As of June 30, 1999 the aggregate market value of the voting stock held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the  average  bid and asked  price of such  common  equity as of a
specified date within the past 60 days (June 30,1999): $49,762,972

         State the number of shares  outstanding of each of the issuer's  common
equity, as of the latest practicable date: 22,358,646 as of June 30, 1999

         Transitional Small Business Format: YES     NO   X
                                                ---      ---

<PAGE>




<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


                                     PART I

<S>                                                                                                               <C>
Item 1. Description of Business...................................................................................3

Item 2. Description of Property...................................................................................8

Item 3. Legal Proceedings.........................................................................................8

Item 4. Submission of Matters to a Vote of Security Holders.......................................................8


                                     PART II

Item 5. Market for Common Equity..................................................................................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.....................34


                                    PART III


Item 9. Directors and Executive Officers.........................................................................34

Item 10. Executive Compensation..................................................................................37

Item 11. Security Ownership of Certain Beneficial Owners and Management..........................................38

Item 12. Certain Relationships and Related Transactions..........................................................38

Item 13. Exhibits and Reports....................................................................................40
</TABLE>

                                       2
<PAGE>


                                     Part I

ITEM 1.  Description of Business

Forward Looking Statements

         This annual filing includes  Aforward  looking  statements@  within the
meaning of the Private  Securities  Litigation Reform Act of 1995 (the "PSLRA").
The PSLRA provides a "safe harbor" for such statements to encourage companies to
provide prospective  information about themselves so long as such information is
identified  as  forward-looking  and is  accompanied  by  meaningful  cautionary
statements  identifying  important  factors that could cause  actual  results to
differ materially from those projected in the information.  All statements other
than  statements  of  historical  fact made in this  report or  incorporated  by
reference are  forward-looking.  In particular,  the statements herein regarding
the  availability  of adequate  funding and progress in the  development  of its
various  business  segments  are  forward-looking  statements.   Forward-looking
statements  represent  management's  current  expectations  and  are  inherently
uncertain.  Investors  are warned that the Company's  actual  results may differ
significantly from management's  expectations and,  therefore,  from the results
discussed in such forward-looking statements.

History of the Company

         The  Company was  incorporated  under the laws of the State of Texas on
April 21,  1989  under the name  Ainsley  Corporation.  The  Company  issued its
initial shares of common stock on April 25, 1989  (inception)  and was organized
primarily  for the purpose of raising  capital to take  advantage  of  potential
business  opportunities.  The name of the Company was later changed to Automated
Compliance & Training, Inc. (AC&T), when the Texas corporation was merged with a
Utah  corporation  to make the  change  to Utah as state  of  incorporation.  On
September  3, 1996,  AC&T merged  with its wholly  owned  subsidiary  Chequemate
International,  Inc.  (the  "Company"  or  "CMI")  and  assumed  the name of the
subsidiary.

         On April  17,  1997 CMI  formed a new  wholly  owned  subsidiary  named
Chequemate Third  Dimension,  Inc. The name has since been changed to Chequemate
Electronics,  Inc. (CE). CE was formed to manufacture and market breakthrough 3D
imaging technology which was acquired from Advanced Technology Group, LLC (ATG).
On June 23, 1997 an agreement  was  finalized by which CE obtained the exclusive
worldwide license to the 3D technology developed by ATG.

         On November  12, 1998 the Company sold the assets  associated  with the
financial  service  segments of the business to TFL, LLC with its two principals
being former Chequemate International  employees.  Both TFL, LLC and the Company
continue  to use the name  Chequemate  International,  although  the Company has
filed for, and is operating under, the assumed name of C-3D Digital, Inc. At the
time  of the  1999  shareholders'  meeting,  the  name  of the  Company  will be
officially  changed to C-3D  Digital,  Inc. and the rights  associated  with the
Chequemate International name will be fully transferred to TFL, LLC.

         On  December  8, 1998 the  Company  purchased  from Alpha  Broadcasting
Corporation   inventory,   equipment  and  contracts  to  provide   pay-per-view
television  services to 19 hotel  properties  amounting  to roughly  3,000 hotel
rooms.  The value of the purchase was placed at $1,000,000 and was  accomplished
through a combination of restricted  stock,  cash,  and a note for $440,000.  On
July 2, 1999 the Company purchased additional equipment and contracts to provide
pay-per-view television services to an additional 21 properties. The purchase of
these assets was accomplished for the sum of $150,000 cash and 125,000 shares of
stock of the Company.  Both of these  transactions  were  completed  through the
Company's wholly owned subsidiary, Chequemate Technologies, Inc.

         On December 10, 1998 and March 31, 1999, the Company  acquired the debt
position of several secured investors in Strata,  Inc., a 3D software  provider.
On June 16, 1999 these debt  positions  were used to foreclose on the assets and
technology  previously owned by Strata, Inc. The Company continues to market the
developed  products  and  find new ways  that the  technology  can help in other
businesses in which the Company is involved.


                                       3
<PAGE>


Principal Products and Services

Realeyes Product and Technology

         On June 23,  1997 the  Company's  wholly  owned  subsidiary  executed a
license agreement and was granted an exclusive,  worldwide and perpetual license
to  certain  proprietary  three  dimensional  video  technology  which  has been
developed under the name of Realeyes 3D Video.

         The  revolutionary  Realeyes  product consists of a small VCR-size unit
which digitizes a TV signal and converts it to a third dimensional  picture.  It
can be used with any  television  in  combination  with signals  from  satellite
receivers,  cable feed,  VCRs, laser disc players or video games. The Chequemate
3-D system can  convert  any TV signal to 3-D in either the NTSC  format used in
the United States, or the PAL format used abroad.

Cable Channel

         The Company has been  operating  its own cable channel since January 1,
1999. The channel is currently  accessible by owners of C-Band  satellite dishes
which are the large 8 to 12 foot backyard  dishes.  The satellite space which is
used to broadcast  the channel is on the GE Spacenet 3 satellite at  Transponder
9. The  programming on the channel  continues to increase and consists of movies
which have been  licensed for use by the Company as well as video  content which
was specifically  contracted for production by the Company.  Content acquisition
and development is coordinated through the Company's Los Angeles office.

         The channel  signal is  currently  broadcast  without  any  encryption,
meaning  that any  C-Band  satellite  dish  owner  can tune in and  receive  the
Company's  channel.  However,  the picture they see has two different images and
appears  shadowed  and out of focus  when  viewed  without  the  proprietary  3D
equipment available from the Company.  This equipment consists of a pair of high
speed shutter glasses and either the Company's  original Realeyes product or the
new Channel Player. The difference between the two products is that the original
Realeyes  product  will not only  allow the  viewer to see the 3D cable  channel
clearly,  but will also  convert  existing  to 2D content  from  whatever  video
source, be it other television  channels,  videos or video games, to a 3D image.
The Channel Player can be used to view the Company's  channel but cannot convert
normal 2D images to 3D like the more expensive Realeyes unit.

         The Company is actively marketing its channel to cable operators across
the United  States and  recently  returned  from the National  Cable  Television
Association  (NCTA)  show in  Chicago.  At the  show,  the  Company  was able to
introduce the channel to numerous cable  operators,  hardware  manufactures  and
others involved in the cable industry.  VisionComm,  a cable operator in Dallas,
Texas, has successfully pulled the channel into its system and will be marketing
it to their subscribers beginning July 1st . The Company is optimistic that many
other cable  operators  will follow suit and begin offering the channel to their
subscribers in the near future. The channel will begin as a premium channel with
the  cable  operator  and the  Company  sharing  in the  revenue  which  will be
generated.

Hotel Pay-Per-View

         Another key business  segment of the Company is its hotel  pay-per-view
business. The Company became involved in this business area through acquisitions
from Alpha Broadcasting Corporation and Hotel Movie Express. In the acquisitions
the  Company  purchased  a  combination  of  inventory  to outfit  hotels  for a
pay-per-view  service,  equipment that had already been installed in hotels, and
contracts to provide the pay-per-view service where this equipment was in place.
The Company is interested in the hotel market as another revenue source from its
3D  technology.  Currently the hotel  properties,  consisting of more than 5,800
rooms, continue to operate as a traditional  pay-per-view system, but steps have
been taken which will make it possible for hotel guests to enjoy a 3D experience
right in their own room.  The  properties  are located in  Arizona,  California,
Idaho, Nevada, New Mexico, Texas, Utah and Washington.

Strata Software Division

     The Company  completed on June 16, 1999 the process of acquiring the assets
and  technology  previously  owned by Strata,  Inc. The Company has hired former
Strata,  Inc. employees to support and sell the Strata products for the Company.
Strata, Inc. was one of the early pioneers in 3D software.  The Strata tool line
has been used for such  well-known  projects as the game  "MYST"(c);  television
shows like the "98 MTV Movie (c) Awards"  (c),"Hercules" (c) and "Xena" (c); the
NBC dancing  peacocks;  the Warner  Bros and  Blockbuster  web sites;  the films
"Contact" (c), "5th Element" (c), "Batman  Forever" (c), and many others.  These
tools will  provide the  Company  with some of the most  advanced 3D  technology
available and should enhance the Company's position in 3D media and technology.

                                       4
<PAGE>


The core  Strata  products,  that will now be  offered by the  Company,  are the
following:

StudioPro (TM).  StudioPro is the premier Strata 3D product and is available for
Apple  Macintosh,  Windows 98 and NT. StudioPro has a retail price of $1,495 and
is available in the United States at the Astreet price@ of  approximately  $950.
StudioPro  is used for  creating 3D images and  animations  for the web,  video,
movies,  print, games and multimedia.  StudioPro is well known for being used to
create the graphics for the world's best selling  CD-Rom game, Myst (c).Recently
StudioPro has been used on projects such as the Blockbuster  Video Web site, the
NBC dancing peacocks and the movie Contact. An upcoming release will add special
stereographic  3D features.  StudioPro  has an installed  base of  approximately
60,000 customers.

Vision 3D (TM).  Vision 3D is an entry level 3D product and is based directly on
StudioPro.  Vision 3D is presently available only on Apple Macintosh  computers.
Vision 3D is priced at $395 retail with a $295 street  price.  Vision 3D is used
by professionals and non-professionals  alike. Vision 3D is used for print, Web,
video and  multimedia - as well as  recreational  purposes.  This product has an
installed base of approximately 40,000 customers.

VideoShop.  VideoShop  is a  professional  quality  non-linear  video editor and
presently runs only on Apple  Macintosh  computers.  VideoShop is priced at $495
retail with a $395 street price. VideoShop is used primarily for multimedia, web
and desktop video tasks. It has been bundled on select  Macintosh  computers for
over five years and has  developed  an  installed  base of well over one million
customers through this process.

MediaPaint  (TM).  MediaPaint  is a  video  painting  and  effects  application.
MediaPaint is available for Apple  Macintosh,  Windows 98 and NT.  MediaPaint is
priced  at  $695  retail  with a $395  street  price.  MediaPaint  is  used  for
professional projects on the Web, multimedia and broadcast video. MediaPaint has
an installed base of approximately 6,000 users.

3D.COM

         The Company also recently announced the formation of a new wholly owned
subsidiary  company  named  3D.COM.  Created from the  Company's  recent  Strata
acquisition  and its own internal  web  division,  3D.COM will be launching  the
world's first Virtual Reality Portal. The portal, planned for a fall 1999 debut,
is designed to allow  visitors to "go in" rather than just "go to" the web.  The
plan is patterned after Real Networks(TM) which is both a technology company and
a media portal. Similarly,  3D.COM will be providing a web portal and technology
products,  but with the focus being on 3D and virtual  reality.  Revenue will be
generated  for the  subsidiary by ad placement on the website and through sales
at the 3D.COM online store.


                                       5
<PAGE>




Research and Development

         The Company is  continuing  its efforts to develop  and  integrate  its
various 3D  technologies.  During  fiscal  year 1998 and 1999,  the  Company has
expended  approximately  $215,000  and  $320,000  respectively  on research  and
development.

Patents, Trademarks and Copyrights

         On June 23, 1997,  the Company  acquired an  exclusive,  worldwide  and
perpetual license to the Realeyes proprietary three dimensional video technology
and subsequently  filed U.S.  provisional  patent  application number 60/034,149
with regard to aspects of such technology. The Company has now proceeded to file
additional patent applications, including a U.S. utility application, Serial No.
08/997,068,   with   regard  to  the   system   and   method   of   synthesizing
three-dimensional  video from a two-dimensional video source. Patent Cooperation
Treaty (PCT) national phase patent  applications based upon this technology have
been filed in  Australia,  Brazil,  Canada,  China,  Japan,  Europe and  Mexico.
Another  U.S.  provisional  patent  application  has been filed with regard to a
system  and  method  for  recording  and  broadcasting  three-dimensional  video
synthesized from a two-dimensional source.

         On  June  16,  1999,  the  Company  acquired  certain   copyrights  and
trademarks relative to the technology and products of its Strata Division.

<TABLE>
<CAPTION>

 The Company currently owns or licenses the following U.S. and foreign patents:

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

Patent/Product           Application or      Country        Granted or Filed        Year of expiration or
                         Registration No.                                           Renewal
-----------------------------------------------------------------------------------------------------------------
<S>                      <C>                 <C>            <C>                     <C>
Chequemate 2D to 3D       08/997,068         U.S.A.         December 23, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate 2D to 3D       57206/98           Australia      December 24, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate 2D to 3D                          Brazil         December 24, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate 2D to 3D                          Canada         December 24, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate 2D to 3D                          China          December 24, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate 2D to 3D                          Japan          December 24, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate 2D to 3D       97953466.6         Europe         December 24, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate 2D to 3D                          Mexico         December 24, 1997       Pending
-----------------------------------------------------------------------------------------------------------------
Chequemate Recording and  60/114,264         U.S.A.         December 30, 1998       Conversion due
Broadcasting 3D from 2D   Provisional                                                December 30, 1999
-----------------------------------------------------------------------------------------------------------------
      The Company currently owns or licenses the following U.S. copyrights:
-----------------------------------------------------------------------------------------------------------------

Copyright/Product                        Registration No.         Country             Granted
-----------------------------------------------------------------------------------------------------------------
StrataVISION 3D                          TX 2,688,747             U.S.A.              October 2, 1989
-----------------------------------------------------------------------------------------------------------------
AIM - 3D                                 TXu 507, 718             U.S.A.              February 13, 1992
-----------------------------------------------------------------------------------------------------------------
</TABLE>

                                        6
<PAGE>

<TABLE>
<CAPTION>

       The Company currently owns or licenses the following U.S. and foreign trademarks:

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

Trademark/Product                Registration No.    Country        Granted or Filed        Year of expiration or
                                 or Serial No.                                              Renewal
---------------------------------------------------------------------------------------------------------------
<S>                              <C>                 <C>            <C>                     <C>
C-3D Digital class 38            75/605,796          U.S.A.         December 15, 1998       Pending
----------------------------------------------------------------------------------------------------------------
C-3D Digital class 9             75/605,795          U.S.A.         December 15, 1998       Pending
----------------------------------------------------------------------------------------------------------------
C-3D class 9                     75/605,794          U.S.A.         December 15, 1998       Pending
----------------------------------------------------------------------------------------------------------------
C-3D class 38                    75/605,904          U.S.A.         December 15, 1998       Pending
----------------------------------------------------------------------------------------------------------------
3D.COM class 42                  75/729,813          U.S.A.         June 16, 1999           Pending
----------------------------------------------------------------------------------------------------------------
3D TRAVEL class 38               75/279,982          U.S.A.         June 16, 1999           Pending
----------------------------------------------------------------------------------------------------------------
3D SPORTS class 9                75/729,984          U.S.A.         June 16, 1999           Pending
----------------------------------------------------------------------------------------------------------------
3D SPORTS class 38               75/729,985          U.S.A.         June 16, 1999           Pending
----------------------------------------------------------------------------------------------------------------
3D TRAVEL class 42               75/729,812          U.S.A.         June 16, 1999           Pending
----------------------------------------------------------------------------------------------------------------
3D SPORTS class 25               75/729,811          U.S.A.         June 16, 1999           Pending
----------------------------------------------------------------------------------------------------------------
3D SPORTS class 42               75/729,031          U.S.A.         June 16, 1999           Pending
----------------------------------------------------------------------------------------------------------------
STRATAVISION 3D                  1,606,234           U.S.A.         July 17, 1990           July 17, 2000
----------------------------------------------------------------------------------------------------------------
STUDIOPRO                        1,892,027           U.S.A.         May 2, 1995             May 2, 2001 (1)
----------------------------------------------------------------------------------------------------------------
MEDIAPAINT                       2,042,281           U.S.A.         March 4, 1997           March 4, 2003 (1)
----------------------------------------------------------------------------------------------------------------
POWERING THE CREATIVE            2,098,858           U.S.A.         September 23, 1997      September 23, 2003 (1)
ENVIRONMENT
----------------------------------------------------------------------------------------------------------------
STRATAVISION                     TMA404,400          Canada         November 6, 1992        November 6, 2007
----------------------------------------------------------------------------------------------------------------
STRATAVISION                     1,723,500           France         November 14, 1998       November 13, 1999
----------------------------------------------------------------------------------------------------------------
STRATAVISION                     1,162,225           Germany        August 8, 1990          October 5, 1999
----------------------------------------------------------------------------------------------------------------
TELECHARGE                       2,241,551           U.S.A.         April 27, 1999          April 27, 20051
----------------------------------------------------------------------------------------------------------------
TELECHARGE SIMPLE ACCESS         2,241,550           U.S.A.         April 27, 1999          April 27, 20051
----------------------------------------------------------------------------------------------------------------
</TABLE>

The Company has also licensed other technology regarding its Strata product line
that  enables  the  Company  to offer  certain  of its  Strata  products  on the
Microsoft Windows 95 (or higher), operating system.
-------------------------

     (1)  Affidavits  of  Continued  Use are  due by this  date.  If  filed  the
trademark  will be valid for ten years from the date of grant.  If not filed the
trademark will expire on this date.

                                       7
<PAGE>


Employees

         As of June 30, 1999, the Company and its  subsidiaries had 33 full time
employees.

ITEM 2.  Description of Property

         The Company  occupies  leased office space at 57 West 200 South,  Suite
350, Salt Lake City, Utah; at 21601 Devonshire Street Ste. 320,  Chatsworth,  CA
9131;  at 1545 N. McQueen Suite 4,  Gilbert,  AZ 85233;  and at 567 South Valley
View Dr. Suite 202,  St.  George,  Utah.  The Company  offices are  comprised of
15,659  square  feet and are leased at a monthly  base  rental of  $18,958.  The
Company also occupies space for its fulfillment  division at 545 West 500 South,
Suite 140 Bountiful,  Utah. The office space is 2,125 square feet, and is leased
at a monthly base rental of $1,223.

ITEM 3.  Legal Proceedings

         On March 11, 1997 a citation and petition for suit on damages was filed
against  Chequemate  Tele-Services  Inc., in the District Court of Dallas County
Texas. The plaintiff is Peak Credit Card  Processing,  L.C. d/b/a Peak Financial
Services.  Relief is being  sought by  plaintiff  for damages in an  unspecified
amount,  to be  determined  at some later date.  A response to the  citation was
filed  in a timely  basis  in the  court  of  jurisdiction  denying  any and all
allegations  made in the citation.  A court hearing was set for May 4, 1998; the
plaintiff  did not show up. A motion was made to  dismiss  the  action,  but the
court wanted to give the  plaintiff  time to file a motion for  continuance.  No
motion for continuance has been filed,  and it is the belief of the Company that
the plaintiff  does not have the means or the will to continue  this action.  No
action has been evident since the original citation was filed.

         On December 18, 1997 a citation and petition for suit was filed against
Chequemate  Tele-Services,  Inc.,  Blaine  Harris,  and  Fred  Boedeker,  in the
District  Courts of Dallas County Texas.  The plaintiff is Central  Meadow Park,
L.P.  Plaintiff  seeks  damages,  both direct and  consequential,  for breach of
contract on leased premises as detailed in the citation.

         On June 22,  1998 a suit was filed  against  Chequemate  International,
Inc.  in the  District  Court for the  Northern  District  of  Illinois  Eastern
Division.  The  plaintiff,  BH  Productions,  Inc.  d/b/a Ignite  Advertising is
seeking payment remaining under a contract for advertising services entered into
in October 1997. The case was settled and the Company is making monthly payments
of  $40,000.  There are three  payments  remaining  under  the  settlement.  The
liability is reflected in the financial statements.

     The Company has been named as a defendant in litigation  entitled  Marshall
Industries v. Chequemate International, Inc., Civil No. 990901773. The plaintiff
claims payment of $18,360.83  for parts  acquired  either by the Company or ATG,
the licensee of the 3D  technology.  The Company is  negotiating  to settle this
matter.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of fiscal year 1999.

                                     PART II
                                     -------

ITEM 5.  Market for Common Equity and Related Stockholder Matters.

         The stock of the Company is traded on the American Stock Exchange under
the symbol of DDD. The listing on the American Stock Exchange took place on June
9, 1999.  Prior to this date,  the  Company's  stock had been  traded on the OTC
Bulletin  Board under the symbol CQMT of the NASD Stock Market,  Inc. As of June
29, 1999, there are approximately 829 shareholders of record of the Company.  As


                                       8
<PAGE>

of June 29, 1999, the Company had issued and  outstanding  shares of 22,358,646.
Of  this  amount,  2,991,904  shares  represent  paid  subscriptions  for  which
certificates  have not been  issued.  The stock of the  Company,  as of June 30,
1999, was quoted at $2.75 bid and $2.875 ask.

         The NASD Stock Market,  Inc.  provided the fiscal year 1999  quotations
for the Company's stock. The referenced  quotations reflect  inter-dealer prices
without dealer  mark-up,  markdown or commissions  and may not represent  actual
transactions.

<TABLE>
<CAPTION>

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

<S>                                        <C>                                 <C>
      Fiscal Year                          High Bid Price                      Low Bid Price
      ----------------------------------------------------------------------------------------------
      1998 B 1st Quarter (4/97-6/97)       6.6875                               3.50
      ----------------------------------------------------------------------------------------------
      1998 B 2nd Quarter (7/97-9/97)       6.0625                              3.625
      ----------------------------------------------------------------------------------------------
      1998 B 3rd Quarter (10/97-12/97)     3.6875                               2.25
      ----------------------------------------------------------------------------------------------
      1998- 4th Quarter (1/98-3/98)         2.625                               1.20
      1999- 1st Quarter (4/98-6/98)        2.5625                               1.19
      1999- 2nd Quarter (7/98-9/98)          1.24                                .78
      1999- 3rd Quarter (10/98-12/98)        3.76                                .66
      1999- 4th Quarter (1/99-3/99)       3.34375                            1.46875
      ----------------------------------------------------------------------------------------------
</TABLE>

         The Company has paid no  dividends  on common stock during its two most
recent  fiscal  years,  and has no present  intention to pay dividends in fiscal
year 2000.

Recent Sales of Unregistered Securities

         On June 4, 1999,  the  Company  issued to a private  U.S.  investor  8%
Convertible  Debentures  in the face amount of $500,000 and a warrant for 16,950
shares of common stock. Both of these convertible securities may be exercised by
the  holder  prior to June 4,  2002 to  obtain  shares  of  common  stock of the
Company. The convertible debentures provide for conversion based on a formula of
eighty percent of the bid price of the stock of the Company for the five trading
days prior to the exercise of the conversion  right,  with a maximum  conversion
price of $3.54 per  share.  The  warrants  have an  exercise  price of $3.54 per
share.

         On July 8, 1999, the Company  executed an agreement to acquire  certain
hotel  pay-per-view  contracts and equipment.  As part of this transaction,  the
Company has issued  125,000  shares of restricted  common stock to the seller of
the purchased assets.

         In both of the  transactions  described  above,   the recipients of the
securities of the Company were U.S. entities making written  representations  of
their  "accredited  investor"  status,  and the issuance of the shares is exempt
from  registration  under the  provisions  of  Regulation D  promulgated  by the
Securities and Exchange Commission.

         All other  securities  sold by the Company within the past three years,
which were not registered  under the Securities Act of 1933,  have been reported
in the previously filed reports of the Company.

                                       9
<PAGE>


ITEM 6.   Management's Discussion and Analysis

General

         The audited  financial  statements for the fiscal years ended March 31,
1999 and March 31, 1998 are enclosed with this Form 10-KSB. Reference is made to
the Consolidated  Financial Statements filed with this report for greater detail
regarding the financial position of the Company.

         The  selected  financial  data  set  forth  below  should  be  read  in
connection  with the more  complete  information  provided  in the  Consolidated
Financial Statements, and their accompanying notes, which are included as Item 7
in this report.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                   March 31, 1999           March 31, 1998              March 31, 1997
-----------------------------------------------------------------------------------------------------------------
<S>                                <C>                      <C>                         <C>
Total Assets                       $9,683,716               $5,809,466                  $1,286,760
-----------------------------------------------------------------------------------------------------------------
Total Liabilities                  $4,626,526               $2,017,711                  $  849,309
-----------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity         $5,057,190               $3,791,755                  $  437,451
-----------------------------------------------------------------------------------------------------------------
Revenue                            $  682,760               $1,091,794                  $  776,963
-----------------------------------------------------------------------------------------------------------------
Net Income (Loss)                 ($4,213,079)             ($8,024,045)                ($1,503,573)
-----------------------------------------------------------------------------------------------------------------
</TABLE>

         Over the past year, the Company expended  considerable amounts of money
to further  develop and prepare its 3D technology  based products to be marketed
to the  mass  consumer.  The  Company  also  incurred  significant  expenses  in
maintaining  operations of the Company for the year.  These  operations not only
included the 3D based segments of the business,  but also the financial services
segment of the  business  for the first two  quarters of the year,  until it was
sold in November of 1998.

         Some of the  larger  expenditures  during  the  year  came in the  last
quarter  when the Company  launched  what it believes to be the only  television
network to exclusively offer 3D programming.  Monthly expenses to rent satellite
space, and the services  necessary to broadcast the channel,  are near $100,000.
Other significant expenditures have been made to provide content/programming for
the 3D network.  These expenditures include licensing movie rights and producing
new shows for the 3D  channel.  The  Company  believes  these  expenditures  are
critical to create the monthly  revenue that will come from the subscriber  base
which it is now beginning to be established.

         The   acquisitions   of  Strata   technology  and  Alpha   Broadcasting
pay-per-view  television  assets have also created two new revenue streams which
replace,  and have  actually  outdistanced,  revenue  which  was  lost  when the
financial  services  segment of the  business  was sold.  In just the final four

                                       10
<PAGE>


months of the fiscal year,  and acting only as a reseller,  the Strata  products
accounted for nearly  $400,000 of revenue for the Company.  The following  table
shows the revenue by quarter for the varying business segments of the Company:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                             1st Quarter        2nd Quarter            3rd Quarter            4th Quarter
----------------------------------------------------------------------------------------------------------------
<S>                          <C>                <C>                    <C>                    <C>
Financial Services           $ 62,4052          $ 33,2352              $      0               $      0
----------------------------------------------------------------------------------------------------------------
Realeyes Units               $ 24,843           $ 41,798               $139,232               $ 42,028
----------------------------------------------------------------------------------------------------------------
Strata Software              $      0           $      0               $122,854               $259,462
----------------------------------------------------------------------------------------------------------------
Hotel Pay-Per-View           $      0           $      0               $ 13,851               $ 38,692
----------------------------------------------------------------------------------------------------------------
</TABLE>

         As indicated in the chart above, the Company has more than replaced the
revenue  lost from the  financial  services  business  through its new  business
segments.

         Management  of the Company is very  optimistic  due to the  increase in
revenue  during the last two quarters of the year and believes these new product
lines can do even better. The Company believes it has only scratched the surface
of the  potential  revenue due to its patented  technology  used in the Realeyes
units.  All revenue  generated in the past fiscal year from this  technology was
due to hardware  sales of the  Realeyes  units.  In the coming year this revenue
will be  augmented by monthly  subscriber  revenue,  as people  subscribe to the
newly launched channel through their local cable provider.  Furthermore,  actual
hardware  sales are expected to increase as people who  subscribe to the channel
will need to buy the Realeyes unit or the newly developed  Channel  Player.  Two
recent  contracts,  one from the United Kingdom and one from Japan,  should also
significantly increase sales of the technology in hardware form.

     There are roughly  70,000,000  cable  television  subscribers in the United
States alone,  whether through the traditional  cable company or the new digital
satellite  systems.  Even the  smallest of  penetrations  into this market would
create   monthly   subscriber   revenue  in   significant   amounts,   plus  the
aforementioned increase to hardware sales.

         The Strata  software  products  generated in excess of  $10,000,000  in
annual  revenue in 1995 and 1996.  Although the Company is not  projecting  that
this will be  duplicated  in the coming  year,  the Company  expects to regain a
portion of this revenue  amount.  A new licensing  agreement  with Software Too,
Inc. in Japan is being negotiated,  and other sales averaged nearly $100,000 per
month for the last four  months of the year just  ended.  These two  sources  of
revenue, if annualized, could create in excess of $2 million in revenue from the
Strata products alone.

         The  hotel  pay-per-view  segment  generates roughly $20,000 a month in
revenue.  Although this is not a large  amount,  the real  significance  of this
business  is its  ability to serve as an  internal  beta test for  providing  3D
entertainment to hotel guests. The Company has adapted its 3D technology to work
through  the hotel  pay-per-view  system  and will be  testing  it in one of its
properties  in July 1999.  If it is  successful  and can increase buy rates from
hotel guests, the possibilities are tremendous. There are an estimated 3,800,000
hotel rooms  receiving  pay-per-view  services with some of the more  recognized
providers being On-Command Video and Lodgenet. Once the Company proves the value
of adding 3D to the pay-per-view menu through our own properties, there is great
potential with these large providers.

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

     (2) This revenue is not included in revenue section of the Company's income
statement, because this business segment represents discontinued operations.

                                       11
<PAGE>

Liquidity and Capital Resources

         The  Company  used $4.57  million of cash in  operating  activities  in
fiscal year 1999,  compared with $5.08 million in fiscal year 1998.  The Company
was able to decrease its current  liabilities  during the year by over $550,000.
The Company also showed a considerable  increase in current assets with the most
notable  change  being an increase of over $1.5 million in cash at year end. The
net effect of the changes  during the year was an  increase  in working  capital
from $937,835 at year end 1998,  to  $3,807,707 at year end 1999.  The change in
working capital  results in a ratio of current assets to current  liabilities of
3.65 at March 31, 1999.

         There was a measurable  increase in the  long-term  liabilities  of the
Company when comparing the year end statements. The increase is due to the $2.75
million the Company  issued as  convertible  debentures  during the year and the
$440,000  note  payable  to  Alpha  Broadcasting  from  the  hotel  pay-per-view
purchase.  The Company  fully  expects the  debentures to be converted to equity
during the coming  year and will no longer show this  investment  as a long-term
debt.

         In addition to cash from sales,  the Company also received cash through
issuance of notes payable (the previously mentioned convertible debentures being
the major part) and the issuance of common stock and subscribed stock. The notes
payable  issuance  accounts for just over $3 million and the stock,  both issued
and subscribed, accounts for slightly over $3.5 million.

     At  March  31,  1999,  the  stockholders'   equity  was  $5,057,190  versus
$3,791,755 at March 31, 1998. The improvement is due mainly to the  acquisitions
from  Alpha  Broadcasting,  Inc.  and  Strata,  Inc.  The Alpha  asset  purchase
transaction was completed in December and is fully integrated into the financial
statements. The Strata acquisition was completed subsequent to year end and will
be fully integrated into the financial statements for the coming quarter, but is
reflected in the year end statement as part of the note receivable.  The Company
had issued stock to certain parties involved in these transactions and forwarded
funds to Strata which are reflected as a line item on the balance sheet entitled
"Secured  Interest." The $1.2 million  secured  interest,  and additional  funds
forwarded  subsequent to year end are being converted to furniture and fixtures,
equipment  and  machinery,   inventory,   and  intellectual  property  in  their
proportional  amounts, now that the foreclosure action on the interests has been
completed on June 16, 1999.

     The Company has received subsequent to year end additional capital from the
issuance of notes payable and subscribed stock, and plans to do so in the future
to help fund its business plan and growth.

Results of Operations

         The Company's revenues for fiscal year 1999 were down from the previous
year.  The decrease of $409,034 can in part be  attributed  to the fact that the
financial service segment is accounted for as discontinued  operations,  and the
two revenue sources replacing the discontinued segment did not begin functioning
until December.  However, as explained in the table above,  revenue for the last
two quarters  was over three and a half times higher when  compared to the first
two quarters of the year.

         Gross Profit for the year was down $190,247 when compared to last year.
This decrease can in part be  attributed to the overall  decrease in revenue for
the  Company.  The  Company  is also  making a  calculated  effort to get the 3D
technology based hardware into customers= hands so that awareness of the product
and its  capabilities  is  enhanced.  The other  benefit  of  increasing  market
awareness of the  Realeyes  hardware is that,  as the Company  markets its cable
channel to cable providers, more of their customers will already be aware of the
product and will be more apt to subscribe to the channel.

         Management  is also aware of the  business  model being used by many of
the digital satellite providers who make small margins on the original equipment

                                       12
<PAGE>

subscriber revenue. Management believes that in the future this model may become
applicable  to its products and services  and, in the  long-term,  lead to
higher gross margins.

         The loss for the year  showed a marked  improvement  from $8 million in
1998 to $4.2 million in 1999.  This comparison is somewhat skewed however due to
the  impairment of product rights expense the Company had to recognize in fiscal
year 1998.  Regardless  of this  factor,  the Company  would have still shown an
improvement in its overall loss in the current  fiscal year. The  improvement is
due to  decreases in all three of the  operating  expenses;  Bad Debts,  Selling
Expenses, and General and  Administrative. The decrease in these three  expenses
totaled $1.228 million.

Year 2000 Compliance

         The Year 2000  issue is a result of  computer  programs  being  written
using two digits  rather  than four to define the  applicable  year.  Any of the
Company's  computer programs that have  date-sensitive  software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system/job  failure or  miscalculations  causing  disruptions  of  operations,
including,  among other things, a temporary  inability to process  transactions,
send invoices, or engage in similar business transactions.

         The  Company  utilizes  and is  dependent  upon  computer  systems  and
software to conduct its  business.  The Company  began a review of its  computer
systems and software  applications during the first quarter of 1998. The Company
has  purchased  upgrades to  existing  software  programs  which claim Year 2000
compliance  and has also hired  computer  consultants  which have  evaluated the
Company's system for preparedness.  These computer  specialists will continue to
work  closely  with  the  Company  during  the  coming  months  to  help  ensure
preparedness.  The  Company  does not use any  specialized  software  programmed
internally  in  its  operations,   so  there  will  be  no  need  for  expensive
re-programming of this kind of system.

     The  Company  has  initiated  formal   communications   with  many  of  its
significant  suppliers and larger customers to determine the extent to which the
Company is vulnerable  to third party  failure to remediate  their own Year 2000
issue.  Many of these third parties have  responded to the letter of the Company
or sent their company's  official  statement on Year 2000  compliance.  However,
there can be no  guarantee  that the  systems  of other  companies  on which the
Company's systems rely will be timely  converted,  or that failure to convert by
another  company,  or a  conversion  that is  incompatible  with  the  Company's
systems, would not have a material adverse effect on the Company.

         The  Company  presently  believes  that, with the steps it has taken in
purchasing new software and hiring external computer consultants to evaluate and
prepare the system, the affects of the Year 2000 will be mitigated.  However, if
such efforts are not successful on overcoming the Year 2000 issue, it could have
a material adverse impact on the operations of the Company.


                                       13
<PAGE>


ITEM 7.   Financial Statements



                         CHEQUEMATE INTERNATIONAL, INC.
                                AND SUBSIDIARIES
                               (dba C3-D Digital)

                        Consolidated Financial Statements

                             March 31, 1999 and 1998










<TABLE>
<CAPTION>

<S>                                                                                                             <C>
Independent Auditors' Report.....................................................................................15

Consolidated Balance Sheets......................................................................................16

Consolidated Statement of Operations.............................................................................18

Consolidated Statement of Stockholders' Equity...................................................................19

Consolidated Statements of Cash Flows............................................................................20

Notes to Consolidated Financial Statements.......................................................................22
</TABLE>

                     The accompanying notes are an integral
                part of these consolidated financial statements.



                                       14
<PAGE>





                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors and Stockholders
Chequemate International, Inc. and Subsidiaries
(dba C3-D Digital)
Salt Lake City, Utah


We have  audited the  accompanying  consolidated  balance  sheets of  Chequemate
International, Inc. and Subsidiaries (dba C3-D Digital) as of March 31, 1999 and
1998  and the  related  consolidated  statements  of  operations,  stockholders'
equity,  and cash flows for the years ended March 31, 1999, 1998 and 1997. 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 audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Chequemate  International,  Inc. and Subsidiaries (dba C3-D Digital) as of March
31, 1999 and 1998 and the  consolidated  results of their  operations  and their
cash flows for the years ended March 31, 1999,  1998 and 1997 in conformity with
generally accepted accounting principles.



Jones, Jensen & Company
Salt Lake City, Utah
June 30, 1999

                                       15


<PAGE>

<TABLE>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                           Consolidated Balance Sheets
<CAPTION>

                                     ASSETS
                                     ------

                                                                                            March 31,
                                                                                 -------------------------
                                                                                     1999                1998
                                                                                    ------              ------

<S>                                                                         <C>                 <C>
CURRENT ASSETS

  Cash                                                                      $      1,732,199    $        220,840
  Accounts receivable - net of allowances of $53,820
   and $115,000 in 1999 and 1998, respectively                                       197,922              24,305
  Inventory (Note 2)                                                               3,115,763           2,684,378
  Prepaid expenses                                                                   198,349              11,259
                                                                            ----------------    ----------------

     Total Current Assets                                                          5,244,233           2,940,782
                                                                            ----------------    ----------------

PROPERTY AND EQUIPMENT (Note 3)                                                      622,717             200,335
                                                                            ----------------    ----------------

OTHER ASSETS

  Notes receivable                                                                    65,000              -
  Organization costs and product rights (Note 1)                                   2,534,532           2,657,296
  Secured interest (Note 15)                                                       1,198,530              -
  Refundable deposits                                                                 15,704               8,053
  Investments                                                                          3,000               3,000
                                                                            ----------------    ----------------

     Total Other Assets                                                            3,816,766           2,668,349
                                                                            ----------------    ----------------

     TOTAL ASSETS                                                           $      9,683,716    $      5,809,466
                                                                            ================    ================
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       16
<PAGE>


<TABLE>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                     Consolidated Balance Sheets (Continued)


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
<CAPTION>



                                                                                            March 31,
                                                                            --------------------------------------
                                                                                      1999                1998
                                                                                  -------------        -----------
<S>                                                                         <C>                <C>
CURRENT LIABILITIES

  Accounts payable                                                          $        871,116    $      1,584,576
  Related party accounts payable (Note 16)                                            25,292              42,034
  Customer deposits                                                                     -                 54,724
  Accrued expenses                                                                    38,672              43,339
  Income tax payable (Note 18)                                                           500                 500
  Accrued interest - related party (Note 5)                                           79,943              65,903
  Accrued interest payable                                                            39,791                -
  Current portion related party (Note 5)                                             140,000             156,802
  Current portion long-term debt (Note 6)                                            227,610              50,080
  Current portion capital lease (Note 7)                                              13,602               4,989
                                                                            ----------------    ----------------

     Total Current Liabilities                                                     1,436,526           2,002,947
                                                                            ----------------    ----------------

LONG-TERM LIABILITIES

  Long-term debt (Note 6)                                                          3,190,000              11,976
  Capital lease obligations (Note 7)                                                    -                  2,788
                                                                            ----------------    ----------------

     Total Long-Term Liabilities                                                   3,190,000              14,764
                                                                            ----------------    ----------------

     Total Liabilities                                                             4,626,526           2,017,711
                                                                            ----------------    ----------------

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY

  Common stock, $.0001 par value, 500,000,000 shares
   authorized, 22,358,646 and 14,088,650 shares
   outstanding at 1999 and 1998, respectively                                          2,236               1,409
  Capital in excess of par                                                        24,461,440          18,983,753
  Accumulated deficit                                                            (19,406,486)        (15,193,407)
                                                                            ----------------    ----------------

     Total Stockholders' Equity                                                    5,057,190           3,791,755
                                                                            ----------------    ----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $      9,683,716    $      5,809,466

                                                                            ================    ================
</TABLE>



                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                       17
<PAGE>

<TABLE>
<CAPTION>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                      Consolidated Statements of Operations



                                                                        For the Years Ended March 31,
                                                        ---------------------------------------------------------
                                                              1999                1998                1997
                                                            -------              -------             -------
<S>                                                     <C>                 <C>                 <C>
REVENUES
  Sales - products                                      $        682,760    $      1,091,794    $        776,963
                                                        ----------------    ----------------    ----------------
COST OF SALES
  Product, supplies and materials                                631,132             849,919             291,072
                                                        ----------------    ----------------    ----------------
GROSS MARGIN                                                      51,628             241,875             485,891
                                                        ----------------    ----------------    ----------------
EXPENSES
  Impairment of product rights (Note 14)                          -                3,133,333              -
  Bad debt expense                                                53,820             138,259               6,465
  Selling expenses                                               851,339           1,639,806             630,207
  General and administrative                                   3,074,839           3,430,005           1,338,066
                                                        ----------------    ----------------    ----------------
     Total Expenses                                            3,979,998           8,341,403           1,974,738
                                                        ----------------    ----------------    ----------------
OPERATING LOSS                                                (3,928,370)         (8,099,528)         (1,488,847)
                                                        ----------------    ----------------    ----------------
OTHER INCOME (EXPENSE)
  Loss from discontinued operations                              (40,859)             -                   -
  Interest income                                                 11,265              24,152               7,018
  Interest expense                                               (93,779)            (18,478)            (20,344)
  Gain (loss) on sale of equipment                              (160,836)             70,309              -
                                                        ----------------    ----------------    ----------------
     Total Other Income (Expense)                               (284,209)             75,983             (13,326)
                                                        ----------------    ----------------    ----------------
LOSS BEFORE INCOME TAXES                                      (4,212,579)         (8,023,545)         (1,502,173)
INCOME TAX PROVISION (Note 18)                                       500                 500                 400
                                                        ----------------    ----------------    ----------------
NET LOSS                                                $     (4,213,079)   $     (8,024,045)   $     (1,502,573)
                                                        ================    ================    ================
BASIC LOSS PER SHARE                                    $          (0.23)   $          (0.59)   $          (0.12)
                                                        ================    ================    ================
FULLY DILUTED LOSS PER SHARE                            $          (0.23)   $          (0.59)   $          (0.12)
                                                        ================    ================    ================
WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                                           17,984,186          13,568,845          12,891,947
                                                        ================    ================    ================
</TABLE>


                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       18
<PAGE>

<TABLE>
<CAPTION>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                 Consolidated Statements of Stockholders' Equity
                For the Years Ended March 31, 1999, 1998 and 1997


                                           Total
                                          Shares                            Capital                                 Total
                                       Stockholders'         Common        in Excess                            Accumulated
                                          Issued             Stock          of Par          Deficit               Equity
                                       --------------        -------  ---------------    -----------           ------------
<S>                                     <C>         <C>              <C>             <C>                 <C>
Balance, March 31,1996                  12,666,053  $        1,267   $    5,785,695  $     (5,666,789)   $       120,173

Shares issued through
 stock offering                            450,788              44        1,816,307            -               1,546,351
Shares issued for services                   1,000               1            3,499            -                   3,500
Subscribed stock                              -               -                -               -                 270,000
Net loss                                      -               -                -           (1,502,573)        (1,502,573)
                                    --------------  --------------   --------------  ----------------    ---------------

Balance, March 31, 1997                 13,117,841           1,312        7,605,501        (7,169,362)           437,451

Shares issued through
 stock offering                            379,000              38        4,756,682            -               4,756,720
Shares issued for cash                     315,142              31           67,355            -                  67,386
Shares issued in exchange
 for services                              256,667              26          387,474            -                 387,500
Shares issued for debt                      20,000               2           85,494            -                  85,496
Option issued for
 compensation                               -               -                81,247            -                  81,247
Options issued for rights                   -               -             6,000,000            -               6,000,000
Net loss                                    -               -                -             (8,024,045)        (8,024,045)
                                    --------------  --------------   --------------  ----------------    ---------------

Balance, March 31, 1998                 14,088,650           1,409       18,983,753      (15,193,407 )         3,791,755

Shares issued through
 stock offering                          6,085,430             609        3,770,925            -               3,771,534
Shares issued for assets                   583,333              58        1,532,942            -               1,533,000
Shares issued for cash                     371,800              37            3,681            -                   3,718
Correction of an error                      50,000               5           -                 -                       5
Shares issued in exchange
 for services                            1,094,810             109           43,338            -                  43,447
Shares issued for debt                      84,623               9          126,801            -                 126,810
Net loss                                      -                -               -           (4,213,079)        (4,213,079)
                                    --------------  --------------   -------------- -----------------    ---------------

Balance, March 31, 1999                 22,358,646  $        2,236   $   24,461,440  $    (19,406,486)   $     5,057,190
                                    ==============  ==============   ==============  ================    ===============
</TABLE>


                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       19
<PAGE>

<TABLE>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                      Consolidated Statements of Cash Flows
<CAPTION>

                                                                                     For the Years Ended March 31,
                                                                            ----------------------------------------------------
                                                                               1999                 1998                1997
                                                                             -------               -------             -------
<S>                                                                   <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                                                            $     (4,213,079)   $      (8,024,045)  $      (1,502,573)
  Adjustments to reconcile net loss to net cash used by
    operating activities:
   Amortization                                                                314,873              427,575              62,183
   Depreciation                                                                 79,599               70,209              41,549
   Loss on sale of assets                                                      160,836               -                   -
   Allowance for bad debts                                                      53,820              107,480               4,602
   Reduction in product rights valuation                                        -                 3,133,333              -
   Common stock and options issued for services rendered                       448,547              651,517              -
 (Increase) decrease in:
   Accounts receivable                                                        (227,437)             (92,933)              9,546
   Prepaid expenses                                                           (187,090)              (2,756)             (1,859)
   Inventory                                                                   275,246           (2,498,860)           (101,637)
   Note receivable                                                            (530,530)              -                   -
   Deposits                                                                     (7,651)               7,514               2,862
  Increase (decrease) in:
   Accounts payable                                                           (730,202)           1,448,879              94,038
   Accrued interest payable                                                     53,831               -                   (7,000)
   Customer deposits                                                           (54,724)              54,724              -
   Short-term note payable                                                      -                  (300,000)             -
   Accrued expenses                                                             (4,667)             (60,213)             81,056
   Income taxes payable                                                         -                       100                 400
                                                                      ----------------    -----------------   -----------------

     NET CASH USED BY OPERATING ACTIVITIES                                  (4,568,628)          (5,077,476)         (1,316,833)
                                                                      ----------------    -----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES

  Proceeds from sale of fixed assets                                            -                   375,000              -
  Purchase or development of intangibles                                      (128,021)              -                 (222,706)
  Equipment purchases                                                         (198,736)            (194,392)           (101,121)
  Collection on notes receivable                                                -                    -                    1,380
                                                                      ----------------    -----------------   -----------------

     NET CASH PROVIDED (USED) BY
       INVESTING ACTIVITIES                                                   (326,757)             180,608            (322,447)
                                                                      ----------------    -----------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Issuance of common stock                                                   3,502,167            4,824,204           1,719,951
  Minority interest                                                             -                    -                  100,000
  Issuance of notes payable                                                  3,043,409              135,000              -
  Payments made on notes payable                                              (138,832)              (7,032)            (45,415)
                                                                      ----------------    -----------------   -----------------

     NET CASH PROVIDED BY FINANCING ACTIVITIES                        $      6,406,744    $       4,952,172   $       1,774,436
                                                                      ----------------    -----------------   -----------------
</TABLE>


                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                       20
<PAGE>

<TABLE>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                Consolidated Statements of Cash Flows (Continued)
<CAPTION>


                                                            For the Years Ended March 31,
                                           ---------------------------------------------------------
                                                 1999                 1998               1997
                                               -------              --------            -------

<S>                                        <C>                 <C>                 <C>
NET INCREASE (DECREASE) IN CASH            $      1,511,359    $          55,304   $         135,156

CASH AT BEGINNING OF YEAR                           220,840              165,536              30,380
                                           ----------------    -----------------   -----------------

CASH AT END OF YEAR                        $      1,732,199    $         220,840   $         165,536
                                           ================    =================   =================
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       21
<PAGE>

                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              The  Company's   accounting  policies  reflect  practices  of  the
              software sales, 3-D electronic devices and services industries and
              conform to generally accepted accounting principles. Certain prior
              year  amounts have been  reclassified  to be  consistent  with the
              March 31, 1999 presentation. The following policies are considered
              to be significant:

              Principles of Consolidation
              ---------------------------

              The consolidated  financial statements include the accounts of the
              Company  and  its  subsidiaries,   Chequemate  Electronic,   Inc.,
              Families  in  Focus,  Inc.,  AC&T  Direct,   AC&T  and  Chequemate
              Tele-Services,  Inc.  All  significant  intercompany  accounts and
              transactions have been eliminated.

              Revenue Recognition
              -------------------

              Revenue  is  recognized  on an accrual  basis upon  deliver of the
              software or product.  Revenue consists of software sales,  product
              sales, license fees, and monthly service fees.

              Organization Costs and Product Rights
              -------------------------------------

              Organization  and  production  costs  have  been  capitalized  and
              amortized over five years using a straight line method.  The total
              amortization  of organization  and production  costs for the years
              ended March 31, 1999, 1998 and 1997 amounted to $314,873, $427,575
              and $62,183, respectively.

              Property and Equipment
              ----------------------

              Property and  equipment are stated at cost with  depreciation  and
              amortization  computed on the straight  line method.  Property and
              equipment  are  depreciated  over the following  estimated  useful
              lives:
                                                          Years
                                                        ---------
                        Office equipment                    5
                        Office furniture                   5-7
                        Machinery and equipment             5
                        Leasehold improvements             3-5
                        Capital leases                     3-5

               Organization Costs and Product Rights
               -------------------------------------
<TABLE>
<CAPTION>
                                                                                            ---------------
                                          Term           Cost         Amortization      1999             1998
                                      -------------  -------------  --------------   --------------  --------------
<S>                                       <C>        <C>             <C>             <C>             <C>
               Product rights             4-5 years  $   3,093,087   $      669,688  $    2,423,399  $    2,580,574
               Contract/movie
                  rights                    2 years        129,022           17,889         111,133          76,722
               Organization cost            5 years         17,261           17,261          -               -
------------- ------------- -------------- -------------- --------------

                                                     $   3,134,610   $      695,436  $    2,534,532  $    2,657,296
                                                     =============   ==============  ==============  ==============
</TABLE>

                                       22
<PAGE>

                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Organization Costs and Product Rights (Continued)
              -------------------------------------------------

              The  Company  evaluates  the  recoverability  of  intangibles  and
              reviews  the  amortization  period  on an  annual  basis.  Several
              factors  are  used to  evaluate  intangibles.  Including,  but not
              limited  to,  management=s  plans for  future  operations,  recent
              operating results and projected, undiscounted cash flows.

              Basic Loss Per Share
              --------------------

              Basic loss per share is  calculated  using a weighted  average for
              common stock.

              Cash Flows
              ----------

              For purposes of reporting  cash flows,  cash and cash  equivalents
              include cash on hand and cash on deposit with banks.

              Income Taxes
              ------------

              The  Company's  tax basis is the same as the  Company's  financial
              statement basis. The Company has net operating loss  carryforwards
              of  approximately  $19,000,000  available to offset future federal
              and state income tax through 2014.  The Company has not recorded a
              tax benefit attributable to the carryforwards  because realization
              of such has been  offset  by a  valuation  allowance  for the same
              amount.

              Computer Software Costs
              -----------------------

              The  Company  classifies  the  costs  of  planing,  designing  and
              establishing the  technological  feasibility of computer  software
              product as software  development  costs and charges those costs to
              expense when  incurred.  Costs incurred for  duplicating  computer
              software  from  product   masters,   documentation   and  training
              materials and  packaging  costs are  capitalized  as inventory and
              charged to cost of sales  when  revenue  is  recognized.  Costs of
              maintenance and customer support are charged to expense when costs
              are incurred.

              Advertising
              -----------

              The  Company   follows  the  policy  of  charging   the  costs  of
              advertising to expense as incurred.

              Estimates
              ---------

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and  liabilities  and  disclosure of contingent  assets and
              liabilities  at the  date  of the  financial  statements  and  the
              reported  amounts of revenues  and expenses  during the  reporting
              period. Actual results could differ from those estimates.


                                       23
<PAGE>

                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Change in Accounting Principles
              -------------------------------

              The Company adopted  Statement of Financial  Accounting  Standards
              (SFAS) No. 128,  AEarnings  Per Share@ during the year ended March
              31, 1999. In accordance  with SFAS No. 128,  diluted  earnings per
              share  must  be   calculated   when  an  entity  has   convertible
              securities, warrants, options, and other securities that represent
              potential  common  shares.  The  purpose  of  calculating  diluted
              earnings  (loss)  per share is to show (on a pro forma  basis) per
              share  earnings or losses  assuming the exercise or  conversion of
              all securities  that are  exercisable  or convertible  into common
              stock and that would either  dilute or not affect basis of EPS. As
              permitted by SFAS No. 128, the Company has  retroactively  applied
              the  provisions  of this new standard by showing the fully diluted
              loss per common share for all years presented.

              The Company adopted  Statement of Financial  Accounting  Standards
              AAccounting for Stock-Based  Compensation@ (ASFAS No. 123@), which
              requires  the  Company  to  determine  compensation  costs for the
              Company's  stock option plans and other stock awards in accordance
              with the fair value based method  prescribed  in SFAS No. 123. The
              Company   recognized   approximately   $405,100   and  $-0-  of  a
              stock-based  compensation  expense  for the years  ended March 31,
              1999 and 1998, respectively.

              The  Company  also  adopted  Statement  of  Financial   Accounting
              Standards (SFAS) No. 130, AReporting  Comprehensive Income@ during
              the year ended March 31, 1999, SFAS No. 130 established  standards
              for reporting and display of  comprehensive  income (loss) and its
              components (revenues, expenses, gains and losses) in a full set of
              general purpose financial statements. This statement requires that
              an  enterprise  classify  items of other  comprehensive  income by
              their nature in a financial  statement and display the accumulated
              balance of other  comprehensive  income  separately  from retained
              earnings and additional paid-in capital in the equity section of a
              balance sheet.  The adaption of SFAS 130 had no material effect on
              the Company's financial statements.

              Prior Period Reclassification

              Certain 1998  balances  have been  reclassified  to conform to the
              presentation of the 1999 consolidated financial statements.

NOTE 2 -      INVENTORY
                                                           March 31,
                                            ------------------------------------
                                                   1999                 1998
                                                 -------              -------

                          Finished goods    $       1,035,682    $     1,238,258
                          WIP                       1,076,880            124,243
                          Raw goods                 1,003,201          1,321,877
                                            -----------------    ---------------

                                            $       3,115,763    $     2,684,378
                                            =================    ===============

                                     24

<PAGE>


                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 2 -      INVENTORY (Continued)

              The Company inventories are stated at the lower of cost or market,
              using the first-in,  first-out (FIFO) method.  Inventories consist
              mainly of components related to the 3-D electronic devices product
              and pay-per-view operations.

NOTE 3 -      PROPERTY AND EQUIPMENT

              Property and  equipment as of March 31, 1999 and 1998 are detailed
              in the following summary:
<TABLE>
<CAPTION>
                                                                                            Net Book Value
                                                                     Accumulated  ----------------------------------
                                                     Cost           Depreciation             1999           1998
                                                 -------------  ----------------  ---------------- -----------------

<S>                                              <C>            <C>               <C>              <C>
              Office furniture and fixtures      $      62,427  $         38,107  $        24,320  $         33,237
              Machinery and equipment                  739,541           170,053          569,488           161,464
              Capital leases                            29,895             2,990           26,905             2,707
              Leasehold improvements                     4,581             2,577            2,004             2,927
                                                 -------------  ----------------  ---------------  ----------------

                   Total                         $     836,444  $        213,727  $       622,717  $        200,335
                                                 =============  ================  ===============  ================
</TABLE>

              Depreciation  expense is computed principally on the straight line
              method in amounts  sufficient to write off the cost of depreciable
              assets over their estimated useful lives. Depreciation expense for
              the years ended March 31, 1999, 1998 and 1997 amounted to $79,599,
              $70,209 and $41,549, respectively.

NOTE 4 -      STOCKHOLDERS' EQUITY

              The Company is  authorized to issue  500,000,000  shares of common
              stock,  par value  $.0001.  As of March 31, 1999,  the Company has
              issued 22,358,646 shares of common stock.

              The Company  continued  the placement of Regulation S stock in the
              year ended March 31, 1999 and issued  2,729,526 shares to non U.S.
              persons.  The Company's plans are to continue placing common stock
              through private placements to fund the growth  requirements of the
              Company.

                                       25
<PAGE>

<TABLE>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998
<CAPTION>
NOTE 5 -      RELATED PARTIES

              Notes payable to related parties as of March 31, 1999 and 1998 are
              detailed in the following summary:

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

<S>                                                                      <C>                        <C>
              Note payable to CEO; due on demand, with an
               interest rate of 10.4%; unsecured; accrued
               interest of $79,943 is due on demand.                     $         140,000          $    135,000

              Note payable to CEO; unsecured, due in monthly
               interest installments of $930 with an interest rate
               of 12%; due December 31, 1998.                                       -                     21,802
                                                                         -----------------     -----------------

                   Total related party notes payable                               140,000               156,802

                   Less: current portion                                          (140,000)             (156,802)
                                                                         -----------------     -----------------

                   Long-term portion$                                               -                  $  -
                                                                         =================     =================

              Maturities of the related party notes payable are as follows:

                                    Period ending March 31,              2000                  $         140,000
                                                                         2001                             -
                                                                                               -----------------

                                                                         Total                 $         140,000
                                                                                               =================

NOTE 6 -      LONG-TERM DEBT

              Notes  payable as of March 31,  1999 and 1998 are  detailed in the
following summary:

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

              Note payable to a company; due in monthly
               installments of $3,244 which includes
               interest at 8%; due July, 1999, unsecured.                $          53,907     $          62,056

              Convertible debentures to a company; due
               December 22, 2001, which includes interest
               at 8%.                                                              750,000                -

              Convertible debentures to a company; due
               February 22, 2002, which includes interest at 8%.                 2,000,000                -
                                                                         -----------------     -----------------

              Balance Forward                                            $       2,803,907     $          62,056

                                                                         -----------------     -----------------
</TABLE>
                                       26
<PAGE>

<TABLE>
                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998
<CAPTION>


<S>                                                                      <C>                   <C>
NOTE 6 -      LONG-TERM DEBT (Continued)

              Balance Forward                                            $       2,803,907     $          62,056

              Note   payable to a company; due June 8, 2000,
               interest at 10% due monthly, secured by
               equipment and inventory.                                            440,000                -

              Note payable to a company; unsecured, due in
               monthly installments of $19,654, which includes
               interest at 6%; due October 1999.                                   173,703                -
                                                                         -----------------     -----------------

                   Total long-term debt                                          3,417,610                62,056

                   Less: current portion                                          (227,610)              (50,080)
                                                                         -----------------     -----------------

                   Long-term portion$                                            3,190,000     $          11,976
                                                                         =================     =================
              Maturities of long-term debt are summarized below:

                                               Period ending March 31,        2000             $         227,610
                                                                              2001                       440,000
                                                                              2002                     2,750,000
                                                                              2003                        -
                                                                              2004                        -
                                                                                               -----------------

                                                                              Total            $       3,417,610
                                                                                               =================
</TABLE>

NOTE 7 -      LEASES

              All  noncancelable  leases with an initial  term  greater than one
              year have been  categorized  as  capital  or  operating  leases in
              conformity with the definitions in Financial  Accounting Standards
              Board Statement No. 13, "Accounting for Leases".

              The following analysis  represents property under capital lease at
              March 31, 1999 and 1998.

<TABLE>
<CAPTION>

                                                                              1999                    1998
                                                                         -----------------     -----------------
<S>                                                                      <C>                   <C>
                           Equipment                                     $          29,895     $          26,877
                           Less: accumulated depreciation                           (2,990)              (24,170)
                                                                         -----------------     -----------------

                           Net property under capital lease              $          26,905     $           2,707
                                                                         =================     =================
</TABLE>

                                       27
<PAGE>


                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998



NOTE 7 -      LEASES (Continued)

              At March  31,  1999,  the  Company  is  liable  under the terms of
              non-cancelable leases for the following minimum lease commitments:

<TABLE>
<CAPTION>

                                                                               Capital              Operating
                                                                                Leases               Leases
                                                                         -----------------     -----------------
              <S>                                                        <C>                   <C>
              Period ended March 31,
                  2000                                                   $          22,744     $         147,099
                  2001                                                              -                    113,987
                  2002                                                              -                     76,687
                  2003                                                              -                     -
                  later years                                                       -                     -
                                                                         -----------------     -----------------

              Total minimum lease payments                                          22,744     $         337,773
                                                                                               =================
                  Less: interest                                                     9,142
                                                                         -----------------
                  Present value of net minimum lease payment                        13,602
                  Less: current portion                                             13,602
                                                                         -----------------

                  Capital lease obligations payable long-term            $          -
                                                                         =================
</TABLE>

              Rental  expense for the years ended March 31, 1999,  1998 and 1997
              amounted to $135,580, $187,961 and $86,094, respectively.




<TABLE>
<CAPTION>

NOTE 8 -      CASH FLOW AND NON CASH INVESTING AND FINANCING ACTIVITIES

              Cash flow information
                                                                                       March 31,
                                                                        ----------------------------------------
                                                                          1999          1998            1997
                                                                        -------        -------         ------

<S>                                                               <C>            <C>           <C>    <C>
              Interest paid                                       $      34,535  $     18,478  $      24,230

              Income taxes paid                                   $         500  $        400  $         300
              Non-cash investing and financing activities

              For the years ending March 31, 1999 and 1998, the Company incurred
              the following non-cash investing and financing activities.

                                                                                    March 31,
                                                                  ----------------------------------------------
                                                                      1999             1998            1997
                                                                  ---------------  --------------  -------------
              Capital lease obligations incurred                  $        29,895  $       -       $      -
              Issuance of stock and options for services
               rendered                                           $       448,547  $      651,517  $      -
              Issuance of stock for assets                        $     1,533,000  $       -       $      -
              Increase in debt for assets                         $       440,000  $       -       $      -

</TABLE>

                                       28



<PAGE>


                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 9 -      FINANCIAL INSTRUMENTS

              Concentrations of credit risk

              Financial  instruments  which  potentially  subject the Company to
              concentrations  of  credit  risk  consist   principally  of  trade
              receivables.  The Company  provides credit to its customers in the
              normal course of business.  However,  the Company performs ongoing
              credit  evaluations of its customers and maintains  allowances for
              potential  credit  losses.  The Company  places its temporary cash
              with  high  quality  financial  institutions.  At times  such cash
              accounts may be in excess of the FDIC insurance limit.

NOTE 10 -     COMMITMENTS AND CONTINGENCIES

              The Company has entered  into an agreement to maintain a satellite
              transponder  and uplink  for  broadcasting  its three  dimensional
              cable channel.  The agreement requires the Company to make monthly
              payments of $100,000 to retain these services.

              The Company is the  defendant in a pending  lawsuit.  The ultimate
              outcome  of  this  litigation  is  unknown  at the  present  time.
              Accordingly,  no provision for any liability that might result has
              been made in the accompanying financial statements. In the opinion
              of  management,  the existing  litigation is not  considered to be
              material in relation to the Company's financial position.

NOTE 11 -     ACQUISITIONS

              On  February  27,  1997,   the  Company   established   Chequemate
              Tele-Services,  Inc.  (CTS)  along  with  another  individual  and
              received fifty-one percent (51%) of the company.  CTS then entered
              into an asset  purchase  agreement to acquire all of the assets of
              Quality Products Distribution, Inc. The assets consisted mainly of
              credit  card  processing  software  and  certain  intangibles.  In
              November of 1997,  the Company  sold the  processing  software and
              related intangibles.

              In December 1998, the Company  purchased  assets to supplement the
              hotel movie pay-per-view operations.  The assets included existing
              contracts with several hotels to provide  pay-per-view movies. The
              Company issued 250,000 shares of common stock, a convertible  note
              and cash for the assets.

NOTE 12 -     GOING CONCERN

              The Company's  financial  statements are prepared using  generally
              accepted accounting principles applicable to a going concern which
              contemplates   the   realization  of  assets  and  liquidation  of
              liabilities  in the normal  course of  business.  The  Company has
              incurred  losses from its inception  through  March 31, 1999.  The
              Company does not have an established source of revenues sufficient
              to cover its operating  costs.  It is the intent of the Company to
              seek additional financing through private placements of its common
              stock.

                                       29
<PAGE>

                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 12 - GOING CONCERN (Continued)

              Management  has  formulated  a plan to  raise  additional  funding
              through stock  issuances  and increase in debt.  In addition,  the
              Company's  projected increase in revenue from the establishment of
              its  three  dimensional  cable  channel  will  provide  sufficient
              capital for  operations.  Subsequent  to year end, the Company had
              raised  approximately  $966,000  through  common  stock  and  debt
              issuances.

NOTE 13 -     COMMON STOCK AND WARRANTS

              Effective  May 17, 1995,  the  stockholders  approved an Incentive
              Stock Option Plan  granting to key  employees  options to purchase
              Company  common stock over a ten year  period,  at the fair market
              value at time of grant.  The aggregate  number of common shares of
              the Company which may be granted under the plan is 800,000 shares.
              The plan expires on March 23, 2004.

              The  convertible  debentures  entered  into by the  Company  carry
              warrants  allowing the debtor to acquire  stock.  The  convertible
              debentures of $750,000 are in $250,000 incremental units and carry
              warrants  equal  to  24,753  shares  per  unit.  The   convertible
              debentures  of  $2,000,000  are in $250,000  increments  and carry
              warrants equal to 8,475 shares per unit.

              Activity regarding stock options is summarized as follows:

<TABLE>
<CAPTION>
                                                                                               Number of Shares
                                                  -----------------------------------------------------------------
                                                           1999            Price            1998          Price
                                                  ---------------  ---------------  -------------  ------------------
<S>                                               <C>              <C>              <C>            <C>
              Options Granted:
                   Beginning of year                    2,354,800  $    .01 - 7.00        354,800  $    3.50 - 7.00
                   Additional granted                      64,000              .01      2,000,000               .01
                   Canceled                              (252,800)       3.50-7.00         -                 -
                                                   --------------                   -------------

                   End of year                          2,166,000                       2,354,800
                                                   ==============                   =============


              Options Exercised:
                   Beginning of year                      283,242  $    .01 - 7.00            100              3.50
                   Additional exercised                 1,074,810              .01        283,142               .01
                   Expired                                 -                -              -                 -
                                                   ---------------                  -------------

                   End of year                          1,358,052                         283,242
                                                   ==============                   =============

              Options Outstanding at End
                of Year                                   807,948                       2,071,558
                                                   ==============                   =============
</TABLE>

              Option  prices  range from $0.01 to $7.00 per share.  The  Company
              granted  several stock options to various  individuals for service
              performed  or for  future  services.  The  option  price  for  the
              services performed was stated at $5.00 per share on 4,000 shares.


                                       30
<PAGE>

                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 14 -     ACQUISITION OF TECHNOLOGY

              In May of 1997,  the Company formed the  wholly-owned  subsidiary,
              Chequemate Electronic,  Inc. (formerly Chequemate Third Dimension,
              Inc,)  (CEI).  CEI  then  entered  into an  agreement  to  acquire
              technology relating to certain intellectual property from Advanced
              Technology  Group,  LLC  (LLC).  Pursuant  to the  agreement,  the
              Company contributed to CEI three million dollars within sixty (60)
              days  of  signing.   In  addition,   the  Company   established  a
              non-qualified stock option for certain members of the LLC.

              In May 1997, the Company granted 2,000,000 common stock options to
              certain  individuals  in  exchange  for the  exclusive  rights  to
              specified  intellectual  property.  Under APB 17, the transactions
              were  recorded  using the fair market  value of the stock upon the
              date of the  grant,  which  was  determined  to be $3.00 per share
              based  upon the  current  trading  value of the stock and the time
              delay before the shares could be exercised. At March 31, 1998, the
              Company's  projected cash flows indicated that the  recoverability
              of the asset may be impaired.  Revaluation  of the projected  cash
              flow   associated  with  this  technology  was  determined  to  be
              approximately   $2,500,000.   Under  FASB  121  an  adjustment  of
              $3,133,333 for impairment of the asset was recognized.

NOTE 15 -     ACQUISITION OF SECURED INTEREST

              In  December  1998,   the  Company   purchased  from  a  financing
              institution  the  secured  interest  on a line of  credit  against
              Strata, Inc. (Strata).  The Company continued to advance credit to
              Strata and as of March 31, 1999 have recorded a note receivable of
              $465,530. Also, on March 31, 1999, the Company obtained the secure
              interests  of  several  other  promissory  notes  held by  several
              investors  against Strata by exchanging  stock for the notes.  The
              Company  exchanged  333,333 shares,  at $3.00 per share, of common
              stock for the notes.  The above  notes hold a secured  interest in
              the tangible assets,  accounts receivable,  intellectual  property
              and other assets of Strata. Strata is in the business of providing
              3D centric  graphical  software  applications.  Subsequent to year
              end,  the Company  foreclosed  upon Strata and acquired all of the
              assets of Strata.

NOTE 16 -     RELATED PARTY TRANSACTIONS

              The Company owes certain officers and directors royalties from the
              revenue of book  sales.  In  addition,  the  Company  owes a major
              shareholder  royalties on active users of the Chequemate  product.
              The total amount owing to these  individuals  as of March 31, 1999
              and 1998 was $25,292 and $42,034, respectively.

NOTE 17 -     MARKETING DEVELOPMENT AGREEMENT

              In December  1996,  the  Company  entered  into a venture  with an
              individual to enhance and improve its  marketing  capacity as well
              as to strengthen its in-house administrative capacity. The Company
              has incurred  monthly  expenses of  approximately  $10,000 on this
              venture.  The  alliance  between  the parties  indicates  that the
              individual  will earn 50% of all net  profits  directly  generated
              from  revenues  created   specifically  and  exclusively  by  this
              agreement.   Upon  termination  of  this  alliance,  the  specific
              revenues will revert back to the individual.

                                       31
<PAGE>





                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 18 -     PROVISION FOR INCOME TAXES

              The  provision for income taxes for the years ended March 31, 1999
              and 1998 consists of the following:

<TABLE>
<CAPTION>

                                                         Current              Deferred             Total
                                                   ------------------    -----------------     -----------------

<S>                                                <C>                   <C>                   <C>
              Year ended March 31, 1999
                   U.S. Federal                    $           -         $          -          $          -
                   State and local                                500               -                        500
                                                   ------------------    -----------------     -----------------

                                                   $              500    $          -          $             500
                                                   ==================    =================     =================

              Year ended March 31, 1998
                   U.S. Federal                    $           -         $          -          $          -
                   State and local                                500               -                        500
                                                   ------------------    -----------------     -----------------

                                                   $              500    $          -          $             500
                                                   ==================     ================     =================
</TABLE>



              Income tax  expense  was $500 and $500 for each of the years ended
              March  31,  1999 and 1998,  respectively,  and  differed  from the
              amounts  computed by applying the U.S.  Federal income tax rate of
              34 percent to loss from  operations  before  provision  for income
              taxes and extraordinary item as a result of the following:

<TABLE>
<CAPTION>
                                                                               1999                 1998
                                                                         -----------------     -----------------

<S>                                                                      <C>                   <C>
              Computed Aexpected@ benefit                                $      (1,552,274)    $      (2,728,005)
              Increase (reduction) in income taxes resulting from:
                   Change in valuation allowance for deferred
                     tax assets                                                  1,542,774             2,722,639
                   Non-deductible expenses                                           9,000                 4,866
                                                                         -----------------     -----------------

                        Income tax provision                             $             500     $             500
                                                                         =================     =================
</TABLE>


              The  tax  effects  of  temporary  differences  that  give  rise to
              significant  portions of the deferred tax assets at March 31, 1999
              are presented below:

<TABLE>
<CAPTION>

<S>                                                                     <C>                    <C>
              Deferred tax assets:
                   Net operating loss carryforwards
                        Total deferred tax assets                        $       5,656,774     $       4,114,000
                        Less valuation allowance                                (5,656,774)           (4,114,000)
                                                                         -----------------     -----------------

                        Net deferred tax assets                          $          -          $          -
                                                                         =================     =================
</TABLE>

                                       32
<PAGE>

                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                               (dba C3-D Digital)
                   Notes to Consolidated Financial Statements
                             March 31, 1999 and 1998


NOTE 19 -     SUBSEQUENT EVENTS

         Subsequent  to year end,  the  Company  acquired  assets to enhance its
         hotel pay-per-view operations by issuing 125,000 shares of common stock
         and  $150,000  of cash.  The  Company  increased  its debt  position by
         borrowing an additional $500,000 in convertible debentures.

                                       33
<PAGE>

ITEM 8.  Changes  In  and  Disagreements  With  Accountants  on  Accounting  and
         Financial Disclosure

         The  Company  does  not  have any  disagreements  with its  accountants
regarding the accounting and financial disclosures contained in this Form 10-KSB
report.

                                    PART III
                                    --------

ITEM 9.  Directors and Executive Officers

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------

Name and Principle Occupation or          Age     First        Shares of Common   Percentage of
Employment                                        Became a     Stock              Common Stock
                                                  Director     Beneficially       Outstanding
                                                               Owned

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

<S>                                       <C>     <C>          <C>                <C>
Blaine Harris                             60      1994         2,192,948 (3)      10.2%
Chairman and former CEO and President
of the Company. Elected as an officer
of the Company in 1994
-----------------------------------------------------------------------------------------------

Harold P. Glick                           57      1995         528,962            2.4%
Partner in the real estate company of
Moore Warfield & Glick
-----------------------------------------------------------------------------------------------

Robert E. Warfield                        59      1995         1,000,000          4.6%
Partner in the real estate company of
Moore Warfield & Glick
-----------------------------------------------------------------------------------------------

Andre Peterson                            46      1998         32,990 (4)         less than 1%
VP of Marketing and Chief Marketing
Officer of Cogito Incorporated
-----------------------------------------------------------------------------------------------

John Bartholomew                          40      1998         202,133 (5)        1%
General Manager of The Kaizen Group
-----------------------------------------------------------------------------------------------

J. Michael Heil                           44      n/a          0                  0%
CEO
-----------------------------------------------------------------------------------------------

Terrell A. Lassetter                      68      n/a          14,285             less than 1%
President
-----------------------------------------------------------------------------------------------

Steven B. Anderson                        30      n/a          9,000 (6)          less than 1%
CFO
----------------------------------------------------------------------------------------------
</TABLE>
------------------------

(3) This amount includes 49,000 shares available under  unexercised  options and
2,074,500  shares held by a limited  liability  company,  of which Mr. Harris is
general partner.

(4) This amount  includes  9,900  shares  owned by a  partnership,  of which Mr.
Peterson is a partner.

(5) This amount  includes  3,990  shares  owned by a  partnership,  of which Mr.
Bartholomew is a partner,  and includes  17,143 shares subject to an unexercised
option.

(6) This amount consists of shares available under unexercised options.

                                       34
<PAGE>


Business Experience

Blaine  Harris.  Chairman,  Director.  Mr.  Harris is an alumnus of Idaho  State
University, where he majored in Business and Marketing. Mr. Harris has extensive
experience  in  real  estate  with  his  primary  focus  being   commercial  and
residential project development. From 1986 to 1991, he served as Chief Executive
Officer and  Chairman of the Board of  Directors  of  Help-U-Sell,  Inc. and was
involved  with  Help-U-Sell  as  a  partner  of  Conquest  Management,   a  Utah
partnership,  which managed and owned a 49% interest in Help-U-Sell.  During his
administration,  Help-U-Sell grew from 118 franchises to 650 plus franchises and
was listed as the fastest  growing real estate  franchising  organization in the
country. In 1991, the Help-U-Sell parent company, Mutual Benefit Life, was taken
over by the New Jersey State  Insurance  Regulators  and its  subsidiaries  were
liquidated, including Help-U-Sell, Inc. In 1991, Mr. Harris formulated and began
development of Chequemate International, Inc.

Harold P. Glick.  Director.  Mr. Glick received his BS degree in Accounting from
the University of Maryland in 1965 and became a Certified Public  Accountant the
following year. Mr. Glick successfully  built and managed a family-owned  retail
business  prior to joining Mr.  Robert  Warfield as a partner in the real estate
Company of Moore,  Warfield and Glick.  Additionally,  since 1988, Mr. Glick has
been a  regional  owner  of  Help-U-Sell  Real  Estate  in  Virginia,  Maryland,
Washington D.C. and Delaware. Mr. Glick served as President of the Greater Ocean
City, Maryland,  Board of Realtors in 1988, is a member of the Advisory Board of
Nations  Bank  and  serves  on  the  Maryland  Governor's  Economic  Development
Committee.

Robert E.  Warfield.  Director.  Mr.  Warfield has a BS Degree in Economics from
Western  Maryland  College.  He has an extensive  background  in real estate and
regional sales management with the Weyerhaeuser Corporation.  Mr. Warfield first
became  licensed  in real  estate in 1962,  and in 1975  started  Warfield  Real
Estate.  He has been in the real estate and development  business in Ocean City,
Maryland  since 1971.  For the past 18 years Mr.  Warfield has been President of
Moore,  Warfield and Glick,  Inc.,  with real estate sales over $100 million and
rentals of $12  million.  Additionally,  since  1988,  Mr.  Warfield  has been a
regional owner of help-U-Sell Real Estate in Virginia, Maryland, Washington D.C.
and  Delaware.  Mr.  Warfield  currently  serves  on the Board of  Directors  of
Atlantic General Hospital and Ocean City Golf and Yacht Club. He has also served
as a director of Second National Service Corp., and Salisbury School.

Andre Peterson. Director. Mr Peterson is an alumnus of Brigham Young University,
where he majored in Business  Management.  He is currently the Vice President of
Marketing  and Chief  Marketing  Officer  for  Cogito  Incorporated,  a software
technology  development company. He was the VP of Marketing and a Partner of The
Kaizen Group, a marketing and development  group for start-up software from 1996
to 1998. He served as the President of Enhanced  Simulation  Marketing from 1994
through 1996,  marketing a newly patented motion simulator for the entertainment
industry.  He was the VP of Marketing  for  WordPerfect  Corporation  and Novell
Corporation  from 1983 to 1994. Mr.  Peterson was responsible for all aspects of
sales and marketing for  WordPerfect,  taking sales from one million in 1983, to
over seven  hundred  million  in 1994.  Prior to working  for  WordPerfect,  Mr.
Peterson was a member of the White House Staff for four years.

John V.  Bartholomew.  Director.  Mr.  Bartholomew  has a BS degree in  Computer
Science  from Brigham  Young  University.  He has  extensive  experience  in the
application of technology in computers and complex systems. He has been involved
in the management of technology  sales and marketing for more than a decade with

such  companies  as  WordPerfect  and Novell.  He is the General  Manager of The
Kaizen Group,  a consulting  organization  for  technology  companies  with such
customers  as  Microsoft,  NetVision,  PowerQuest,   LogicalNet  and  Cogito,  a
knowledge based software solutions provider.

Committees of the Board of Directors

         Robert E. Warfield serves as the sole voting member of the Compensation
Committee of the board of  directors.  Harold P. Glick serves as the sole voting
member of the Audit Committee.  The Compensation Committee has been charged with


                                       35
<PAGE>


the   responsibility  of  evaluating  and  establishing   compensation  for  the
management of the Company and the grant of corporate  stock  options.  The Audit
Committee has been charged with the  responsibility  of  communicating  with the
auditors of the Company, and evaluating the accounting  controls,  functions and
systems of the Company.

Executive Officers

         The following table outlines the executive officers of the Company.

<TABLE>
<CAPTION>
    ---------------------------------------------------------------------------------------------------------
    Name                         Age                Position Held         Current Term of Office or
                                                                          Directorship and period of Service
    ---------------------------------------------------------------------------------------------------------
<S>                              <C>                                      <C>
    J. Michael Heil              44                                       September 1998 to present
    ---------------------------------------------------------------------------------------------------------
    Terrell A. Lassetter         68                 President             September 1998 to present
    ---------------------------------------------------------------------------------------------------------
    Steven B. Anderson           30                 CFO/Secretary/        Service since July 1995
                                                    Treasurer
    ---------------------------------------------------------------------------------------------------------
</TABLE>

Business Experience

J. Michael Heil. CEO. Mr Heil has over 17 years  experience in the satellite and
television business. Mr Heil was formerly president of Skylink America, Inc. and
Satellite  Cinema,   successfully  launching  five  digital  video  pay-per-view
networks.  During his tenure in these  businesses,  he developed the business to
$20 million in annual revenue and over 150,000 subscribers.  He was the Director
of Operations for Comsat Video  Enterprises,  and Chairman and CEO of Television
Entertainment Network, Inc., a Canadian hotel pay-per-view company.

Terrell Lassetter.  Mr. Lassetter spent over 34 years with IBM working as Senior
Engineer,   product   manager  and  vice  president  of  data   processing  (DP)
manufacturing  IBM World Trade  Corp.  He  successfully  managed all of IBM's DP
plants  and  technology  plants  outside  the  U.S.  He later  became a  private
consultant  for  such  companies  as  Toyota  MFG.,   Mutual  Benefit  Life  and
Help-U-Sell, Inc.

Steven B.  Anderson.  CFO/Secretary/Treasurer.  Mr.  Anderson  has a Masters  of
Business  Administration  degree from the University of Utah. Mr.  Anderson also
received his BA Degree in Accounting  from the University of Utah. Mr.  Anderson
has been with the Company since 1995 when he joined  Chequemate as the Assistant
Controller.  Mr.  Anderson first  distinguished  himself  through his ability to
provide  projections and models that help with business  decisions.  Since then,
his role with the Company has  continually  increased.  Mr.  Anderson  currently
works  on  SEC  reporting,   financial  statements,   shareholder  and  investor
relations, among other corporate responsibilities.

                                       36
<PAGE>


ITEM 10.  Executive Compensation

         The table set forth below contains  information  about the remuneration
received and accrued  during fiscal years 1997,  1998, and 1999 from the Company
and its subsidiaries by the Chief Executive  Officer and each of the most highly
compensated executive officers of the Company.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------

Name and Principal        Fiscal Year         Salary ($)           Bonus ($)             All Other Annual
Position                                                                                 Compensation
---------------------------------------------------------------------------------------------------------

<S>                       <C>                 <C>                  <C>                   <C>
Blaine Harris, Former     1999                $111,667             $1,218                $     0
CEO and current Chairman  1998                $100,000             $1,457                $10,000
                          1997                $100,000             $1,015                $ 2,443
---------------------------------------------------------------------------------------------------------

J. Michael Heil           1999                $100,000             $6,299                $     0
CEO                       1998                $      0             $    0                $     0
                          1997                $      0             $    0                $     0
---------------------------------------------------------------------------------------------------------

Terrell Lassetter         1999                $70,000              $1,299                $     0
President                 1998                $     0              $    0                $     0
                          1997                $     0              $    0                $     0
---------------------------------------------------------------------------------------------------------

Steven B. Anderson        1999                $54,833              $  812                $     0
CFO/Secretary/            1998                $41,208              $  950                $     0
Treasurer                 1997                $32,977              $  390                $     0
---------------------------------------------------------------------------------------------------------
</TABLE>



         The  following  chart  shows the stock  options  that were  granted  to
executive officers of the Company during the last completed fiscal year.

<TABLE>
<CAPTION>
    -----------------------------------------------------------------------------------------------------

    Name and Principal       Total       Percentage of total      Total        Exercise       Expiration
    Position                 Options     granted to employees     Options      Price          Date
                             Granted     in fiscal year           Vested       ($/share)
    -----------------------------------------------------------------------------------------------------

<S>                          <C>                   <C>            <C>          <C>                 <C> <C>
    Blaine Harris, CEO       7,000                 70 %          49,000        $6.32          Dec. 16, 2005

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

    Steven B. Anderson       3,000                 30 %           9,000        $5.75          Dec. 16, 2005
    CFO
    -----------------------------------------------------------------------------------------------------
</TABLE>


         The following  table reflects the number of  unexercised  options which
are  exercisable and  unexercisable  at the end of fiscal year 1999. None of the
executive  officers  exercised  any options in the fiscal year ending  March 31,
1999.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------

                                         Number of unexercised options         Value of unexercised in-the-money
                                         at FY-end (#)                         options at FY-end ($)
Name of Officer                          exercisable/unexercisable             exercisable/unexercisable
------------------------------------------------------------------------------------------------------------------

<S>                                      <C>                                   <C>
Blaine Harris                            49,000/21,000                         $0/$0
------------------------------------------------------------------------------------------------------------------

Steven B. Anderson                       9,000/30,000                          $0/$0
------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       37

<PAGE>

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management.

         The table below sets forth certain  information as of July 7, 1998 with
respect  to each  person  who owns of  record,  or is known  to the  Company  to
beneficially own, more than 5% of the outstanding shares of Voting Common Stock,
and the beneficial ownership of such securities by each officer and director who
owns any stock,  and by all  officers  and  directors  as a group.  The original
directors and officers of the Company,  whose  aggregate  share holdings are now
less than three percent of the total shares  outstanding,  may be deemed to have
been promoters of the Company.

<TABLE>
<CAPTION>
    Name and Address of Beneficial Owner  Amount and Nature of Ownership of   Percent of currently issued and
                                          Voting Stock                        Subscribed Common Stock
    -----------------------------------------------------------------------------------------------------------
<S>                                       <C>                                 <C>
    Blaine Harris                         118,448 Direct Ownership
    57 West 200 South Suite 350           2,074,500 Indirect Ownership        10.2%
    Salt Lake City, Utah 84101
    -----------------------------------------------------------------------------------------------------------
    Robert Warfield                       1,000,000
    10481 Golf Course Road                Direct Ownership                    4.6%
    Ocean City, MD 21842
    -----------------------------------------------------------------------------------------------------------
    Harold P. Glick                       528,962
    10706 Piney Island Drive              Direct Ownership                    2.4%
    Bishopville, MD 21842
    -----------------------------------------------------------------------------------------------------------
    Andre Peterson                        32,990                              less than 1%
    -----------------------------------------------------------------------------------------------------------
    John Bartholomew                      202,133                             1%
    -----------------------------------------------------------------------------------------------------------
</TABLE>


         The  Company  knows of no  arrangements,  including  any  pledge by any
person of securities of the Company,  the operation of which may at a subsequent
date result in a change in control of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

         Subsequent  to the  end of its  fiscal  year,  on  June  9,  1999,  the
registrant  became  a  reporting  company  pursuant  to  Section  12(b)  of  the
Securities  Exchange Act of 1934.  All reports  required under Section 16(a) are
believed  to  have  been  timely  filed  by  the  officers,  directors  and  10%
shareholders of the stock of the Company.

ITEM 12.  Certain Relationships and Related Transactions.

         At the  August  21,  1998  meeting  of the  board of  directors  of the
Company,  a resolution was adopted to issue 300,000  restricted shares of common
stock to the  Chairman  of the  board  for  financing  activities  and  services
rendered on behalf of the Company.  A resolution  was also adopted to compensate
the members of the board of directors  through the issuance of 10,000  shares of
the  restricted  stock of the  Company  for each year of service on the board of
directors.  None of the described shares have been issued, and such matters have
been  referred  to the  Compensation  Committee  of the board of  directors  for
further  action.  If the  grants of stock to the  directors  are  completed,  an
aggregate of 230,000  shares would be issued to the directors of the Company for
service  through  the  end of  this  calendar  year.  Because  the  Compensation
Committee has not taken final action on these  matters,  and the shares have not
been issued,  such shares have not been  included in the  compensation  or share
ownership tables in Items 10 and 11 of this report.

         Independent members of the Board of Directors acted on November 6, 1998
to approve the sale of the  financial  services  business of the Company to TFL,
L.L.C.,  a Utah limited  liability  company.  A definitive  sales  agreement was
executed on November  12,  1998.  The sale was made in order to pursue the newly
developed business plan of the Company. This strategic business plan is premised
upon focusing on the three dimensional  imaging  technology of the Company.  The
notion of spinning  off the  business  segments  of the  Company  which were not
related to the Company's communications and entertainment business had long been
a matter under consideration by management.

         In  conjunction  with this sale,  the  Company has  transferred  to the
purchaser the Chequemate  trademark which has been identified with the financial
services   business  formerly   conducted  by  the  Company.   As  part  of  the
consideration   for  the  transaction,   the  purchaser  agreed  to  assume  all
operational  expenses of the financial services business from September 1, 1998.
The balance of the purchase  consists of a percentage  of the net profits of the


                                     38
<PAGE>

business  segment from the closing of the transaction  until September 30, 2001,
with a Fifty Thousand  Dollar minimum  payment  obligation.  The physical assets
sold in the  transaction  are limited.  The  remaining  assets are  intangibles;
including trademarks, proprietary information and other intellectual property.

         The  purchase  price  and all  material  terms  of the  agreement  were
established in arm's length  negotiations with an independent third party. After
the Company achieved the best possible terms for the  transaction,  the proposed
purchaser  declined  to proceed  with the closing of the  transaction.  With the
transaction  stalemated  in this  manner,  Ken and  Marci  Redding  (two  former
employees  of the  Company),  agreed to step  into the shoes of the  independent
third party and  consummate  the  transaction  on the same terms in all material
respects.  This  purchase  was  completed  by the  Reddings  through  a  limited

liability company which they control. Because the Reddings were former employees
of the Company (and are the son-in-law and daughter respectively of the Chairman
of the board of directors of the Company),  the  substitution of the Reddings as
purchasers  in the  transaction  was disclosed to the board of directors and the
terms of the transaction were approved a second time. Upon this latter vote, the
Chairman  abstained from voting. The final sales transaction was approved by the
unanimous action of the independent board members.

                                       39

<PAGE>



<TABLE>
<CAPTION>
ITEM 13.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

         <S>     <C>                                                                                                   <C>
         NO.      DESCRIPTION                                                                                          PAGE
         ---      -----------                                                                                          ----
         3.1      Restated Articles of Incorporation.  Incorporated by reference from Form 8-A (Film No. 99636119)
                  filed by the Company with the Commission on May 27, 1999.


         3.2      By-Laws.  Incorporated by reference from Form 8-A (Film No. 99636119) filed by the Company with
                  the Commission on May 27, 1999.


         4        Specimen Common Stock Certificate. Incorporated by reference from Form 8-A (Film No. 99636119)
                  filed by the Company with the Commission on May 27, 1999.


         10.1     License   Agreement   between  the   Company's   wholly  owned
                  subsidiary and Advanced  Technology Group,  L.L.C. dated as of
                  June 23,  1997.  Incorporated  by  reference  from Form 10-KSB
                  (Film No.  97641185)  filed by the Company with the Commission
                  on July 16, 1997.

         10.2     Subscription Agreement between the Company and Augustine Fund,
                  LP dated as of December  21, 1998.  Incorporated  by reference
                  from Form 8-K (Film No.  98774706)  filed by the Company  with
                  the Commission on December 23, 1998.

         10.3     Subscription Agreement between the Company and Augustine Fund,
                  LP dated as of February  9, 1999.  Incorporated  by  reference
                  from Form 10-QSB (Film No. 99541584) filed by the Company with
                  the Commission on February 16, 1999.

         10.4     Subscription Agreement between the Company and Augustine Fund,
                  LP dated as of June 4, 1999.  Incorporated  by reference  from
                  Form S-3/A (Film No.  99659015)  filed by the Company with the
                  Commission on July 2, 1999.

         11       Computation of per-share earnings................................................................

         21       Subsidiaries of the registrant (see section entitled Principals of Consolidation)..............22

         23       Consent of Jones, Jensen & Company.............................................................42

         24       Power of Attorney..............................................................................43

         27       Financial Data Schedule (for SEC use only).....................................................44

         (b)  Reports Filed on Form 8-K

         Dec. 23, 1998 Form 8-K report regarding the acquisition of certain assets of Alpha Communications.

         April 14, 1999 Form 8-K regarding the acquisition of secured interests in the assets of Strata. Inc.
</TABLE>


                                      40
<PAGE>

                                   SIGNATURES

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


                         CHEQUEMATE INTERNATIONAL, INC.


By: /s/J. Michael Heil                           Date  July 14, 1999
    -------------------------                          --------------
    J. Michael Heil B CEO


By  /s/Steven B. Anderson                        Date  July 13, 1999
    ---------------------                              --------------
    Steven B. Anderson B CFO

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

/s/Blaine Harris
---------------------------------------
Blaine Harris, Chairman                      Date  July 14, 1999
                                                   -------------
/s/Terrell A. Lassetter for
---------------------------------------
for Harold P. Glick,  Director               Date  July 13, 1999
                                                   -------------
/s/Terrell A. Lassetter for
---------------------------------------
for Robert E. Warfield, Director             Date  July 13, 1990
                                                   -------------
/s/Terrell A. Lassetter
---------------------------------------
for Andre Peterson, Director                 Date  July 13, 1999
                                                   -------------
/s/Terrell A. Lassetter
---------------------------------------
for John Bartholomew, Director               Date  July 13, 1999
                                                   --------------

                                       41